Cheerwin : Environmental, Social and Governance Report 2020

Environmental, Social and

Governance Report

Contents

ABOUT THE REPORT	2
MESSAGE OF THE MANAGEMENT					4
ABOUT US						6
ESG GOVERNANCE	12
I.	Enhancing the Foundation for Development through Innovation	16
	1.1	Product Research and Development	16
	1.2	Digital Transformation	21
	1.3	Intellectual Property	22
II.	Better Quality to Create a Better Life	23
	2.1	Quality as Top Priority	23
	2.2	Responsible Marketing	26
	2.3	Customer Service	28

1. People-orientedCulture Promoting Employees' Individual

	Development	29
	3.1	Employment Overview	29
	3.2 Employee Development	30
	3.3	Health and Safety	33
	3.4	Employee Care	34
IV.	Green Development in Response to Climate Change	37
	4.1 Environmental Management	37
	4.2	Green Production	38
	4.3	Green Office	41
	4.4	Environmental Performance	42
V.	To Build a Responsible System Together	44
	5.1	Distributor Management	44
	5.2	Supplier Management	46
	5.3	Fight against the Pandemic	49
	5.4	Charity	50
Appendix I: Laws and Regulations Applicable to Cheerwin
		and a List of Our Internal Policies	52
Appendix II: ESG Reporting Guide Indicators Index Table	54

ESG Report 2020 1

ABOUT THE REPORT

INTRODUCTION OF THE REPORT

This report is the first environmental, social and governance report (the "Report" or the "ESG Report") issued by Cheerwin Group Limited (the "Company"), together with its subsidiaries (collectively, the "Group", "we", "us" or "Cheerwin"), for the purpose of providing information on the Group's environmental, social and governance ("ESG") system building and performance and objectively disclosing the Group's management and effectiveness in respect of sustainable development in response to the expectations of our stakeholders and the public.

SCOPE AND COVERAGE OF THE REPORT

The Report discloses the management and results of ESG related issues for the period from January 1, 2020 to December 31, 2020 (the "Reporting Period" or the "Year") and part of the information dates back to the previous year or covers the first quarter of 2021. For details of the Group's business, please refer to the annual report of the Company published on April 23, 2021 (the "2020 Annual Report").

BASIS OF PREPARATION

The Report has been prepared strictly in accordance with the requirements of Environmental, Social and Governance Reporting Guide (the "ESG Reporting Guide") as set out in Appendix 27 of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange" or the "Hong Kong Stock Exchange") and based on the following principles:

Material: As the Group believes the ESG Report has significant influences on the investors and stakeholders, we have disclosed the procedures of identifying material ESG factors in the Report, including identifying stakeholders and conducting assessment on substantive topics using the materiality matrix. We identified ESG related material factors based on our engagement mechanism with stakeholders and materiality principle, paid more attention to them and disclosed corresponding measures in the Report.

Quantitative: The Group measured key performance indicators and disclosed quantitative data as required by the ESG Reporting Guide issued by the Stock Exchange. The Group also disclosed the calculation methods of and assumptions for the data contained in the Report.

Balanced: The Group fairly and objectively presented our ESG related work in the Report.

Consistent: The Group adopted a consistent data disclosure approach and explained relevant statistical methods and standards.

The indicators index of the ESG Reporting Guide is set out in the Appendix II of the Report for easy and quick reference by readers.

DATA SOURCES AND RELIABILITY STATEMENT

The information and data disclosed in the Report are based on the statistical reports and formal documents of the Group and have been reviewed by the relevant departments. The Group confirms that there is no misstatement or misleading representation contained in the Report and takes responsibility for the truthfulness, accuracy and completeness of the contents of the Report. All the currency amounts in the Report are denominated in RMB.

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ABOUT THE REPORT

PROCESS OF PREPARATION

The contents of the Report have been determined based on a set of systematic procedures. Such procedures include, among others, forming a working group, identifying key stakeholders, conducting interviews with the stakeholders, identifying and prioritizing material ESG related topics, deciding the scope of the ESG Report, collecting relevant materials and data, determining the framework, report compiling, report designing and review by the relevant departments and the senior management.

ACKNOWLEDGEMENT AND APPROVAL

Subject to the acknowledgement of the Management, the Report has been approved by the board of the Company (the "Board") on May 16, 2021.

ACCESS TO AND FEEDBACK ON THE REPORT

The electronic version of the Report will be available on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) and the website of the Company (www.cheerwin.com). Should you have any advice or recommendation as to the Group's disclosure and performance in relation to ESG issues, please contact us through the following ways.

E-mail: [e-mail]

Tel: [phone]

ESG Report 2020 3

MESSAGE OF THE MANAGEMENT

In 2020, the outbreak of the COVID-19 pandemic swept across the world and brought unprecedented challenges to all industries and businesses. In face of the COVID-19 pandemic, the Group assumed its responsibilities and actively exploited the advantages of our expertise to arrange the donation of materials such as antibacterial sachet, disinfectant, antibacterial cleanser, antibacterial hand sanitizer and face mask for kids to provide support to all designated hospitals for the treatment of COVID-19 across the nation. In addition, we actively followed the guidelines on COVID-19 prevention and control issued by the central and local governments and implemented comprehensive prevention and control measures to safeguard the health and safety of our staff and help them conduct effective and scientific epidemic prevention and control and self-protection, through which we have effectively resumed work and operation and maintained healthy and orderly operation.

Looking back on 2020, focusing on the core value of "customer first and pursuit of excellence", the Group achieved rapid and high-quality development. During the Year, with the commitment of making life full of surprises and creating a better life with infinite possibilities, we continuously improved our in-house innovation and R&D capabilities and industrial technologies and promoted product innovation and upgrading from various perspectives. In the R&D of various categories of products, such as household insecticides and repellents, household cleaning, air care and pet care products, we have given due consideration to safety and environmental protection factors with an aim to provide natural, safe and green products to consumer while satisfying the demand of consumers for innovative products. We have also adopted strict product safety and quality control standards and measures in the whole process of production, covering the supply chain of raw materials, logistics, product processing, inventory and sales channel, to ensure safety and high quality of our products.

With digitalization and social media tools as the core, we implemented highly personalized marketing strategies and have built an offline sales network comprising a total of over 1,200 distributors and around 620,000 sales points. In the Year, our e-commerce business developed rapidly and our brand recognition improved continuously through online platforms such as TV, the Internet and social media. We have also continuously improved customers' sense of participation and experience for our products to satisfy customers' demand for personalized products and products with social attributes and provide consumers with a one-stop smart life style, thus creating a better life.

For many of our employees, Cheerwin is a place where they can move forward and develop together with the Company. Adhering to the people-oriented principle, the Group attaches significant importance to the development of our staff and fully respects and protects the essential rights and interests of each staff member. The Group strives to create a healthy workplace environment where the corporation and its staff can realize harmonious development and positive interaction, through efforts made in various aspects including remuneration and benefits, training and development, health and safety and staff care, which will allow the staff to improve themselves and realize their value in the course of work and at the same time improve their cohesion, sense of belonging and happiness.

While recognizing the importance of the impacts of products on people's health, the Group also pays attention to the environmental impacts of our products and production activities by taking measures from the origin. We have integrated the concept of green development into all aspects of product manufacturing. By improving energy efficiency, reducing emission and actively promoting green production, we have continuously improved our environmental management and performance. During the Reporting Period, our production facilities in Panyu and Anfu obtained ISO 14001 Environmental Management System certification and GB 23331 Energy Management System certification.

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