[年报]格力电器:2020年年度报告（英文版）
原标题:格力电器:2020年年度报告（英文版） GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2020 April 2021 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, Liao Jianxiong, responsible person in charge of accounting work and Liu Yanzi, 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 number of 5,832,851,217 shares of the Company enjoying profit distribution rights as of 28 April, 2021 (the total stock capital of 6,015,730,878 shares excluding the 182,879,661 shares held in the repurchase account of the Company), the Company plans to distribute all shareholders a cash dividend of RMB 30 (tax included) per 10 shares, but does not plan to give any bonus share or use any public reserve funds for capitalization. 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 ....................................................................................................................... 9 Section IV Discussion and Analysis of Business Operation ......................................................................................... 17 Section V Important Events .......................................................................................................................................... 53 Section VI Changes in Stock Capital & Information of Shareholders ....................................................................... 83 Section VII Related Information of Preferred Stock ................................................................................................... 91 Section VIII Related Information of Convertible Corporate Bonds .......................................................................... 92 Section IX Directors, Supervisors, Senior Management Personnel and Employees ................................................. 93 Section X Corporate Governance ............................................................................................................................... 109 Section XI Related Information of Corporate Bonds .................................................................................................114 Section XII Financial Report .......................................................................................................................................115 Section XIII References ............................................................................................................................................... 274 Paraphrase Items Means Contents Company, the Company, the enterprise, GREE ELECTRIC APPLIANCES or GREE Means GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI 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 Internet Means Jinghai Internet Technology Development Co., Ltd. Yinlong Means Zhuhai Yinlong New Energy Co., Ltd. CSRC Means China Securities Regulatory Commission Report Period Means 1 January, 2020 to 31 December, 2020 Section II Company Profile and Main Financial Indices I. Company information Stock Abbreviation GREE ELECTRIC APPLIANCES Stock Code 000651 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 (if any) GREE 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 protected] II. Contacts and contact information Board Secretary Securities Affairs Representative Name Deng Xiaobo Zhang Zhouhu, Yan Zhangxiang Address Jinji West Road, Qianshan, Zhuhai City, Guangdong Province Jinji West Road, Qianshan, Zhuhai City, Guangdong Province Tel 0756-8669232 0756-8669232 Fax 0756-8614998 0756-8614998 [email protected] [email protected] III. Information disclosure and place of the report Media designated by the Company for information disclosure China Securities Journal, Securities Times, Shanghai Securities News and Securities Daily Website specified by CSRC for release of the Annual http://www.cninfo.com.cn Report Place where the Annual Report is available for inspection Investment Management Department of the Company IV. Alteration of registration Organization code 91440400192548256N Changes (if any) in the main business since listing of the Company No change Changes (if any) in the controlling shareholders On 2 December, 2019, Gree Group and Zhuhai Mingjun signed the Share Transfer Agreement. Gree Group planned to transfer 902,359,632 shares of the Company with unlimited sales conditions held by Gree Group to Zhuhai Mingjun at a price of RMB 46.17/share (accounting for 15% of the Company's total equity); On 13 December, 2019, the Zhuhai Municipal People's Government and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) of Zhuhai City separately approved the share transfer. Gree Group obtained the Transfer Registration Confirmation issued by China Securities Depository and Clearing Corporation Limited (CSDC) Shenzhen Branch on 3 February, 2020. The share transfer registration procedures for the transfer of this agreement have been completed, and the transfer date is 23 January, 2020. After the completion of the share transfer registration, the Company has neither a controlling shareholder nor an actual controller. 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 Han Zhenping, Geng Ting Sponsor engaged by the Company to perform continuous supervision during the Report Period √ Applicable □ Not applicable Name of the sponsor Office address of the sponsor Name of the recommended representative Continuous supervision period Huatai United Securities Co., Ltd. 26F, CTS Tower, No.4011, Shennan Boulevard, Futian District, Shenzhen Gu Chongxiang, Li Shijing From 26 July, 2019 to 25 July, 2020 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: Yuan Item 2020 2019 Increase/Decrease over the previous year 2018 Operating Revenue (Yuan) 168,199,204,404.53 198,153,027,540.35 -15.12% 198,123,177,056.84 Net profit attributable to shareholders of listed Company (Yuan) 22,175,108,137.32 24,696,641,368.84 -10.21% 26,202,787,681.42 Net profit attributable to shareholders of listed Company less non-recurring gains and losses (Yuan) 20,285,816,036.00 24,171,511,911.32 -16.08% 25,580,865,501.38 Net cash flow generated from operating activities (Yuan) 19,238,637,309.16 27,893,714,093.59 -31.03% 26,940,791,542.98 Basic earnings per share (Yuan per Share) 3.71 4.11 -9.73% 4.36 Diluted earnings per share (Yuan per Share) 3.71 4.11 -9.73% 4.36 Weighted average return on net assets 18.88% 25.72% -6.84% 33.36% Item At the end of 2020 At the end of 2019 Increase/Decrease over the previous year At the end of 2018 Total asset (Yuan) 279,217,923,628.27 282,972,157,415.28 -1.33% 251,234,157,276.81 Net asset attributable to shareholders of listed Company (Yuan) 115,190,211,206.76 110,153,573,282.67 4.57% 91,327,095,069.10 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: Yuan Quarter 1 Quarter 2 Quarter 3 Quarter 4 Operating incomes 20,395,535,183.42 49,106,787,186.52 56,387,073,628.99 42,309,808,405.60 Net profit attributable to shareholders of listed company 1,558,013,539.01 4,804,123,838.63 7,336,584,665.51 8,476,386,094.17 Net profit attributable to shareholders of listed companies after deduction of non-recurring profit and loss 1,429,583,505.27 4,566,954,114.64 6,585,565,313.26 7,703,713,102.83 Net cash flows from operating activities -11,772,862,523.80 7,255,186,786.04 7,549,675,839.30 16,206,637,207.62 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: Yuan Item Amount in 2020 Amount in 2019 Amount in 2018 Description Gains and losses from disposal of non-current assets (including the provision for asset impairment write-off part) -4,974,224.62 -9,293,929.38 -23,064,935.35 For details, see Note (V) 57, Note (V) 58, and Note (V) 59 Governmental subsidies recorded into the current gains and losses (excluding the governmental subsidies closely relating to the business of the enterprise and enjoyed by a fixed quota or a fixed amount in accordance with the state policies) 1,346,168,393.38 1,215,852,371.66 671,678,104.47 For details, see Note (V) 52 and Note (V) 58 Capital occupation fee collected from the non-financial institution and recorded into the current gains and losses 883,505.62 359,713.10 1,262,805.80 Net profits or losses of the subsidiaries in the current period from the beginning of the period to the combination date that are generated by business combination involving 184,503.98 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 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 877,450,950.74 1,449,722.86 151,222,484.83 Reversal of impairment provision for the accounts receivable and contract assets for which an independent impairment test is conducted 2,320,229.26 Non-operating incomes and expenditures other than the above items 50,024,914.68 -530,486,147.03 32,323,207.44 For details, see Note (V) 58 and Note (V) 59 Other profit and loss items that conform to the definition of non-recurring profit and loss 17,915,425.64 997,770.17 6,119,851.77 Less: Influence amount of income tax 386,974,457.37 147,189,032.83 170,139,883.37 Influence amount of minority equity (after tax) 11,202,406.75 6,561,011.03 49,984,188.79 Total 1,889,292,101.32 525,129,457.52 621,922,180.04 -- 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. Section III Corporate Business Overview I. Major businesses engaged in during the Report Period (I) Major businesses 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 products have been expanded to cover the two major fields of household consumer goods and industrial equipment, including residential air conditioners, HVAC, refrigerators, washing machines, water heaters, kitchen appliances, environmental appliances, communication products, smart buildings, and smart household appliances in the consumption field; high-end equipment, precision moulds, freezers and refrigeration equipment, motors, compressors, capacitors, semiconductor devices, precision casting equipment, basic materials, industrial energy storages, and renewable resources in the industrial field 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 2020, Gree was again listed in the Fortune Global 500 and ranked the 436th by virtue of its outstanding comprehensive strength; listed in the Forbes Global 2000 – World's Best Employers and ranked the 246th, rising 14 places from 2019. According to the data released by HVAC Information, Gree took the lead in the central air conditioner market relying on a market share of 13.9% and has maintained the position for nine consecutive years in the Chinese market; according to the 2020 domestic sales data of air conditioner brands published by ChinaIOL.com, Gree air conditioners ranked the first in the field with a share of 36.9%, taking the lead for 26 years. Gree takes "To be Global Leading Air Conditioning Enterprise" as its corporate vision, and "carrying forward the industrial spirit, mastering core technologies, pursuing perfect quality, providing first-class services, and achieving ‘Made in China, Loved by the World’" 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. (II) Overview of industry development 1. Field of household appliances According to the Report on China's Household Appliance Market in 2020 issued by China Center for Information Industry Development, the household appliance market of China first underwent a depression and then recovered in 2020. The retail sales volume of household appliances in the whole year was RMB 833.3 billion, a decrease of 6.5% year on year, and the retail sales of air conditioners, refrigerators, washing machines, and kitchen appliances decreased to varying degrees. Due to the COVID-19 epidemic (the epidemic for short), the proportion of people working at home increased, and the retail sales of home appliances increased by 1.85% year on year. According to the statistics of ChinaIOL.com, the sales volume of residential air conditioners was 141,460,000 in 2020, a year-on-year decrease of 6.1%; wherein the domestic sales volume was 80,280,000, decreased by 12.9%, and the export sales volume was 61,180,000, increased by 4.7%. The epidemic situation has promoted the rapid development of online retails. In 2020, the proportion of online retails to the total retail sales of household appliances market increased from 41.17% in 2019 to 50.4%, and the contribution rate of e-commerce channels to household appliances retails exceeded 50% for the first time, further highlighting the importance of online retails. The epidemic has changed people's life philosophy and life style. For the household appliances market in 2020, the air conditioners focusing on intelligence, comfort and health, refrigerators focusing on large volume, healthy disinfection and scientific storage, and the washing machines focusing on large capacity, healthy washing and care, and clothes drying have been recognized and accepted by more and more consumers. Small household appliances such as dishwashers, hand-held vacuum cleaners, and air fryers sold well at different degrees, not only enlivening the dull household appliance market, but also strengthening the role of household appliances in enhancing people's happiness. The remarkable retail sales of consumption upgrading goods and subdivided functional household appliances reflected people's demand for improving the quality of life through consumption of household appliances, and the upgrading of consumption and the transformation of household appliance business were speeding up at the same time. "New consumption" and "high-end" will be the main innovative orientation of household appliances in 2021. 2. Industrial equipment field The sector of core air conditioning parts benefited from the effective control of the epidemic. The compressor field and the motor field began to recover gradually in the second half, and a slight decline was observed throughout the year. According to the 2020 statistics of ChinaIOL.com, the sales volume of rotor compressors in China was 211,551,000, a year-on-year decrease of 1.69%; the sales volume of rotor compressors in China was 356,762,000, a year-on-year decrease of about 5.5%. For the intelligent equipment sector, with the proposal of the "Made in China 2025" strategy, the intelligent manufacturing industry has ushered in an opportunity period of rapid development in recent years. According to the data in the 2020 Statistical Bulletin of National Economic and Social Development of the PRC, the added value of China's equipment manufacturing industry increased by 6.6% year on year in 2020, accounting for 33.7% of the added value of industries above the designated scale; the output of industrial robots was 212,000 sets, a year-on-year increase of 20.7%. Regarding the product trend of industrial robots, manufacturers have probed into the application to the specific industries and fields such as medical treatment, wine making, sewing, and edge cutting, and launched special robots. In terms of technology development, traditional industrial robots perform more complex production tasks through the collaborative application of force, vision, tactile, and other sensors; fusion development of the 5G, artificial intelligence, big data, cloud computing, intelligent sensing, and other emerging technologies with robot technologies will drive industrial robots to evolve towards a more intelligent and flexible direction. At present, the development level of intelligent manufacturing is maintained at a sustained high speed, and the development level of high-end intelligent equipment has become a criterion for measuring the development level of a country's manufacturing industry. However, the intelligent manufacturing industry of China started relatively late, and there is still a certain gap compared with developed countries. Fortunately, China has gradually extricated itself from the dependence on foreign new and high technologies through unremitting independent R&D and independent innovation of core technologies. Moreover, China will increase its investment in R&D in the future, improve the policy for development of intelligent manufacturing industry, and promote intelligent transformation of the industry. The intelligent manufacturing industry shows a huge growth potential. II. Significant changes in major assets 1. Significant changes in major assets Major assets Significant changes Fixed assets A decrease of 0.69% over the end of last year. No significant change is made. Intangible assets An increase of 10.80% over the end of last year. No significant change is made. Construction in Progress An increase of 65.20% over the end of last year. This is mainly caused by the increase of construction in progress of the current period. Other current assets A decrease of 32.37% over the end of last year. This is mainly caused by the maturity of the Company’s investment in structured deposits and wealth management products in the current period. Long-term equity investment An increase of 14.94% over the end of last year. No significant change is made. Other equity instrument investments An increase of 67.69% over the end of last year. This is mainly caused by the increase of the equity investment in San’an Optoelectronics Co., Ltd. and the change in the fair value of the equity investment. 2. Major overseas assets □ Applicable √ Not applicable III. Core competence analysis Facing new opportunities and challenges, Gree takes "mastering core technologies and forging perfect 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 takes "carrying forward the industrial spirit, mastering core technologies, pursuing perfect quality, providing first-class services, and achieving Made in China, Loved by the World" as its mission to stride forward. (I) World famous brand, continuing to create value for the society Gree is a diversified technological global industrial group integrating R&D, production, sales and service. Gree has won a great number of honors such as "World Brand", "Most Competitive Brand in the Market", "National Quality Award", "Export Inspection Exemption Enterprise" and "China Brand Innovation Award" over these years. Forbes released the Global 2000 – World's Best Employers in May 2020. Gree ranked the 246th, rising 14 places from 2019. Since becoming one of the top 500 of the list in 2015, Gree's ranking has risen year after year, and its development strength has been recognized by the world. The world top 500 list of Fortune was released in August 2020. Gree was again listed in the Fortune Global 500 and ranked the 436th by virtue of its outstanding comprehensive strength. Meanwhile, Gree was listed in the "China's Most Admired Companies in 2020" in the Fortune, ranking the seventh in the list and taking the first place in the household appliance industry. According to the customer satisfaction survey results issued by the Customer Satisfaction Evaluation Center of China National Institute of Standardization, the customer satisfaction of Gree air conditioners and all the indexes were at the first place in the industry, ranking No.1 for 10 consecutive years. Gree has always been adhering to the core sense of worth of “quality first, customer satisfaction, good faith management, and win-win situation”, and forging its brands and creating social value, environmental value and economic value for the society and consumers depending on its perfect quality and world-leading technologies. (II) Excellent R&D strength, 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, one research and evaluation base of the National Notification Enquiry Center, 15 research institutes, nearly 1,000 laboratories, and nearly 15,000 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 2020, Gree was approved to establish "Guangdong Key Laboratory for Enterprises of High-speed Energy Saving Motor System". Gree Electric continued to lead the industry in testing, certification and standards. Gree has built more than 300 professional laboratories for thermal balance, noises, reliability, electrical safety, electromagnetic compatibility, etc., and has been successively recognized by a variety of national or international organizations (including CNAS, TUV, UL, CSA, VDE, ITS, SGS, BV, and AHRI), growing into the largest experimental center in the industry that can provide the most complete tests and receive the largest number of national and international recognitions. Gree has accumulatively won 48 national, provincial or ministerial and industrial awards. By the end of 2020, Gree has accumulatively applied for 79,014 patents, including 40,195 patents for inventions; won 46 Chinese patent awards in total, including one gold award for invention and three gold awards for appearance; won 6 gold awards at International Exhibition of Inventions of Geneva and 5 gold awards at iENA. (III) Leading PQAM perfect quality assurance mode, achieving “Made in China, Loved by the World” 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 for continuously promoting and refining the perfect quality management mode of Gree. From the quality concept of "zero defect" put forward in the early stage of doing pioneering work to the concept of perfect quality nowadays, the connotation of Gree' quality management concept has been constantly enriching and developing. 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. Based on the "four in one" system of ISO9001, ISO14001, ISO45001 and QC080000, a total quality management model with independent innovation as the core has been gradually formed in the process of introduction, promotion, and practicing total quality management, lean Six Sigma management and performance excellence model. Gree participated in the drafting and development of the Quality Management - Innovation Cycle Guide Based on Customer Demand as a national standard, with a view to publicizing Gree's advanced quality management experience throughout the industry and promoting continuous improvement of the quality level of the whole industry. The quality level of Gree's products has been continuously improved by strengthening the internal quality control, and the after-sale failure rate has fallen greatly for years. From 2014 to 2020, Gree won 2 first prizes, 22 second prizes, 3 third prizes, and 61 excellent prizes of “Quality Technology Award” of China Association for Quality respectively relying on its leading core technologies and excellent quality management system; in November 2018, Gree won the “Third China Quality Award” relying on its perfect quality management mode of "Made in China, Loved by the World", getting the highest honor in China's quality field; Gree won the gold award of the 44th International Convention on Quality Control Circles (ICQCC) in 2019 and the second award of innovation category of large enterprises in the Quality Innovation Award (QIA) in 2020, becoming the first household appliance enterprise in China that won this award. These awards highlighted Gree's solid strength in the field of quality technologies. (IV) Online and offline integrated new retail system, meeting the new needs of consumers with digital technologies 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 established an offline sales network covering the whole country, providing service for consumers through its 27 sales companies and more than 30,000 exclusive stores. “Gree Dong Mingzhu's store” has been transformed and upgraded into a comprehensive online retail e-commerce platform, selling high quality commodities of various categories and varieties such as household appliances, food and beverage, beauty and personal care products, clothing boutiques, and online travel products. As the market environment changes, Gree has started the "new retail" marketing mode reform of online and offline integration. The online third-party e-commerce platform and “Gree Dong Mingzhu's store” are deeply integrated with more than 30,000 offline stores to provide online-offline linkage integrated services including offline experience, online ordering, and nationwide unified distribution and installation. Information, digital and intelligent technologies have been deeply applied to Gree's "new retail" marketing mode. The whole chain construction and operation of new retail including the shopping mall platform, order fulfillment system, online wholesale system, and after-sales dispatch system realizes user reaching of Gree’s new retail online, the informatization capability empowers the channel business to drive the digital upgrade of marketing. Relying on the Internet engineering technology and integrating the artificial intelligence, Internet of Things and AR/VR technology, Gree promotes the digital upgrade of terminal stores through the intelligent touch interaction mode offline, achieves the functions of product sampling, price adjustment, training, user value tag precipitation and management in the cloud, builds Gree’s characteristic smart shopping guide stores, and constantly improves consumers' shopping experience; uses the functions of inventory data analysis and early warning, dynamic display and analysis of sales data and conduct data-driven operation to meet the new needs of consumers continuously. (V) The full series of household appliances, providing consumers with overall solutions for high-quality smart life By 2020, Gree has provided 46 categories of household appliances, including 32 categories of home appliances, which can meet consumers’ all-round needs for high quality life. In 2020, Gree launched new types of household appliances such as hand-held water flosser, disinfectant maker, sterilization small square tube, heat pump washer dryer, automatic drum washing machine with drying function, dishwasher, hand-held vacuum cleaner, zero-cold-water gas water heater, baseboard heater, portable electric kettle, electric lunch box, and portable juicer, enriching the life of consumers. In 2020, Gree Smart Home built “Gree Zero-carbon Healthy Home” centering on the goal of " Link Gree, Connect Free", and implemented the overall smart life solution featuring energy conservation, environmental protection, comfort and health, wisdom and humanities, consisting of the six intelligent management systems of energy, air, sleep, recipe, security and lighting, covering 61 categories of intelligent products, and meet consumers' requirement for pursuing a better life depending on intelligent high technologies. (VI) Precise production capacity layout and complete industrial support able to quickly meet the needs of consumers Gree Electric has established 17 production bases of household electrical appliances around the world, which are located in Zhuhai, Chongqing, Hefei, Zhongshan, Zhengzhou, Wuhan, Shijiazhuang, Wuhu, Changsha, Hangzhou, Suqian, Luoyang, Nanjing, Chengdu, Ganzhou, Brazil, and Pakistan. In 2020, Gree further improved the regional layout of production capacity for various categories of products, promoted the upgrading of sales logistics services and coordinated to reduce the overall logistics operating cost based on the channel reform of new retail mode. In addition, Gree has built upstream plants for parts 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 six renewable resource bases in Zhuhai, Changsha, Zhengzhou, Shijiazhuang, Wuhu and Tianjin, covering the whole industrial chain from upstream production to downstream recycling, and achieving green, cyclic and sustainable development. Meanwhile, Gree also provides convenient channels for consumers to dispose of waste household appliances. (VII) Self-made core components and advanced supply chain management lay a solid foundation for steady development Gree showcases a powerful self-development and self-making capability of core components, and the production capacity, technologies and quality of its wholly owned subsidiaries, Landa Compressor, Kaibang Motor, Xinyuan Electronics and Gree Electrical stand in the front rank of the industry. Gree's 10 products including the High-efficiency Scroll Compressor, High-performance Linear Servo Motor and Driver, and High-performance Servo Motor and Driver for Industrial Robots were appraised as the "world-leading" level by the end of 2020. The powerful R&D and manufacturing capabilities of core components vigorously support the leapfrog development of Gree. Aiming to create a leading supply chain in the industry, Gree has established a long-term win-win strategic cooperative relationship with leading supporting enterprises in the industry to effectively guarantee the supply of raw materials. In 2020, in the face of the complicated domestic and overseas political and economic environment, Gree continued to give full play to its advantage of scale in the centralized procurement, and took measures such as localization of sensitive materials and replacement with environmentally friendly materials, which effectively alleviated the pressure caused by environmental changes on operation, and showed the powerful strength of Gree in supply chain management. (VIII) Refined cost control capability to provide guarantee for the steady development of the Company Gree adheres to the orientation to market demand and user experience, plans and controls the product cost in consideration of the Company's business objectives, promotes product design to implementing value engineering by relying on technological innovation, and realizes whole process cost control and creates value for customers and shareholders while completing product functions and guaranteeing product quality. In 2020, Gree further promoted cost reduction through product design by taking measures such as optimizing the product structure design, simplifying the process and developing lean models; reduced the cost of material procurement by means such as promoting substitution schemes, locking resources in advance and annual rebate; cut down the production cost of products by increasing the utilization rate of materials, boosting the automation level and improving the production process. In 2020, Gree further improved and promoted the lean manufacturing system (GMS) with Gree characteristics, built an online learning platform of lean manufacturing, reinforced innovation in the three sections of new product design, logistics technology and production technology, and focused on the work such as promoting lean design, lean production, and low cost intelligent automation (LCIA) of new products. China Institute of Electronic Labor awarded Gree the honorary title of “Excellent Enterprise Practicing Lean Management” in October 2020. (IX) 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 2020, the Company had about 84,000 employees, including 2 leading talents in science and technology innovation under the National Ten Thousand Talents Program, 3 experts enjoying special allowances from the State Council, 1 winner of the Award of Outstanding Contribution to Nanyue, 1 Outstanding Talent under the Guangdong Special Support Program, and 80 high-level talents of Zhuhai, 448 outstanding young talents, 710 scientific and technological experts evaluated inside the Company, and more than 7,500 intermediate and senior engineers. Gree built a diversified independent training mechanism by setting up a training system independently, strengthened the training of innovative talents and realized the supply of high quality talents. In 2020, Gree continued to strengthen the independent cultivation of innovative talents, deepen the support to core businesses, set up an intelligent learning organization, create an empowering ecology of vocational education, speed up the talent cultivation and supply of innovation achievement transformation, and promote high quality development of the enterprise. In 2020, Gree conducted more than 120 training sessions and evolved 8000 person-times in the field of technology R&D; organized and carried out 12 special marketing training sessions, with a total of more than 25,000 trainees, better supporting the first-tier marketing and service. Employees are an important driving force for development of the Company. The Company seeks benefits for employees through multiple channels including talent subsidies, talent housing and Gree school, improving the employee satisfaction and happiness through continuous efforts. Section IV Discussion and Analysis of Business Operation I. 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