ZTE : 2022 Sustainability Report.

ZTE Corporation 2022 Sustainability Report

ZTE Corporation

2022 Sustainability Report

March 2023

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ZTE Corporation 2022 Sustainability Report

Contents
Message from the CEO	4
Message from the COO	6
About This Report	9
ZTE in 2022	10
About ZTE	10
Highlights of 2022	11
Honors and Achievements	11
Sustainability Strategy and Management	14
Sustainability Management Structure	14
Materiality Analysis	16
Major Progress in 2022	17
Stakeholder Engagement	19
Making Steady Progress and Pursuing High-QualityGrowth	21
Strengthening Governance and Preventing Emerging Risks	22
Steadily Promoting Corporate Governance	22
Fully Preventing and Controlling Operational Risks	23
Enhancing Organizational Resilience Through BCM	24
Tax Management	25
Adhering to Compliance in Operations for Steady Business Growth	27
Strengthening Compliance Operations and Management	27
Firmly Curbing Bribery and Corruption	29
Reinforcing the Export Control Compliance System	32
Enhancing Data Security and Privacy Protection	33
Improving the Whistleblowing System	36
Remaining People-Centric and Supporting Employee Development	39
Protecting Employees' Rights and Interests	39
Talent Development and Capability Building	46
Caring for Employees	49
Igniting Innovation with Solid Foundation for Shared Success in Digital Economy	51
Empowering Industries Through Innovation and Building the Foundation of Digital Economy	53
Building Digital Capability	53
Strengthening Intellectual Property Management	56
Building the Digital Ecosystem for Industries	57
Enabling Smart Life	67

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ZTE Corporation 2022 Sustainability Report
Staying Open and Transparent to Win Customers' Trust	69
Guaranteeing Cybersecurity	69
Controlling Hazardous Substances in Products	72
Reinforcing the Prevention of Quality Problems	74
Responding to Customer Demands Rapidly	78
Promoting Green Development to Tackle Climate Change	79
Green Operations	79
Green Supply Chain Ecosystem	83
Green Product Innovation	86
Empowering the Green Development of Industries	89
Upholding Win-Win Cooperation to Grow with Partners	92
Improving Supplier CSR Management	92
Refining Responsible Minerals Management	95
Shouldering CSR to Contribute to the Global Community	98
Promoting Rural Vitalization	98
Supporting Educational Development	99
Caring for Vulnerable Groups	101
Advancing Public Health	103
Practicing Green Public Welfare	103
Contributing to the Global Community	103
A Letter from the Board of Directors	106
Policy List	107
2022 Sustainability Performance	113
ESG Reporting Guidelines Index of the Hong Kong Stock Exchange	120
GRI Standards Index	123
Readers' Feedback Form	128

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ZTE Corporation 2022 Sustainability Report

Message from the CEO

In 2022, the global political and economic environment was still complex, with huge challenges from regional conflicts, energy crisis, high inflation, interest rate hike, supply chain uncertainties, and aging population. Meanwhile, extreme weather events occur frequently around the globe, making environmental protection a race against time. In this time of unprecedented changes, how to build a more resilient socioeconomic system and seek more opportunities for sustainable development has become a global concern.

However, despite all these uncertainties, we firmly believe in the power of human wisdom and collaboration. While making our way forward, we can, as always, seize opportunities amid challenges, thus bringing about a new round of evolution.

On this new journey, digital transformation is playing a critical role. Over the past few years, we have seen faster deployment of 5G and gigabit optical networks for wider dual-gigabit network coverage. Moreover, next-generation information technologies including cloud computing, big data, and AI are enabler of each other as they are converging. Driven by these technologies, the real and digital worlds are converging and evolving at a fast pace, reshaping the entire human society.

For individuals, digital technologies are extending the boundaries of sensing and control, unlocking infinite possibilities. For example, smart home devices make our lives more convenient, and with applications like UAVs, machine vision, unmanned excavators, and rescue robots, our lives and property are better protected.

For communities, digital technologies are bridging the digital divide and promoting equality of opportunity for all. Particularly, 5G Fixed Wireless Access (FWA) enables quick broadband services in areas with inadequate infrastructure, distance learning brings equity in education to people in different areas, and over dual-gigabit networks, telemedicine allows doctors to treat patients in remote areas. In this way, high- quality educational and medical resources are within immediate reach of all. Also, by using holographic video technology, reporters can communicate face to face with interviewees thousands of miles away; with advanced digital tools, people can work from home as efficiently as in the office; and, with 5G Air-To- Ground systems, passengers can enjoy in-flight services just as if they are on the ground. As it turns out, digital transformation has narrowed the distance between people and brought hearts closer, leading to a more harmonious society.

For industries and society as a whole, digital technologies are accelerating the industrial revolution and social progress. For instance, smart factory represents a leap from traditional manufacturing, lowering costs while improving efficiency and quality. Intelligent traffic infrastructure facilitates low-carbon emissions and more efficient transportation. With 5G, the grid-connected distributed photovoltaic system enables flexible scheduling of source, network, load, and storage, contributing to the goals of carbon peaking and carbon neutrality. With 5G, intelligent and refined management becomes a reality in climate-dependent agriculture. 5G also helps protect biodiversity, and improves our living environment with higher water and air quality, thus promoting sustainable development.

Playing an indispensable role in industrial digitalization, ZTE will always adhere to the business philosophy of "Simplicity, Agility, and Openness for Win-Win", and speed up its evolution by riding the trend. In the fields with business certainties, we keep with innovation for simplicity. With decades-long efforts in DICT innovations, we promote computing and network convergence, and redefine hardware and software integration, to work out optimal, end-to-end solutions. In the fields with business uncertainties, we act agilely to explore new opportunities. Internally, we step up efforts to enhance underlying capabilities with highly flexible components for fast implementation. Externally, we launch Minimum Viable Products (MVPs)

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and make constant iterations for different scenarios. Together with customers and partners, we aim to build a digital and intelligent ecosystem for greater openness and shared success.

According to the reports from authoritative agencies, ZTE has secured the first place in the global market shares of 5G MBB and FWA products for two consecutive years, and ranked second in the global shipments of wireless base stations, 5G gNodeBs, and 5GC products in 2022. We have been working with more than 500 partners on innovative applications in 100+ scenarios in over 15 industries, striving for the prosperity of an open ecosystem worldwide.

For ZTE itself, the company has been promoting all-round digital transformation for six years. Shifting from process-driven to data-driven, we are dedicated to building an "ultimate cloudified company" with fully cloud-based, intelligent, and lightweight workflows. Currently, most of our daily tasks can be completed through our internal OA platform on smartphones. Even in the special conditions when tens of thousands of employees worked from home, the R&D efficiency reached up to 98% of that in normal situations. Overall, the company's operational efficiency has improved by about 15% annually. And also, we have built a Global 5G Intelligent Manufacturing Base.

In the future, the world will witness constant breakthroughs in both technology and market, along with numerous changes beyond imagination. Against such backdrop, we will never stop innovating digital and intelligent technologies to create greater value. To ride the digital wave, ZTE will stick to its role as a driver of digital economy and strive for excellence while tackling the hardest challenges. With greater determination, we will join hands with partners across the industry to break new ground, and ultimately contribute to high-quality economic growth and make the planet a better place for all.

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