格力电器:2019年年度报告(英文版)

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI

             Annual Report 2019




                 April 2020
                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019




     Section I Important Notice, Table of Contents and Paraphrase


The Board of Directors, Board of Supervisors, all directors, supervisors and Senior
Management Personnel of the Company hereby guarantee that the contents are
authentic, accurate and complete, and there are no false records, misleading
representations or material omissions in the Annual Report, and shall take all the joint
and several legal responsibilities.

Dong Mingzhu, the Company's responsible person, Wang Jingdong, responsible
person in charge of accounting work and Liao Jianxiong, in-charge person of
accounting institution (accounting superintendent) hereby declare and warrant that
the financial report in the Report is authentic, accurate and complete.

All the directors attended the meeting of the Board of Directors in respect of
deliberation of the Report.

The forward-looking statements such as future plans and development strategies in the
Report do not constitute a substantive commitment of the Company to investors.
Investors and relevant persons should therefore be aware of risk factors attendant in
investment and understand the differences between plans, forecasts and commitments.

The Company's profit distribution proposal passed upon deliberation at the meeting of
the Board of Directors is set out as below: Based on the total stock capital of
6,015,730,878 of the Company, all directors were distributed a cash dividend of RMB
12 (tax included) per 10 stocks and given 0 bonus share (tax included). Public reserve
funds were not used for capitalization.




                                            1
                                                                 GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019




                                                      Table of Contents



Section I Important Notice, Table of Contents and Paraphrase .............................................................................. 1

Section II Company Profile and Main Financial Indices ....................................................................................... 4

Section III Corporate Business Overview ....................................................................................................... 10

Section IV Discussion and Analysis of Business Operation .................................................................................. 19

Section V Important Events ........................................................................................................................ 57

Section VI Changes in Stock Capital & Information of Shareholders                 .................................................................... 89
Section VII Related Information of Preferred Stock .......................................................................................... 94

Section VIII Related Information of Convertible Corporate Bonds ....................................................................... 95

Section IX Directors, Supervisors, Senior Management Personnel and Employees .................................................... 96

Section X Corporate Governance ............................................................................................................... 111

Section XI Related Information of Corporate Bonds ....................................................................................... 116

Section XII Financial Report ..................................................................................................................... 117

Section XIII References ........................................................................................................................... 278




                                                                          2
                                           GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019




                                         Paraphrase


                     Items              Means                              Contents

Company, the Company, the enterprise,
                                        Means    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
GREE ELECTRIC APPLIANCES or GREE

GREE GROUP                              Means    Zhuhai Gree Group Co., Ltd.

Zhuhai Mingjun                          Means    Zhuhai Mingjun Investment Partnership (Limited Partnership)

Finance Company                         Means    Zhuhai Gree Group Finance Company Limited

Jinghai Guaranteed                      Means    Hebei Jinghai Guaranteed Investment Co., Ltd.

Yinlong                                 Means    Zhuhai Yinlong New Energy Co., Ltd.

CSRC                                    Means    China Securities Regulatory Commission

Report Period                           Means    From 1 January, 2019 to 31 December, 2019




                                                 3
                                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019




              Section II Company Profile and Main Financial Indices


I. Company information

                                                GREE ELECTRIC
 Stock Abbreviation                                                                Stock Code                000651
                                                APPLIANCES

 Stock Exchange                                 Shenzhen Stock Exchange

 Name in Chinese                                珠海格力电器股份有限公司

 Name Abbreviation in Chinese                   格力电器

 Name in Foreign Language (if any)              GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI

 Name Abbreviation in Foreign Language
                                                GREE
 (if any)

 Legal Representative                           Dong Mingzhu

 Registered Address                             Jinji West Road, Qianshan, Zhuhai City, Guangdong Province

 Post Code of Registered Address                519070

 Office Address                                 Jinji West Road, Qianshan, Zhuhai City, Guangdong Province

 Post Code of Office Address                    519070

 Website                                        http://www.gree.com.cn

 Email                                          gree@gree.com.cn



II. Contacts and contact information

                                                            Board Secretary                     Securities Affairs Representative

 Name                                           Wang Jingdong                              Zhang Zhouhu,Yan Zhangxiang

                                                Jinji West Road, Qianshan, Zhuhai City,    Jinji West Road, Qianshan, Zhuhai City,
 Address
                                                Guangdong Province                         Guangdong Province

 Tel                                            0756-8669232                               0756-8669232

 Fax                                            0756-8614998                               0756-8614998

 Email                                          gree0651@cn.gree.com                       gree0651@cn.gree.com



III. Information disclosure and place of the report

 Media designated by the Company for information           China Securities Journal, Securities Times, Shanghai Securities News and
 disclosure                                                Securities Daily

 Website specified by CSRC for release of the
                                                           http://www.cninfo.com.cn
 Annual Report

                                                                    4
                                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019


 Place where the Annual Report is available for
                                                         Investment Management Department of the Company
 inspection



IV. Alteration of registration

 Organization code                                       91440400192548256N

 Changes (if any) in the main business since listing
                                                         No change
 of the Company

 Changes (if any) in the controlling shareholders        No change



V. Other related information

Accounting firm engaged by the Company

 Name of the Accounting Firm                             Union Power Certified Public Accountants (Special General Partnership)

 Office Address                                          No. 169 Donghu Road, Wuchang District, Wuhan City

 Names of Accountants as Signatories                     Gong Jingwei, Wu Zihao

Sponsor engaged by the Company to perform continuous supervision during the Report Period
√ Applicable   □ Not applicable

                                                                            Name of the
        Name of the sponsor         Office address of the sponsor          recommended               Continuous supervision period
                                                                           representative

                                    26F, CTS Tower, No.4011,
 Huatai United Securities Co.,                                          Gu Chongxiang, Li
                                    Shennan Boulevard, Futian                                    From 26 July, 2019 to 25 July, 2020
 Ltd.                                                                   Shijing
                                    District, Shenzhen

Financial adviser engaged by the Company to perform continuous supervision during the Report Period
□ Applicable √ Not applicable


VI. Main accounting data and financial indices

Whether the Company has retroactive adjustment or restatement of previous accounting data
□ Yes √ No
                                                                                                                         Unit: RMB Yuan

                                                                                                Increase/
                                            2019                         2018               Decrease over the             2017
                                                                                              previous year

 Operating Revenue (Yuan)             198,153,027,540.35        198,123,177,056.84                     0.02%          148,286,450,009.18

 Net profit attributable to
 shareholders of listed                 24,696,641,368.84        26,202,787,681.42                    -5.75%           22,400,484,001.26
 Company (Yuan)

 Net profit attributable to             24,171,511,911.32        25,580,865,501.38                    -5.51%           21,170,184,740.88

                                                                    5
                                                               GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

 shareholders of listed
 Company less non-recurring
 gains and losses (Yuan)

 Net cash flow generated from
                                       27,893,714,093.59            26,940,791,542.98                  3.54%        16,338,082,774.25
 operating activities (Yuan)

 Basic earnings per share
                                                        4.11                         4.36             -5.73%                          3.72
 (Yuan per Share)

 Diluted earnings per
                                                        4.11                         4.36             -5.73%                          3.72
 share(Yuan per Share)

 Weighted average return on
                                                  25.72%                        33.36%                -7.64%                      37.44%
 net assets

                                                                                                Increase/
                                     At the end of 2019           At the end of 2018        Decrease over the    At the end of 2017
                                                                                              previous year

 Total asset (Yuan)                   282,972,157,415.28           251,234,157,276.81                 12.63%       214,987,907,124.70

 Net asset attributable to
 shareholders of listed               110,153,573,282.67            91,327,095,069.10                 20.61%        65,614,913,868.06
 Company (Yuan)



VII. Accounting data differences under domestic and foreign accounting standards

1. Differences in net profit and net assets in the financial report disclosed under international accounting
standards and that disclosed under domestic accounting standards

□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under international accounting standards and that
disclosed under domestic accounting standards during the Report Period.


2. Differences in net profit and net assets in the financial report disclosed under overseas accounting
standards and that disclosed under domestic accounting standards

□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under overseas accounting standards and that
disclosed under domestic accounting standards during the Report Period.


VIII. Quarter-based main financial indicators

                                                                                                                      Unit: RMB Yuan

                                            Quarter 1                    Quarter 2               Quarter 3            Quarter 4

 Operating incomes                      40,547,673,072.89           56,749,291,262.00        57,741,792,636.95    43,114,270,568.51


                                                                     6
                                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019


 Net profit attributable to
                                         5,671,869,041.09        8,078,325,047.80         8,367,302,278.13        2,579,145,001.82
 shareholders of listed company

 Net profit attributable to
 shareholders of listed companies
                                         5,113,678,278.15         8,279,748,411.85        8,172,069,543.75        2,606,015,677.57
 after deduction of non-recurring
 profit and loss

 Net cash flows from operating
                                         7,733,213,419.06        8,722,853,827.89       16,273,618,883.00        -4,835,972,036.36
 activities

Whether major differences exist between the above financial indicators or their sum and those in the disclosed quarterly report and
semi-annual report
□ Yes √ No


IX. Non-recurring profit and loss items and amounts

√ Applicable □ Not applicable
                                                                                                                     Unit: RMB Yuan

               Item                   Amount in 2019            Amount in 2018          Amount in 2017             Description

 Gains and losses from
 disposal of non-current                                                                                      For details, see Note
 assets (including the                       -9,293,929.38            -23,064,935.35         -8,463,062.31    (VII) 57, Note (VII)
 provision for asset                                                                                          58 and Note (VII) 59
 impairment write-off part)

 Governmental subsidies
 recorded into the current
 gains and losses (excluding
 the governmental subsidies
                                                                                                              For details, see Note
 closely relating to the
                                          1,215,852,371.66            671,678,104.47       880,235,834.70     (VII) 52 and Note
 business of the enterprise
                                                                                                              (VII) 58
 and enjoyed by a fixed
 quota or a fixed amount in
 accordance with the state
 policies)

 Capital occupation fee
 collected from the
 non-financial institution and                  359,713.10              1,262,805.80         1,480,255.77
 recorded into the current
 gains and losses

 All kinds of provisions for
 impairment of assets
                                                                                               264,556.46
 accrued due to force
 majeure factors, e.g.,


                                                                  7
                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

suffering from natural
disasters

Net profits or losses of the
subsidiaries in the current
period from the beginning
of the period to the
combination date that are                                184,503.98       -757,426.22
generated by business
combination involving
enterprises under common
control

Gains and losses caused by
fair value changes from the
holding of trading financial
assets, derivative financial
assets, trading financial
liabilities and derivative
financial liabilities, and
investment income obtained
from the disposal of trading
                                  1,449,722.86        151,222,484.83   399,373,171.53
financial assets, derivative
financial assets, trading
financial liabilities,
derivative financial
liabilities and other debt
investments, except for the
effective hedging business
related to the Company's
normal business operations

Reversal of impairment
provision for the accounts
receivable and contract
                                                        2,320,229.26     4,225,536.19
assets for which an
independent impairment test
is conducted

Non-operating incomes and                                                               For details, see Note
expenditures other than the    -530,486,147.03         32,323,207.44    18,316,586.90   (VII) 58 and Note
above items                                                                             (VII) 59

Other profit and loss items
that conform to the
                                   997,770.17           6,119,851.77      496,004.65
definition of non-recurring
profit and loss

Less: Influence amount of      147,189,032.83         170,139,883.37    55,182,008.00

                                                  8
                                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

 income tax

 Influence amount of
                                              6,561,011.03             49,984,188.79         9,690,189.29
 minority equity (after tax)

 Total                                      525,129,457.52            621,922,180.04     1,230,299,260.38               --

Explanation should be given for non-recurring profit and loss items defined by the Company according to Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit and
Loss and for non-recurring profit and loss items which are listed in Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss and defined as recurring profit and loss items.
□ Applicable √ Not applicable
No non-recurring profit and loss items which are defined or listed in Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss were defined by the Company as recurring profit
and loss items during the Report Period.




                                                                  9
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                        Section III Corporate Business Overview

I. Major businesses engaged in during the Report Period

1. Major business and position in industry


Gree Electric Appliances, Inc. of Zhuhai is a diversified and technological global industrial group and has three
major brands: Gree, TOSOT and KINGHOME. Its business scope has been expanded to cover the fields of air
conditioning, home appliances, high-end equipment and communication equipment, including residential air
conditioners, commercial air conditioners, freezers and refrigeration equipment, air conditioners for nuclear power
projects, air conditioners for rail transit projects, and photovoltaic air conditioners in the air-conditioning field;
intelligent equipment, CNC machine tools, precision moulds, and precision casting equipment in the field of
high-end equipment; kitchen appliances, healthy appliances, environmental appliances, washing machines and
refrigerators in the field of home appliances; as well as Internet of Things devices, mobile phones, chips, and big
data in the field of communication equipment. Gree products are sold in more than 160 countries and regions,
providing more than 400 million users with satisfactory products and services, for the purpose of creating a better
life.

In 2019, Gree was listed in the Fortune 500 and ranked the 414th. Among the 129 Chinese enterprises on the list,
the return on equity (ROE) of Gree ranks the first; according to the data released by HVAC Information, Gree took
the lead in the central air conditioner market relying on a market share of 14.7% and has maintained the position
for eight consecutive years in the Chinese market; according to the market data of AVC, Gree's share in the offline
market of Chinese residential air conditioners ranked the first in 2019, with the retail sales accounting for 36.83%;
among the top 20 residential air conditioner models in offline retail sales, 12 are Gree products, accounting for
60%; according to the data of Nihon Keizai Shimbun, a world renowned economic media, in 2019, Gree ranked
No.1 in the field of residential air conditioners with the global market share of 20.6%.

Gree takes "building a globally advanced industrial group and making Gree a century-year world brand" as its
corporate vision, and "carrying forward the industrial spirit, pursuing perfect quality, providing professional
services and creating comfortable environment" as its mission. By adhering to the management philosophy that
"innovation never stops", Gree focuses on independent innovation and development, in order to grasp the pulse of
the times, build a world brand and create a development model with Chinese characteristics for Chinese
manufacturing enterprises.


2. Overview of industry development


(1) Field of household appliances

The Industry Analysis Report of Residential Air Conditioners in 2019 published by China Business Industry
Research Institute shows that, in 2019, the total output of industry increased by 1.21% year on year, the total sales
                                                         10
                                                  GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

of the industry decreased by 0.74% year on year, the total export of the industry decreased by 0.82% year on year
and the total internal sales of the industry decreased by 0.69% year on year. In 2019, the total sales, export and
domestic sales of the industry decreased year on year and the whole air conditioner industry felt the pressure of
the market. On the other hand, according to the statistics of National Information Center for Household Appliance
Industry, the retail market share of top 3 brands in the offline air conditioner market increased from 73.6% in 2018
to 76.39%, and that of top 5 brands increased from 83.8% in 2018 to 85.74%. The influence of traditional
household appliance brands continued to rise, and the market share of domestic brands was further increased.

In the long run, as the upgrading process of resident consumption becomes accelerated, consumers put forward
higher requirements for brand recognition and product quality and higher standards for energy saving, comfort
and intelligent degree of air conditioners and show strong demand for high-quality life; as the policy of the new
national standards is implemented, the proportion of energy-saving products gradually increases. According to the
forecast of China National Institute of Standardization, after the new standards are implemented, the energy
efficiency standard of air conditioners will be increased by 14% in 2020 and by 30% in 2022 and the existing air
conditioners with low energy efficiency will be replaced by those air conditioners with high energy efficiency.

The household appliance market has entered the period in which the online and offline markets are promoted at
the same time and the scale of the online market increases continuously. According to the statistics of National
Information Center for Household Appliance Industry, in 2019, the online retail sales of the Chinese household
appliance industry was approximately RMB 310.8 billion, a year-on-year growth of 4.2%, and the market share
reached 38.7%; the offline retail sales was about RMB 492.4 billion, a year-on-year decrease of 5.8%, and the
market share reached 61.3%. The importance of the online market in Chinese consumer market is self-evident.
However, the offline market still has a comparative advantage. In the process in which old high-end products are
replaced by new high-end products, offline stores are more flexible. The deep combination of the online market
and offline market has always been the development direction of household appliance enterprises.

(2) High-end equipment field

The State Council issued "Made in China 2025" and "Development Plan for a New Generation of Artificial
Intelligence" in May 2015 and July 2017, respectively; the General Administration of Quality Supervision,
Inspection and Quarantine of the People's Republic of China, Standardization Administration of the People's
Republic of China and Ministry of Industry and Information Technology of the People's Republic of China jointly
issued the "Standardization and Quality Improvement Plan of the Equipment Manufacturing Industry" in 2016;
the Ministry of Industry and Information Technology issued the "High-End Intelligent Remanufacturing Action
Plan (2018-2020)" in October 2017. Under the support of policies, intelligent manufacturing equipment develops
quickly, the demand of the industry increases rapidly, the capacity increases rapidly, and industrial upgrading and
technological iteration become accelerated. Intelligent manufacturing has become the core of development for
China's manufacturing industry. According to the data of China Business Industry Research Institute, the global
market scale of intelligent manufacturing reached USD 868.7 billion in 2016 and China's intelligent
manufacturing accounts for about one fifth. In 2018, the scale exceeded USD 1 trillion. Based on the current
development and trend of global intelligent manufacturing, it is estimated that the global intelligent manufacturing
                                                        11
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industry will maintain stable growth in the coming years.

Intelligent manufacturing has become a key factor in reshaping the industrial competitiveness in the world and
provides opportunities for development and transformation of countries. According to the Intelligent
Manufacturing Development Plan (2016-2020) issued by the Ministry of Industry and Information Technology,
the development foundation and supporting capacity of intelligent manufacturing will be significantly enhanced
and digital manufacturing will be basically realized in the key areas of traditional manufacturing industry in 2020;
the support system of intelligent manufacturing will be basically established, and intelligent transformation will be
initially realized for the key industries in 2025.


II. Significant changes in major assets

1. Significant changes in major assets



                Major assets                                               Significant changes


                                       Year-on-year growth of 58.82%. See Note VII (11) of the financial report for the causes
 Disbursement of loans and advances
                                       of the change.

                                       Year-on-year growth of 213.86%. This is mainly caused by the change in the fair value
 Long-term equity investment           of the equity of Wingtech Technology Co., Ltd. indirectly held by the Company through
                                       "Zhuhai Ronglin Equity Investment Partnership (Limited Partnership)".

                                       Year-on-year growth of 305.67%. This is mainly caused by the change in the fair value
 Other equity instrument investments
                                       of the equity investment of Wingtech Technology Co., Ltd.

 Fixed assets                          Year-on-year growth of 4.00%. No significant change is made.

 Intangible assets                     Year-on-year growth of 1.94%. No significant change is made.

                                       Year-on-year growth of 46.10%. This is mainly caused by the increase of investment in
 Construction in Progress
                                       the infrastructure project of the current phase.


2. Major overseas assets

□ Applicable √ Not applicable


III. Core competence analysis

The mission drives creation of value and innovation makes the future of the world. In the background of the new
era, Gree has developed from the period in which it catches up with leading enterprises in innovation to a new
period in which it takes the lead in innovation and faces new opportunities and challenges. Gree adheres to the
principle of concentration, advocates the management policy of "be fair, be open, be dedicated", promotes the
code of conduct of "be truthful, work for real; be principled, work for good, be committed, work for success",
follows the "eight strict policies" for quality control, takes "mastering core technologies and forging perfect
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quality" as the two wheels for driving, transfers and improves the value through unique marketing model, sticks to
independent people cultivation, independent innovation and independent production, and aims to achieve "Made
in China, Loved by the World" by carrying forward the industrial spirit, pursuing perfect quality, providing
professional services and creating comfortable environment.


1. World famous brand, adding luster to "Made in China"


Gree is a diversified technological global industrial group integrating R&D, production, sales and service. Gree
won the honors such as "World Brand", "Most Competitive Brand in the Market", "National Quality Award",
"Export Inspection Exemption Enterprise" and "China Brand Innovation Award". In 2019, Gree was listed in
Fortune 500, ranking the 414th. Meanwhile, Gree was listed in the "China's Most Admired Companies in 2019" in
the Fortune, ranking the third in China and continuously ranking the first in the household appliance industry. In
the "2019 China Brand Value Evaluation Information Session and China Brand Building Summit Forum" held in
Shanghai, Gree ranked the second in the light industry and the first in the household appliance industry. In 2019,
in the People's Daily "China Brand Development Index" initiated and compiled by People's Daily, Gree ranked the
seventh in the list with a total index of 917.73, ranking the first in the household appliance industry. This shows
the hard strength and brand influence of Gree in its development.

According to the customer satisfaction survey on 10 categories of household appliances in 2019 jointly issued by
the Customer Satisfaction Evaluation Center of China National Institute of Standardization, Tsinghua University
National Entrepreneurship Research Center and China Standard Science and Technology Group Co., Ltd., Gree
ranked the first in the industry in terms of comprehensive customer satisfaction score and various indicators in the
air conditioner category, ranking the first in the industry for eight consecutive years.

Gree has always been adhering to the "craftsman spirit", "innovation spirit" and "challenge spirit", insisting on
establishing a brand with excellent quality and world-leading technology, demonstrating its firm belief and
ambition to the society and declaring its responsibility of creating social value, environmental value and economic
value for the country, society and consumers.


2. Excellent R&D system, continuously leading technological innovation and product upgrading of the
industry


Gree adheres to the philosophy that "science and technology change life; science and technology create life" and
insists on "independent research and development of core technologies". It firmly believes that only the real
mastery of core technologies can enable us to grasp the fate of the enterprise and realize independent development
of the enterprise. Meanwhile, Gree has set up a technological innovation system of "enterprise regarded as the
main player, market orientation, enterprise-university-research cooperation". It insists on innovation driving,
cultivates innovative talents, implements the leader strategy, and constantly consolidates its global leading
position in the field of refrigeration.

Gree boasts the largest R&D center of air conditioners in the world, four national R&D centers, 15 research
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institutes, more than 900 laboratories and over 14,000 R&D members. Its national R&D centers are the National
Key Laboratory on Air Conditioning Equipment and Energy-saving System Operation, National Engineering
Research Center of Green Refrigeration Equipment , State Recognized Enterprise Technology Center and the
State-level Industrial Design Center. Meanwhile, it has been recognized as the "National Demonstration Base for
Standardization of Consumer Goods" and "National Pilot Enterprise for Standardization of High-end Equipment
Manufacturing Industry". In addition, Gree has established the "Motor and Control" academician workstation and
has been successively approved to establish post-doctoral research centers and doctoral workstations in
Guangdong Province. In 2019, Gree was approved to establish "Guangdong Key Laboratory for Enterprises of
High-performance Servo System", "Guangdong Intelligent Mould Technology Innovation Center", "Guangdong
Energy Internet Innovation Center" and "Guangdong Small Household Appliance Intelligent Manufacturing
Regional Innovation Center".

Gree has accumulatively won 33 national, provincial or ministerial and industrial awards. In 2019, Gree won
seven awards, including one national second prize for technological invention and three provincial and ministerial
first prizes. Gree's "key technology and application of large-capacity and high-efficiency centrifugal
air-conditioning equipment" project won the second prize of national technological invention in 2019; Gree's "key
technology and application of direct current in optical storage air conditioners" project won the first prize of
Guangdong provincial technological invention, China Patent Gold Award and other awards.


3. Industry leading PQAM perfect quality assurance mode, shaping China's quality image with high
standards


"Quality is crucial to two lives: one is the life of consumers and the other is the life of enterprises". Gree always
considers product quality as the lifeline and insists on "not taking consumers as test targets". Gree adheres to the
quality policy of "pursuing the perfect quality, creating an international brand, and forging a century enterprise",
sticks to the quality culture of "strict, true and new" oriented to customer demand and social responsibility, sets no
upper limit of investment in the basic capacity building of quality, implements all-round quality training for all
staff, and extensively carries out QCC quality improvement activities and Six Sigma quality improvement projects.
It gradually forms a comprehensive quality management mode with independent innovation as the core.

Gree has strong consciousness of reform in quality management. It promoted quality management reform,
focusing on promoting the systematic development of Gree's quality management to deepen the construction of
high quality enterprise. On the basis of learning and absorbing the advantages of ISO9000, Six Sigma,
performance excellence model, and other management systems, Gree put forward the unique PQAM. Starting
from the quality management process, it used the five-step method of quality prevention to strictly control the
pre-event process, and adopted the quality technology innovation cycle D-CTFP to perform post-event tracking.
Gree ensured the applicability and reliability of products through active prevention and control and avoided
quality problems during use of products.

Under the guidance of the perfect quality philosophy, Gree runs quality management through the value chain links
such as product R&D and design, parts procurement, production and manufacturing, and marketing service and
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continuously improves the technical basis, standard system, rules and regulations, information systems and
organizational guarantee of quality management, forming a comprehensive quality control system. Gree regards
"pursuing perfect quality" as the quality policy and "zero defect" and "best service not requiring after-sales
service" as the quality objectives, considers the "five-step method of quality prevention" and "quality technology
innovation cycle D-CTFP method" as the methods and summarizes and refines the perfect quality management
mode of Gree.

Gree's quality standards follow two principles: one is that the quality standards must be stricter than international
standard and national standards and the other is that the quality standards must be consumer-oriented. Gree
participated in the drafting and development of the Quality Management — Innovation Cycle Guide Based on
Customer Demand as a national standard, which sets Gree's quality management experience as a model in the
whole industry. Gree attaches great importance to quality management. It promotes and escalates quality
construction of the enterprise to the national standards, shapes an industry development benchmark relying on the
ingenuity of manufacturing, further improves the quality management system of China, and creates a more
competitive image of Chinese manufacturing quality.


4. Efficient and in-depth sales network and deep integration of online and offline channels lay a solid
foundation for the growth of Gree


Gree insists on the sales channel construction and sales model of independent management, mutual benefit and
win-win and creates a solid online and offline business layout. The two channels complement each other and are
deeply integrated to create a full channel sales platform. Gree has constructed competitive product experience
halls, Gree living centers and Gree exclusive shops all over the country to provide consumers with integrated
smart home solutions and bring consumers comfortable enjoyment and the experience of home.

As the business scale of the Company expands, the marketing mode of its "self-built channel" enables the
"integrity" concept of the enterprise to run through all phases from production to sales. Gree maintains good
cooperation with distributors and provides great support for terminal channel construction and advertising. Gree
has established a joint-stock regional sales company, which greatly enhances the motive power of distributors.
Through an established sound market management system, Gree guides sales companies to lead various channels
to carry out large diversified and rich promotional activities by using policies and constantly increases the market
share and improves corporate reputation. As a result, Gree stands out in the fierce channel competition and
realizes independent management and control of sales channels.

At present, Gree has accelerated expansion of its online sales channels and realized rapid expansion through
distribution stores. In addition, it realizes big data analysis, allocation and circulation of stock products with the
help of the cloud platform, further promotes optimization of the inventory structure and reduces the risk of
unsalable sales by reversing production plans through low inventory warning. Meanwhile, the Company carries
out further cooperation with major e-commerce platforms and actively holds large activities during festivals,
achieving extraordinary results. Big data analysis is carried out offline through a digital management system to
realize dynamic statistics and display of sales data. Market trends and problems can be found in time through
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observation of dynamic data and strategic deployment can be adjusted in time.

5. Precise industrial layout and perfect supply chain system lay a solid foundation for business development

Gree now has 14 production bases in the world, located in Zhuhai, Chongqing, Hefei, Zhengzhou, Wuhan,
Shijiazhuang, Wuhu, Changsha, Hangzhou, Luoyang, Nanjing, Chengdu, Brazil and Pakistan, and the production
capacity ranks the first in the world.

In 2019, Gree further improved its structure layout, production capacity layout and variety layout, promoted the
upgrading of sales logistics services and coordinated to reduce the overall logistics operating cost based on the
new trend and new demand of e-commerce development. All bases spare no effort to produce low-end and
middle-range air conditioners, and high-end and medium-range air conditioners are produced in a centralized
manner in regions such as Wuhan, Hefei and Zhengzhou, radiating the whole country and giving full play to the
advantages of economic regions. E-commerce centers on nearby distribution with the platform transferring goods
from warehouses and the production bases of e-commerce products are deployed in Wuhan, Hefei and Zhengzhou.
Meanwhile, Gree accelerates construction of the bases in Changsha, Chengdu and Luoyang and accelerates the
product layout of refrigerators and washing machines. Gree has built upstream plants for raw materials of
household appliances, for example, compressors, motors, capacitors and enameled wires, in various bases, which
greatly enhances the control capability of the Company for upstream and downstream supply chain, guarantees the
efficient operation of production and meets the needs of consumers in a timely manner. Moreover, the Company
has built five renewable resource bases in Changsha, Zhengzhou, Shijiazhuang, Wuhu and Tianjin, covering the
whole industrial chain from upstream production to downstream recycling, and achieving green, cyclic and
sustainable development.

6. Refined cost control capability to provide guarantee for the steady development of the Group

Gree has been committed itself to establishing and improving the cost control system. It adheres to the philosophy
of refined cost control and saves unnecessary costs. The Company aims to increase the value by improving the
production efficiency, gradually optimizes the manufacturing system, implements full-process cost control and
routinizes the work of cost analysis relying on "quota management".

In 2019, Gree gradually optimized the lean manufacturing system (GMS), established an integrated human
demand assessment and allocation management mechanism and improved the production efficiency and human
resource utilization. By innovating in production automation, the Company improves the level of automation,
promotes the transformation and upgrading of intelligent manufacturing and reduces the demand for production
personnel; through digital innovation in production, the Company improves the level of production
informatization and lays a solid information foundation for intelligent manufacturing. In addition, to strengthen
the research of new technologies and eliminate high-cost technologies, Gree holds a lean design competition every
year to commend excellent lean products.

Through continuous application of lean, automation and digital technology, Gree's per capita efficiency increased
by 7.1% in 2019. In December 2019, the "2019 Chinese Enterprise Reform and Development Summit and

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Achievement Press Conference" organized by China Enterprise Reform and Development Society released the
"3rd Excellent Achievements of Chinese Enterprise Reform and Development". Gree's "Lean Management
Innovation Practice for Intelligent Manufacturing of Large Household Appliance Manufacturing Enterprises"
program won the first prize.


7. Adhere to independent training of talents and continuously upgrade the talent structure


Gree always adheres to the principle of "focusing on the strategic layout of the Company and adhering to
independent training of talents” and gradually forms an independent talent training mode with independent talent
introduction channel, independent training and development mechanism and all-round incentive and guarantee
system as the core based on the development experience and cultural deposit of the Company, striving to make
employees and the Company make progress and develop together.

Gree's talent team has been growing and its talent structure has been upgraded over the years. By the end of 2019,
the Company had about 90,000 employees, including more than 14,000 technological R&D personnel and more
than 30,000 skilled workers. During the process of talent introduction, Gree gives consideration to ideology and
morality, cultural identification, professional competence and development potential. The Company cooperates
with universities to carry out a variety of science and technology competition programs, arouse the enthusiasm of
students' invention and creation and explore outstanding talents with innovative ability; the Company actively sets
up an exchange platform between universities and the enterprise, invites teachers and students of universities
across the country to go into Gree and go into "Intelligent manufacturing in China", feel the unique industrial
culture of Gree and the development pulse of China's advanced manufacturing industry and set up a goal of
serving the country by devoting to the industry.

In order to continuously improve the level of technological innovation of the Company, enhance the core
competence of the Company and encourage the technological talents with outstanding technology and outstanding
abilities to make greater contributions to independent innovation of the Company, Gree insists on the principles of
" be fair, be open, be dedicated" and selects technological experts every year through internal recommendation of
each department, section review, on-site defense and publicity of selection results based on the technological level,
post value and performance level so as to further expand the team of technological experts and optimize the
structure of experts at all levels. Meanwhile, the Company applies the evaluation results to various personnel
decisions such as salary, further optimizes the salary adjustment mechanism and stimulates staff capacity
improvement in an all-around manner. Gree now has two leading talents in science and technology innovation
under the National 10000 Talents Program, one young and middle-aged expert with outstanding contributions to
the nation, three experts enjoying the special allowance of the State Council, one talent winning the Outstanding
Contribution Award of South Guangdong, one Guangdong special support program outstanding talent, 62
high-level talents of Zhuhai, more than 300 young outstanding talents and more than 470 science and technology
experts.

Gree has designed three career development paths for technical management employees, namely "professional,
management and comprehensive development", and designed a skill rating mechanism for front-line employees.
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Based on staff competence, performance and determination, Gree creates a fair and just development environment,
which makes Gree have a large number of talents in all fields.




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          Section IV Discussion and Analysis of Business Operation

I. Overview

In 2019, Gree steadfastly followed the development path of "independent innovation, winning by technology,
driving by two efficiency and global leading", improved the four business fields: air conditioning, home
appliances, high-end equipment and communication equipment, which are the main pillars, centered on users,
insisted on technological innovation, optimized the quality control system, strengthened the online and overseas
layout, promoted enterprise transformation and upgrading and created a more competitive and diversified
technological global industrial group. In 2019, the Company achieved the total operating revenue of RMB
200.508 billion, an increase of 0.24% year on year, and a net profit attributable to the parent company of RMB
24.697 billion, a decrease of 5.75% year on year.


1. Center on users, continuously improve product competitiveness and meet new needs of users


(1) Residential air conditioner sector

Gree insists on centering on user needs for development of new products, creates perfect quality management and
fully considers new needs of users. Based on the product R&D idea of "Study one generation, reserve one
generation and develop one generation”, Gree made significant breakthroughs in product intelligence, comfort and
energy savings. In order to meet the needs of different consumers, Gree divides the market based on three
dimensions: region, climate and economy, and strives to fully understand the market under the condition of market
segmentation. In response to the new needs of consumers, Gree focuses on the innovation and upgrading of
technologies and products from the aspects such as air supply comfort, heating comfort, healthy air and intelligent
interaction. It has developed new products such as fresh air conditioners, AI voice air conditioners, constant-warm
defrosting air conditioners and high-end art air conditioners to resolve pain points of users and improve user
experience.

For the problems such as indoor and outdoor air pollution and harm to people's health due to increase of carbon
dioxide concentration caused by long-term stay of people in closed rooms, the Company developed the “Freair”
series wall-mounted and floor-standing fresh air conditioners. The products provide the function of supplying
fresh air in two ways. The products can introduce outdoor fresh air after multi-stage of filtration and discharge
indoor dirty air at the same time, which enables the products to effectively and permanently keep the indoor air
fresh. Meanwhile, the built-in air quality sensor of the air conditioner can monitor the indoor air quality and the
intelligent opening and closing of the fresh air system brings convenient and healthy enjoyment to users.

For the problems that many steps are required to remotely control an air conditioner, user operation is
inconvenient and functions of the air conditioner are monotonous, Gree developed a series of AI voice air
conditioners such as Gree Kimbe II floor-standing unit, I-Poem II floor-standing unit, LEAD ROYAL

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floor-standing unit and Kimbe wall-mounted unit. Equipped with the AI voice technology, the air conditioners
provide interactive functions such as music play, news broadcast, encyclopedia query and social chat and can even
link all home appliances in the house, making air conditioners become intelligent home terminals.

For the problem that frosting easily occurs on traditional air conditioners in winter and heat is absorbed from
indoors during defrosting, resulting in drop of indoor temperature and poor experience, Gree developed the
constant-warm defrosting air conditioners i-Yao floor-standing unit and Runyao wall-mounted unit. The heating
efficiency of the products is 32.4% higher than that of traditional air conditioners. During defrosting, the air
conditioners do not stop working or absorb heat from indoors. After defrosting, the air conditioners blow out hot
air immediately, effectively improving the heating comfort of air conditioners.

The innovative design of air outlet and the integration of romantic art elements create Rose III floor-standing air
conditioner, the current peak of Gree. The air conditioner inherits the romantic spirit and adopts the distributed air
supply technology uniquely developed by Gree. Cold air is not blowing people, the temperature is more uniform,
and the heat and cold air is more comfortable. The air conditioner can keep warm during defrosting and keep
heating. It provides strong heating under ultra-low temperature and improves the heating capacity and the degree
of comfort. In addition, the air conditioner is also equipped with the AI voice control system, which realizes
human-computer interaction and adds fun and convenience to our life.

Gree silent window-type air conditioner is a brand-new window-type air conditioner featuring novel appearance,
low noise and superior performance. In appearance, the panel adopts an inclined upward air outlet so that people
do not feel blowing wind, which improves user comfort. The new design of the honeycomb air inlet panel
highlights simplicity and fashion and the control area adopts touch buttons that are reasonably arranged and light
transmission display to highlight user-friendly operation. It is the first time that two motors and the brand-new air
duct system structure with cross-flow fan blades and axial flow fan blades are adopted in window-type air
conditioners of the Company. The refrigeration noise of the product is 42 dB, which is the industry leading level.
The environmental-friendly R32 refrigerant is adopted to realize high energy efficiency and meet the requirements
of North America E-STAR. The silent window-type air conditioner enriches the window-type air conditioner
product line of the Company and improves the market competitiveness of the corporate brand.

In 2019, Gree won the bid for the project of Shanghai Jiaotong University. Gree adopted split air conditioners and
VRF air conditioners to provide 12,000 dormitory rooms, classrooms, dinning halls and office rooms in multiple
campuses, totaling about 3 million square meters, with high-quality integrated air-conditioning guarantee services.
The project won the high praise of "providing first-class products for first-class universities and allowing
first-class teachers and students to enjoy first-class services". In addition, Gree signed strategic framework
agreements with large enterprises such as State Grid Corporation of China, Evergrande Real Estate Group, R&F
Properties and Huawei, laying a foundation for the continuous growth of air conditioner sales in the future.

(2) HVAC equipment sector

In 2019, Gree adhered to the orientation that products meet the needs of consumers, insisted on technological
innovation, continuously strengthened the planning and layout of technological research and development,

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constantly made breakthroughs in key technologies, formed a strong technical reserve and promoted product
upgrading.

Gree's high-efficiency oil-free dynamic air bearing compressor breaks through the high-end air bearing technology,
develops the foil gas bearing with high loading capacity and long service life, which is suitable for refrigerants,
and breaks the monopoly of foreign technologies; Gree researches the ultra-high speed and high stability air
bearing rotor dynamics technology, micro flow coefficient and efficient pneumatic design technology and greatly
improves the performance and reliability of the compressor. The full load of the unit is COP6.35 W/W and the
IPLV reaches 10.15 W/W. On 7 December, 2019, the unit was identified by China Machinery Industry Federation
to reach the "world-leading" level.

Gree's luxury air conditioners for passenger trains break through the high-efficiency and high-reliability
technology of compressor under all working conditions, low-noise and high-efficiency wind blade technology,
high-strength frame anti-seismic structure design technology, 1 mm stainless steel sheet welding technology and
EMC anti-interference design and meet the requirements for high reliability and safety. In 2019, Gree completed a
series of work such as TS22163 rail transit quality management system certification, EN15085 welding system
certification and FAI first product quality appraisal. The Company has obtained the qualification to supply train
air conditioners and achieved the technological breakthrough of the Company's commercial air conditioners from
station air conditioners to vehicle-mounted air conditioners.

Through innovation and breakthrough of the magnetic bearing motor system, Gree magnetic bearing inverter
centrifugal chillers have completed the development and successful application of the 1300RT magnetic bearing
centrifugal chiller with the highest cooling capacity in the world and won the bid for Beijing Xinghuo High-speed
Railway Station project. This marks that Gree's magnetic bearing centrifugal technology advances to the
"depopulated zone" again and continues to lead in the field of central air-conditioning technology. By the end of
2019, Gree completed the development of the 80-1300RT full series magnetic bearing systems, including 6 series
and 28 models, becoming the only manufacturer in the world with the single compressor of high cooling capacity
and full series of magnetic bearing compressors and units. The project won the Gold Award of International
Exhibition of Inventions of Geneva, Morocco Special Gold Award and the first prize of the Fourth National
Quality Innovation Competition.

In 2019, closely catering to the market demand, Gree established the Institute of Building Environment and
Energy, launched the professional system solution of central air conditioners, continuously made breakthroughs in
the key technologies of system energy conservation and created the benchmarking project of efficient refrigeration
room. Gree provided ultra-high efficiency and large temperature difference centrifugal chillers for the ultra-high
efficiency air-conditioning system of Wuyi University, realizing the breakthrough of the annual average energy
efficiency of the refrigeration room higher than 6.0 and the average energy efficiency in September higher than
7.0, establishing a new benchmark of the domestic high-efficiency air-conditioning system and creating a new
record of the high-efficiency refrigeration room.

Gree's high-efficiency permanent magnetic synchronous inverter screw chiller won the bid for the Holiday Inn
Orchard Hotel Project in Singapore. The overall energy efficiency of the refrigeration room reaches 5.41, reaching
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the highest level of Green Mark in Singapore: platinum certification. The project is recognized as a
"high-performance energy-saving project" by the National Construction Energy Conservation Quality Supervision
and Inspection Center. Chengdu National New Drug Safety Evaluation Center is currently the largest professional
institution for preclinical research and technical services of new drugs in China, which has high requirements for
the stability and safety of indoor environmental control. Gree provided the project with an efficient system
solution centering on high-efficiency permanent magnetic synchronous inverter centrifuge, which is recognized in
the field of high-end biopharmaceuticals and fills in the gap of domestic equipment in this field.

Gree building management system (GBMS) is a building management engine independently developed and
produced by Gree. It implements the functions such as integration, monitoring, alarm, operation and maintenance
of building equipment and creates a full building ecological intelligent management system, including
five-constant health system, eight-dimension safety system, multi-dimensional energy saving system and
intelligent and efficient system. The GBMS platform supports distributed and centralized scenario application and
can be widely used in different industries such as smart park, smart hotel, smart campus, smart community, smart
hospital and smart fire fighting. At present, the GBMS accumulatively has 26 patents for invention and 2 software
copyrights.

To solve user problems of low temperature adaptability, limited hot water consumption and slow heating that
occur on air source water heaters, the Company completed the development of Mu Zun air source water heater
series in 2019. Mu Zun air source water heater adopts the independently-developed and world-leading inverter
two-stage compression EVI heat pump technology and realizes abundant heat water during use, without being
limited by the volume of water tank. In addition, Mu Zun air source water heater saves energy by up to 75%
compared with electric water heaters and won the AWE2019 Award - Environmental Protection Award.

Gree U series close control air conditioners was listed in the Product Catalog of Advanced Applicable
Technologies for Green Data Center (Version 2019) prepared by the Ministry of Industry and Information
Technology and the product energy-saving index is recognized by experts in the HVAC construction industry,
safeguarding data centers.

(3) Home appliances sector

Relying on the deep understanding of fashion, international advanced technologies, attitude of constantly striving
for perfection and excellent detail control capability, Gree R&D team created high-quality home appliances for
global users and achieved perfect integration of technologies and fashion. In 2019, Gree micro-pressure IH
electric rice cooker GDCF-4009C won the "Copper Award" of the 71st Nuremberg International Invention
Exhibition in Germany; micro-pressure cooker and TOSOT multi-cooker were included in the Guide to Upgraded
and Innovative Consumer Products in the Light Industry.

In 2019, in the "15th China Household Appliances Innovation Result Selection" activity organized by China
Household Electric Appliances Research Institute, Gree's water purifier with the filter cartridge serviceable in
three years won the award of annual outstanding innovation results. In addition, relying on its advantages of small
size and long service life and 360-degree convenient operation for ring blind assembly and core replacement,

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Gree's two-core large-flow water purifier won the Thales Outstanding Product Award of GWPS Global Water
Purifier Market Summit in 2019. Relying on the reverse-osmosis engineering water purification equipment, Gree
successfully completed the demonstration projects of Diaoyutai State Guesthouse and Foreign Language School
Affiliated to Beijing Foreign Studies University. In "2019 Golden Tripod Award Ceremony for Two National
Purification Industries and Industry Leader Summit" organized by the Golden Tripod Award Organizing
Committee for Two National Purification Industries, Gree won the 2019 technological innovation brand in the
national water purification industry.

Gree's foldable baseboard electric heater adopts the innovative design of multi-angle folding and is applicable to
more scenarios in family use. It is convenient and easy to store the product. The baseboard is designed with an
innovative air-guide structure, which controls efficient heat dissipation at 45°of hot air and realizes carpet-type
heat transfer. Relying on the unremitting pursuit for innovation and quality, Gree's electric heater won the
"Industry Craftsmanship Brand of the Year" awarded by China Association for Quality Promotion in 2019.

The brand-new series of dishwashers developed by Gree includes Jinghuan series of embedded dishwashers and
Jingyun series of small table dishwashers. Jinghuan series of embedded dishwashers adopt the C-Max intelligent
washing system and dual-swirl heat drying technology to provide users with better washing and drying effect and
obtain 6A+ certification. Meanwhile, in order to meet the needs of different users, Gree developed Jingyun series
of small table dishwashers, which adopt 72°C high temperature for washing and the hot air drying system. The
sterilization rate reaches up to 99.99%.

In 2019, the Company completed the design of new categories of home appliances (such as piglet rice cooker,
portable juicer and electric teapot). Of these products, the piglet rice cooker adopts bionic design and its shape is
small and lovely; the portable juicer is colorful and the hidden hand strap design is unique and ingenious. The two
products won 2020 Red Dot Product Award at the same time. Gree electric teapot is the first automatic water
filling intelligent electric teapot independently developed by the Company. It is equipped with high-altitude
adaptive recognition and real-time variable frequency and adjustable power heating technology. While solving the
problem of continuous boiling under high altitude, the product guarantees the accuracy of temperature control.
The technology for accuracy of temperature control reaches the leading level in the industry.

 (4) Refrigerator and washing machine sector

In 2019, Gree Kinghome continued to deepen and mine the application of three meat preservation technologies,
namely -3°C tender freezing, -5°C instant freezing and -33°C deep freezing. The high-end line-up of magic
refrigerators was upgraded: for the users' feedback on the demand for high capacity and long-term preservation of
meat, Kinghome developed a T-type variable temperature side-by-side door refrigerator supporting -33°C deep
freezing; for the need for different meat storage time in different usage scenarios, Kinghome developed a
large-capacity French multi-door refrigerator supporting tender freezing and instant freezing magic preservation;
for the decoration need of customers' integrated cupboards, Kinghome developed different series of thin products;
Gree Kinghome insists on leading green development relying on innovation, adheres to the ecological production
philosophy of environment-friendly and sustainable development of resources and implements energy saving,
emission reduction and green production. In 2019, Kinghome won the title of "First Batch Certified Enterprises of
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CQC Certified Green Products". Meanwhile, Kinghome adheres to the modern enterprise craftsmanship, practices
the perfect quality mode of Gree, and strengthens the foundation of enterprise manufacturing relying on lean
quality and intelligent manufacturing. According to the statistics of ChinaIOL.com, under the situation that the
refrigerator sales in the whole industry increased by 3.1% year on year in 2019, the sales of Kinghome
refrigerators achieved a year-on-year growth of 28.1%, with the growth rate ranking top 4 in the industry and the
total sales ranking No.9 in the industry.

The upgraded version of Jingrou washing machine is equipped with a silver ion sterilization device. The silver ion
crystal is released slowly when it meets water, penetrates into the clothing fiber and kills bacteria on the clothing
efficiently. According to the test conducted by a third-party agency, the silver ion sterilization rate of Jingrou
upgraded version reaches as high as 99%. In addition, Jingrou washing machine adopts the new anti-mildew and
anti-bacterial door sealing design. According to the test conducted by the Technical Institute of Physics and
Chemistry of CAS, the anti-bacterial rate reaches 99%. Jingrou washing machines also uses the dynamic spatial
clothing distribution technology to increase the dehydration success rate of one clothes by 60%, saving time and
electric energy for consumers.


2. Adhere to independent innovation, constantly make breakthrough in world-leading technologies and lead
industry standards to the world


In 2019, Gree has made a series of new technological achievements thanks to continuous breakthroughs and
tackling of difficulties by its R&D personnel. According to evaluation of the authority, Gree has added four
"world-leading" technologies, including "High Performance Straight Line Servo Motor and Driver", "Research
and Development of Rare Earth Free Magnetic Resistance Master Drive Motor System for New Energy Vehicles",
"High-efficiency Dynamic Pressure Air Bearing Centrifugal Compressor Key Technologies and Applications",
and "Research and Application of High-efficiency Magnetic Resistance Inverter Scroll Compressor", which add
strength to the core technologies. By far, Gree has obtained 28 "world-leading" technologies in total.

Gree insists on innovation driving, regards consumer demands as the standards and sticks to the principle of R&D
expenditure on demand without upper limit. By the end of 2019, Gree accumulatively applied for 63,956 patents,
including 31,500 patents for inventions; in 2019, Gree applied for 15,259 patents in total, including 8,860 patents
for inventions.

In 2019, the number of Gree's authorized patents reached 1,739, ranking No.6 in the country. Gree has become the
only household appliances enterprise that entered the top 10 in terms of the number of authorized patents in China
for four consecutive years. In 2019, Gree won 16 Chinese patent awards, with the total number of won awarded
ranking No.1 in China, which promotes deep integration of intellectual property rights with industrial
development. In addition, Gree won five gold awards at the International Invention Exhibition in Geneva,
Switzerland and Nuremberg, Germany in 2019, and authorized three motor patent technologies to Grundfos, a
Danish company, which fully demonstrated the invention and creation capabilities and the world-leading strength
of Gree to the world.


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In 2019, Gree won 33 awards of four International Design Awards (16 IF Product Design Awards in Germany, 12
Red Dot Awards in Germany, 3 IDEA Awards in the United States and 2 excellent design awards in Japan), two
21st China Design Excellence Awards, one silver prize of 6th Guangdong Design Patent Award, 12 design awards
in the 5th Mayor's Cup, five export product design awards in 2019 China Import and Export Fair, one Good
Design Innovation Award in 2019 and one excellent award of 2019 Intelligent Manufacturing Award.

While increasing the introduction of R&D equipment, Gree insists on the improvement of testing technologies to
guarantee the product quality. It performed comprehensive combing and upgrading in the aspects such as
intelligent testing, automation, professional personnel and post standardization to guarantee the product testing
quality and greatly improve the testing efficiency. Meanwhile, evaluation of the authority shows that Gree
obtained seven important certificates at home and abroad in 2019 product certification, including the first batch of
"Ergonomics - Thermal Comfort" certificate in the industry, China's first CVC certificate for DC air conditioner
products, the first certificate with three characteristics: heat recovery, carbon dioxide removal and formaldehyde
removal of air conditioners supply fresh air in two ways, the first batch of ROHS certificate, China's first batch of
CCC certificate for gas appliances, the first software evaluation characteristic certificate for household appliance
industry, and the first CSA energy efficiency certificate for ultra-low temperature heat pump unit in the world. In
addition, Gree led and participated in standards development of 15 Chinese and foreign certification technical
specifications, leading the industry standards to the world. By the end of 2019, the Company joined 18
standardization organizations, including the Heat Pump Standard Workgroup of Sub-committee for Testing and
Assessment of Air-conditioning Heat Pumps of the ISO Committee of Refrigeration and Air Conditioning (ISO
TC86/SC6/WG12), the Chiller Engineer Committee of Association of Air-Conditioning, Heating, and
Refrigeration Institute (AHRI), Standard Technical Group of Inverters for Distributed Energy of Underwriter
Laboratories Inc (UL/STP 1741), European Partnership for Energy and the Environment (EPEE), and Australian
Institute of Refrigeration, Air Conditioning and Heating (AIRAH). Gree takes the initiative to participate in
development and revision of international standards and learn the industry dynamics and changes of international
standards policies in time, further improving the influence of the Company in the world.


3. Optimize the quality control system, insist on quality innovation and implement the perfect quality
assurance mode in an in-depth manner


Gree believes that "best service not requiring after-sales service", takes perfect quality as the highest pursuit of
quality management, tries to eliminate quality problems before consumers use products, ensures the applicability
and reliability of products and avoids quality problems during use of products. In order to achieve this goal, in
2019, Gree continued to fully and deeply implement the perfect quality assurance mode and continued to
emphasize the beforehand and afterward quality control in the whole process of value creation from product
research and development, procurement and logistics, manufacturing and marketing services. Meanwhile, Gree
summarized and extracted the five-step method of quality promotion. Starting from demand survey, Gree
promoted optimization through careful planning and strict implementation supplemented by inspection and
supervision, realized early planning and check of the quality control work, prevented and avoided occurrence of

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quality problems from the source. Relying on deep implementation of the PQAM perfect quality assurance mode,
Gree's products of all categories completely passed spot test at all levels such as national spot test, provincial spot
test, municipal spot test, third-party spot test and overseas spot test, explaining the perfect quality of Gree's
products to consumers.

In 2019, Gree won the first prize in the 4th National Quality Innovation Competition relying on its Research and
Application of High-precision Magnetic Suspension System and won the second prize of the large enterprise
innovation category in the annual conference of International Quality Innovation Award (QIA) in 2019. Gree was
the first enterprise that won the award in China's household appliances industry. In November 2019, Gree
successfully won the "Best Improvement Project Award" in the "63rd Annual Conference of the European Quality
Organization and Bilateral Quality Exchange Meeting between China and the West", becoming the only Asian
enterprise that won this award in this conference.

The quality level of Gree's products has been continuously improved by strengthening the internal quality control,
and the first time yield of process reached 99.54%. The after-sales failure rate of products decreased from 16,429
PPM in 2004 to 488 PPM in 2019, with an average decline of 20% for 16 consecutive years. According to the
2019 Air Conditioner Customer Satisfaction Index Survey and Analysis Report issued by the Customer
Satisfaction Evaluation Center of China National Institute of Standardization, the customer satisfaction of Gree air
conditioners reaches 81 points, ranking the first in the industry for nine consecutive years.


4. Strengthen the online layout, vigorously carry out digital operation and achieve a breakthrough in sales
of all categories


In 2019, in the face the new consumption mode and communication mode of the e-commerce market, major
e-commerce brands perform continuous new exploration. In response to the online and offline integrated
development trend, Gree repackaged and upgraded its original self-built platform, namely Gree Mall, and made all
staff to participate in the Company's sales channel development and recommend high-quality products to their
relatives and friends based on the new business model of distribution mode and social media communication,
realizing the upgrading of Gree's marketing model. In 2019, the number of registered distribution stores of "Dong
Mingzhu's store" exceeded 100,000 and the accumulated sales in the whole year exceeded RMB 1.4 billion, a
year-on-year growth of 660%.

In the aspect of third-party platforms, in 2019, many brands in the online consumer market still adopted the low
price strategy. Gree insists on the development route of "quality e-commerce". In the market environment where
competition tends to be fierece, the online air conditioner sales of Gree increased by 16% year on year and the
sales of the household appliance category increased by 13%. In third-party operations in 2019, Gree was
recognized by jd.com, tmall.com and Suning.com platforms and won many platform awards such as "Outstanding
Achievement Award of jd.com in 2019", "Best National Product Cooperation Award of jd.com in 2019", "Best
Partner of the Year" award of jd.com in 2019, "Best Influencer" in live broadcast of jd.com in 2019 and "Best
Cooperation Award" of tmall.com in 2019. During the Shopping Festival on 11 November, 2019, the total online
sales of Gree's products exceeded RMB 4.1 billion, a year-on-year increase of 200%, of which the sales of air
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conditioners on third-party platforms exceeded RMB 3.64 billion, a year-on-year increase of 178%. The sales of
Gree's air conditioner products on the Internet ranked the first. Gree became the sales champion in terms of air
conditioner on Tmall platform for six consecutive years. The sales of all categories of products on Gree's
proprietary platform "Dong Mingzhu's store" (https://fmall.gree.com) reached RMB 363 million, a year-on-year
increase of 48 times.

In October 2019, Gree e-commerce discussed the digital operation project with third-party platforms. By creating
a huge user database, analyzing internal laws of data and mining the internal data logic, Gree grasped consumer
demands, consumption habits and other user information and obtained user portraits. According to the user
portraits, Gree realizes customization of all aspects such as product, marketing, pre-sales and after-sales. Through
digital operation, Gree implements the "user-centered" sales philosophy.

In 2020, based on the analysis on the consumer market, Gree e-commerce will carry out digital operation and
achieve a new breakthrough in sales from the perspective of users. Meanwhile, with the further upgrading of the
new consumption model, "Gree Dong Mingzhu's store" will promote the new retail model nationwide in 2020 and
realize platform sharing with the existing sales channels, thereby realizing the gradual transformation from the
operation of single store distribution to professional platform operation of household appliances. In the future,
"Gree Dong Mingzhu's store" will sell Gree products of all categories. Relying on the advantage of offline
channels and high-quality brands and aiming to create a new online and offline integrated sales model, Gree will
realize the development strategy of Company's proprietary online channels, bringing new growth of sales.


5. Actively expand the overseas market, insist on the high-end leading strategy and energetically develop
proprietary brands


Gree continues to make more efforts in the overseas market. It centers on its proprietary brands, vigorously carries
out proprietary brand construction from the aspects such as strategy, technology, quality, training, talent and
service and adheres to the open, transparent, cooperative and win-win philosophy through the new customer
cooperation model to enhance the international popularity of Gree brand.

In 2019, Gree made great achievements in internationalization. It won the bids for large projects such as Mauritius
Stadium, Office Building of the Ministry of Foreign Affairs of Maldives, Gabon National Convention Center, Sri
Lanka Substation and Nepal Pokhara Airport. Meanwhile, Gree assisted local governments in implementing
assistance projects such as Cook Island Archives, Niue Parliament Building and Niue Airport. Meanwhile, Gree
continues to insist on the high-end leading strategy in the overseas market and its brand influence continues to
expand. In the whole year, Gree prepared for 14 international professional refrigeration exhibitions such as
Air-conditioning, HVAC and Refrigeration Exhibition in Atlanta and Chicago International Household Appliances
and Small Household Appliances Exhibition, demonstrating Gree's industrial strength of independent research and
development. In 2019, Gree held "Gree Makes the Future" 3rd Brands Strategic Partners Conference in Hefei
production base to strengthen the exchange and cooperation with global distributors, improving the brand
influence of Gree and demonstrating the strength of Made in China on the global stage.


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In order to strengthen the promotion of commercial air conditioners and construction of proprietary brand
channels and maintain quick upgrading of products, in 2019, Gree launched a photovoltaic multi VRF product in
Australia, a 24 V ultra-low temperature side discharge inverter household unit in North America, an
environmental-friendly refrigerant R32 side discharge multi VRF product in the EU, and a series of core products
such as new-generation GMV6 heat pump and GMV6 heat recovery multi VRF product, inverter air-cooled screw
unit and inverter module unit in the world. In terms of residential air conditioners, Gree launched the G-Tech air
conditioner featuring five-layer washing, separation of water and electricity and easy removal and washing and
the high-end Soyal air conditioner that provides eight air supply modes, which enable the wind to move with
people and avoid direct blowing, in the global market; in Southeast Asia, Gree launched Minty air conditioner that
integrates air-conditioning and purification and removes PM2.5 at a rate of 98%.

In the future, Gree will continue to strengthen the overseas strategic planning and the overall layout in the global
market, center on proprietary brands and explore new development models; maintain the long-term investment in
overseas brand construction, really root Gree's manufacturing, technologies and culture in all corners of the world
and realize the output of soft power such as brand, culture and management experience; carry out business
integration, brand construction, channel layout and industrial chain coordination and improve the efficient
operation system of overseas full value chain; strengthen cultivation of localized talents and broaden the
international vision; establish a new customer cooperation model, focus on later growth of the market based on the
three brands: Gree, Tosot and Kinghome, and classify products, sales channels and publicity strategies in a refined
and differentiated manner to further develop the market.


6. Pay close attention to industrial transformation, make efforts in the sectors of high-end equipment and
communication equipment and accelerate diversified layout


(1) Intelligent equipment sector

Aiming at "Excellent quality, created by Gree", Zhuhai Gree Intelligent Equipment Co., Ltd. insists on
independent R&D and lean manufacturing and helps upgrade the intelligent manufacturing industry through AI. It
forges ahead in the R&D, manufacturing, sales and service of intelligent equipment products and provides
professional and personalized products and services to realize "Intelligent manufacturing in China". Based on the
"production, industrialization, marketization and internationalization" development path, the Company has formed
a product system covering a dozen fields such as servo manipulators, industrial robots, intelligent warehousing
equipment, intelligent testing, special machine tool equipment for heat exchanger, unmanned automation
production line body and CNC machine tools and more than 100 products.

By the end of 2019, Zhuhai Gree Intelligent Equipment Co., Ltd. accumulatively applied for 2,501 patents and
authorized 840 patents, of which 653 patents were applied for and 470 patents were authorized in 2019. It
accumulatively helped multiple brands nationwide and more than 100 enterprises with intelligent manufacturing
transformation successfully and completed a batch of influential demonstration projects in the intelligent industry
in various sectors. Since it was founded in 2015, Zhuhai Gree Intelligent Equipment Co., Ltd. successively won
the tiles such as "Guangdong Robot Backbone Enterprise", "Zhuhai Intelligent Equipment Engineering
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Technology Center" and "Guangdong Small Household Appliances Intelligent Manufacturing Regional
Innovation Center". At present, the Company's machine tool products cover horizontal machining center, five-axis
machining center, gantry machining center, compound turning milling machining center, graphite machining
center and vertical machining center and provide customers with a complete set of production solutions such as
processing technology and automatic processing, which are widely used in the fields of moulds and 3C
processing.

In the field of industrial robot technology, the Company optimized the research on design methods, key
technologies of gear transmission, effective torque control technology and robot precision calibration algorithm
through the body of industrial robots, which makes Gree robots reach the first-class level in the industry. In terms
of technological innovation in the field of machine tools, the Company conquered the stepless inverter adjustment
technology, which realizes a temperature control accuracy of up to 0.1°C for the machine tool cooler unit and
solves the industry problems of slow cooling under the industry cooling mechanism and low temperature control
accuracy. In addition, the unit features efficient energy saving, high reliability, strong adaptability and convenient
installation and maintenance.

By independently developing the facial recognition technology, visual inspection technology, audio analysis
technology and process action analysis technology, Gree builds platform-level and equipment-level products and
provides cloud services and edge applications. In the aspects such as image collection and processing, signal
analysis and voice recognition, natural language processing and operation optimization, Gree established an
all-round intelligent manufacturing service system for internal and external users of the Company. In the aspect of
production application, by building six core systems such as facial recognition application system, industrial
visual inspection system, voice and audio analysis system, logistics and warehousing scheduling system,
intelligent search recommendation system and industrial engineering and operational research system, Gree
established an intelligent manufacturing service application system, which realizes deep integration with
production application requirements.

In 2020, Gree will continue with reform and innovation, continuously develop markets, explore new customers,
and focus on promoting conversion of technological achievements of robots, CNC machine tools, environmental
protection equipment, automated production line and warehousing equipment and increasing the market share;
actively implement the talent introduction strategy and implement the pyramid R&D talent management mode of
"expert team, core technical backbones, and technical staff"; in the aspect of product R&D, continue to promote
the "product-focused" and "project-based" management mode and further improve the market competitiveness of
products with high-speed and high-precision robots, gantry machining center, five-axis machining center,
heavy-duty and laser navigation AGV, energy-saving and environmental protection equipment and non-standard
automatic production equipment for household appliances as core new products.

(2) Precision mould sector

Mould is the "mother of industry" and provides important technical support for high efficiency, low cost and high
quality of product manufacturing. The industrial level of moulds is an important symbol of the manufacturing
level for a country provides important guarantee for industrial products of a country to maintain international
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competitiveness. By the end of 2019, Gree invested in multiple mould bases. It has two automated processing
lines covering more than 1,200 CNC equipment, more than 20 independently developed mould automated
processing lines, and more than 2,200 mould employees, serving hundreds of enterprises in the fields of
household appliances, automobiles, 3C electronics and aerospace.

Gree precision moulds have become a benchmark in the mould industry in terms of technological innovation,
quality management, informatization and intelligent manufacturing. In 2019, Gree mold company accumulatively
applied for 121 patents, of which 39 are authorized patents, 4 are patents for inventions, 9 are patents for utility
models, 26 are design patents and 2 are software copyrights. In addition, the Company won the title of
"Guangdong Intellectual Property Demonstration Enterprise" and the certificate of integrated system. In 2019, the
Company undertook major provincial scientific and technological projects such as Research and Demonstrative
Application of the Intelligent Manufacturing System Integration Technology of Moulds and Manufacturing
Industry. Its cost management project Refined Cost Management Application and Practice of Large Mould
Enterprises won the second prize of Guangdong Enterprise Management Modernization Innovation
Achievements.

In order to accelerate the construction of the mold technology innovation system and build a high-level intelligent
mould technology innovation platform with international competitiveness, Gree Precision Mold Co., Ltd. Zhuhai
Guangchang Plant was officially put into production in 2019. Gree was also approved to build "Guangdong
Intelligent Mould Technology Innovation Center", leading moulds to develop toward the intelligent direction in
Guangdong Province. At present, the Company takes the lead in the research and application of Internet of Things,
cloud computing, big data analytics, artificial intelligence and industrial robots in the mould manufacturing
industry.

China's mould industry is transforming from the "traditional model" to "Internet plus" model. In 2020, Gree
Precision Mold Co., Ltd. will continuously focus on the layout in the aspects such as technological innovation,
intellectual property rights and intelligent manufacturing and transform towards the "Internet plus" model to
become the leader of China's mould industry.

(3) Semiconductor sector

In 2019, Gree made great progress in research of the semiconductor field, promoting the optimization and
upgrading of products such as smart home series of chips, industry standard MCU and power devices. At present,
Zhuhai Zero Boundary Integrated Circuit Co., Ltd., a subsidiary of Gree, has become a one-stop service provider
for embedded chips, power devices and their supporting development solutions and algorithms.

Gree smart home series chips are embedded AI cross-border processors launched for the markets such as smart
home, smart healthcare, smart education and smart energy management under the tide of IoT and intelligent AIot
applications. In 2019, Gree developed the latest AI cross-border series of chips, which integrates
high-performance AI computing capability and low power consumption feature of embedded SOC, provides
complete software and hardware solutions for related products and supports functions such as computer visual
recognition, image acceleration engine, real-time control capability and multiple hardware security encryption.

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The general industrial control MCU of Gree involves multiple series of products. It features high performance,
low energy consumption, high integration and low cost and can be widely used in three categories of electric
appliances (air conditioners, washing machines and refrigerators) and the industrial application market. At present,
the annual output of industrial-grade MCU exceeds 10 million, and the failure rate is as low as 15 PPM. The MCU
is widely used in products such as wall-mounted and floor-standing residential air conditioners, commercial multi
VRF indoor units, wired controllers, and air conditioner remote controllers.

Gree independently developed power devices, which cover the high reliability Trench Field-Stop IGBT, FRD, PM
module, PIM module and IPM intelligent power module of 600 V and 1200 V platforms. The power devices can
be used in a wide range of scenarios. They can be used in scenarios such as PFC circuit, motor drive, inverter
circuit, induction heating, and soft switch circuit in the fields such as household appliances, industrial equipment,
photovoltaic inverter, and new energy vehicle.


7. Focus on user needs, continue to explore core technologies and lead the era where everything is
connected


Gree insists on independent innovation, independent research and development and independent manufacturing,
uses core technologies to build a smart home where everything is connected, focuses on the consumer quality and
needs of life, and realizes the linkage of household appliances in the whole house by connecting intelligent,
high-quality and all categories of household appliances. Based on the goal of "connecting everything, responding
to any call", Gree independently developed smart home products, IoT platform, smart decision-making system,
G-Voice voice interaction system, smart visual system, G-OS IoT operating system, G-Learning comfortable and
energy-saving algorithm, and intelligent IoT technologies to provide family life with a solution for connecting
everything and create a high-quality life in which everything is connected. Consumers can experience the family
life of "connecting everything, responding to any call" through five control entries (Gree IoT air conditioner,
"Gree+" App, IoT mobile phone, smart door lock and Cube Monster).

On 28 December, 2019, Gree solemnly held the "2019 Made in China, Loved by the World Summit Forum".
During the forum, Gree demonstrated the blueprint of "smart household appliances in the whole house". Relying
on the full category and diversified development, through the powerful G-IoT and G-Voice technology cluster,
Gree built five systems: energy management, air management, health management, safety management and light
management, and established an intelligent, healthy and safe smart home system. A full smart home not only
connects all household appliances but also has the analysis, judgment and feedback capabilities on the basis of
perception, learning and detection, so as to provide accurate personalized services according to the user age,
interests, habits and other information.

At present, in the field of smart home, Gree has six key technologies: intelligent connection, intelligent perception,
intelligent interaction, intelligent cloud platform, intelligent energy management system, and artificial intelligence.
Intelligent connection: Through the 5G technology, Bluetooth distribution network technology and password-free
direct connection technology, Gree provides efficient connection guarantee to enable users to experience smart
home more stably and conveniently; intelligent perception: Gree adopts AI micro perception technology to reduce
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worry of users about family privacy; intelligent interaction: Gree performs in-depth research and iterative
upgrading in the key voice interaction aspects such as ASR, NLP and TTS; intelligent cloud platform: On the
premise of guaranteeing security, Gree provides cloud services with the intelligent decision-making capability and
provides users with more humanized, considerate, intelligent, convenient and accurate services based on the
knowledge base and user behaviors and habits; intelligent energy: Gree realizes intelligent, economical, efficient
and clean energy utilization through an energy-saving algorithm; artificial intelligence: Gree sets up an artificial
intelligence platform and provides users with a more energy-saving, more environmental-friendly, more
comfortable and healthy intelligent decision-making system through a variety of deep learning algorithms.

In 2019, Gree focused on the combination of artificial intelligence with manufacturing industry and the layout of
production quality inspection, logistics scheduling, personnel management, voice interaction and informatization
and implemented the application of facial recognition, voice recognition, warehousing path optimization, product
quality and visual inspection based on a variety of technologies independently developed by Gree. Meanwhile,
Gree completed the setup of an artificial intelligence open platform, the construction of a facial recognition
service platform, the design and development of industrial visual inspection equipment, and the development of a
warehousing and logistics scheduling platform. By combing software with hardware, Gree realizes the application
of technologies and service platforms.


8. Focus on industrial positioning, accelerate market layout and occupy the commanding height of energy
interconnection


In the new energy sector, Gree made a series of deployment from technological projects and product development,
gathered resources, carried out team's activities of "going to the frontline", improved products from the angle of
customer thinking, formulated differentiated highlights and competitive product goals, and intensified efforts to
carry out comprehensive market promotion and layout. According to the characteristics and development trend of
the industry, Gree constantly explores and focuses on positioning. It gives more connotation and significance to
the distributed energy Internet, further consolidates the technologies and products of the six product lines, enriches
the product series, and expands the number of product categories to 7 categories, 39 types and 114 models.

Gree implemented the DC demonstration project in a centralized manner in key regions nationwide, fully
integrated the production, university and research resources of State Grid Corporation of China, China Southern
Power Grid Company Limited and the Construction Institute, and promoted the successful implementation of the
project. The Company completed Shanxi Datong Energy Revolution Pacesetter Exhibition Hall Project,
successfully building a full Micro DC-Grid and realizing zero energy consumption. Relying on the
implementation experience of the project, the Company was invited to participate in the compilation of
"Preparation of Technical Standards for Public Buildings with Near Zero Energy Consumption" for Shanxi
Province, which lays a foundation for the promotion and application of photovoltaic air conditioners and DC
ecology in local regions; the Company participated in a national demonstration new energy town project of State
Grid Corporation of China Jiangsu Branch in Tongli, Jiangsu Province, completed the supply and joint
commissioning of core DC equipment, and opened up an innovative way for energy transformation to drive

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integrated development of cities; the patent titled "Method and Control Method for Suppressing Voltage
Fluctuation of DC Bus in Dual PWM Converters" won the Excellent Award of National Patents for Inventions; the
patent titled "Energy Gateway, Household Appliances, DC Micro-Grid System and their Energy Management
Methods" won the Excellent Award of Patents for Inventions in Guangdong Province.

In 2019, Gree was approved to build "Guangdong Energy Internet Innovation Center". Based on the operation
mode of "Company + Innovation Alliance", the center carries out research and tackling of distributed energy
Internet application technologies, conducts research based on the energy Internet system architecture, key
technologies and key equipment, and promotes the construction of standards system and intellectual property
protection; builds innovation demonstration projects and industrial incubators and carries out talent cultivation
and international exchange and cooperation to promote the DC new ecology, build a new world of network energy,
and create a better new life!

In the aspect of new energy electric vehicles, the Company successfully developed products such as 5.9-18m rare
earth main drive motors and controllers, covering five series, with power covering 60 W to 240 kW, which can
fully meet the needs of various commercial buses. At present, the products have been used in many cities such as
Zhuhai, Hangzhou, Changsha, Chengdu, Handan, Shijiazhuang, Tianjin, Lanzhou and Wuhu. Meanwhile, the first
new efficient reluctance motor used for new energy electric vehicles in the industry breaks the bottleneck of low
energy efficiency, poor safety and large noise encountered by the rare-earthless permanent reluctance main drive
motor system. In 2019, the technology was identified to be "world-leading" by China Machinery Industry
Federation and won the gold award of Nuremberg International Invention Exhibition. This technology makes the
main drive motors of new energy vehicles free from the dependence on rare earth resources, creates a new
technology research direction of the main drive motor system, and improves the competitiveness of core parts of
Chinese new energy vehicles.


9. Deepen the talent cultivation mechanism, build a staff incentive system in an all-round way and help the
Group develop steadily


In 2019, Gree's talent cultivation focused on the Company's development theme of "independent innovation, pursuit
for dreams in the new era", highlighted the key core talents of the Company and actual effects of cultivation in
various fields by taking measures such as "learning innovation of project design, deepening the cultivation mode and
mechanism, linking to improve management efficiency, and promoting upgrading of talent cultivation", and built a
diversified independent cultivation mechanism, promoting transformation and upgrading of talent cultivation,
helping and supporting development of the enterprise.

In 2019, in order to strengthen the cultivation of college students and middle and grassroots managers, Gree
focused on cultivation of cutting-edge technical talents and accelerated high-quality supply of talents. By closely
following the planning requirements of "insisting on independent cultivation of talents and building a high-quality
backbone team", Gree deepened the advanced cultivation mechanism of "foundation, improvement, and
reinforcement", organized and implemented advanced cultivation of backbones, strengthened the Company's
development confidence, set up a positive attitude of profession, and strengthened thinking transformation and
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quality improvement.

Focusing on the important fields and topics of the Company's strategic development in 2019, the Company
organized and implemented 80 learning programs such as key special training camps, cutting-edge technology and
R&D support topics, and operation and management training topics to comprehensively connect strategies with
performance, and strengthened independent cultivation, all staff cultivation, systematic cultivation and lifelong
cultivation for talents of the Company. Meanwhile, in order to actively respond to new challenges brought by
market changes, better grasp the market and serve the market, the Company formulated a marketing strategic
blueprint with "Gree characteristics", continuously established a marketing team with outstanding comprehensive
abilities and excellent professional quality, organized and carried out the training camp for marketing service
personnel in 2019, integrated "theories as the basis and practices as the priority", and customized advanced
cultivation based on four dimensions: "culture practice, comprehensive competence, business skills, and product
learning" for marketing service personnel to help marketing service personnel improve their skills and better
support front-line marketing and services.

In 2019, in order to continuously improve employee satisfaction and happiness, Gree established an "all-round
employee incentive system", a well-equipped living area for employees, a Gree school with a beautiful
environment and complete teaching facilities, and a huge shuttle bus system, provided communication packages
for all staff, and prepared to build Gree Hospital. All these welfare guarantee measures build a happy factory for
Gree people. Meanwhile, in order to solve the housing problem of employees and make employees devote
themselves to career development, Gree implements the policy of "One Apartment for Each Gree Employee".
Hardbound residential buildings are handed over to employees and employees can move in by carrying their
luggage. At present, Gree is accelerating the construction of the Talent Apartment in Gree Mingzhu Plaza.


II. Analysis on principal businesses

1. Overview

See the description in "Overview" of "Discussion and Analysis of Business Operation".


2. Revenue and cost


(1) Composition of operating income

                                                                                                                Unit: RMB Yuan

                                      2019                                      2018

                                             Proportion in                              Proportion in   Increase/Decrease over
                           Amount              Operating             Amount              Operating        the previous year
                                                Income                                    Income

 Total operating
                     198,153,027,540.35               100%     198,123,177,056.84               100%                    0.02%
 income

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 Categorized by industry

 Manufacturing         156,888,659,016.13          79.18%      170,592,428,489.17                  86.10%                     -8.03%

 Other businesses        41,264,368,524.22         20.82%       27,530,748,567.67                  13.90%                     49.88%

 Categorized by product

 Air Conditioner       138,665,055,103.82          69.99%      155,682,359,475.59                  78.58%                    -10.93%

 Home Appliances          5,575,911,375.57           2.81%        3,794,087,435.54                 1.91%                      46.96%

 Intelligent
                          2,141,285,558.55           1.08%        3,108,531,271.87                 1.57%                     -31.12%
 equipment

 Other main
                         10,506,406,978.19           5.30%        8,007,450,306.17                 4.04%                      31.21%
 business

 Other businesses        41,264,368,524.22         20.82%       27,530,748,567.67                  13.90%                     49.88%

 Categorized by region

 Domestic-main
                       136,073,206,974.43          68.67%      148,322,536,473.83                  74.86%                     -8.26%
 business

 Overseas-main
                         20,815,452,041.70         10.51%       22,269,892,015.34                  11.24%                     -6.53%
 business

 Other businesses        41,264,368,524.22         20.82%       27,530,748,567.67                  13.90%                     49.88%


(2) Industry, product, or region accounting for more than 10% of the Company's operating income or
operating profit

√ Applicable □ Not applicable
                                                                                                                        Unit: RMB Yuan

                                                                                     Increase or                           Increase or
                                                                                                        Increase or
                                                                      Gross      Decrease of                               Decrease of
                                                                                                        Decrease of
                     Operating Incomes        Operating Cost          Profit         Operating                             Gross Profit
                                                                                                      Operating Cost
                                                                     Margin      Income over                               Margin over
                                                                                                       over Last Year
                                                                                     Last Year                              Last Year

 Categorized by industry

 Manufacturing        156,888,659,016.13     103,703,283,171.60       33.90%               -8.03%             -7.74%            -0.21%

 Other
                       41,264,368,524.22      39,796,089,409.76        3.56%              49.88%              54.07%            -2.62%
 businesses

 Categorized by product

 Air
                      138,665,055,103.82      87,192,449,061.21       37.12%             -10.93%             -11.83%             0.64%
 Conditioner

 Other
                       41,264,368,524.22      39,796,089,409.76        3.56%              49.88%              54.07%            -2.62%
 businesses

 Categorized by region

                                                               35
                                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019


 Domestic             136,073,206,974.43          85,697,917,155.53        37.02%           -8.26%             -7.95%          -0.21%

 Overseas              20,815,452,041.70          18,005,366,016.07        13.50%           -6.53%             -6.71%           0.16%

 Other
                       41,264,368,524.22          39,796,089,409.76         3.56%          49.88%             54.07%           -2.62%
 businesses


In case of adjustment of statistical caliber for the Company's main business data during the Report Period, main business data after
statistical caliber adjustment at the end of the Report Period in the recent year
□ Applicable √ Not applicable


(3) Physical item income is higher than service income


(4) Fulfillment of major sales contracts signed by the Company by the end of the Report Period

□ Applicable √ Not applicable




                                                                    36
                                                             GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019



(5) Composition of operating cost

                                                                                                                                       Unit: RMB Yuan

                                                           2019                                               2018                          Increase/
                                                                         Proportion                                                         Decrease
         Industry                                                                                                       Proportion
                            Item                                              to                                                             over the
         Category                                 Amount                                             Amount            to Operating
                                                                         Operating                                                          previous
                                                                                                                              Cost
                                                                           Cost                                                                year

                     Raw material             88,126,710,086.12               86.66%             95,511,355,520.45             87.23%           -7.73%
  Household
                     Labor wage                4,943,375,465.37               4.86%               4,988,975,648.45              4.56%           -0.91%
  appliances
                     Depreciation              1,565,803,533.57               1.54%               1,456,650,827.31              1.33%            7.49%
  manufacturing
                     Energy                      836,728,653.04               0.82%                 872,173,883.95              0.80%           -4.06%


(6) Changes in the consolidation scope occurred during the Report Period

√ Yes     □ No


 1. Business combination not involving enterprises under common control

(1) Business combination involving enterprises not under common control in the current period

                                                                                                                                       Unit: RMB Yuan

                                                                                                                 Revenue of the         Net profit of the
                                                            Proportion of
                    Time point of                                                    Equity                    acquired party from       acquired party
 Name of acquired                       Cost of equity            equity                            Date of
                         equity                                                    acquisition                 the date of purchase     from the date of
          party                            acquisition       acquisition                           purchase
                     acquisition                                                     mode                       to the end of the       purchase to the
                                                                   (%)
                                                                                                                     period             end of the period
Nanjing Walsin                                                                 Purchase by
                                                                                                  31 May,
Nonferrous Metal    31 May, 2019    1,417,551,321.45        94.30              means of                       10,411,966,740.54        46,316,187.50
                                                                                                  2019
Co., Ltd.                                                                      cash


[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafter
referred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.

1) Combination cost and business reputation

                                                                                                                                      Unit: RMB Yuan

                                    Item                                                         Nanjing Walsin Nonferrous Metal Co., Ltd.
Combination cost:

--Cash                                                                                                                                1,071,239,072.20

--Other payables                                                                                                                        346,312,249.25

Total combination cost                                                                                                                1,417,551,321.45
Less: Fair value share of the identifiable net assets acquired                                                                        1,143,436,281.34

                                                                         37
                                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Business reputation                                                                                             274,115,040.11

2) Determination of fair value of combination cost

The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of business
combination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,
2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by China
Alliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] Appraisal
Report.

3) Reason for the formation of large-amount goodwill

In order to deepen the development of the Company's enameled wire business in the electrical sector and reduce
the impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of the
industrial chain. Due to the long construction cycle of the project, in order to expand production capacity and
occupy the market as soon as possible, the Company’s office meeting decided to acquire Nanjing Walsin
Nonferrous Metal Co., Ltd.;

The acquisition price was determined by referring to the price-to-book ratio of the target company’s comparable
listed company, comprehensively considering and fully evaluating the target company’s asset status, profitability,
brand influence, technology level, synergy effect and other factors;

Major reasons for increased value incurred from the appraisal:

A. Depreciation accruing life of some equipment assets was shorter than their economic life;

B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark use
rights in intangible assets increased due to the appraisal.

                    Identifiable assets and liabilities of the acquired party on the date of purchase

                                                                                                               Unit: RMB Yuan

                                                                   Nanjing Walsin Nonferrous Metal Co., Ltd.
                        Item
                                                  Fair value on the date of purchase      Carrying amount on date of purchase
Assets:
Monetary capital                                                        313,841,040.72                         313,841,040.72
Accounts receivable                                                     306,347,724.29                         306,347,724.29
Receivables financing                                                     32,897,848.99                          32,827,077.99
Prepaid accounts                                                           3,774,390.86                           3,774,390.86
Other receivables                                                           250,561.22                              250,561.22
Inventories                                                             370,015,709.58                         366,647,781.96
Other current assets                                                      51,860,228.86                          51,860,228.86
Fixed assets                                                            148,157,020.23                           38,678,328.99
Construction in Progress                                                   8,162,465.21                           9,544,356.01
Intangible assets                                                       137,922,500.00                            9,173,710.00


                                                              38
                                                   GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Deferred income tax assets                                           10,028,895.44                    10,116,258.43
Other non-current assets                                              1,295,685.45                     1,635,079.39
                  Subtotal of assets                              1,384,554,070.85                  1,144,696,538.72
Liabilities:
Trading financial liabilities                                        16,785,750.00                    16,785,750.00
Accounts payable                                                     37,510,699.95                    37,510,699.95
Advances from customers                                               8,143,309.65                     8,143,309.65
Payroll payable                                                       8,804,769.39                     8,804,769.39
Taxes payable                                                         3,546,574.30                     3,546,574.30
Other payables                                                        9,114,493.56                      9,114,493.56
Other current liabilities                                            27,680,199.09                    27,680,199.09
Deferred income tax liabilities                                      60,416,544.96
                 Subtitle of liabilities                            172,002,340.90                   111,585,795.94
Net assets                                                        1,212,551,729.95                  1,033,110,742.78
Less: minority equity                                                69,115,448.61                    58,887,312.34
Net assets obtained                                               1,143,436,281.34                   974,223,430.44

[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,
equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).
The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin's
identifiable assets and liabilities. The appraisal methods of main assets were listed as follows:

1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement cost
minus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;

2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used to
appraise the equipment which of the transaction information can be obtained from the market;

3) The appraisal method of land use rights is the market comparison method and the benchmark low price
coefficient correction method;

4) The appraisal method of other intangible assets such as trademark use rights and customer relations is the
income method. During the appraisal, the future income of the appraised intangible assets within a reasonable
income period will be discounted and accumulated at a reasonable discount rate, and the present value of income
will be obtained.

2. Business combination involving enterprises under common control

None.

3. Counter purchase

None.

4. Disposal of subsidiaries
                                                          39
                                                    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

None.

5. Change in other consolidation scopes

(1) The main body of cancellation in the current period:

1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on
17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;

2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,
and was no longer included in the consolidation scope from the date of deregistration.

(2) The newly established main bodies in this period are as follows:

                                                                                                             Unit: RMB Yuan

                        Name                      Time of establishment     Net assets of the end     Net profit from the
                                                                                of the period       combination date to the
                                                                                                       end of the period
Gree (Anji) Precision Mold Co., Ltd.                   14 February, 2019           47,063,023.27               -236,976.73

Huzhou Landa Compressor Co., Ltd.                         1 March, 2019          Not yet invested

Gree Material Supply (Wuhan) Co., Ltd.                   20 March, 2019            12,716,347.67             -7,283,652.33

Gree Material Supply (Hefei) Co., Ltd.                   20 March, 2019            24,858,404.13              4,858,404.13

Guangdong Guochuang Intelligent Technology Co.,          22 March, 2019            30,270,563.23                270,563.23
Ltd.
Gree (Luoyang) Washing Machine Co., Ltd.                 25 March, 2019            47,278,161.95             -2,721,838.05

Gree Material Supply (Chongqing) Co., Ltd.               27 March, 2019            18,056,402.39             -1,943,597.61

Gree Material Supply (Zhengzhou) Co., Ltd.               29 March, 2019            19,777,618.60               -222,381.40

Gree Rongzhu Copper (Nanjing) Co., Ltd.                  29 March, 2019          Not yet invested

Zhuhai Gree Green Resources Recycling Co., Ltd              16 July, 2019          52,263,754.97              2,263,754.97

Luoyang Lianmei Real Estate Co., Ltd.                     7 August, 2019          995,335,429.21             -4,664,570.79

Guochuang Energy Internet Innovation Center              20 August, 2019           29,874,379.59               -125,620.41
(Guangdong) Co., Ltd.
Zhuhai Hengqin Gree Huatai Energy Development            28 August, 2019           15,024,339.91                 24,339.91
Co., Ltd.
Handan Yingdong New Energy Technology Co.,           20 September, 2019                    660.13                 -1,339.87
Ltd.
Gree E-commerce Co., Ltd.                              5 November, 2019          Not yet invested

Gelan Environmental Protection Technology              5 December, 2019          Not yet invested
(Shaoguan) Co., Ltd.


(7) Major changes or adjustment of businesses, products or services during the Report Period

□ Applicable √ Not applicable


                                                           40
                                                             GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

(8) Major sales customers and suppliers of the Company

Major sales customers

Total sales amount of 5 top customers (RMB)                                                                      34,174,890,230.35

Proportion of total sales amount of 5 top customers to the
                                                                                                                            17.05%
annual sales volume

Proportion of sales amount of related party in the sales
                                                                                                                             4.35%
amount of 5 top customers to the annual sales volume

Information of 5 top customers

    Serial Number             Customer Name                     Sales Volume (Yuan)          Proportion to Annual Sales Volume

1                    First                                              8,719,678,107.95                                     4.35%

2                    Second                                             7,137,244,341.16                                     3.56%

3                    Third                                              6,529,755,328.06                                     3.26%

4                    Fourth                                             5,993,005,069.20                                     2.99%

5                    Fifth                                              5,795,207,383.98                                     2.89%

Total                                  --                              34,174,890,230.35                                    17.05%

Other description of major customers
√ Applicable □ Not applicable

Among the top five customers, Henan Shengshi Xinxing Gree Trading Co., Ltd. is a related party of the Company.
Other customers have no related-party relationship with the Company. The Company's directors, supervisors,
senior management personnel, core technical personnel, shareholders holding more than 5% of the shares, actual
controllers and other related parties have no direct or indirect interests in other customers.
Major suppliers of the Company

Total amount of purchase of top 5 suppliers (RMB)                                                                33,461,077,701.75

Percentage to the total amount of annual purchase                                                                           25.07%

Percentage of related parties' purchase amount in the total
amount of purchase of top 5 suppliers to the total amount                                                                    0.00%
of annual purchase

Information about top 5 suppliers of the Company

                                                                    Amount of              Percentage to the total amount of annual
    Serial Number             Name of supplier
                                                                  purchase (yuan)                         purchase

1                    First                                              8,184,234,791.03                                     6.13%

2                    Second                                             7,409,943,423.67                                     5.55%

3                    Third                                              6,397,500,623.49                                     4.79%

4                    Fourth                                             6,187,804,931.51                                     4.64%

5                    Fifth                                              5,281,593,932.05                                     3.96%



                                                                  41
                                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019


Total                                 --                         33,461,077,701.75                                    25.07%

Other information about the major suppliers
□ Applicable √ Not applicable


3. Expenses

                                                                                                              Unit: RMB Yuan

                                                                            Increase/Decrease         Description of the
                                      2019                2018
                                                                          over the previous year       material change

 Sales expense                    18,309,812,188.35   18,899,578,046.25                  -3.12%

 Overhead Expense                  3,795,645,600.08    4,365,850,083.19                -13.06%

                                                                                                   Mainly attributable to the
                                                                                                   interest income and
 Financial expense                -2,426,643,429.91     -948,201,396.74                155.92%
                                                                                                   increase of exchange
                                                                                                   gains

 R&D expenses                      5,891,219,715.90    6,988,368,285.92                -15.70%


4. Investment in research and development

√ Applicable □ Not applicable

Gree adheres to the philosophy that "science and technology change life; science and technology create life" and
insists on "independent research and development of core technologies". It firmly believes that only the real
mastery of core technologies can enable us to grasp the fate of the enterprise and realize independent development
of the enterprise. Meanwhile, Gree has set up a technological innovation system of "enterprise regarded as the
main player, market orientation, enterprise-university-research cooperation". It insists on innovation driving,
cultivates innovative talents, implements the leader strategy, and constantly consolidates its global leading
position in the field of refrigeration.

Gree boasts the largest R&D center of air conditioners in the world, four national R&D centers, 15 research
institutes, more than 900 laboratories and over 14,000 R&D members. Its national R&D centers are the National
Key Laboratory of Energy Saving for Air Conditioning Equipment and System Operation, National Engineering
Research Center of Green Refrigeration Equipment, State Recognized Enterprise Technology Center and the
State-level Industrial Design Center. Meanwhile, it has been recognized as the "National Demonstration Base for
Standardization of Consumer Goods" and "National Pilot Enterprise for Standardization of High-end Equipment
Manufacturing Industry". In addition, Gree has established the "Motor and Control" academician workstation and
has been successively approved to establish post-doctoral research centers and doctoral workstations in
Guangdong Province. In 2019, Gree was approved to establish "Guangdong Key Laboratory for Enterprises of
High-performance Servo System", "Guangdong Intelligent Mould Technology Innovation Center", and
"Guangdong Energy Internet Innovation Center".

                                                            42
                                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Gree has accumulatively won 33 national, provincial or ministerial and industrial awards. In 2019, Gree won
seven awards, including one national second prize for technological invention and three provincial and ministerial
first prizes. Gree's "key technology and application of large-capacity and high-efficiency centrifugal
air-conditioning equipment" project won the second prize of national technological invention in 2019. Gree's "key
technology and application of direct current in optical storage air conditioners" project won the first prize of
Guangdong provincial technological invention, China Patent Gold Award and other awards.

R&D investment of the Company

                                                       2019                            2018                        Change ratio

 Number of R&D personnel (persons)                              14,251                          11,808                          20.69%

 Proportion of number of R&D
                                                               16.04%                          13.30%                           2.74%
 personnel

 Investment amount in research and
                                                      6,011,210,604.21               7,268,369,454.61                        -17.30%
 development (Yuan)

 Proportion of investment in research
                                                                 3.03%                          3.67%                           -0.64%
 and development in operating income

 Capitalization amount of research and
                                                        119,990,888.31                 280,001,168.69                        -57.15%
 development investment (RMB)

 Proportion of capitalized research and
 development investment to research and                          2.00%                          3.85%                           -1.85%
 development investment

Reason for the significant change in proportion of investment in research and development to the operating income compared to the
previous year
□ Applicable √ Not applicable
Reason of the great change in the capitalization rate of R&D investment and its rationality explanation
□ Applicable √ Not applicable


5. Cash flows

                                                                                                                       Unit: RMB Yuan

                                                                                                          Increase/Decrease over the
                Item                           2019                             2018
                                                                                                                previous year

Sub-total of cash inflows from
                                              175,195,923,314.18               146,209,763,702.97                               19.83%
operating activities

Sub-total of cash outflows from
                                              147,302,209,220.59               119,268,972,159.99                               23.50%
operating activities

Net cash flows from operating
                                               27,893,714,093.59                26,940,791,542.98                                 3.54%
activities

Sub-total of cash inflows from
                                                8,445,533,871.01                  9,948,975,741.20                              -15.11%
investing activities

                                                                 43
                                                              GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019


Sub-total of cash outflows from
                                                   19,720,582,471.78              31,794,741,016.87                            -37.98%
investing activities

Net Cash Flow from Investment
                                                   -11,275,048,600.77             -21,845,765,275.67                            48.39%
Activities

Sub-total of cash inflows from
                                                   21,595,107,923.68              27,639,080,524.35                            -21.87%
financing activities

Sub-total of cash outflows from
                                                   40,817,084,044.61              25,125,234,042.18                             62.45%
financing activities

Net Cash Flow from Financing
                                                   -19,221,976,120.93               2,513,846,482.17                          -864.64%
Activities

Net increase in cash and cash
                                                    -2,399,549,002.85               7,412,504,600.40                          -132.37%
equivalents

Major factors that result in major changes in relevant data
√ Applicable □ Not applicable
                                                                                                                        Unit: RMB Yuan

                                                                                Increase/
        Item                      2019                        2018              decrease                   Cause of change
                                                                                proportion
Net Cash Flow
                                                                                             Attributable to decrease of cash paid for
from Investment             -11,275,048,600.77             -21,845,765,275.67       48.39%
                                                                                             investments
Activities
Net Cash Flow                                                                                Attributable to increase of cash paid for
from Financing              -19,221,976,120.93               2,513,846,482.17     -864.64% debts, distribution of dividends and
Activities                                                                                   profits or interests

The description of causes of major differences existing between the net cash flows from operating activities of the Company and net
profits of the current year in the Report Period
□ Applicable √ Not applicable


III. Non-core business analysis

□ Applicable √ Not applicable


IV. Assets and liabilities

1. Major changes in assets composition

Since 2019, the Company has implemented new financial instrument standards, new income standards or new lease standards for the
first time and adjusted and implemented relevant items in financial statements at the beginning of the year.
√ Applicable □ Not applicable
                                                                                                                      Unit: RMB Yuan


                                                                     44
                                                  GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019


                          At the end of 2019                    At the beginning of 2019                        Description
                                                                                                   Change of      of the
                                        Proportion to                            Proportion to
                       Amount                                   Amount                             proportion    material
                                         total assets                             total assets
                                                                                                                  change

Monetary capital   125,400,715,267.64          44.32%    115,022,653,811.67            45.80%         -1.48%

Accounts
                     8,513,334,545.08           3.01%         7,642,434,078.24             3.04%      -0.03%
receivable

Inventories         24,084,854,064.29           8.51%        20,011,518,230.53             7.97%      0.54%

Investment real
                      498,648,691.85            0.18%          537,589,343.08              0.21%      -0.03%
estate

Long-term
equity               7,064,186,161.29           2.50%         2,250,732,461.71             0.90%      1.60%
investment

Fixed assets        19,121,930,757.04           6.76%        18,385,761,475.54             7.32%      -0.56%

Construction in
                     2,431,051,409.94           0.86%         1,663,938,988.55             0.66%      0.20%
Progress

Short-term
                    15,944,176,463.01           5.63%        22,197,899,406.88             8.84%      -3.21%
borrowing

Long-term
                        46,885,882.86           0.02%                                                 0.02%
borrowing




                                                        45
                                                                                                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

2 Assets and liabilities measured by fair value

√ Applicable □ Not applicable
                                                                                                                                                                                    Unit: RMB Yuan

                                                                                                 Depreciation
                                   Amount at the      Gains and losses     Accumulated fair        reserves
                                                                                                                 Amount of buying in     Amount of selling out                     Amount at the end
               Item               beginning of the    from changes in        value changes        withdrawn                                                      Other changes
                                                                                                                   during the period       during the period                         of the period
                                      period             fair value       recognized in equity    during the
                                                                                                    period

 Financial assets

 1. Trading financial
 assets (excluding
                                   1,012,470,387.43      28,348,042.95                                               2,937,144,194.29        3,022,754,041.09                         955,208,583.58
 derivative financial
 assets)

 2. Derivative financial
                                     170,216,138.92     -77,823,513.23                                                                                                                 92,392,625.69
 assets

 3. Other debt investments         1,064,120,569.43       -4,038,275.59          2,177,765.62                                                  330,000,000.00    -426,789,360.26      296,836,282.20

 4. Other equity
                                   1,144,907,946.33   2,398,458,222.20       1,713,290,280.44                        1,084,999,993.84                                                4,644,601,697.51
 instrument investments

 Subtotal                          3,391,715,042.11   2,344,944,476.33       1,715,468,046.06                        4,022,144,188.13        3,352,754,041.09    -426,789,360.26     5,989,039,188.98

 Total                             3,391,715,042.11   2,344,944,476.33       1,715,468,046.06                        4,022,144,188.13        3,352,754,041.09    -426,789,360.26     5,989,039,188.98

 Financial liabilities               257,364,882.07     274,150,632.07                                                   16,785,750.00

Content of other changes
Whether there are significant changes in the main asset measurement attribute of the Company during the Report Period.
□ Yes √ No


                                                                                                 46
                                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019



3. Limitation of asset rights by the end of the Report Period

                                                                                                                     Unit: RMB Yuan

                     Item                        Book balance at the end of the period                Cause of restriction
 Monetary capital                                                      13,329,429,050.16   Legal deposit reserved and deposits

 Financing of accounts receivable                                       8,874,415,345.76   Pledged
 Other current assets                                                     100,000,000.00   Pledged

 Other equity instrument investments                                    3,316,957,037.50   Restricted shares
 Intangible assets                                                        153,191,226.30   Mortgage

                     Total                                             25,773,992,659.72



V. Investments

1. Overall review

√ Applicable □ Not applicable

                                                Investment in the same period last year
  Investment in the Report Period (RMB)                                                               Change percentage
                                                               (RMB)

                             7,192,756,039.01                          15,477,712,506.03                                     -53.53%


2. Major equity investments obtained during the Report Period

□ Applicable √ Not applicable


3. Major non-equity investments during the Report Period

□ Applicable √ Not applicable




                                                                  47
                                                                                                                                                                                           GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019



         4. Financial asset investment


         (1) Securities investment

         √ Applicable □ Not applicable
                                                                                                                                                                                                                                                                                 Unit: RMB Yuan
                                                                                         Accounting      Carrying amount at       Gains and losses      Accumulated fair value                                                  Profit and loss                              Accounting           Capital
                                            Abbreviation of       Initial investment                                                                                             Amount of buying in    Amount of selling                            Carrying amount at
 Type of securities     Security code                                                    measurement     the beginning of the   from changes in fair    changes recognized in                                                  during the Report                             calculation         Source of
                                             security name                cost                                                                                                    during the period    out during the period                        the end of the period
                                                                                           method               period                 value                   equity                                                               Period                                      items           Investment
Stocks listed on
                                                                                                                                                                                                                                                                        Other equity
domestic and                                                                           Measure at fair
                      600745            Wingtech Technology           884,999,996.60                                     0.00      2,431,957,040.90          2,431,957,040.90        884,999,996.60                                                    3,316,957,037.50 instrument             Private
overseas stock                                                                         values
                                                                                                                                                                                                                                                                        investments
exchanges
Stocks listed on
                                                                                                                                                                                                                                                                        Other equity
domestic and                                                                           Measure at fair
                      600619            HIGHLY                      1,145,070,921.73                         801,289,952.19          -26,982,776.24           -369,871,271.40                                                      14,408,571.49         775,199,650.33 instrument             Private
overseas stock                                                                         values
                                                                                                                                                                                                                                                                        investments
exchanges
Stocks listed on
                                                                                                                                                                                                                                                                        Other equity
domestic and                            RS MACALLINE- H                                Measure at fair
                      1528                                            701,240,501.50                         343,617,994.14          -17,066,501.03           -359,345,947.63                                                      14,398,299.50         341,894,553.87 instrument             Private
overseas stock                          SHS                                            values
                                                                                                                                                                                                                                                                        investments
exchanges
Stocks listed on
                                                                                                                                                                                                                                                                        Other equity
domestic and                                                                           Measure at fair
                      600888            Xinjiang Joinworld            199,999,997.24                                     0.00         10,550,458.57             10,550,458.57        199,999,997.24                                                      210,550,455.81 instrument             Private
overseas stock                                                                         values
                                                                                                                                                                                                                                                                        investments
exchanges
                                                                                       Measure at fair                                                                                                                                                                      Trading
Bonds                 151191            19 Chang'an 01                503,813,082.19                                                  18,866,237.81                                 1,296,701,369.86        792,888,287.67         34,927,670.83         522,679,320.00                        Private
                                                                                       values                                                                                                                                                                               financial assets
                                                                                       Measure at fair                                                                                                                                                                      Other debt
Bonds                 1080022           10 State grid bonds 01        344,572,550.00                         369,461,328.07           -4,640,291.70                677,072.11                                                      11,799,893.40         365,610,278.07                        Private
                                                                                       values                                                                                                                                                                               investments

                                        16 Interest-bearing                            Measure at fair                                                                                                                                                                      Other debt
Bonds                 160017                                          288,405,500.00                         291,920,782.20            3,792,759.76               1,695,134.07                                                     13,135,500.00         296,836,282.20                        Private
                                        treasuries 17                                  values                                                                                                                                                                               investments
                                                                                       Measure at fair                                                                                                                                                                      Other debt
Bonds                 101758021         17 Baoanji MTN001              59,940,000.00                           60,850,102.19             308,588.72                -194,440.56                                                       3,838,413.96         61,179,082.19                        Private
                                                                                       values                                                                                                                                                                               investments
Other securities investments                                          203,663,800.00           --            341,888,356.97           -3,499,332.37                                  744,865,753.42       1,074,865,753.42         24,888,596.92                    0.00           --               --
Total                                                               4,331,706,349.26           --           2,209,028,515.76       2,413,286,184.42          1,715,468,046.06       3,126,567,117.12      1,867,754,041.09        117,396,946.10       5,890,906,659.97            --               --
Disclosure date of Announcement on Approval of Portfolio
                                                                 29 April, 2019
Investment by Board of Directors
Disclosure date of Announcement on Approval of Portfolio
                                                                 27 June, 2019
Investment by Board of Shareholders (if any)




                                                                                                                                                       48
                                                                                        GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019



(2) Investment in derivatives

√ Applicable □ Not applicable
                                                                                                                                                                      Unit: RMB 10,000
                                                                                                                                                            Proportion
                                                                                                                                                              of the
                                                                                                                          Amount
 Operation                                                   Initial                                                                Withdrawing               ending     Profits
                             Whether or       Type of                                                          Amount of of selling
  name of                                                  amount of                                Beginning                       depreciation   Ending    contract and losses
                Incidence        not        investment                                                         buying in    out
investment                                                investment       Start date   Expiry date investment                        reserve    investmen amount to during the
                 relation    transaction         in                                                            during the during
     in                                                        in                                     amount                          amount      t amount net assets at report
                             was related    derivatives                                                          period     the
 derivative                                               derivatives                                                                 (If any)              the end of   period
                                                                                                                          period
                                                                                                                                                            the report
                                                                                                                                                              period
Jinrui                                     Futures                                      31
               Non-related                                              1 January,
Futures co.,                 No            Hedging            -617.81                   December,         -617.81                                            613.47        0.01%        -398.44
               party                                                    2019
LTD                                        Contract                                     2019

                                           Forward                                      31
Financing      Non-related                                              1 January,                                                                                                  -33,638.9
                             No            Financial        -8,714.87                   December,        -8,714.87                                         9,239.26        0.08%
Institution    party                                                    2019                                                                                                                   1
                                           Contract                                     2019

                                                                                                                                                                                    -34,037.3
Total                                                       -9,332.68          --              --        -9,332.68          0          0               0   9,852.73        0.09%
                                                                                                                                                                                               5

Capital Source of Investment in Derivatives               Own funds

Lawsuits (if apply)                                       None

Disclosure Date of Announcement on Approval of
Investment in Derivatives by Board of Directors (if       29 April, 2019
any)

Disclosure Date of Announcement on Approval of
Investment in Derivatives by Board of Shareholders 27 June, 2019
(if any)

                                                          In order to evade any risk in the cost of purchase of raw materials by the Company which might arise from wide fluctuations of
                                                          the price of bulk raw materials, the Company carried on the hedging business for part of the raw materials and duly locked the
                                                          cost of raw materials according to the futures market situation to reduce any uncertainty risk from fluctuations of the market
                                                          price of the spot goods; meanwhile, the Company carried out foreign exchange transactions by bank's financial instruments to
                                                          evade any risk in the fluctuations of exchange rate and interest rate, reduce foreign exchange liabilities and conduct the cost
                                                          locking, and realize the maintenance and increase of the value of foreign exchange assets. The Company laid down the Rules for
                                                          Hedging Management of Futures and "Internal Control System of Forward Foreign Exchange Transactions to execute the full
                                                          appraisal and control of the investment in derivatives and risks in open interest, and the detailed description is provided below:

                                                          Legal and regulatory risk; While the Company carried on hedging and foreign exchange transactions, it was required to follow
                                                          the laws and regulations and specifically stipulate the rights and obligations with the agency. Control measures: The Company
                                                          assigned the responsible department to strictly execute the contract review, clarify the rights and obligations, strengthen
Risk analysis of open interest of derivatives and
                                                          compliance check and ensure the Company's investment in derivatives and operation of open interest in accordance with any
control measures during the Report Period
                                                          laws and regulations and internal control system of the Company.
(including but not limited to market risk, liquidity
                                                          2. Operation risk: it means any risk in operation arising out of imperfect internal process, operation of employees and system.
risk, credit risk, operation risk and legal risk)
                                                          Control measures: The Company established the corresponding management system, clarified the division of responsibilities
                                                          and examination & approval procedures of the hedging and foreign exchange transactions, built more perfect supervision
                                                          mechanism and effectively reduced any operation risk through business, decision and transaction processes.

                                                          3. Market risk: The price change of bulk goods and uncertainty of fluctuations of exchange rate of foreign exchange market
                                                          bring a greater market risk to the futures business and foreign exchange transactions. Control measures: The principle of prudent
                                                          and moderate operation is upheld in the futures hedging and foreign exchange transactions of the Company, in which any
                                                          speculative transaction is not permitted. As to the hedging business, the Company strictly restricted the number of hedging not
                                                          to exceed the number of actual spot transaction and the open interest of the futures not to exceed the number of hedged spot
                                                          goods and implemented the mechanism to stop loss. In respect of the foreign exchange transactions, the Company effectively
                                                          prevented the market risk by judging the trend of foreign exchange rate and utilizing a contract to lock the settlement of
                                                          exchange rate.




                                                                                                    49
                                                                                   GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

The detailed usage and related hypothesis and
parameter setting should be disclosed in terms of the
                                                         The loss under the futures hedging contract during the Report Period was RMB -3,984,400; the loss under the forward foreign
market price of the invested derivatives or changes
                                                         exchange contract during the Report Period was RMB -156,742,100.
in fair value of the products during the Report Period
and analysis on the fair value of the derivatives.

Descriptions about whether there were major
changes in the accounting policies and detailed
accounting principle of the Company's derivatives        No change
during the Report Period as compared to the last
report period.

                                                         In the opinion of the Company's independent directors, the Company improved its management level by strengthening internal
Special opinions of independent directors regarding      control and carrying out the risk prevention measures as well as stabilizing price fluctuations through futures hedging. It also
the investment in derivatives and risk control of the    enhanced its foreign exchange risk control level through foreign exchange transactions. The above investment in derivatives
Company                                                  helps to give play to competitive advantages of the Company, so it is feasible for the Company to carry on the investment in
                                                         derivatives under controllable risk.




5 Usage of raised funds

□ Applicable √ Not applicable
The Company was not involved in any usage of raised funds during the Report Period.


VI. Sales of major assets and equities

1. Sales of major assets

□ Applicable √ Not applicable
The Company was not involved in sales of major assets during the Report Period


2. Sale of major equities

□ Applicable √ Not applicable




                                                                                                50
                                                                                                                                         GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019



VII. Analysis on major controlling shareholder and joint stock companies

√ Applicable □ Not applicable
Information regarding major subsidiaries and joint stock companies that contribute over 10% of net profits to the Company
                                                                                                                                                                                                         Unit: RMB Yuan

                Company Name                    Company type          Main business        Registered capital          Total assets         Net assets        Operating incomes    Operating profit     Net profits

 Zhuhai Gree Group Finance Company
                                                Subsidiary     Financial Services         1,500,000,000.00           70,450,849,470.09     6,449,784,786.60     2,399,580,625.93    1,057,892,882.19    795,328,040.73
 Limited

 Gree Electric Appliances (Chongqing) Co.,                     Air Conditioner
                                                Subsidiary                                230,000,000.00              4,943,677,549.76     2,387,623,740.36    10,703,012,677.06      924,700,401.68    784,272,003.69
 Ltd.                                                          Manufacturing

                                                               Varnished Wire
 Zhuhai Gree Electrical Co., Ltd.               Subsidiary                                1,669,315,586.15            9,038,392,090.84     2,742,570,888.17    37,487,458,843.09      198,015,868.59    246,873,908.91
                                                               Manufacturing

 Zhuhai Kaibang Motor Manufacture Co., Ltd.     Subsidiary     Motor Manufacturing        82,000,000.00               3,165,078,452.44      936,607,925.54      3,268,915,837.06      104,343,372.27     94,891,085.95

                                                               Air Conditioner
 Gree Electric Appliances (Hefei) Co., Ltd.     Subsidiary                                150,000,000.00             13,434,554,094.46     6,839,893,850.88    17,678,676,202.54    1,319,053,736.29   1,146,345,338.81
                                                               Manufacturing

 GREE (Zhongshan) Home Appliances Co.,                         Small Home Appliances
                                                Subsidiary                                30,000,000.00                767,498,126.19       345,588,332.67      1,308,967,399.32       20,000,756.45     19,979,115.24
 Ltd.                                                          Manufacturing

 Zhuhai Landa Compressor Co., Ltd.              Subsidiary     Compressor Manufacturing   93,030,000.00              12,009,778,160.54     6,739,234,453.82    18,296,919,165.74      975,334,931.42    839,171,836.50

 Gree (Zhengzhou) Electric Appliances Co.,                     Air Conditioner
                                                Subsidiary                                20,000,000.00              10,098,813,462.45     6,719,526,446.93    12,388,055,547.15    1,428,832,323.28   1,257,175,220.76
 Ltd.                                                          Manufacturing

                                                               Air Conditioner
 Gree (Wuhan) Electric Appliances Co., Ltd.     Subsidiary                                100,000,000.00              4,808,679,659.23     1,773,336,648.92    12,667,391,059.28    1,123,856,430.60    940,489,282.46
                                                               Manufacturing

                                                               Air Conditioner
 Gree (Wuhu) Electric Appliances Co., Ltd.      Subsidiary                                20,000,000.00               9,144,901,772.10     2,583,021,379.88     7,300,613,248.36      538,250,961.53    524,690,033.11
                                                               Manufacturing

 Gree (Shijiazhuang) Electric Appliances Co.,                  Air Conditioner
                                                Subsidiary                                100,000,000.00              3,485,566,564.08      861,971,036.70      8,750,297,120.47      666,975,416.91    553,014,031.00
 Ltd.                                                          Manufacturing

 Zhuhai Gree Xinyuan Electronics Co., Ltd.      Subsidiary     Capacitor Manufacturing    126,180,000.00              1,825,318,035.27      854,492,987.09      1,679,187,933.25      225,753,813.76    189,048,061.77




                                                                                                                51
                                                         GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Information about acquisition and disposal of subsidiaries during the Report Period
√ Applicable □ Not applicable
                                                                                                                    Unit: RMB Yuan

                                                        Methods of acquisition and disposal
                                                                                                 Impact on overall production and
                   Company Name                              of subsidiaries during the Report
                                                                                                  operation and financial results
                                                                          Period

 Gree (Luoyang) Washing Machine Co., Ltd.               Establishment                                                -2,721,838.05

 Guochuang Energy Internet Innovation Center
                                                        Establishment                                                  -125,620.41
 (Guangdong) Co., Ltd.

 Gree (Anji) Precision Mold Co., Ltd.                   Establishment                                                  -236,976.73

 Zhuhai Gree Green Resources Recycling Co., Ltd         Establishment                                                 2,263,754.97

 Gree E-commerce Co., Ltd.                              Establishment                                                               -

 Huzhou Landa Compressor Co., Ltd.                      Establishment                                                               -

 Gree Material Supply (Hefei) Co., Ltd.                 Establishment                                                 4,858,404.13

 Gree Material Supply (Zhengzhou) Co., Ltd.             Establishment                                                  -222,381.40

 Gree Material Supply (Chongqing) Co., Ltd.             Establishment                                                -1,943,597.61

 Gree Material Supply (Wuhan) Co., Ltd.                 Establishment                                                -7,283,652.33

 Guangdong Guochuang Intelligent Technology Co.,
                                                        Establishment                                                   270,563.23
 Ltd.

 Nanjing Walsin Nonferrous Metal Co., Ltd.              Acquisition                                                 46,316,187.50

 Gree Rongzhu Copper (Nanjing) Co., Ltd.                Establishment                                                               -

 Zhuhai Hengqin Gree Huatai Energy Development
                                                        Establishment                                                    24,339.91
 Co., Ltd.

 Luoyang Lianmei Real Estate Co., Ltd.                  Establishment                                                -4,664,570.79

 Handan Yingdong New Energy Technology Co.,
                                                        Establishment                                                    -1,339.87
 Ltd.

 Gelan Environmental Protection Technology
                                                        Establishment                                                               -
 (Shaoguan) Co., Ltd.

 Zhuhai Meiling General Motors Co., Ltd.                Cancelled on 7 August, 2019                                   2,737,019.33

 Anhui Gree Kinghome Electric Appliances Sales
                                                        Cancelled on 17 October, 2019                                -9,003,490.77
 Co., Ltd.

 Total                                                  --                                                          30,266,801.11



VIII. Information about businesses controlled by the Company

□ Applicable √ Not applicable




                                                                    52
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IX. Prospects of the Company's future development

1. Development strategy of the Company


Gree takes "building a global advanced industrial group and making Gree a century-year world brand" as its
corporate vision and continues to insist on independent education, independent innovation and independent
production; driven by technological innovation, strengthens technological research and development and improves
the research and development efficiency; accelerates the transformation and upgrading of the marketing model
and comprehensively expands marketing channels; insists on quality innovation, optimizes the quality control
system, and gradually achieves the quality goal of "zero defect and zero after-sales"; strengthens fund
management, improves the risk control system, and guarantees the sound development of the Company; explores
deeply in the industrial field, accelerates intelligent manufacturing, and steadily develops emerging industries such
as precision mould, communication equipment and new energy, and builds a more competitive diversified and
technological global industrial group.


2. Key work of the Company in 2020


(1) Strengthen innovation of scientific research and improve the level of standardization and generalization

Gree will strengthen the construction of major scientific research platforms focusing on key national laboratories,
accelerate the judgment and deployment in major innovation fields, and actively undertake major national and
industrial scientific research projects; focus on the basic research directions consistent with the product strategy,
improve the quality of research projects, accelerate promoting the conversion of technological research results;
increase the R&D investment in new business sectors such as household appliances, refrigerators and washing
machines, and intelligent equipment, achieve greater technological leaps, and improve the product layout of new
business sectors; strengthen the platform-based and modular design of products and comprehensively improve the
level of standardization and generalization; improve the intellectual property protection system, enhance the
protection for technological innovation, and share independent innovation achievements with the world.

(2) Optimize the marketing model and cultivate market growth points

Gree will integrate superior online and offline resources, establish a new retail model with Gree characteristics,
and increase the speed of response to market demand; continue to go deep into the market segments of central air
conditioners and further increase the share in the commercial market through standard and professional technical
services; optimize the overseas business management model and strengthen the promotion of overseas proprietary
brands; vigorously promote the integration of refrigerators, washing machines and household appliances into the
full channel sales to make them gradually become the second major business sector; based on changes of the
market and industry reform, further improve the overall market competitiveness of intelligent equipment, moulds,
industrial products, new energy, and casting, continue to expand sales channels and cultivate market growth points;
actively go into the medical and healthcare industry and make more efforts to invest in the development and
production of epidemic prevention products and health products.

                                                         53
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(3) Improve top-level design of intelligent manufacturing and accelerate industrial transformation and
upgrading

Gree will accelerate the comprehensive application of new-generation information technology, set up a
full-process and full-element intelligent analysis and decision-making platform, and build an intelligent
information ecosystem; promote the rapid implementation of the intelligent demonstration base project and build a
leading, technological and intelligent benchmarking plant; promote the layout of the intelligent home industry
chain and expand the intelligent home ecosystem.

(4) Promote reform of the management system and improve the operation efficiency of the enterprise

Gree will accelerate the promotion of the block management model, establish an industry sector responsibility
system, define the target indicators of independent operation and make each business sector be responsible for the
profits and losses; improve existing business processes, make enterprise management more systematic, integrated
and synergistic, and increase the management and decision-making efficiency; solve the problems such as unclear
division of responsibilities between departments and repeated setting of posts in a targeted manner and establish a
normalized organization and a mechanism for simplifying posts, determining posts and staffing and improving the
work.

(5) Strengthen cost management and promote cost reduction and efficiency improvement

Gree will improve the full-process cost control system and encourage all staff to participate in cost reduction;
strengthen front-end design to reduce costs, improve the cost control awareness of R&D personnel, and reduce
unnecessary waste of resources and excessive services; analyze in an in-depth manner the cost drivers of products
from multiple perspectives such as standards, quality, production, procurement and sales and continue to promote
cost reduction and efficiency improvement.

(6) Improve the fund management and risk prevention system and strengthen audit

Gree will strengthen fund management, improve the financial management and control capability, and realize fund
maintenance and appreciation on the premise of strictly controlling capital risk; carry out audit in an in-depth and
efficient manner, fully mine the value of information, improve data analysis models, and enhance the full-process
audit and review; strengthen the information security management and control mechanism, identify and monitor
risks in advance, and improve the overall capability of responding to information security risks.

(7) Strengthen the backbone management and talent cultivation and establish a talent team

Gree will strengthen independent talent cultivation and cultivation of young employees, lay a solid talent
foundation for the long-term development of the enterprise, and cultivate more high-level technological R&D
talents and excellent industrial talents; strive to establish a backbone team with excellent quality, select and
cultivate backbones according to the requirements of "loyalty, cleanness and responsibility", and actively advocate
creation of a realistic and practical atmosphere and orientation inside the enterprise; strengthen the market
awareness of backbones, sort out and improve the backbone performance assessment mechanism oriented by


                                                         54
                                                  GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

goals and results, determine management posts synchronously, and optimize the backbone structure.


3. Major risks in future development


(1) Macroeconomic fluctuation risk

The products sold by the Company are mainly HVAC and household appliances, and its market demand is greatly
influenced by the economic situation and macroeconomic regulation. The impact of the novel coronavirus
pneumonia may lead to a slowdown in the growth of macro-economy or consumer demand, and the growth of the
Company in the household appliances market will also slow down. Considering the expected impact of the
implementation of the new energy efficiency standards, the competition in the industry may be further intensified,
thus affecting sales of the Company's products.

(2) Risk of price fluctuation in production factors

The household appliance manufacturing industry in which Gree is engaged is a labor-intensive industry, wherein
the main raw materials used to produce household appliances are copper, steel, aluminium and plastics of various
grades, and their cost accounts for a large proportion. If the price of raw materials fluctuates considerably, or the
cost of labor, water, electricity, land and other production factors fluctuates substantially due to macroeconomic
environment changes and policy adjustments, it will have a certain impact on the Company's operating
performance.

(3) Market risks caused by "de-globalization"

Influenced by the novel coronavirus pneumonia, "de-globalization" and the trade protectionism trend in some
countries and regions become increasingly prominent. The uncertainty of global economy further increases, which
brings new challenges to the expansion in the overseas market and the risk of increasing the operating costs.

(4) Export market risks and exchange losses caused by exchange rate fluctuation

With continuous expansion of the Company's overseas market, the Company's export revenue continues to
increase. Exchange rate fluctuations may not only bring adverse effects on the Company's export of products, but
also cause the Company's exchange losses and increase the financial costs.




                                                         55
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X. Reception of activities including researches, communication and interviews

1. Registration form for reception of activities including researches, communication and interviews

√ Applicable □ Not applicable

                                      Method of    Type of reception
      Time of reception                                                           Basic situation index of research
                                      reception          object

                                                                       For details, see the Survey Activity Information (from
 1 March, 2019 to 27
                                  Field Research   Institution         1 March, 2019 to 27 March, 2019) of Gree (000651)
 March, 2019
                                                                       disclosed by the Company at www.cninfo.com.cn.

                                                                       For details, see the Activity Record of Meeting with
 22 May, 2019                     Field Research   Institution         Interested Investors disclosed by the Company at
                                                                       www.cninfo.com.cn on 22 May, 2019.

 Times of reception                                                                                                           35

 Number of received institutions                                                                                              60

 Number of received individuals                                                                                                0

 Number of other received objects                                                                                              0

 Whether undisclosed material information is
                                                                                                                              No
 revealed, disclosed or divulged




                                                                 56
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                                          Section V Important Events

I. Information about common stock profit distribution and capitalization from capital reserve
funds

The common stock profit distribution policy in the report period, especially preparation, execution or adjustment of the cash dividend
policy
√ Applicable □ Not applicable

Profit distribution preplan of 2018 (executed already in 2019): Calculated by the total stock capital of the
Company equivalent to 6,015,730,878 shares, all shareholders will be distributed a cash of RMB 15 (tax included)
per 10 shares, with the total amount of cashes to be distributed in such a way up to RMB 9,023,596,317.00 and the
balance to be carried forward to the future year.


                                             Special description of the cash dividend policy

In compliance with provisions of the Articles of Association or requirements of the
                                                                                           Yes
resolution of the general meeting of shareholders:

The dividend standard and ratio are definite and clear:                                    Yes

The related decision procedures and mechanisms are complete:                               Yes

Independent directors perform their duties responsibly and play their due roles:           Yes

Minority shareholders have the opportunity to fully express their opinions and demands
                                                                                           Yes
and their legitimate rights and interests are fully protected:

The conditions and procedures are transparent and comply with regulations if the cash
                                                                                           Not applicable
dividend policy is adjusted or changed:

The common stock dividend distribution plan (preplan) and the capitalization plan (preplan) from capital reserve funds in recent three
years (including the Report Period)

1) Profit distribution preplan of 2019: Calculated by the total stock capital of the Company equivalent to
6,015,730,878 shares, all shareholders will be distributed a cash of RMB 12 (tax included) per 10 shares, with the
total amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the balance to be carried
forward to the future year.
2) Profit distribution plan of 2018: Calculated by the total stock capital of the Company equivalent to
6,015,730,878 shares, all shareholders will be distributed a cash of RMB 15 (tax included) per 10 share, with the
total amount of cashes to be distributed in such a way up to RMB 9,023,596,317.00 and the balance to be carried
forward to the future year.
3) Profit distribution plan for half year of 2018: Calculated by the total stock capital of the Company equivalent to
6,015,730,878 shares, all shareholders will be distributed a cash of RMB 6 (tax included) per 10 shares, with the
total amount of cashes to be distributed in such a way up to RMB 3,609,438,526.80 and the balance to be carried
forward to the future year.
4) Profit distribution plan of 2017: No cash dividend was distributed, no bonus share was given, public reserve

                                                                   57
                                                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

funds were not used for capitalization, and the balance was carried forward to the next year.
Table for common stock cash dividends of the Company in the recent three years (including the Report Period)
                                                                                                                                                            Unit: RMB Yuan

                                                                                                                                                           Proportion of total
                                                         Proportion of amount
                                     Net profit                                                        Ratio of amount of cash                                cash dividend
                                                          of cash dividend to
                                   attributable to                                 Amount of cash       dividend to net profit                           (including other ways)
                                                         net profit attributable
          Amount of cash              common                                       dividends based     attributable to common      Total cash dividend         to net profit
                                                              to common
  Year      dividend (tax       shareholders of listed                             on other ways        shareholders of listed      (including other         attributable to
                                                         shareholders of listed
             included)           company in annual                                   (e.g., share     company in consolidated            ways)            common shareholders
                                                              company in
                                    consolidated                                     repurchase)      financial statements based                          of listed company in
                                                             consolidated
                                financial statements                                                        on other ways                                 consolidated financial
                                                         financial statements
                                                                                                                                                               statements

2019        7,218,877,053.60      24,696,641,368.84                    29.23%                  0.00                       0.00%       7,218,877,053.60                   29.23%

2018      12,633,034,843.80       26,202,787,681.42                    48.21%                  0.00                       0.00%     12,633,034,843.80                    48.21%

2017                     0.00     22,400,484,001.26                      0.00%                 0.00                       0.00%                   0.00                     0.00%

The profits of the Company in the Report Period and the parent company's profits distributable to common shareholders are positive,
but the common stock cash dividend distribution preplan has not been put forward.
□ Applicable √ Not applicable


II. Profit distribution and capitalization from public reserve funds in the Report Period

√ Applicable □ Not applicable

Number of bonus shares (stock) given per 10 stocks                                                                                                                               0

Dividend allocated per 10 stocks (RMB) (tax included)                                                                                                                           12

Increase by transfer per 10 stocks (stock)                                                                                                                                       0

Equity base of distribution proposal (stock)                                                                                                                  6,015,730,878

Cash dividend (RMB) (tax included)                                                                                                                        7,218,877,053.60

Cash dividend in other ways (such as repurchasing shares) (RMB)                                                                                                                0.00

Total cash dividend (including other methods) (RMB)                                                                                                                              0

Distributable profit (RMB)                                                                                                                               53,971,127,295.29

Proportion of total cash dividends (including other methods) in total
                                                                                                                                                                         100%
profit distribution

                                                                Cash dividends of this distribution

If the company's development stage is mature and there are no major capital expenditure arrangements, when the profit is
distributed, the minimum proportion of cash dividends in this profit distribution should reach 80%

                  Detailed description of the preplan for profit distribution or capitalization from public reserve funds

The Company plans to use the total share capital of 6,015,730,878 shares as the base to distribute all shareholders a cash of RMB
12 (tax included) per 10 shares, but does not plan to give any bonus share or use any public reserve funds for capitalization, with
the total amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the remaining undistributed profits to
be carried forward to the future year.
If the total number of shares of the Company enjoying profit distribution rights changes from the date of this announcement to the


                                                                                       58
                                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

date of equity registration for the implementation of equity distribution due to convertible bonds to shares, share repurchase, etc.,
the Company will follow the principle of unchanged total distribution to adjust the distribution ratio per share accordingly.



III. Fulfillment of commitments

1. Commitments of the Company's actual controllers, shareholders and acquirers, the Company and other
related parties of commitments that have been fulfilled completely in the Report Period or have not been
fulfilled completely as of the end of the Report Period

√ Applicable □ Not applicable

       Cause of         Party of           Type of                                                       Time of        Period of        Fulfillment
                                                                Content of commitment
     commitment       commitment     commitment                                                        commitment     commitment            status

 Share-splitting
 commitment

                                                     1. The transferee commits that shares
                                                     acquired from Gree Electric Appliances due
                                                     to this transfer will be fully locked up when
                                                     the transfer registration is completed in this
                                                     transaction, and will not be transferred for
                                                     36 months from the date of completion of
                                                     the share transfer registration; if there are
                                                     relevant laws and regulations that require the
                                                     lock-up period of the transferred shares                       36 months from
                                                     exceeds the above-mentioned lock-up period                     the date of         Being under
                      Zhuhai                                                                          2 December,
                                   Share lock-up     committed by the transferee, the transferee                    completion of the   normal
                      Mingjun                                                                         2019
                                                     agrees to extend the lock-up period of the                     share transfer      fulfillment
                                                     shares accordingly to meet the prescribed                      registration
                                                     period. 2. After the completion of this share
                                                     transfer, for shares acquired by the
                                                     transferee from Gree Electric Appliances,
                                                     Inc. due to this transfer, their dividend
 Commitments made                                    shares generated due to bonus share and
 in the acquisition                                  capitalization from public reserve funds by
 report or equity                                    the listed company will also abide by the
 change report                                       above share lock-up commitment.

                                                     1. The transferee commits that after the
                                                     completion of the transfer, the overall
                                                     stability of Gree Electric Appliances'
                                                     Operation and Management Team will be
                                                     maintained within the scope of authority,
                                                     and no major changes will be made to Gree
                                                     Electric Appliances' management structure.
                                                     2. The transferee commits that during the                                          Being under
                      Zhuhai       Other                                                              2 December,   Effective for a
                                                     period of direct or indirect holding of shares                                     normal
                      Mingjun      commitments                                                        2019          long time
                                                     of Gree Electric Appliances, it will not take                                      fulfillment
                                                     the initiative to put forward any suggestions
                                                     and proposals regarding the relocation of
                                                     Gree Electric Appliances' headquarters and
                                                     registered address from Zhuhai City, and it
                                                     will actively urge all parties to ensure that
                                                     Gree Electric Appliances' headquarters and
                                                     registered address are not relocated from



                                                                       59
                                           GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                                    Zhuhai City; if any shareholder puts forward
                                    any suggestions and proposals regarding the
                                    relocation of Gree Electric Appliances'
                                    headquarters and registered address from
                                    Zhuhai City, the transferee commits to
                                    participate in the general meeting of
                                    shareholders and vote against such
                                    proposals. 3. The transferee commits to do
                                    its utmost to make effective industrial
                                    investment and strategic resource
                                    introduction for Zhuhai's economic
                                    development, and urge Gree Electric
                                    Appliances to make new contributions to the
                                    sustainable and healthy development of
                                    Zhuhai's economy. 4. Zhuhai Mingjun
                                    commits to actively exercise the voting
                                    rights of shareholders in the general meeting
                                    of shareholders of the listed company
                                    involving dividends and to prompt the
                                    directors nominated by it to vote in favor of
                                    the board of directors' resolution of the listed
                                    company regarding an annual net profit
                                    dividend ratio of not less than 50%.

                                    Letter of Commitment on Maintaining the
                                    Independence of the Listed Company: In
                                    order to guarantee the independent operation
                                    of the listed company after this equity
                                    transfer, Zhuhai Mingjun, Zhuhai Xianying
                                    and Zhuhai Yuxiu make the following
                                    commitments. (I) To ensure asset
                                    independence and completeness of the listed
                                    company: 1. To ensure that Gree Electric
                                    Appliances will be equipped with the
                                    relevant production system, auxiliary
                                    production system as well as supporting
                                    facilities corresponding to its business
                                    operations, have the right to own or use the
                                    land, workshop and machines and facilities
Zhuhai
                                    relating to its business operations as well as
Mingjun,       Maintaining the                                                                                         Being under
                                    the ownership or use right to its trademarks,      2 December,   Effective for a
Zhuhai         independence of                                                                                         normal
                                    patent technologies and know-how, and have         2019          long time
Xianying,      the listed company                                                                                      fulfillment
                                    an independent purchase system of raw
Zhuhai Yuxiu
                                    materials and sales system of products. 2. To
                                    ensure that Gree Electric Appliances will
                                    have independent and complete assets, and
                                    all of their assets will be under the control of
                                    Gree Electric Appliances and independently
                                    owned and operated by Gree Electric
                                    Appliances. 3. To ensure that Zhuhai
                                    Mingjun and other enterprises controlled by
                                    Zhuhai Mingjun will not illegally occupy
                                    Gree Electric Appliances' assets in any way;
                                    or provide guarantee for the debts of Zhuhai
                                    Mingjun and other enterprises under its
                                    control with Gree Electric Appliances'
                                    assets. (II) To ensure personnel
                                    independence of the listed company: 1. To



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ensure that Gree Electric Appliances' labor,
personnel and compensation management
will be completely independent from related
companies. 2. To ensure that the
recommendation of directors, supervisors
and senior management personnel by the
enterprise to Gree Electric Appliances will
be conducted in accordance with legal
procedures, and will not be beyond the
personnel appointment and removal
decisions adopted at Gree Electric
Appliances' meeting of board of directors
and general meeting of shareholders. (III) To
ensure finance independence of the listed
company: 1. To ensure that Gree Electric
Appliances will establish an independent
financial department and an independent
financial accounting system, and have a
standardized and independent financial
accounting system. 2. To ensure that Gree
Electric Appliances will independently open
accounts in banks and will not share bank
accounts with its related companies. 3. To
ensure that Gree Electric Appliances'
financial personnel will not take part-time
jobs in its related companies. 4. To ensure
that Gree Electric Appliances will pay taxes
independently according to law. 5. To ensure
that Gree Electric Appliances can make
financial decisions independently, and the
intended transferee will not illegally
interfere with Gree Electric Appliances' use
of funds. (IV) To ensure organization
independence of the list company: 1. To
ensure that Gree Electric Appliances will
establish a sound corporate governance
structure for joint stock companies and have
an independent and complete organizational
structure. 2. To ensure that Gree Electric
Appliances' internal management
organization will independently exercise its
functions and powers in accordance with
laws, regulations and the Articles of
Association. (V) To ensure business
independence of the listed company: 1. To
ensure that Gree Electric Appliances will
have the assets, personnel, qualifications and
ability to independently carry out business
activities, and have the ability to
independently and continuously operate in
the market. 2. To ensure that, except through
the exercise of shareholders' rights, the
enterprise will not interfere in its business
activities of Gree Electric Appliances. 3. To
ensure that the enterprise and other
enterprises controlled by the enterprise will
avoid substantial industry competition with




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                             Gree Electric Appliances. 4. To ensure that,
                             when the enterprise and other enterprises
                             controlled by the enterprise conduct
                             necessary and unavoidable related
                             transactions with Gree Electric Appliances,
                             the enterprise will conduct fair operation in
                             accordance with the marketization principle
                             and at fair prices, and perform transaction
                             procedures and information disclosure
                             obligations in accordance with relevant laws
                             and regulations and regulatory documents. If
                             any one of the above commitments is
                             violated, the enterprise will be willing to
                             bear all the responsibilities arising
                             therefrom, and fully compensate or
                             reimburse all direct or indirect losses caused
                             to Gree Electric Appliances.

                             Letter of Commitment on Avoiding
                             Horizontal Competition: In order to avoid
                             horizontal competition with the listed
                             company, Zhuhai Mingjun, Zhuhai Xianying
                             and Zhuhai Yuxiu make the following
                             commitments: 1. the enterprise and other
                             enterprises controlled by the enterprise (me),
                             the controlling shareholders and actual
                             controllers of the enterprise will not engage
                             in the same or similar business with Gree
                             Electric Appliances and its subsidiaries in a
                             direct or indirect manner in the future, so as
                             to avoid possible direct or indirect business
                             competition with Gree Electric Appliances
                             and its subsidiaries. 2. If other enterprises
                             controlled by the enterprise further expand
                             their business scopes, other enterprises
                             controlled by the enterprise will take the
Zhuhai
                             principle of giving priority to the protection
Mingjun,       Avoiding                                                                                        Being under
                             of the rights and interests of Gree Electric      2 December,   Effective for a
Zhuhai         horizontal                                                                                      normal
                             Appliances and take all possible measures to      2019          long time
Xianying,      competition                                                                                     fulfillment
                             avoid horizontal competition with Gree
Zhuhai Yuxiu
                             Electric Appliances and its subsidiaries. 3. If
                             Gree Electric Appliances and its subsidiaries
                             or related regulatory authorities determine
                             that the enterprise and other enterprises
                             controlled by the enterprise are engaging in
                             or will engage in any business which
                             constitutes horizontal competition with Gree
                             Electric Appliances and its subsidiaries, the
                             enterprise will give up or cause the
                             enterprises which its subsidiaries directly or
                             indirectly hold to give up any business or
                             business opportunities that may result in
                             horizontal competition, or cause such
                             business or business opportunities to be
                             provided with a priority to Gree Electric
                             Appliances or its wholly-owned and holding
                             subsidiaries on a fair and reasonable basis or
                             to be transferred to other unrelated third



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                                    parties. 4. If any one of the above
                                    commitments is violated, the enterprise will
                                    be willing to bear all the responsibilities
                                    arising therefrom, and fully compensate or
                                    reimburse all direct or indirect losses caused
                                    to Gree Electric Appliances.

                                    Letter of Commitment on Regulating
                                    Related Transactions: In order to protect the
                                    interests of public shareholders and maintain
                                    the sustained and healthy development of
                                    the listed company, Zhuhai Mingjun, Zhuhai
                                    Xianying, and Zhuhai Yuxiu make the
                                    following commitments: 1. To ensure that
                                    the future related transactions between the
                                    enterprise and other enterprises controlled
                                    by the enterprise and Gree Electric
                                    Appliances will be fair and conducted in
                                    accordance with the normal business
                                    conduct standards; and that the enterprise
                                    will continue to regulate related transactions
                                    with Gree Electric Appliances and its
                                    subsidiaries. 2. To ensure that the enterprise
                                    will perform its obligations as a shareholder
                                    of Gree Electric Appliances in good faith
                                    and in good faith, and for related
                                    transactions that cannot be avoided or exist
                                    on reasonable grounds, it will sign a
                                    standard related transaction agreement with
                                    Gree Electric Appliances in accordance with
Zhuhai
                                    the law, and in accordance with relevant
Mingjun,                                                                                                              Being under
               Regulating related   laws, regulations, rules, other regulatory        2 December,   Effective for a
Zhuhai                                                                                                                normal
               transactions         documents and the articles of association,        2019          long time
Xianying,                                                                                                             fulfillment
                                    and fulfill the approval procedures; the price
Zhuhai Yuxiu
                                    of related transactions will be determined in
                                    accordance with fair and reasonable market
                                    prices, and the price of related transactions
                                    will be fair; it will perform the information
                                    disclosure obligations of related transactions
                                    in accordance with relevant laws,
                                    regulations and the articles of association; it
                                    will not use related transactions to illegally
                                    transfer the funds and profits of Gree
                                    Electric Appliances or damage the interests
                                    of Gree Electric Appliances and related
                                    shareholders. 3. To ensure that the enterprise
                                    and other enterprises controlled by the
                                    enterprise will, in accordance with the
                                    provisions of laws, regulations and the
                                    articles of association, when considering
                                    related transactions involving the enterprise
                                    and other enterprises controlled by the
                                    enterprise, effectively abide by the
                                    avoidance procedure during the voting on
                                    related transactions at the meeting of the
                                    board of shareholders or the general meeting
                                    of shareholders of Gree Electric Appliances.




                                                     63
                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                               Letter of Commitment on Maintaining the
                               Independence of the Listed Company: In
                               order to guarantee the independent operation
                               of the listed company after this equity
                               transfer, I make the following commitments.
                               (I) To ensure asset independence and
                               completeness of the listed company: 1. To
                               ensure that Gree Electric Appliances will be
                               equipped with the relevant production
                               system, auxiliary production system as well
                               as supporting facilities corresponding to its
                               business operations, have the right to own or
                               use the land, workshop and machines and
                               facilities relating to its business operations
                               as well as the ownership or use right to its
                               trademarks, patent technologies and
                               know-how, and have an independent
                               purchase system of raw materials and sales
                               system of products. 2. To ensure that Gree
                               Electric Appliances will have independent
                               and complete assets, and all of their assets
                               will be under the control of Gree Electric
                               Appliances and independently owned and
                               operated by Gree Electric Appliances. 3. To
                               ensure that Zhuhai Mingjun and other
                               enterprises controlled by Zhuhai Mingjun
                               will not illegally occupy Gree Electric
          Maintaining the      Appliances' assets in any way; or provide                                        Being under
Dong                                                                            2 December,   Effective for a
          independence of      guarantee for the debts of Zhuhai Mingjun                                        normal
Mingzhu                                                                         2019          long time
          the listed company   and other enterprises under its control with                                     fulfillment
                               Gree Electric Appliances' assets. (II) To
                               ensure personnel independence of the listed
                               company: 1. To ensure that Gree Electric
                               Appliances' labor, personnel and
                               compensation management will be
                               completely independent from related
                               companies. 2. To ensure that the
                               recommendation of senior management
                               personnel by I to Gree Electric Appliances
                               will be conducted in accordance with legal
                               procedures. (III) To ensure finance
                               independence of the listed company: 1. To
                               ensure that Gree Electric Appliances will
                               establish an independent financial
                               department and an independent financial
                               accounting system, and have a standardized
                               and independent financial accounting
                               system. 2. To ensure that Gree Electric
                               Appliances will independently open
                               accounts in banks and will not share bank
                               accounts with its related companies. 3. To
                               ensure that Gree Electric Appliances'
                               financial personnel will not take part-time
                               jobs in its related companies. 4. To ensure
                               that Gree Electric Appliances will pay taxes
                               independently according to law. 5. To ensure
                               that Gree Electric Appliances can make



                                                 64
                               GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                        financial decisions independently, and the
                        intended transferee will not illegally
                        interfere with Gree Electric Appliances' use
                        of funds. (IV) To ensure organization
                        independence of the list company: 1. To
                        ensure that Gree Electric Appliances will
                        establish a sound corporate governance
                        structure for joint stock companies and have
                        an independent and complete organizational
                        structure. 2. To ensure that Gree Electric
                        Appliances' internal management
                        organization will independently exercise its
                        functions and powers in accordance with
                        laws, regulations and the Articles of
                        Association. (V) To ensure business
                        independence of the listed company: 1. To
                        ensure that Gree Electric Appliances will
                        have the assets, personnel, qualifications and
                        ability to independently carry out business
                        activities, and have the ability to
                        independently and continuously operate in
                        the market. 2. To ensure that, except through
                        the exercise of shareholders' rights and the
                        performance of functions and duties of
                        board chairman / senior management
                        personnel of the listed company, I will not
                        interfere in its business activities of Gree
                        Electric Appliances. 3. To ensure that I and
                        other enterprises controlled by me will avoid
                        substantial industry competition with Gree
                        Electric Appliances. 4. To ensure that, when
                        I and other enterprises controlled by me
                        conduct necessary and unavoidable related
                        transactions with Gree Electric Appliances,
                        the enterprise will conduct fair operation in
                        accordance with the marketization principle
                        and at fair prices, and perform transaction
                        procedures and information disclosure
                        obligations in accordance with relevant laws
                        and regulations and regulatory documents. If
                        any one of the above commitments is
                        violated, I will be willing to bear all the
                        responsibilities arising therefrom, and fully
                        compensate or reimburse all direct or
                        indirect losses caused to Gree Electric
                        Appliances.

                        Letter of Commitment on Avoiding
                        Horizontal Competition: In order to avoid
                        horizontal competition with the listed
                        company, I make the following
          Avoiding      commitments: 1. I and other enterprises                                          Being under
Dong                                                                     2 December,   Effective for a
          horizontal    controlled by me will not engage in the same                                     normal
Mingzhu                                                                  2019          long time
          competition   or similar business with Gree Electric                                           fulfillment
                        Appliances and its subsidiaries in a direct or
                        indirect manner in the future, so as to avoid
                        possible direct or indirect business
                        competition with Gree Electric Appliances



                                          65
                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                               and its subsidiaries. 2. If other enterprises
                               controlled by I further expand their business
                               scopes, other enterprises controlled by I will
                               take the principle of giving priority to the
                               protection of the rights and interests of Gree
                               Electric Appliances and take all possible
                               measures to avoid horizontal competition
                               with Gree Electric Appliances and its
                               subsidiaries. 3. If Gree Electric Appliances
                               and its subsidiaries or related regulatory
                               authorities determine that I and other
                               enterprises controlled by me are engaging in
                               or will engage in any business which
                               constitutes horizontal competition with Gree
                               Electric Appliances and its subsidiaries, I
                               will give up or cause the enterprises which
                               its subsidiaries directly or indirectly hold to
                               give up any business or business
                               opportunities that may result in horizontal
                               competition, or cause such business or
                               business opportunities to be provided with a
                               priority to Gree Electric Appliances or its
                               wholly-owned and holding subsidiaries on a
                               fair and reasonable basis or to be transferred
                               to other unrelated third parties. 4. If any one
                               of the above commitments is violated, I will
                               be willing to bear all the responsibilities
                               arising therefrom, and fully compensate or
                               reimburse all direct or indirect losses caused
                               to Gree Electric Appliances.

                               Letter of Commitment on Regulating
                               Related Transactions: I make the following
                               commitments: 1. To ensure that the future
                               related transactions between I and other
                               enterprises controlled by me and Gree
                               Electric Appliances will be fair and
                               conducted in accordance with the normal
                               business conduct standards; and that I will
                               continue to regulate related transactions with
                               Gree Electric Appliances and its
                               subsidiaries. 2. To ensure that I will perform
                               its obligations as a shareholder of Gree
                               Electric Appliances in good faith and in                                          Being under
Dong      Regulating related                                                     2 December,   Effective for a
                               good faith, and for related transactions that                                     normal
Mingzhu   transactions                                                           2019          long time
                               cannot be avoided or exist on reasonable                                          fulfillment
                               grounds, it will sign a standard related
                               transaction agreement with Gree Electric
                               Appliances in accordance with the law, and
                               in accordance with relevant laws,
                               regulations, rules, other regulatory
                               documents and the articles of association,
                               and fulfill the approval procedures; the price
                               of related transactions will be determined in
                               accordance with fair and reasonable market
                               prices, and the price of related transactions
                               will be fair; it will perform the information
                               disclosure obligations of related transactions



                                                 66
                                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                                              in accordance with relevant laws,
                                              regulations and the articles of association; it
                                              will not use related transactions to illegally
                                              transfer the funds and profits of Gree
                                              Electric Appliances or damage the interests
                                              of Gree Electric Appliances and related
                                              shareholders. 3. To ensure that I and other
                                              enterprises controlled by I will, in
                                              accordance with the provisions of laws,
                                              regulations and the articles of association,
                                              when considering related transactions
                                              involving I and other enterprises controlled
                                              by I, effectively abide by the avoidance
                                              procedure during the voting on related
                                              transactions at the meeting of the board of
                                              shareholders or the general meeting of
                                              shareholders of Gree Electric Appliances.

Commitments made
during asset
reorganization

                                              Commitment issued during public issuance
                                              of additional shares in 2007: 1. In the future,
                                              the Company and the enterprises controlled
                                              by the Company will not directly or
                                              indirectly engage in the residentail air
                                              conditioner, commercial air conditioner,
                                              household appliances and other businesses
                                              that constitute horizontal competition with
                                              Gree Electric Appliances, Inc. of Zhuhai,
                                              nor will they invest in the enterprises or
                                              projects related to the above businesses or
                                              having direct or indirect competition with
                                              Gree Electric Appliances, Inc. of Zhuhai. 2.
                                              If it is found that the Company and the
                                              enterprises controlled by the Company are
                                              engaged in or intend to engage in the
Commitments made                              residential air conditioner, commercial air
                                Avoiding                                                                         Period of acting   Being under
during initial public   GREE                  conditioner, household appliances and other
                                horizontal                                                       29 June, 2007   as a controlling   normal
offering or             GROUP                 businesses that constitute horizontal
                                competition                                                                      shareholder        fulfillment
refinancing                                   competition with Gree Electric Appliances,
                                              Inc. of Zhuhai, or have invested or plan to
                                              invest in the enterprises or projects related to
                                              the above businesses or having direct or
                                              indirect competition with Gree Electric
                                              Appliances, Inc. of Zhuhai, Gree Electric
                                              Appliances, Inc. of Zhuhai has the right to
                                              request the Company to stop engaging in the
                                              above competitive business, stop
                                              implementing the above competitive
                                              projects and stop investing in the
                                              above-mentioned related enterprises; if the
                                              Company has completed the investment,
                                              Gree Electric Appliances, Inc. of Zhuhai has
                                              the right to request the Company to transfer
                                              the relevant equity of the project or the
                                              enterprise dealing with the business; if the




                                                               67
                                                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                                                              Company breaches this commitment and
                                                              engages in related competitive businesses,
                                                              resulting in damage to the interests of Gree
                                                              Electric Appliances, Inc. of Zhuhai, the
                                                              Company is willing to assume the
                                                              corresponding liability for compensation.

                                                              Commitment issued during public issuance
                                                              of additional shares in 2007: promised to
                                                              ensure that Gree's business has the
                                                              independent and complete production,
                                                              supply, marketing and other auxiliary
                                                              supporting systems so as to reduce
                                                              unnecessary related transactions. When
                                                              related transactions occur, the relevant
                                                              matters of related transactions will be
                                                              handled in accordance with the principle of
                                          Reducing and
                                                              good faith, fairness, impartiality, due
                                          standardizing the                                                                    Period of acting   Being under
                         GREE                                 diligence and public disclosure, the
                                          related                                                              29 June, 2007   as a controlling   normal
                         GROUP                                transaction price will be determined in
                                          transactions with                                                                    shareholder        fulfillment
                                                              accordance with the principle of market
                                          Gree
                                                              fairness, and the relevant procedures of
                                                              avoiding voting by associated shareholders
                                                              and associated directors and the relevant
                                                              procedures for independent directors to
                                                              express their opinions on related
                                                              transactions independently will be strictly
                                                              implemented to ensure legitimacy and
                                                              fairness of the related transaction procedures
                                                              and fairness and reasonableness of the
                                                              related transaction results.

                                                              During the period of holding shares of Gree
                                                                                                                               The period when
                                                              Electric Appliances, the Company will fully
                                                                                                                               I am a             Being under
Equity incentive         GREE             Other               assume all reasonable expenses and
                                                                                                               14 June, 2019   shareholder of     normal
commitments              GROUP            commitments         economic losses (if any) incurred by Gree
                                                                                                                               Gree Electric      fulfillment
                                                              Electric due to the Company's termination of
                                                                                                                               Appliances
                                                              the remaining equity incentive plan.

Other commitments
made to minority
shareholders of the
Company

Commitments are
                         Yes
fulfilled in time

If commitments are
not fulfilled in time,
detail the specific
                         Not applicable
reason of fulfillment
failure and the work
plan for the next step




                                                                               68
                                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

2. The Company's assets or projects involve earnings forecast and the Report Period is still in the earnings
forecast period and the Company explains the assets or projects that achieve the original earnings forecast
and the relevant reasons

□ Applicable √ Not applicable


IV. The listed company' non-operating funds occupied by the controlling shareholders and
their related parties

□ Applicable √ Not applicable
No controlling shareholder or its related party occupied non-operating funds of the listed company in the Report Period of the
Company.


V. Description about the "Non-standard Audit Report" of the accounting firm in the Report
Period by the Board of Directors, Board of Supervisors and independent director (if any)

□ Applicable √ Not applicable


VI. Description about changes in the accounting policies, accounting estimates and accounting
methods in comparison to the financial report of last year

√ Applicable □ Not applicable

I. Changes of major accounting policies

Changes in accounting policies resulting from the implementation of new standards for financial instruments

The Ministry of Finance issued the Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments (2017 Revision) (Finance and Accounting [2017] No. 7), the Accounting
Standards for Business Enterprises No. 23 - Transfer of Financial Assets (2017 Revision) (Finance and
Accounting [2017] No. 8), and the Accounting Standards for Business Enterprises No. 24 - Hedging Accounting
(2017 Revision) (Finance and Accounting [2017] No. 9) on 31 March, 2017, and the Accounting Standards for
Business Enterprises No. 37 - Presentation of Financial Instruments (2017 Revision) (Finance and Accounting
[2017] No. 14) on 2 May, 2017 (the above standards are collectively referred to as "new standards for financial
instruments"), requiring domestic listed companies to implement the new financial instruments standards from 1
January, 2019.

As approved by the resolution of the fourth meeting of the eleventh session of board of directors of the Company
on 29 April, 2019, the Company began to implement the aforementioned new standards for financial instruments
from 1 January, 2019.

Under the new standards for financial instruments, all recognized financial assets are subsequently measured at
amortization cost or fair value. On the implementation date of the new standards for financial instruments, the

                                                                 69
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Company's business model for managing the financial assets is evaluated based on the Company's existing facts
and circumstances on that day, and the contractual cash flow characteristics on the financial assets are evaluated
based on the facts and circumstances at the time of initial recognition of the financial assets, and the financial
assets are divided into three categories: measured at amortization cost, measured at their fair values and of which
the changes are included into other comprehensive income, and measured at their fair values and of which the
changes are included into the current profits and losses. Among them, for equity instrument investment measured
at their fair values and of which the changes are included into other comprehensive income, when the financial
assets are derecognized, the cumulative gains or losses previously included into other comprehensive income will
be transferred from other comprehensive income to retained income, but will not be included into the current
profits and losses.

Under the new standards for financial instruments, the Company, on the basis of expected credit losses, makes
provisions for impairment of financial assets measured at amortization cost and debt instrument investments
which are measured at fair value and of which the changes are included into other comprehensive income, and
recognizes credit impairment losses.

The Company applies the new standards for financial instruments retrospectively. However, if the classification
and measurement (including impairment) involves any inconsistency between the data of the previous
comparative financial statements and the new standards for financial instruments, the Company chooses not to
restate. Therefore, for the cumulative impact of the implementation of the standards for the first time, the
Company adjusts the retained earnings or other comprehensive income at the beginning of 2019 and the amount
of other related items in the financial statements, and does not restate the 2018 financial statements.

Changes in the format of financial statements

The Ministry of Finance issued the Notice on Revising and Issuing the Format of Financial Statements of General
Enterprises for 2019 (Finance and Accounting [2019] No. 6) and the Notice on Revising and Issuing the Format of
Consolidated Financial Statements (2019 Version) (Finance and Accounting [2019] No. 16) in April and
September 2019 respectively, revising the format of financial statements of general enterprises and the format of
consolidated financial statements. The Company prepared financial statements according to the relevant
requirements and in accordance with the format of financial statements for general enterprises (applicable to the
enterprises that have implemented the new financial standards, the new revenue standards and the new lease
standards). Major changes are as follows:

A. The "notes receivable and accounts receivable" item is split into the "notes receivable" item and the "accounts
receivable" item; the "notes payable and accounts payable" item is split into the "notes payable" item and the
"account payable" item;

B. The "receivables financing" item is added;

C. Interest receivable or interest payable presented in the "other receivables" or "other payables" items only reflect
the interest which is receivable or payable upon the maturity of the relevant financial instruments but has not been
received or paid on the balance sheet date; the interest on financial instruments accrued based on the actual


                                                          70
                                                  GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

interest rate method is included in the book balance of the corresponding financial instruments;

D. The "asset impairment loss" and "credit impairment loss" items move downward from the "other gains" item to
the "fair value change gain" item, and the "credit impairment loss" item is presented before the "asset impairment
loss" item;

E. The "investment income" item newly includes the "income from derecognition of financial assets measured at
amortization costs".

The Company has retrospectively restated the comparative statements accordingly according to the above
presentation requirements.




                                                        71
                                                                                                                                                    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Impact of implementation of new standards for financial instruments and changes in the format of financial statements on consolidated financial statements

                                                                                                                                                                                                                        Unit: RMB Yuan

                                                      Book value presented                                                                                                                                          Book value presented
                                                     according to the original                                          Impact of the implementation of new standards for financial instruments                     according to the new
                                                            standards                                                                                                                                                    standards
                                                                                     Impact of the
                                                                                                                          Reclassification                                     Remeasurement
                        Item                                                     preparation of format
                                                                                                                                      Transfer-in of assets
                                                                                 of financial statements                                                         Change from cost     Impact of new standards for
                                                       31 December, 2018                                   Transfer-in of original   originally classified as                                                         1 January, 2019
                                                                                                                                                                measurement to fair    financial instruments on
                                                                                                              notes receivable         available-for-sale
                                                                                                                                                                value measurement        credit loss adjustment
                                                                                                                                        financial assets
Assets:

Monetary capital                                          113,079,030,368.11          1,943,623,443.56                                                                                                                 115,022,653,811.67

Trading financial assets                                                              1,012,470,387.43                                                                                                                   1,012,470,387.43

Financial assets measured at their fair values and          1,012,470,387.43          -1,012,470,387.43
of which the changes are recorded into the
current profits and losses
Notes receivable and accounts receivable                   43,611,226,866.20          -9,229,039,643.82        -34,382,187,222.38

Including: Bills receivable                                35,911,567,876.04          -1,529,380,653.66        -34,382,187,222.38

           Accounts receivable                              7,699,658,990.16          -7,699,658,990.16

Accounts receivable                                                                   7,699,658,990.16                                                                                             -57,224,911.92        7,642,434,078.24

Receivables financing                                                                                           34,382,187,222.38                                    -81,714,642.25                                     34,300,472,580.13

Other receivables                                           2,553,689,544.47          -2,257,098,901.99                                                                                             -6,244,306.10          290,346,336.38

Including: Interests receivable                             2,257,098,901.99          -2,257,098,901.99

Other current assets                                       17,110,921,223.89          1,802,424,633.81                                                                                                                  18,913,345,857.70

Original value of available-for-sale financial              2,217,095,036.33                                                              -2,217,095,036.33
assets
Less: Impairment provisions of available-for-sale                  900,000.00                                                                   -900,000.00



                                                                                                                     72
                                                                                                         GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

financial assets

Net amount of available-for-sale financial assets    2,216,195,036.33                            -2,216,195,036.33

Disbursement of loans and advances                   9,071,332,784.86      10,381,298.66                                                                  9,081,714,083.52

Debt investment                                                             1,216,700.19            36,000,000.00                                           37,216,700.19

Other debt investments                                                     28,833,479.43         1,035,287,090.00                                         1,064,120,569.43

Other equity instrument investments                                                              1,144,907,946.33                                         1,144,907,946.33

Deferred income tax assets                          11,349,573,709.69                                                12,274,180.53      15,242,873.91    11,377,090,764.13

Liabilities:

Short-term borrowing                                22,067,750,002.70     130,149,404.18                                                                 22,197,899,406.88

Deposits from customers and interbank                 315,879,779.13        3,597,463.78                                                                   319,477,242.91

Other payables                                       4,747,139,263.00   -1,663,127,521.62                                                                 3,084,011,741.38

Including: Interests payable                          133,746,867.96     -133,746,867.96

Other current liabilities                           63,361,598,764.96   1,529,380,653.66                                                                 64,890,979,418.62

Owners' equity:

Including: Other comprehensive income                 -550,806,051.51                                                -69,440,461.72                        -620,246,513.23

               Undistributed profit                 81,939,701,613.83                                                                   -48,226,344.11   81,891,475,269.72




                                                                                            73
                                                                                                                                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Impact of implementation of new standards for financial instruments and changes in the format of financial statements on the parent company's financial statements

                                                                                                                                                                                                                          Unit: RMB Yuan

                                                                Book value presented                                                                                                                                Book value presented
                                                               according to the original                                    Impact of the implementation of new standards for financial instruments                 according to the new
                                                                      standards                                                                                                                                          standards

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                              Item                                                         preparation of format of                              Transfer-in of
                                                                                                                                                                                              Impact of new
                                                                                             financial statements                               assets originally    Change from cost
                                                                 31 December, 2018                                    Transfer-in of original                                             standards for financial     1 January, 2019
                                                                                                                                                  classified as     measurement to fair
                                                                                                                         notes receivable                                                 instruments on credit
                                                                                                                                                available-for-sale value measurement
                                                                                                                                                                                             loss adjustment
                                                                                                                                                 financial assets
Assets:

Monetary capital                                                    102,696,932,265.26            1,500,459,111.30                                                                                                       104,197,391,376.56

Trading financial assets                                                                           412,114,127.42                                                                                                            412,114,127.42

Financial assets measured at their fair values and of which              412,114,127.42           -412,114,127.42
the changes are recorded into the current profits and losses
Notes receivable and accounts receivable                              35,047,382,637.60          -2,988,819,694.63      -32,058,562,942.97

Including: Bills receivable                                           32,516,210,775.80           -457,647,832.83       -32,058,562,942.97

            Accounts receivable                                        2,531,171,861.80          -2,531,171,861.80

Accounts receivable                                                                              2,531,171,861.80                                                                                                          2,531,171,861.80

Receivables financing                                                                                                    32,058,562,942.97                              -81,544,800.33                                    31,977,018,142.64

Other receivables                                                      3,898,630,873.93          -1,719,333,737.63                                                                                -2,300,000.00            2,176,997,136.30

Including: Interests receivable                                        1,803,079,868.37          -1,803,079,868.37

Other current assets                                                  12,311,814,484.26            676,522,459.16                                                                                                         12,988,336,943.42

Original value of available-for-sale financial assets                    765,090,199.08                                                           -765,090,199.08

Less: Impairment provisions of available-for-sale                            900,000.00                                                               -900,000.00
financial assets



                                                                                                                       74
                                                                                                   GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Net amount of available-for-sale financial assets     764,190,199.08                           -764,190,199.08

Other equity instrument investments                                                            764,190,199.08                                       764,190,199.08

Deferred income tax assets                          10,931,512,853.30                                            12,231,720.05      345,000.00    10,944,089,573.35

Liabilities:

Short-term borrowing                                17,759,081,480.00    77,161,272.95                                                            17,836,242,752.95

Other payables                                       1,795,358,032.57   -534,809,105.78                                                            1,260,548,926.79

Including: Interests payable                          108,650,144.21    -108,650,144.21

Other current liabilities                           63,348,220,747.89   457,647,832.83                                                            63,805,868,580.72

Owners' equity:

Including: Other comprehensive income                 -330,283,919.33                                            -69,313,080.28                     -399,596,999.61

               Undistributed profit                 48,123,803,614.75                                                             -1,955,000.00   48,121,848,614.75


2. Changes of accounting estimates

None.




                                                                                          75
                                                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019



VII. Description about the retrospective restatement required for correction of significant
accounting errors that occurred in the Report Period

□ Applicable √ Not applicable
The Company didn't involve any correction of significant accounting errors in the Report Period that requires retrospective
restatement.


VIII. Description about changes in the consolidated statement scope in comparison with the
financial report of last year

√ Applicable □ Not applicable


1. Business combination not involving enterprises under common control


(1) Business combination involving enterprises not under common control in the current period

                                                                                                                                                        Unit: RMB Yuan
                                                                                                                          Revenue of the acquired Net profit of the acquired
                                                                  Proportion of
     Name of        Time point of equity      Cost of equity                           Equity                              party from the date of     party from the date of
                                                                     equity                           Date of purchase
 acquired party          acquisition            acquisition                        acquisition mode                      purchase to the end of the purchase to the end of the
                                                                 acquisition (%)
                                                                                                                                  period                     period

Nanjing Walsin
                                                                                   Purchase by
Nonferrous         31 May, 2019            1,417,551,321.45      94.30                                31 May, 2019       10,411,966,740.54          46,316,187.50
                                                                                   means of cash
Metal Co., Ltd.


[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafter
referred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.

1)       Combination cost and business reputation

                                                                                                                                                        Unit: RMB Yuan

                                              Item                                                             Nanjing Walsin Nonferrous Metal Co., Ltd.

Combination cost:

--Cash                                                                                                                                                    1,071,239,072.20


--Other payables                                                                                                                                            346,312,249.25


Total combination cost                                                                                                                                    1,417,551,321.45

Less: Fair value share of the identifiable net assets acquired                                                                                            1,143,436,281.34

Business reputation                                                                                                                                         274,115,040.11


2)       Determination of fair value of combination cost

The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of business
combination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,
2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by China

                                                                                     76
                                                    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Alliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] Appraisal
Report.

3)    Reason for the formation of large-amount goodwill:

In order to deepen the development of the Company's enameled wire business in the electrical sector and reduce
the impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of the
industrial chain. Due to the long construction cycle of the project, in order to expand production capacity and
occupy the market as soon as possible, the Company's office meeting decided to acquire Nanjing Walsin
Nonferrous Metal Co., Ltd.;

The acquisition price was determined by referring to the price-to-book ratio of the target company's comparable
listed company, comprehensively considering and fully evaluating the target company's asset status, profitability,
brand influence, technology level, synergy effect and other factors;

Major reasons for increased value incurred from the appraisal:

A. Depreciation accruing life of some equipment assets was shorter than their economic life;

B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark use
rights in intangible assets increased due to the appraisal.

(2) Identifiable assets and liabilities of the acquired party on the date of purchase

                                                                                                          Unit: RMB Yuan

                                                                    Nanjing Walsin Nonferrous Metal Co., Ltd.
                                Item
                                                       Fair value on the date of purchase Carrying amount on date of purchase
Assets:
Monetary capital                                                        313,841,040.72                       313,841,040.72
Accounts receivable                                                     306,347,724.29                       306,347,724.29
Receivables financing                                                     32,897,848.99                        32,827,077.99
Prepaid accounts                                                           3,774,390.86                         3,774,390.86
Other receivables                                                            250,561.22                           250,561.22
Inventories                                                             370,015,709.58                       366,647,781.96
Other current assets                                                      51,860,228.86                        51,860,228.86
Fixed assets                                                            148,157,020.23                         38,678,328.99
Construction in Progress                                                   8,162,465.21                         9,544,356.01
Intangible assets                                                       137,922,500.00                          9,173,710.00
Deferred income tax assets                                                10,028,895.44                        10,116,258.43
Other non-current assets                                                   1,295,685.45                         1,635,079.39
                       Subtotal of assets                              1,384,554,070.85                     1,144,696,538.72
Liabilities:
Trading financial liabilities                                             16,785,750.00                        16,785,750.00
Accounts payable                                                          37,510,699.95                        37,510,699.95



                                                              77
                                                   GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

Advances from customers                                                 8,143,309.65                   8,143,309.65
Payroll payable                                                         8,804,769.39                   8,804,769.39
Taxes payable                                                           3,546,574.30                   3,546,574.30
Other payables                                                           9,114,493.56                   9,114,493.56
Other current liabilities                                              27,680,199.09                  27,680,199.09
Deferred income tax liabilities                                        60,416,544.96
                      Subtitle of liabilities                         172,002,340.90                 111,585,795.94
Net assets                                                           1,212,551,729.95               1,033,110,742.78
Less: minority equity                                                  69,115,448.61                  58,887,312.34
Net assets obtained                                                  1,143,436,281.34                974,223,430.44

[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,
equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).
The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin's
identifiable assets and liabilities. The appraisal methods of main assets were listed as follows:

1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement cost
minus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;

2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used to
appraise the equipment which of the transaction information can be obtained from the market;

3) The appraisal method of land use rights is the market comparison method and the benchmark low price
coefficient correction method;

4) The appraisal method of other intangible assets such as trademark use rights and customer relations is the
income method. During the appraisal, the future income of the appraised intangible assets within a reasonable
income period will be discounted and accumulated at a reasonable discount rate, and the present value of income
will be obtained.


2. Business combination involving enterprises under common control


None.


3. Counter purchase


None.


4. Disposal of subsidiaries


None.




                                                          78
                                                              GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

5. Change in other consolidation scopes


(1) The main body of cancellation in the current period:

1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on
17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;

2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,
and was no longer included in the consolidation scope from the date of deregistration.

(2) The newly established main bodies in this period are as follows:

                                                                                                                                    Unit: RMB Yuan

                                                                                                                              Net profit from the
                                                                                        Net assets of the end of the
                            Name                            Time of establishment                                        combination date to the end of
                                                                                                  period
                                                                                                                                   the period

Gree (Anji) Precision Mold Co., Ltd.                            14 February, 2019                       47,063,023.27                      -236,976.73

Huzhou Landa Compressor Co., Ltd.                                   1 March, 2019                     Not yet invested

Gree Material Supply (Wuhan) Co., Ltd.                            20 March, 2019                        12,716,347.67                    -7,283,652.33

Gree Material Supply (Hefei) Co., Ltd.                            20 March, 2019                        24,858,404.13                     4,858,404.13

Guangdong Guochuang Intelligent Technology Co., Ltd.              22 March, 2019                        30,270,563.23                       270,563.23

Gree (Luoyang) Washing Machine Co., Ltd.                          25 March, 2019                        47,278,161.95                    -2,721,838.05

Gree Material Supply (Chongqing) Co., Ltd.                        27 March, 2019                        18,056,402.39                    -1,943,597.61

Gree Material Supply (Zhengzhou) Co., Ltd.                        29 March, 2019                        19,777,618.60                      -222,381.40

Gree Rongzhu Copper (Nanjing) Co., Ltd.                           29 March, 2019                      Not yet invested

Zhuhai Gree Green Resources Recycling Co., Ltd                       16 July, 2019                      52,263,754.97                     2,263,754.97

Luoyang Lianmei Real Estate Co., Ltd.                              7 August, 2019                     995,335,429.21                     -4,664,570.79

Guochuang Energy Internet Innovation Center (Guangdong)
                                                                  20 August, 2019                       29,874,379.59                      -125,620.41
Co., Ltd.

Zhuhai Hengqin Gree Huatai Energy Development Co., Ltd.           28 August, 2019                       15,024,339.91                           24,339.91

Handan Yingdong New Energy Technology Co., Ltd.                20 September, 2019                              660.13                           -1,339.87

Gree E-commerce Co., Ltd.                                       5 November, 2019                      Not yet invested

Gelan Environmental Protection Technology (Shaoguan) Co.,
                                                                5 December, 2019                      Not yet invested
Ltd.



IX. Engagement and disengagement of accounting firms

Currently engaged accounting firms

                                                                                    Union Power Certified Public Accountants (Special
 Name of domestic accounting firm
                                                                                    General Partnership)

 Remuneration for the domestic accounting firm (RMB 10,000)                         396

 Consecutive years for the domestic accounting firm to render audit                 5



                                                                      79
                                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

 service

 Names of certified public accountants of the domestic accounting firm      Gong Jingwei, Wu Zihao

 Consecutive years for the domestic accounting firm to render CPA
                                                                            3
 audit service

A new accounting firm was engaged in the current period
□ Yes √ No
Engagement of an accounting firm for internal control auditing, financial adviser or sponsor
√ Applicable □ Not applicable
During the year, the Company hired Union Power CPAs Co., Ltd. (special general partnership) as its internal control accounting firm;
the Company hired Huatai United Securities Co., Ltd. as a sponsor for resolving the follow-up matters of the share split reform.


X. Suspension of listing and termination of listing after disclosure of the annual report

□ Applicable √ Not applicable


XI. Matters related to bankruptcy reorganization

□ Applicable √ Not applicable
The Company was not involved in any matter related to bankruptcy reorganization in the Report Period.


XII. Major legal action or arbitration

□ Applicable √ Not applicable
The Company was not involved in any major legal action or arbitration during the Report Period.


XIII. Punishment and rectification

□ Applicable √ Not applicable
The Company was not involved in any punishment or rectification during the Report Period.


XIV. Integrity status of the Company and its controlling shareholders and actual controllers

□ Applicable √ Not applicable


XV. Implementation of the Company's equity incentive plan, employee stock ownership plan
or other employee motivation measures

□ Applicable √ Not applicable
The Company was not involved in any equity incentive plan, employee stock ownership plan or other employee motivation measures
or their implementation during the Report Period.



                                                                 80
                                                                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019


XVI. Significant related transactions

1. Related transactions associated with day-to-day operation

√ Applicable □ Not applicable
                                                                                      Amount of                  Approved
                                                             Related                                Proportion              Exceeding                 Available
                                  Type of     Contents of                Prices of      related                 transaction           Settlement of
   Related       Incidence                                 transaction                               to amount                 the                  market price Date of
                                  related        related                  related    transactions               amount (ten               related                                Disclosure index
   parties        relation                                   pricing                                 of similar             approved                 of similar disclosure
                               transactions   transactions             transactions (ten thousand                thousand              transactions
                                                            principle                               transaction               quota                 transactions
                                                                                         Yuan)                     Yuan)
               Companies
               where
Zhejiang       directors of
Shengshi       the Company                                                                                                            Payment
                               Sales of       Sales          Market                                                                                                29 April,
Xinxing        act as                                                 Market price    520,267.04       3.32%       800,000 No         before        Market price               www.cninfo.com.cn
                               commodities revenue           price                                                                                                 2019
Gree Trading executive                                                                                                                delivery
Co., Ltd.      directors and
               general
               managers

               Companies
Henan          where
Shengshi       directors of                                                                                                           Payment
                               Sales of       Sales          Market                                                                                                29 April,
Xinxing        the Company                                            Market price    871,967.81       5.56%     1,250,000 No         before        Market price               www.cninfo.com.cn
                               commodities revenue           price                                                                                                 2019
Gree Trading act as                                                                                                                   delivery
Co., Ltd.      executive
               directors

               Companies
Shandong
               where
Shengshi                                                                                                                              Payment
               supervisors     Sales of       Sales          Market                                                                                                29 April,
Xinxing                                                               Market price    493,541.24       3.15%       850,000 No         before        Market price               www.cninfo.com.cn
               of the          commodities revenue           price                                                                                                 2019
Gree Trading                                                                                                                          delivery
               Company act
Co., Ltd.
               as managers

Shanghai       The
Highly         company in
(Group) Co., which the
                               Materials                     Market                                                                   Settlement                   29 April,
Ltd. and its   Company                        Raw material            Market price    216,955.57       1.63%       500,000 No                       Market price               www.cninfo.com.cn
                               procurement                   price                                                                    by schedule                  2019
subsidiaries   holds more
and holding    than 5.00%
subsidiaries   of its shares

Shanghai       The
Highly         company in
(Group) Co., which the
                               Sales of       Sales          Market                                                                   Settlement                   29 April,
Ltd. and its   Company                                                Market price    148,755.48       0.95%       300,000 No                       Market price               www.cninfo.com.cn
                               commodities revenue           price                                                                    by schedule                  2019
subsidiaries   holds more
and holding    than 5.00%
subsidiaries   of its shares

               Companies
               and their
Zhuhai
               subsidiaries
Yinlong New
               and holding
Energy Co.,                                   Energy
               subsidiaries    Materials                     Market                                                                   Settlement                   29 April,
Ltd. and its                                  storage                 Market price      1,996.81       0.01%        70,000 No                       Market price               www.cninfo.com.cn
               where the       procurement                   price                                                                    by schedule                  2019
subsidiaries                                  equipment
               chairman of
and holding
               the Company
subsidiaries
               serves as a
               director




                                                                                               81
                                                                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

               Companies
               and their
Zhuhai
               subsidiaries
Yinlong New
               and holding
Energy Co.,
               subsidiaries   Sales of         Sales        Market                                                              Settlement                   29 April,
Ltd. and its                                                           Market price     32,108.78    0.20%    200,000 No                      Market price               www.cninfo.com.cn
               where the      commodities revenue           price                                                               by schedule                  2019
subsidiaries
               chairman of
and holding
               the Company
subsidiaries
               serves as a
               director

Total                                                           --           --       2,285,592.73   --      3,970,000     --        --            --            --              --

Details of huge-amount sales return                         Not applicable

Actual fulfillment (if any) in the Report Period when the
total amount is estimated by category for the daily related Not applicable
transaction to take place in the current period

Cause (if applicable) of the large difference between the
                                                            Not applicable
transaction price and market reference price




2. Related transactions of acquisition or sales of assets or equity

□ Applicable √ Not applicable
The Company was not involved in any related transaction of acquisition or sales of assets or equity in the Report Period.


3. Related transactions of common foreign investment

□ Applicable √ Not applicable
The Company was not involved in any related transaction of common foreign investment during the Report Period.


4. Associated credits and liabilities

□ Applicable √ Not applicable
The Company was not involved in any associated credit or liability in the Report Period.


5. Other significant related transactions

□ Applicable √ Not applicable
The Company was not involved in any other significant related transaction during the Report Period.


XVII. Major contracts and their fulfillment

1. Information about trusteeship, contracting and lease


(1) Trusteeship

□ Applicable √ Not applicable
The Company was not involved in any trusteeship during the Report Period.




                                                                                                82
                                                         GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

(2) Contracting

□ Applicable √ Not applicable
The Company was not involved in any contracting matter during the Report Period.


(3) Lease

□ Applicable √ Not applicable
The Company was not involved in any lease during the Report Period.


2. Major guarantee

□ Applicable √ Not applicable
The Company was not involved in any major guarantee during the Report Period.


3. Entrusting others to execute any cash asset management


(1) Entrusted financing

√ Applicable □ Not applicable
Overview of entrusted wealth management during the report period
                                                                                                                Unit: RMB 10,000

                                  Source of funds for   Occurrence amount of
                                                                                                           Amount overdue but not
         Specific type             entrusted wealth       entrusted wealth         Outstanding balance
                                                                                                               recovered yet
                                      management            management

 Broker wealth
                            Private                                  101,247.04                42,302.23
 management products

 Total                                                               101,247.04                42,302.23

Specific situation of high-risk entrusted wealth management with large single amount or low security, poor liquidity and
non-guaranteed principal
□ Applicable √ Not applicable
Entrusted wealth management has the circumstance that it is expected to be unable to recover the principal or other circumstances
that may cause impairment
□ Applicable √ Not applicable


(2) Entrusted loan

□ Applicable √ Not applicable
The Company was not involved in any entrusted loan during the Report Period.




                                                                83
                                                                             GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

4. Other major contracts

□ Applicable √ Not applicable
The Company did not have any other major contract during the Report Period.


XVIII. Social responsibilities

1. Fulfilling social responsibilities


Gree actively and voluntarily performed its social responsibilities, effectively protected the lawful rights and
interests of all stakeholders, won with its strength the recognition of the enterprise, brand and products from
capital market and consumer market and promoted the low-carbon green growth in the industry through various
activities. (For details, please refer to the Company's Social Responsibility Report for the Year 2019 published on
www.cninfo.com.cn on 30 April, 2020.)


2. Fulfilling the social responsibilities of taking targeted measures in poverty alleviation


The Company didn't take targeted measures in poverty alleviation in the reporting year.


3. Circumstances related to environmental protection

If the listed company and its subsidiaries are key pollutant discharge units published by the environmental protection department
Yes

                            Names of Major
                                                               Number of   Distribution of
Serial     Company or        Pollutants and     Discharge                                       Discharge         Adopted Pollutant                             Total Approved      Over-standard
                                                               Discharge     Discharge                                                     Total Discharge
Number   Subsidiary Name       Particular          Mode                                       Concentration      Discharge Standard                                Discharge         Discharge
                                                                 Ports         Ports
                               Pollutants


                                                                                                                  Level 2 limit of the          COD:                 COD:
                                                                                             COD: 25 mg/L;
                                                                                                                    second period,         9.19 tons/year;     14.315 tons/year;
                             COD, ammonia       Intermittent                                    Ammonia
                                                                  5        Sewage station                        Discharge Limits of          Ammonia              Ammonia
                                nitrogen         discharge                                    nitrogen: 0.264
                                                                                                                Water Pollutants (DB       nitrogen: 0.443      nitrogen: 3.579
                                                                                                  mg/L.
                                                                                                                     44/26-2001)              tons/year.           tons/year.

         GREE ELECTRIC
                                                                                                                  Level 2 limit of the
  1       APPLIANCES,                                                                                                                                                                   None
                                                                                                                 second period in the
         INC. OF ZHUHAI                                                                                                                     Sulfur dioxide:      Sulfur dioxide:
                                                                                              Sulfur dioxide:    Discharge Limits of
                                                                                                                                                1.3731               1.9208
                            Sulphur dioxide,    Organized                  Roof of factory    2.417 mg/m        Air Contaminants (DB
                                                                  19                                                                         tons/year;        tons/year; Nitroge
                             nitrogen oxide      discharge                    building        Nitrogen oxide:    44/27-2001), Table 2
                                                                                                                                           Nitrogen oxides:     n oxides: 9.2878
                                                                                              15.413 mg/m        in Emission Standard
                                                                                                                                           8.4794 tons/year.       tons/year.
                                                                                                                of Boiler Air Pollutants
                                                                                                                  (GB 13271-2014)


                                                                                                  COD:                Table 1 of                COD:
                                                                                               57.5mg/L;           Comprehensive           3.21 tons/year;
                             COD, ammonia       Continuous
                                                                  1        Sewage station       Ammonia          Standard for Sewage          Ammonia
         Gree (Zhengzhou)       nitrogen         discharge
                                                                                                 nitrogen:          Discharge (GB          nitrogen: 0.073
             Electric                                                                            1.3mg/L.            8978–1996)              tons/year.
  2                                                                                                                                                              Not approved           None
          Appliances Co.,
               Ltd.         Sulfur dioxides,                                                  Sulfur dioxide:    Grade 2 in Table 2 of      Sulfur dioxide:
                               particulate      Organized                  Roof of factory          11             Comprehensive                 1.90
                                                                  9
                                matters,         discharge                    building       mg/m Nitrogen Emission Standards of tons/year; Nitrog
                            non-methane total                                                     oxide:          Air Pollutants (GB       en oxides: 0.69



                                                                                         84
                                                                 GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                       hydrocarbons,                                                4.83 mg/m              16297-1996),              tons/year;
                       nitrogen oxides                                           Particulate matter:        Zhengzhou            Particulate matter:
                                                                                    6.6 mg/m               Environmental          6.45 tons/year;
                                                                                        Total          Document 2017 (172) Total non-methane
                                                                                   non-methane         Circular on Restriction     hydrocarbons:
                                                                                   hydrocarbons:         Requirements for           0.84 mg/m
                                                                                    3.76 mg/m           Non-methane Total
                                                                                                           Hydrocarbons


                                                                                                                                  Sulfur dioxide:
                                                                                                                                      3.8525
                                                                                  Sulfur dioxide:       Grade 2 in Table 2 of
                                                                                                                                    tons/year;
                                                                                    3 mg/m                Comprehensive
                                                                                                                                  Nitrogen oxide:
                                                                                  Nitrogen oxide:      Emission Standards of
                      Sulphur dioxide,                                                                                           6.645 tons/year;
                                                                                  24.35 mg/m             Air Pollutants (GB
                       nitrogen oxide,                                                                                                 Dust:
                                                                                 Dust: 20 mg/m          16297-1996), Hebei
                       dust, tin and its   Organized           Roof of factory                                                   19.39 tons/year;
                                                          53                         Tin and its           local standard
                        compounds,          discharge             building                                                           Tin and its
                                                                                    compounds:          Standard for Volatile
                      non-methane total                                                                                             compounds:
                                                                                 0.00156 mg/m           Organic Compound
                        hydrocarbons                                                                                                  0.00202
                                                                                 Total non-methane      Emission Control in
                                                                                                                                    tons/year;
                                                                                   hydrocarbons:       Industrial Enterprises
     Gree (Wuhu)                                                                                                                 Total non-methane
                                                                                   2.355 mg/m            (DB132322-2016)
        Electric                                                                                                                   hydrocarbons:
3                                                                                                                                                        Not approved       None
    Appliances Co.,                                                                                                               8.605 tons/year.
         Ltd.
                                                                                                                                 Chemical oxygen
                                                                                 Chemical oxygen
                                                                                                                                      demand:
                                                                                      demand:
                                                                                                                                 17.57 tons/year;
                                                                                   241.5 mg/L;
                      Chemical oxygen                                                                   Grade 3 in Table 4 of        Ammonia
                                                                                     Ammonia
                      demand, ammonia                          Total outlet of                            Comprehensive            nitrogen: 1.63
                                           Intermittent                           nitrogen: 27.55
                          nitrogen,                       1    the small north                          Standard for Sewage         tons/year;
                                            discharge                                 mg/L;
                       petroleum type,                              gate                                   Discharge (GB            Petroleum:
                                                                                    Petroleum:
                         phosphate                                                                           8978-88)                 0.4035
                                                                                   10.4 mg/L;
                                                                                                                                    tons/year;
                                                                                    Phosphate:
                                                                                                                                    Phosphate:
                                                                                    0.007 mg/L.
                                                                                                                                  0.355 tons/year.


                                                                                                                                       COD:                  COD:
                                                                                  COD: 37.6mg/L         Table 2 in Pollutant
                                                                                                                                  6.51 tons/year;      18.7969 tons/year;
                       COD, ammonia        Intermittent                              Ammonia           Discharge Standard for
                                                          1    Sewage station                                                        Ammonia               Ammonia
                          nitrogen          emission                                 nitrogen:          Electroplating Water
                                                                                                                                  nitrogen: 0.252      nitrogen: 3.0597
                                                                                    0.457mg/L            DB44/1597-2015
                                                                                                                                     tons/year.            tons/year.


                                                                                                        Level 2 limit of the
                                                                                                        second period in the
                                                                                                        Discharge Limits of
                                                                                                       Air Contaminants (DB
                                                                                                        44/27-2001); Metal
                                                                                                       melting furnace Level
                                                                                                       2 (mg/m3) in Table 2 in
                                                                                                       Emission Standard for
     Zhuhai Landa                                                                                       Air Pollutants from
4   Compressor Co.,                                                                                       Industrial Kilns                                                  None
         Ltd.                                                                                              GB9078-1996;
                                                                                  Sulfur dioxide:                                 Sulfur dioxide:       Sulfur dioxide:
                                                                                                       Emission Standard for
                      Sulphur dioxide,     Organized           Roof of factory       7 mg/m                                       0.582 tons/year;     5.2852 tons/year;
                                                          13                                            Cooking Fume in the
                       nitrogen oxide       discharge             building        Nitrogen oxide:                                 Nitrogen oxide:      Nitrogen oxides:
                                                                                                         Catering Industry
                                                                                    144 mg/m                                      4.689 tons/year.     14.8987 tons/year.
                                                                                                          GB18483-2001;
                                                                                                         Screen printing in
                                                                                                       period II in Table 2 of
                                                                                                          Volatile Organic
                                                                                                       Compounds Emission
                                                                                                       Standards for Printing
                                                                                                              Industry
                                                                                                          DB44/815-2010;
                                                                                                       Special emission limit
                                                                                                        for gas-fired boilers
                                                                                                       (mg/m3) in Table 3 of




                                                                             85
                                                                  GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019

                                                                                                          Emission Standards for
                                                                                                           Boiler Air Pollutants
                                                                                                             GB13271-2014;

                                                                                                          Emission Standards for
                                                                                                             Volatile Organic
                                                                                                            Compounds in the
                                                                                                                Furniture
                                                                                                              Manufacturing
                                                                                                                 Industry
                                                                                                          (DB44/814-2010); Air
                                                                                                            Pollutant Emission
                                                                                                          Limits for Newly Built
                                                                                                          Facilities of Emission
                                                                                                              Standards for
                             &en