[年报]稳健医疗:2020年年度报告（英文版）
原标题:稳健医疗:2020年年度报告（英文版） Winner Medical Co., Ltd. 2020 Annual Report April 2021 Section 1 Important Notes, Contents, and Definitions The board of directors, the board of supervisors and directors, supervisors and senior management of the Company hereby guarantee that no false or misleading statement or major omission was made to the materials in this report and that they will assume all the responsibility, individually and jointly, for the authenticity, accuracy and completeness of the contents of the annual report. Li Jianquan, the head of the Company, Fang Xiuyuan, the head of accounting work, and Wu Kezhen, the head of accounting body (accountant in charge), guarantee the authenticity, accuracy, and completeness of the financial report in the current year report. All directors of the Company personally attended the board meeting for reviewing this report. The forward-looking contents in this report, such as the future development strategy and performance planning, are the goals sets by the Company, which are planned matters. The achievement of the goals depends on many factors, including market change, which is uncertain. So these contents are not the company's profit forecast for the next year and do not constitute a substantial commitment of the Company to investors and related parties. Investors and related parties should be fully aware of related risks and understand the differences among plans, forecasts, and commitments. Investors are asked to beware of investment risks! The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry Information Disclosure of Listed Companies Engaging in Textile and Apparel Business. Investors are asked to read this report carefully. The main risks that the Company may face in the future are described in the section "Prospect of the Company's Future Development" in "Discussion and Analysis of Operation" of this report. Investors are asked to beware of the risks. The preplanned profit distribution deliberated and approved by the board of directors is as follows: taking 426,492,308 shares as the radix, the Company will send cash dividends of 18 yuan (tax included) and 0 bonus share (tax included) to all shareholders for every 10 shares, converting capital reserve into 0 share capital for every 10 shares. To Shareholders Dear shareholders, Greetings! Thirty years ago, we established Winner Medical with the aim of manufacturing surgical dressings. Twelve years ago, we established Purcotton, dreaming of "purcotton changes the world". Two years ago, we established PureH2B based on "nature, science, and bodybuilding". Today, Winner Medical owns three brands: Winner Medical, Purcotton, and PureH2B, and has gradually grown into a health enterprise developing medical and consumption sectors at the same time. The year 2020 was both difficult and hopeful for Winner Medical. In the fight against the COVID-19 pandemic that is still raging around the world, Winner Medical, as one of the companies closest to the center of the pandemic and one of the fastest responders, shouldered its responsibility to race against time to save lives, adhering to its operating principle of "prioritizing quality over profit, brand over speed, and social responsibility over corporate value". All staff in Winner Medical (Huanggang)'s mask factories worked for several month nonstop since before the Spring Festival; Winner Medical (Jiayu) and Winner Medical (Chongyang) resumed work on the first day of the lunar year, all staff working for several month nonstop; it took only 20 days for Winner Medical (Chongyang) to increase its daily output of protective suits from 3,000 pieces to 50,000 pieces.We prioritize social value over everything else and keep our promises to provide medical workers and other anti-pandemic workers with high-quality and low-cost anti-pandemic products. Prioritizing life and health over everything else and following high standards and requirements, we ensured that every move me made work in the fight against the COVID-19 pandemic. By the end of December 2020, we had provided nearly 4 billion masks, more than 86 million protective suits, isolation gowns, and surgical gowns in the battle against the pandemic. Winner Medical has been casting armors for the heroes in harm's way. In June 2020, Winner Medical was praised by the Joint Prevention and Control Mechanism of the State Council as a well-deserved "ordnance factory" in fighting the pandemic. In September, Winner Medical (Huanggang) was awarded the title of "National Advanced Unit for Fighting the COVID-19 Pandemic" by the CPC Central Committee and the State Council. It is also the only enterprise awarded with the title in Hubei Province. The pandemic will finally end, and Winner Medical will keep making the impossible possible. Opportunities always accompany challenges. The pandemic has also brought unprecedented changes to our awareness and our industry. The medical consumables industry is reaching a new height with the support of national policies and public awareness. Winner Medical's masks and protective products were highly appraised by medical workers of hospitals for their high quality, which has greatly enhanced its brand awareness. In 2020, Winner Medical's hospital channels in China has grown to more than 3,000, and its number of OTC pharmacies in China was over 90,000. Meanwhile, in the international market, Winner Medical have established friendly cooperative relations with multinational companies and large chain pharmacies that we've failed to establish partnership for years, and we will maintain the cooperation relationships with them. As for online business, the number of members on Winner Medical's e-commerce platform surged rapidly. With ordinary consumers' demand for our products increased significantly, there were good development opportunities for our home care products. I believe this is a good start, and Winner Medical is developing around China and going global. Facing the sudden plummet of store business caused by the pandemic, Purcotton, a wholly-owned subsidiary of Winner Medical, managed to make the number of Purcotton members surge by linking the sales in offline stores and Wechat mini program; the launches of "commodity digitalization" and "omnichannel digitalization" systems have greatly raised our sales and delivery efficiencies, and significantly improved customer experience; Purcotton currently has more than 257 chain stores, and the franchise model of stores has also been proved successful in pilot projects; our core products such as cotton tissues and sanitary pads are already sold in more than 5,000 offline stores of large supermarket chains, over 4,000 convenience stores, and maternal and child retail stores in more than 20 provinces. With multiple channels, Purcotton has further expanded its product coverage and improved its brand recognition, providing consumers with more convenient services in diverse shopping scenarios. Winner Medical was listed on the Shenzhen Stock Exchange on September 17, 2020, entering a new stage and a new starting point. How to constantly maximize the return on investment for shareholders? How to constantly provide consumers with the best products? How to create the most value for society? How to maintain our competitive edge in the complex global environment and the competitive market environment? All these are the new missions of Winner Medical in its new journey. The historical tide is surging forward. We have to reconsider the value of life and the speed of time after 2020. In an era of tremendous changes, with new technologies such as artificial intelligence, cloud computing, and big data constantly emerging, only by staying true to our original mission can we flourish. In 2020, Winner Medical started a new reform based on innovation, organizational changes, and digital transformations, to improve its adaptability to changes and to fully promote its business transformation that is "consumer-centric and driven by digital and intelligent manufacturing." We are constantly optimizing our internal management, adopting a matrix organizational structure that is closer to users and consumers. Moving toward our goals, we are implementing our digital strategies steps by steps, including "centralized commodity digital operation", "omni-channel digital operation", "consumer omni-channel operation", " smart logistics digital operation", and "smart manufacturing digital operation". Adhering to the people-oriented principle, we have further strengthened our investment in employee rights and benefits, and improved our long-term incentive mechanism. In 2020, the company promoted a program to grant restricted stock incentives to no more than 1,036 employees for the mutual improvement of employees and the company, sharing the dividends of corporate development with employees of Winner Medical. Looking ahead, it is still a long way to go for Winner Medical. We will keep attaching greater importance to the R&D of basic materials of pure cotton spunlace non-woven fabric and high-end wound care products, and do our best in basic materials; we will continue to make Winner Medical a health enterprise that develops and produces world-leading medical consumables, home care products, and quality daily necessities. Staying true to our original mission, we are striving to be a constant innovator, leading the industry to change from providing products "made in China" to providing products "created in China", and to change Chinese brands into international brands. Upholding the sustainable development concept, we pursue quality life, health, and environmental protection at the same time, aiming to constantly bring happiness and quality products to consumers and to create value for a better life. Behind the rise of every national brand, there is the determination and great courage to overcome obstacles. The past thirty years have witnessed Winner Medical's staying true to its original mission. We will always prioritize quality over profit, brand over speed, and social responsibility over corporate value. Just as the old Chinese saying goes, a man should be steadfast at the age of thirty. It is the right time for Winner Medical. I would like to thank all the shareholders for their trust and support for Winner Medical. You are invited to witness more exciting stories of Winner Medical. Li Jianquan, Chairman of Winner Medical April 20, 2021 Contents Section 1 Important Notes, Contents, and Definitions......................................................................................................................................................................... 2 Section 2 Company Profile and Major Financial Indicators ............................................................................................................................................................... 8 Section 3 Business Summary ................................................................................................................................................................................................................. 12 Section 4 Discussion and Analysis of Operations............................................................................................................................................................................... 31 Section 5 Important Matters ................................................................................................................................................................................................................... 87 Section 6 Changes in Shares and Shareholders ................................................................................................................................................................................. 114 Section 7 Preferred Shares ....................................................................................................................................................................................................................124 Section 8 Convertible Bonds ................................................................................................................................................................................................................125 Section 9 Directors, Supervisors, Senior Management and Employees .......................................................................................................................................126 Section 10 Corporate governance ........................................................................................................................................................................................................139 Section 11 Corporate Bonds .................................................................................................................................................................................................................148 Section 12 Financial Report..................................................................................................................................................................................................................149 Section 13 Reference file directory .....................................................................................................................................................................................................325 Definitions Term Definition Company, Winner Medical Refers to Winner Medical Co., Ltd. Winner Group Refers to Winner Group Limited, a controlling shareholder of the Company Glory Ray Holdings Refers to Glory Ray Holdings Limited, another enterprise controlled by the Company's actual controller and used to be the Company's indirect controlling shareholder Glory Ray Limited Refers to Glory Ray Limited, another enterprise controlled by the Company's actual controller and used to be the Company's indirect controlling shareholder Sequoia Xinyuan Refers to Beijing Sequoia Xinyuan Equity Investment Center (L.P.), a shareholder of the Company Kangsheng Investment Refers to Shenzhen Kangsheng Investment Partnership (L.P.), a shareholder of the Company Kangxin Investment Refers to Shenzhen Kangxin Investment Partnership (L.P.), a shareholder of the Company SCGC Refers to Shenzhen Capital Group Co., Ltd., a shareholder of the Company Kanglong Investment Refers to Shenzhen Kanglong Investment Partnership (L.P.), a shareholder of the Company Kangli Investment Refers to Shenzhen Kangli Investment Partnership (L.P.), a shareholder of the Company Winner Medical (Chongyang) Refers to Chongyang Winner Medical Textile Co., Ltd., later renamed Winner Medical (Chongyang) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Jiayu) Refers to Jiayu Winner Medical Textile Co., Ltd., later renamed Winner Medical (Jiayu) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Jingmen) Refers to Jingmen Winner Medical Textile Co., Ltd., later renamed Winner Medical (Jingmen) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Yichang) Refers to Yichang Winner Medical Textile Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Huanggang) Refers to Winner Medical (Huanggang) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Tianmen) Refers to Winner Medical (Tianmen) Co., Ltd. whose former name is Hubei Winner Medical Textile Co., Ltd., a wholly-owned subsidiary of the Company Shenzhen Purcotton Refers to Shenzhen Purcotton Technology Co., Ltd., a wholly-owned subsidiary of the Company Guangzhou Purcotton Refers to Guangzhou Purcotton Medical Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Beijing Purcotton Refers to Beijing Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Shanghai Purcotton Refers to Shanghai Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Qianhai Purcotton Refers to Shenzhen Qianhai Purcotton E-Commerce Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Purunderwear Refers to Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton Winner (Huanggang) Cotton Refers to Winner (Huanggang) Cotton Processing & Trading Co., Ltd., a wholly-owned subsidiary of Winner Medical (Huanggang) Winner Medical Malaysia Refers to Winner Medical Malaysia Sdn. Bhd., a subsidiary controlled by the Company Winner Medical (Hong Kong) Refers to Winner Medical (Hong Kong) Ltd., a subsidiary controlled by the Company Winner Medical (Heyuan) Refers to Winner Medical (Heyuan) Co., Ltd., a wholly-owned subsidiary of the Company Winner Medical (Wuhan) Refers to Winner Medical (Wuhan) Co., Ltd. whose former name is Hubei Winner Medical Co., Ltd., a wholly-owned subsidiary of the Company Pure HB (Shanghai) Refers to Pure HB (Shanghai) Co., Ltd., a wholly-owned subsidiary of the Company PureH2B Refers to Shenzhen PureH2B Technology Co., Ltd., a wholly-owned subsidiary of the Company Chengdu Wenjian Likang Refers to Chengdu Wenjian Likang Medical Products Co., Ltd., a wholly-owned subsidiary of the Company China Nepstar Refers to China Nepstar Chain Drugstore Ltd. LBX Pharmacy Refers to LBX Pharmacy Chain Joint Stock Company Hengan International, Hengan Refers to Hengan International Group Co. Ltd. (01044.HK) Tmall Refers to An integrated online Business-to-Consumer (B2C) shopping platform (www.tmall.com) under Alibaba Group JD.com Refers to Beijing Jingdong Century Trading Co., Ltd. (JD.com, Inc.), a company listed on U.S. exchanges with an integrated online B2C shopping platform (www.jd.com) Vipshop Refers to Vipshop International Holdings Limited, a company listed on U.S. exchanges with an integrated online B2C shopping platform (www.vip.com) Key Client Refers to Corporate clients with bulk purchase or customized purchase needs regarding Purcotton business Galaxy Real Estate Refers to Shenzhen Galaxy Real Estate Development Co., Ltd. Reporting period Refers to Year 2020 yuan Refers to CNY 10,000 yuan Refers to CNY 10,000 yuan Section 2 Company Profile and Major Financial Indicators I. Company Profile Stock abbreviation Winner Medical Stock code 300888 Company name in Chinese Winner Medical Co., Ltd. Company short name in Chinese Winner Medical Company name in foreign language (if any) Winner Medical Co., Ltd. Company short name in foreign language (if any) Winner Medical Legal representative of the company Li Jianquan Registered address Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City Postal code of the registered address 518109 Office address Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City Postal code of the office address 518109 Website http://www.winnermedical.com, http://www.winnermedical.cn [email protected] II. Contact Person and Contact Information Secretary to the board of directors Securities affairs representative Name Chen Huixuan Wei Na, Liu Yanxiang Contact address Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City Tel 0755-28066858 0755-28066858 Fax 0755-28134688 0755-28134688 [email protected] [email protected] III. Information Disclosure and Keeping Place Media designated by the Company for information disclosure Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily Website designated by China Securities Regulatory www.cninfo.com.cn Commission for annual report Place where this report is available for inspection Securities Department IV. Other Relevant Information Accounting firm engaged by the Company Name of the accounting firm BDO China Shu Lun Pan CPAs Office address of the accounting firm Floor 4, No. 61, Nanjing East Road, Huangpu District, Shanghai Name of signatory accountant Chen Qiong, Gao Junlei The sponsor institution engaged by the Company to perform the continuous supervision responsibility during the reporting period √Applicable □ Not applicable Organization Name Office Address Representative Continuous Supervision Time China International Capital Corporation Limited 27th and 28th floors, Tower 2, International Trade Building, No. 1, Jianguo Menwai Main Street, Chaoyang District, Beijing Shen Lulu, Wang Haonan December 31, 2023 The financial advisor engaged by the Company to perform the continuous supervision responsibility during the reporting period □ Applicable √ Not applicable V. Major Accounting Data and Financial Indicators Whether the Company needs to retroactively adjust or restate the accounting data of the previous years □Yes √No 2020 2019 Increase/decrease this year compared to the previous year 2018 Revenue(yuan) 12,533,945,946.63 4,574,625,915.60 173.99% 3,838,917,180.79 Net profits attributable to shareholders of listed companies (yuan) 3,810,412,504.40 546,293,677.91 597.50% 424,684,852.89 Net profits attributable to shareholders of the listed company after deduction of non-recurring profits and losses (yuan) 3,750,822,797.63 480,452,746.25 680.69% 411,288,936.00 Net cash flow from operating activities (yuan) 4,767,496,287.39 599,772,565.88 694.88% 467,862,582.44 Basic EPS (yuan/share) 9.80 1.45 575.86% 1.14 Diluted EPS (yuan/share) 9.79 1.45 575.17% 1.14 Weighted average return on net assets 64.68% 18.80% Increase by 45.88 percent 18.34% End of 2020 End of 2019 Increase/decrease at the end of this year compared End of 2018 to the end of the previous year Total assets (yuan) 13,002,251,764.44 4,531,474,379.58 186.93% 3,958,417,799.14 Net assets attributable to shareholders of listed companies (yuan) 10,453,934,045.43 3,160,380,500.84 230.78% 2,657,001,622.90 The lower of the company's net profit before and after deducting non-recurring profits and losses in the last three fiscal years is negative, and the audit report of the most recent year shows that the Company's ability to continue as a going concern is uncertain. □Yes √No Net profit before and after deducting non-recurring profits and losses is negative □Yes √No VI. Key Quarterly Financial Indicators Unit: yuan Q1 Q2 Q3 Q4 Revenue 1,482,975,289.36 2,696,803,593.91 5,343,370,125.43 3,010,796,937.93 Net profits attributable to shareholders of listed companies 318,806,306.55 713,412,383.36 2,117,879,590.69 660,314,223.80 Net profits attributable to shareholders of the listed company after deduction of non-recurring profits and losses 317,949,508.13 705,011,541.34 2,109,396,234.75 618,465,513.41 Net cash flow from operating activities 611,546,751.39 1,861,859,230.86 1,491,721,330.18 802,368,974.96 Whether there is significant difference between the above financial indicators or the total sum of them and the financial indicators related to the quarterly report and semiannual report disclosed by the Company □Yes √No VII. Differences in Accounting Data Under Domestic and Foreign Accounting Standards 1. Differences between net profits and net assets in financial statements disclosed according to the International Accounting Standards (IAS) and Chinese Accounting Standards simultaneously □ Applicable √ Not applicable No difference between net profits and net assets in financial statements disclosed according to the International Accounting Standards (IAS) and Chinese Accounting Standards during the reporting period. 2. Differences between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standards and Chinese Accounting Standards Simultaneously □ Applicable √ Not applicable No difference between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standards and Chinese Accounting Standards during the reporting period. VIII. Non-Recurring Profit and Loss Items and Amount √Applicable □ Not applicable Unit: yuan Item Amount in 2020 Amount in 2019 Amount in 2018 Description Profits and losses on the disposal of non-current assets (including the write-off part of the provision for asset impairment) -25,914,736.75 55,074,788.79 -2,446,573.74 Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state 74,592,796.36 27,146,755.50 26,831,043.90 In addition to the effective hedging business related to the company's normal business operations, the profit and loss from fair value changes arising from holding tradable financial assets, derivative financial assets, tradable financial liabilities, and derivative financial liabilities, as well as the investment income from disposal of tradable financial assets and derivative financial assets, tradable financial liabilities, derivative financial liabilities, and other debt investments 28,197,958.34 -5,798,618.00 -9,223,789.96 Income and expenditure other than those mentioned above -4,844,628.50 1,236,411.96 829,360.14 Less: Amount affected by income tax 12,117,518.33 11,818,507.38 2,592,882.46 Amount of minority shareholders' equity affected (after tax) 324,164.35 -100.79 1,240.99 Total 59,589,706.77 65,840,931.66 13,395,916.89 -- Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from the non-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses □ Applicable √ Not applicable No definition of non-recurrent profit and loss items defined and enumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses as non-recurrent profit and loss items during the reporting period. Section 3 Business Summary I. Main Business of the Company During Reporting Period The Company needs to comply with the disclosure requirements of the No. 10 Guideline of Shenzhen Stock Exchange's GEM Board for Information Disclosure of Listed Companies Engaging in Medical Device Business. (I) Main business of the Company during reporting period Winner Medical is a health enterprise developing both medical and consumption products under its three brands: Winner, Purcotton, and PureH2B. Specifically, the Company has been adhering to the core business principle of “quality priority over profit; brand priority over speed; social value priority over enterprise value”. Through continuous innovation and expansion of industrial boundaries, the Company has developed from a single manufacturer of medical consumables into a large medical health enterprise covering wound care, infection prevention, operating room consumables, personal care, home care, maternal and child care, home textile and clothing and other fields of health care enterprises. 1. Medical consumables Winner Medical is a benchmarking enterprise in the domestic medical consumables industry. Its main product lines cover wound care, infection prevention and disinfection and cleaning. The specific products include high-end wound dressing products, traditional wound care and dressing products, infection control products in operating room, disease prevention products and disinfection and cleaning products for body surface cleaning. C:\Users\renzheng\Desktop\财务报告图片-2021\1.jpg C:\Users\renzheng\Desktop\财务报告图片-2021\3.jpg The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cotton procurement, R&D, production, and direct export. The Company's products have been certified by the EU CE certification, the US FDA certification and the Japanese Ministry of Health, Labour and Welfare certification, and exported to Europe, America, Japan and other countries. In 2005, "Winner" brand entered the domestic hospital and drugstore market. With its excellent product quality and service, Winner Medical gradually established a good brand and reputation in domestic hospitals and drugstores. Since the outbreak of COVID-19 in 2020, the "Winner" brand epidemic prevention products have entered the hospital and the civilian market. Because of its public commitment not to increase prices and the quality of its products, it has won the unanimous praise at home and abroad, government units and the public, and the brand reputation and popularity have been greatly improved. In terms of products, Winner Medical focuses on market demand, is close to clinical and terminal, is driven by R&D and innovation, and constantly improves product layout. Its business scope extends from sales of single wound care products such as cotton gauze to sales of comprehensive solutions of wound care, infection prevention, disinfection and cleaning. Disposable medical consumables and operating room consumables can more effectively reduce nosocomial infection than reusable medical products. With the attention of the state and hospitals to nosocomial infection and residents' attention to personal health environment, disposable medical consumables and operating room consumables are gradually accepted by the domestic market. Winner Medical's medical dressing product line has been expanded from traditional dressing products mainly focused on gauze products to high-end dressing products, such as silica gel foam dressing, hydrocolloid dressing, super absorbent pad, negative pressure drainage products, etc. it is mainly applied to chronic wound healing scenes such as diabetic foot, large-area burns and wounds. The Company's technical level in the field of high-end dressings has been in the forefront of the industry, and is expected to break the monopoly of large international medical enterprises and realize import substitution. C:\Users\renzheng\Desktop\全棉品牌大图\门店\AJ8A0527.jpg 2. Healthy consumer goods Purcotton is a healthy life brand with " Medical background ,Pure cotton philosophy,, Quality in our DNA" as its core competitiveness, which starts with cotton spun lace non-woven fabric, takes "medicine close to life, Purcotton care for health" as its brand proposition, and its products include cotton dry wipes cotton surface sanitary napkin, cotton wet wipes and other non-woven consumer goods, baby products, baby clothing, adult clothing and other textile consumer goods. Purcotton advocates the life concept of "comfort, health, environmental protection", replacing chemical fiber with cotton and keeping away from chemical stimulation. It provides overall solutions for different life scenes, having a good user reputation and formed a fully differentiated brand image in the field of consumer goods with strong brand appeal. In October 2019, Purcotton won the reputation of "70 Brand of the 70th Anniversary of the Founding of New China" sponsored by CCTV. In terms of products, with excellent quality control ability and technology research and development ability, the Company continues to introduce medical grade quality consumer goods. Cotton is the main raw material of core products of Purcotton, which adopts global high-quality cotton to control product quality and safety from the source. According to the high standard of medical consumables, all kinds of pollution sources are strictly controlled in the production process. Disposable underwear, newborn baby clothing and other close-fitting clothing are packaged with medical grade sterilization to further ensure the safety and environmental protection of the products. Purcotton products cover multiple consumer groups, such as mothers and infants, children and adults, and span multiple product lines, such as high-end cotton wipes, female care, baby care, adult clothing, home textile products, etc. In July 2019, the Company launched the "PureH2B" brand, aiming to build a one-stop retail platform covering beauty makeup, personal care, sports and other healthy and beautiful life needs. As of December 31, 2020, "PureH2B" has sold products through 8 offline stores, online official websites and Wechat mini programs, and its business is still in the initial stage. 稳健消毒湿巾10169 (2)(1) (II) Main Products and Purposes Its health product system covers: wound care products, infection prevention products, disinfection & cleaning products under its medical consumables section; the non-woven consumer goods and textile consumer goods under its healthy consumer goods section; and pure cotton spunlace non-woven fabric, an industry intermediate product. The main categories and images of some products under the Company's medical consumables section are as follows: Product Class Product Category Main Purpose Product Image of Some Products Wound care products Traditional wound care products For absorbing wound exudate, dressing wounds, and sports protection Gauze sheets, non-woven sheets, gauze bandage, dressing change kits, etc. Advanced wound care products For creating a moisture balance at the wound interface to optimize its benefits for wound healing, reduce the frequency of dressing replacement, and reduce secondary damage Silicone dressings, alginate dressings, etc. Infection prevention products OR infection control products For preventing infections in the operating room Surgical packs, surgical gowns, etc. Disease prevention and control products For occupational protection of medical staff and patient isolation Masks, protective suits, isolation gowns, etc. Disinfection & cleaning products Disinfection & cleaning products For wound cleaning and disinfection, and daily cleaning Cotton swabs, cotton pads, cotton balls, alcohol cotton pads, disinfectant, etc. As the important guarantee for medical staff's occupational protection and patient isolation protection, disease protection and control products such as masks and protective suits play an indispensable role in coping with major health incidents and improving public health. During the reporting period, the company shipped nearly 4 billion masks, more than 86 million protective suits, isolation gowns, and surgical gowns to the world to help fight against the COVID-19 pandemic. The main categories and images of some products under the company's healthy consumer goods section are as follows: Class Product Category Product Image of Some Products Non-woven consumer goods Cotton tissues Wet wipes Sanitary pads Other non-woven consumer goods Cotton swabs, makeup cotton pads, disposable underwear, etc. Textile consumer goods Baby supplies Baby's bath towels, handkerchiefs, and quilts, etc. Baby clothing Baby's leisure wear, outing costume, underwear, footwear, etc. Adult clothing Adult's leisure wear, outing costume, underwear, footwear, etc. Other textile consumer goods Bedding, bathroom accessories, etc. The purposes and images of the Company's pure cotton spunlace nonwoven fabric are as follow: Class Main Purpose Image Cotton spun lace non-woven fabric With 100% quality cotton as raw materials, the fabric is made with the pure cotton spunlace nonwoven fabric technology. It can be used in fields such as personal care, home care, medical equipment, and industrial wipes. (III) Main Operating Modes 1. Purchasing Mode The Company has established a complete procurement management system, which mainly includes the Procurement Control Process, Procurement Price Management Process, New Supplier Selection and Review Control Process, Supplier Performance Appraisal Management Process, and the Company also has made a Qualified Supplier Directory. According to the Company's regulations, purchase applications shall be submitted by requiring departments based on customer orders, sales plans, and production plans. The purchasing department shall strictly follow the purchasing management regulations after analyzing the purchasing requirements and the raw material market. The procurement of key bulk raw materials (such as cotton and veil) is implemented in a unified manner according to the Company's rules on its strategic procurement. The Company implements a strict supplier management system to ensure product quality and stable product supply. The Company has set a supplier directory and a perfect update and elimination mechanism to dynamically manage existing suppliers and new suppliers, which enables the Company to preferentially cooperate with the suppliers with the highest assessment results. For new suppliers, the Company has made strict selection criteria and supplier development and process management systems, including on-site inspection on suppliers; for suppliers with poor or even unqualified annual performance, the Company will add them to the key watch list or eliminate them. Generally, the Company will sign an annual framework agreement with a supplier to specify the cooperation content and the annual cooperation arrangement, and specific procurement contracts will be signed separately. 2. Production Mode The Company formulates production plans according to customers' POs and requirements, its annual sales plans, and monthly rolling sales plans. Based on its own production capacity and demand fluctuations, the Company adopts the production strategies of Make to Order (MTO) and Made to Stock (MTS). 3. Sales Mode The Company sells products through multiple channels. The main sales channels are shown in the following figure: 4. Marketing Mode The Company is developing its products under the Winner, Purcotton, and PureH2B brands a coordinated way. With 30 years of experience in the production of medical supplies, Winner is a leading medical consumables brand in the Chinese market and a brand with a global vision. With "To enhance your health, life and well-being" as its vision and industry-leading product quality as the cornerstone of its brand value, the product marketing and promotion for the brand rely more on its brand reputation. With pure cotton products as its label, Purcotton adopts unique, differentiated strategies to build its brand. By integrating multiple promotion channels such as directly-sales stores, brand roadshows, celebrity endorsements, event sponsorship, new media, and advertising, Purcotton keeps conveying to consumers its proposition of "making medicine close to life and protecting health with pure cotton" and its vision of " purcotton changes the world ", which helps deepen the meaning of Purcotton brand and increase its brand awareness and loyalty. PureH2B offers consumers select things that are high-quality, healthy, and beautiful from around the world through its paid membership system. It offers its members products with extremely competitive prices and a series of excellent offline services such as beauty salons, free makeup, and seminars. With " love, protect and enjoy nature " as its vision, and " Influence the mainstream consumption attitude with ‘inner health brings outer beauty’ philosophy, andattract mainstream consumers with natural products " as its mission, PureH2B is bringing consumers a new all-round digital retail experience. C:\Users\renzheng\Desktop\全棉品牌大图\门店\AJ8A0364.jpg （未完）  |