2025

2024 Social Responsibility Report

2024 Corporate Social Responsibility Report

Zhejiang Shangyou Cutting Tools Co., Ltd.

2025 Year 02 Month

Report Writing Instructions

Report Overview

This report is Zhejiang Shangyou Cutting Tools Co., Ltd.'s corporate social responsibility report released to the public. Based on the principles of truthfulness and objectivity, it mainly discloses information related to the company's efforts in 2024 to become an outstanding corporate citizen and promote the sustainable development of the economy, society, and environment.

Time Range:

The reporting period is from January 1, 2024 to December 31, 2024. Some content may extend beyond this period.

Compilation Basis

National Standard of the People's Republic of China《GB／T 36001-2015 Guidelines for Social Responsibility Reporting》

Chinese Academy of Social Sciences《Guidelines for Corporate Social Responsibility Reporting in China》

International Organization for Standardization (ISO)《IS026000: Guidance on Social Responsibility》

Organizational Scope

Unless otherwise specified, all cases and data in this report are from Zhejiang Shangyou Cutting Tools Co., Ltd. Data Source

The data and cases in this report were mainly collected through internal statistical reports of Zhejiang Shangyou Cutting Tools Co., Ltd. and corporate social responsibility practice cases submitted by its subsidiaries. Unless otherwise specified, all amounts in this report are shown in RMB.

Report Appellation

For ease of expression and reading, "Zhejiang Shangyou Cutting Tools Co., Ltd." is also referred to as "Shangyou Cutting Tools," "we," or "the company" in this report.

Report Access Method

Download from the company website.

General Manager's Letter

Integrity is a fundamental principle for businesses. Zhejiang Shangyou Cutting Tools Co., Ltd. is committed to creating a fair, transparent, and open environment and corporate culture for all participants in the company's value chain.

Zhejiang Shangyou Cutting Tools Co., Ltd. is currently the only professional manufacturer of high-precision, complex gear cutting tools in Zhejiang Province. It mainly focuses on the research, development, production, and sales of high-speed gear hobbing cutters, gear shaping cutters, and gear shaving cutters. Its technology and product quality are at the leading level in the industry, with a high market share, representing the development level of Chinese gear hobbing, shaping, and shaving cutters.

The company attaches great importance to the construction of the quality management system, has established a complete quality management system, and has passed the quality management system certification, providing a reliable quality assurance for the company to further expand the market. The company has established a scientific and complete quality control system, and has also established environmental management and occupational health and safety management systems, and passed the certification.

In modern economic society, integrity is not only a moral norm, but also an important resource that can bring economic benefits to enterprises. Quality integrity is the core element to win customers. The corporate culture requires all employees to be honest and upright, to build an integrity culture, to enhance the core competitiveness of the enterprise, to achieve the enterprise's dreams, to reflect the value of employees, to benefit the public, and to revitalize the national industry.

Zhejiang Shangyou Cutting Tools Co., Ltd.

General Manager (Signature): Ye Zhijun

Table of Contents

Report Writing Instructions 2

Report Overview 2

Time Range 2

Compilation Basis 2

Organizational Scope 2

Data Source 2

Report Appellation 2

Report Access Method 2

General Manager's Letter 3

Table of Contents 4

I. About Us 6

1. Company Overview 6

2. Organizational Chart 7

3. Vision and Values 7

4. Awards and Honors 8

II. Social Responsibility Philosophy 9

1. Social Responsibility Management 9

2. Responsible Communication 9

III. Compliant Operations Healthy Development 11

1. Deeply Study and Implement the New Ideas, Strengthen Party Building 11

2. Make Every Effort to Promote Party Style and Integrity Construction, Achieve Clean Enterprise Development 12

3. Create a Distinctive Corporate Culture 13

4. Build a "Rule of Law Shangyou Cutting Tools" 14

IV. Focus on Core Technological Breakthroughs Fulfilling Industrial Responsibilities 15

V. Open Cooperation Building a Win-Win Industrial Ecosystem 16

1. Jointly Build a Cutting Tool System Ecosystem 16

(1) Maintain a mutually beneficial and win-win relationship with suppliers 16

(2) Actively establish a good image in the minds of customers and enhance brand image 17

(3) Uphold moral integrity and establish a positive image 17

(4) Ecosystem Building 17

2. Build a High-Efficiency Collaborative R&D System 18

3. Drive Industrial Structure Upgrades 19

VI. Value the Market Accountable to Customers 20

1. Provide High-Quality Products 20

2. High-Performance Service 20

3. Distinctive and Innovative Achievements 21

VII. Care for Employee Growth 22

7.1 Human Resources 22

7.1.1 Summary 22

7.1.2 Organization and Management of Work 22

7.3 Employee Performance Management 27

7.4 Employee Learning and Development 29

7.5 Employee Rights and Satisfaction 35

VIII. Innovative Technology Building a Green Environment 40

1. Creating Green Products and Solutions 40

2. Building a Green Supply Chain 40

3. Promoting Energy Saving and Emission Reduction through Refined Management 40

IX. Promoting People's Livelihoods Focusing on Harmonious Social Development 42

1. Poverty Alleviation: Winning the Moderately Prosperous Society Era 42

2. Scientific Assistance: Enhancing Self-Reliance 42

3. Education Output: Combining Intellectual and Moral Development 42

4. Charitable Donations: Spreading Love and Warmth 42

5. Volunteer Service: Caring for Socially Vulnerable Groups 42

6. Cultivating and Training Highly Educated Talents 43

(1) School-Enterprise Cooperation for Engineering Practice and Training 43

(2) Cultivating Highly Educated Talents 43

X. Realizing Shareholder Rights 44

1. The company's rapid and stable development and good operating performance protect shareholder interests 44

2. Standardized corporate governance, forming an effective check and balance corporate governance structure 44

3. Continuously improving corporate governance 44

Report Conclusion 45

Outlook 45

Reader Feedback 45

I. About Us

1. Company Profile

Zhejiang Shangyou Cutting Tools Co., Ltd. is currently the only professional manufacturer of high-precision complex gear cutting tools in Zhejiang Province. It is located at No. 9, 25th Street, Eastern Industrial Park, Wenling City. Established in August 2004, the company mainly researches, develops, produces, and sells high-speed gear hobs, broaches, and shaving cutters. Its technology and product quality are at the leading level in the industry, with a high market share, representing the development level of China's gear hobbing, broaching, and shaving cutters.

The company was among the first in its industry to establish an ISO9001 quality management system and has passed the ISO14001:2015 environmental management system certification. The company's standardized management and orderly operation adhere to the path of sustainable development. Its sound R&D institution, excellent innovation capabilities, and strong brand awareness have earned the company numerous honors, including "Zhejiang High-tech Enterprise," "Zhejiang Specialized, Refined, and Unique Small and Medium-sized Enterprise," "Zhejiang Contract-Honoring and Creditworthy AA Enterprise," and "Zhejiang High-tech Enterprise Research and Development Center." The company attaches importance to product quality innovation, increases investment in scientific research and hardware, and occupies the market with high-tech products. It has currently obtained more than 30 domestic patents and is a provincial patent demonstration enterprise.

The company possesses various types of fine professional production equipment: imported internationally advanced 6-axis fully CNC hob sharpening machines from Germany's SMS company, high-precision 3-axis CNC grinding wheel dressing machines; American Sunnen internal honing machines; Taiwan CNC 5-axis linkage blade grinding machines; nationally leading shaft-end face grinding machines; German NILES high-precision broach gear grinding machines; CNC broach grinding machines; German KLINGENBERG P26, P65 gear testing equipment. Product processing and testing are carried out in a constant temperature environment to ensure the reliability and stability of product quality. The company can provide high-precision, high-tech, and high-performance non-standard complex cutting tools for the automotive, wind power, mining, heavy machinery, machine tool, shipbuilding, and railway vehicle industries.

2. Organizational Chart

The company's organizational chart is as follows:

Zhejiang Shangyou Cutting Tools Co., Ltd.

Operating Management Organizational Structure Chart

3. Vision and Values

After years of development, the company has formed unique corporate mission, vision, and core values. The formation process of the company's mission, vision, and core values is basically consistent with the process of the company's growth and development.

Corporate Culture: Happy Work, Happy Life

Company Mission: Realize corporate dreams, reflect employee value, benefit the public, and revitalize the national industry

Company Vision: Build a century-old senior enterprise, keep pace with the times, and strive for the best

Corporate Values: Be a person with a grateful heart, do things with a sincere heart.

Corporate Style: Rigorous and efficient, enthusiastic and thoughtful

Corporate Purpose: Integrity-based, stable operation

Talent Philosophy: Ability determines position, contribution determines value

Service Philosophy: Gaining appreciation through professionalism and sincerity

4. Awards and Honors Received

In recent years, the company has focused on applying for and obtaining awards at various levels, including national, provincial, and municipal levels, and has participated in promoting standardization work. The honors received are as follows:

"Zhejiang High-tech Enterprise"

"Zhejiang Quality Trustworthy Enterprise"

"Zhejiang Specialized, Refined, and Unique Small and Medium-sized Enterprise"

"Zhejiang Contract-Honoring and Creditworthy AA Enterprise"

"Zhejiang High-tech Enterprise Research and Development Center"

II. Social Responsibility Philosophy and Management

1. Social Responsibility Philosophy

Running a good enterprise and providing customers with healthy and safe products and high-quality products is Shangyou Cutting Tools' primary responsibility; promoting industry progress and enhancing the comprehensive competitive advantage of the industrial chain is Shangyou Cutting Tools' inescapable industrial responsibility; implementing the "innovative country" strategy, actively exploring models and paths for innovative development in high-tech fields, and achieving value preservation and appreciation of corporate assets is Shangyou Cutting Tools' commitment to shareholders; improving technological innovation and high-end positioning, being an excellent corporate citizen, is the social responsibility that Shangyou Cutting Tools consciously undertakes.

2. Social Responsibility Management

Shangyou Cutting Tools consistently incorporates the concept of social responsibility, striving to promote social responsibility training, strengthen research on social responsibility theory, actively conduct benchmarking analysis, clarify social responsibility issues, strengthen social responsibility governance, improve the social responsibility management system, continuously improve and innovate social responsibility work, and gradually establish a dynamic development mechanism for social responsibility that involves self-learning, self-management, and continuous improvement.

Starting in 2018, Shangyou Cutting Tools began to include "social responsibility" in its strategic discussions; since 2019, it has clearly defined the budget for social responsibility at the strategic level, ensuring its implementation. In 2024, the company published a social responsibility report.

3. Responsible Communication

Shangyou Cutting Tools actively disseminates the concept and practice of social responsibility, continuously strengthens communication and dialogue with stakeholders, adheres to a stakeholder perspective, actively responds to social concerns, continuously enhances value creation for both internal employees and external stakeholders, and strives to achieve common development and win-win cooperation with all stakeholders.

Communication Targets

Communication Methods

Communication Frequency

Communication Direction

Areas of Responsibility and Measures

Dealers/Consumers	Company publicity materials		Annual	Horizontal		Committed to providing users in different regions around the world with
Communication Targets		Communication Methods	Communication Frequency		Communication Direction	Areas of Responsibility and Measures
Consumers		Customer annual meetings, exhibitions	Annual		Interaction	Reliable Shangyou products; actively listening to consumer feedback to improve product quality and service quality; protecting consumer information and privacy; quickly responding to emergency repairs and consumer complaints
		Customer return visits	Plan		Interaction
		Website, dealer annual meetings	Plan		Horizontal
		Senior management and procurement center, various functional personnel visiting customers	Daily		Two-way
		Customer satisfaction surveys; customer relationship management; handling customer feedback	As planned		One-way
		Media communication	As planned		Horizontal
Shareholders		Business analysis meetings; regular reports; Daily management	As planned		Two-way	Steadily improving economic efficiency and ensuring asset preservation appreciation; strictly fulfilling information disclosure obligations according to law; improving corporate governance and protecting shareholder rights
Employees		Corporate culture manual, strategic manual	3 years		Two-way	Providing a healthy and safe working environment; establishing trade union organizations and common internal communication channels; guaranteeing employee welfare, rights, and safety; guiding employees to participate in company operations and management through multiple channels; establishing a sound vocational training system and providing training opportunities for employees at all levels; corporate culture building to tap employee potential and improve employee participation; incorporating employee opinions and suggestions
		Management documents, management manuals	Annually		Downward and interactive
		Company intranet, OA	At any time		Two-way interaction
		Publicity windows, workshop signs	Monthly		Two-way interaction
		Employee meetings, employee representative meetings, summary meetings, commendation meetings, project launch meetings, etc.	Annually		Interactive and downward
		Various forms of employee forums	Quarterly
		Employee education and training	As planned		Downward and interactive
		Employee cultural activities	Annually		Interaction
		Leadership development program	As planned		Interaction
		General manager's mailbox; problem management system	Monthly		Two-way
		Trade union	At any time		Two-way
		Safety and health protection	As planned		One-way
		Conducting various forms of employee surveys and satisfaction surveys (employees' satisfaction with the company, employees' satisfaction with the trade union, and administration's satisfaction with the party branch)	Annual		Interactive and downward
Suppliers		Supplier annual meeting	This year		Horizontal	Supply chain partner compliance management, inspection and feedback; strict tendering management, strict fulfillment of contractual obligations, ensuring the legitimate interests of suppliers; regular communication with supply chain partners to ensure the healthy and sustainable development of the cooperative relationship
		Supplier training	Annually		Two-way interaction
		Supply chain management system	Daily		One-way
		Websites, newspapers, magazines, etc.	Monthly		One-way
Community and society		Supporting social welfare activities (blood donation, donations, relief)	As planned		Horizontal	Understanding the needs and concerns of the public; maintaining communication with the community and actively responding to the reasonable needs of the community; carrying out various community public welfare and charitable activities; establishing a volunteer team and encouraging employees to give back to the community through volunteer service
		Community public welfare; volunteer service	Community arrangements		Horizontal
		Participating in social co-construction activities	Half a year		Horizontal

III. Compliant Operations Healthy Development

Compliance with laws and regulations is a necessary prerequisite for the sustainable development of enterprises. Shangyou Cutting Tools continuously improves its governance in accordance with the law, taking Party building as the leader, implementing the requirements of comprehensively and strictly governing the Party, continuously promoting the construction of anti-corruption and promoting integrity, strengthening internal audit, paying attention to improving employees' legal thinking awareness, enhancing risk control capabilities, and continuously building the "soft power" of cultural enterprise development to escort the healthy development of the enterprise.

1. Deeply study and implement the new ideas Strengthen Party building

Shangyou Cutting Tools Party branch, in accordance with the three stages of "understanding, mastering, and implementing," clearly defines tasks, deeply studies and disseminates Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era and the spirit of the 19th National Congress of the Communist Party of China, focusing on enhancing the "four consciousnesses," unswervingly upholding Party leadership, comprehensively and strictly strengthening Party building, giving full play to the leading core and political core role of Party organizations, and exploring a path of Party building innovation that closely combines the "great Party building" concept with the strengthening and improvement of enterprises.

Organizational situation of Shangyou Cutting Tools Party branch

1. Enterprise Party branch powers: The basic-level organization of the Party in non-publicly owned economic organizations, implementing the Party's guidelines and policies, guiding and supervising enterprises in complying with national laws and regulations, leading trade unions, Youth League, and other mass organizations, uniting and rallying employees, protecting the legitimate rights and interests of all parties, and promoting the healthy development of enterprises.

2. The basic tasks of the Party's grassroots organizations are:

1. Propagate and implement the Party's line, principles, and policies; propagate and implement the resolutions of the Party Central Committee, higher-level organizations, and this organization; give full play to the exemplary role of Party members; actively strive to be the best; unite and organize cadres and the masses inside and outside the Party; and strive to complete the tasks undertaken by this unit.

2. Organize Party members to earnestly study Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era, promote the normalization and institutionalization of the "Two Studies, One Action" learning education, study the Party's line, principles, policies, and resolutions, study basic Party knowledge, and study scientific, cultural, legal, and professional knowledge.

3. Educate, manage, supervise, and serve Party members; improve the quality of Party members; strengthen their ideals and beliefs; enhance Party spirit; strictly enforce Party organizational life; and conduct criticism and self-criticism. Strengthen and improve the management of mobile Party members.

4. Maintain close ties with the masses, regularly understand the masses' criticism and opinions on Party members and the Party's work, and do a good job in the ideological and political work of the masses.

5. Give full play to the initiative and creativity of Party members and the masses, and discover, cultivate, and recommend outstanding talents from among them.

6. Educate and cultivate activists who request to join the Party, and do regular work to develop Party members.

7. Supervise Party and government cadres and any other staff members to strictly abide by national laws and regulations, and not to infringe upon the interests of the state, collectives, and the masses.

8. Educate Party members and the masses to consciously resist bad tendencies and resolutely fight against various violations of discipline and law.

3. The Party branch is the basic organization of the Party, and it is responsible for directly educating, managing, and supervising Party members, and organizing, publicizing, uniting, and serving the masses.

In 2024, grassroots Party organizations conducted 12 concentrated study sessions, giving full play to their role as a fighting fortress. In 2024, Shangyou Cutting Tools Party branch strengthened

Party building system construction, and successively formulated and issued a series of regulations such as the "Implementation Opinions on Strengthening and Improving Party Building Work" and the "Implementation Measures for the Party's Style and Integrity Construction Responsibility System," providing strong institutional guarantees for the various tasks of the Party branch. These systems not only clarify the work responsibilities, workflows, and assessment standards of the Party branch, but also emphasize the requirements for the education and management of Party members, organizational life, and disciplinary sanctions, ensuring that the various tasks of the Party branch are carried out in an orderly and traceable manner. Through the construction and improvement of the system, the Shangyou Cutting Tools Party branch has further standardized work procedures, improved work efficiency, and provided strong organizational guarantees for the healthy development of the enterprise.

The company promotes the normalization and institutionalization of the "Two Studies, One Action" learning education. It issued the "Implementation Plan for the Normalization and Institutionalization of "Two Studies, One Action" and carried out the themed activity of "Overcoming Difficulties and Strengthening Party Building, Improving Quality and Efficiency, and I Will Strive to Be the First." A meeting was held for the on-site job performance appraisal of the secretaries of Party organizations at the secondary unit level, achieving full coverage of the on-site job performance appraisal of the secretaries of Party branches and general branches at the secondary unit level.

2. Make every effort to promote the construction of Party style and integrity, and achieve clean development of enterprises

Strengthening source governance and promoting the construction of a comprehensive and strict Party governance system. The company, around the goal of "not daring to be corrupt, not being able to be corrupt, and not wanting to be corrupt," insists on starting from the source, actively promoting the construction of a comprehensive and strict Party governance system, building a solid "high line" of integrity and a "bottom line" of discipline, forming a more comprehensive and systematic system, providing a basis for supervision and discipline, and providing common rules and principles for cadres and employees to follow. Deeply excavating resource potential and strengthening the effectiveness of the "large supervision" mechanism. The Shangyou Cutting Tools Party branch established the company's Party style and integrity construction leading group, improved the joint meeting system for Party style and integrity construction, formed a "large supervision" work system with multiple parties participating and professional complementarity, and achieved the same frequency and same direction of supervisory forces.

3. Create a distinctive corporate culture

In 2024, Shangyou Cutting Tools, taking Party building as the leader, with the Party, trade unions, and Youth League working together, deepened; Shangyou Cutting Tools corporate culture construction, through rich dissemination carriers and the creation of diverse employee activities, internalized, externalized, and solidified the corporate culture concept, building a solid foundation for enterprise development.

The corporate culture dissemination carriers are rich, creating a distinct cultural label for the enterprise. Shangyou Cutting Tools' website, WeChat official account, poster bulletin boards, and other publicity platforms closely focus on the central work of the enterprise, publicize the company's image, proactively speak out, and promote the main theme of corporate culture construction, enabling the vast number of cadres and employees to unify their thinking and understanding with the overall situation of enterprise reform and development.

Strengthening the mechanism for corporate culture work: In terms of organizational leadership mechanisms, the company has established a corporate culture leading group to be fully responsible for promoting corporate culture construction. In terms of work operation mechanisms, it cooperates to formulate the "Corporate Culture Construction Plan" and regularly revises it, ensuring that corporate culture construction is organized, planned, and carried out step by step. The company includes the situation of various units carrying out corporate culture construction in the performance appraisal of management, so that corporate culture construction gradually becomes standardized and institutionalized.

Paying attention to the keeping up with the times of corporate culture and strengthening employees' sense of identification with corporate culture: The company has established the core values of "being a person with a grateful heart and doing things with a sincere heart" and put forward the enterprise spirit of "challenging the future and pursuing excellence," keeping up with the times and going deep into people's hearts.

Attaching importance to the construction of practical enterprise subcultures Develop a sub-culture construction plan, focusing on strengthening safety culture, quality culture, and integrity culture; collect corporate culture stories and create a corporate culture story column in Shangyou Cutting Tools Information to leverage the guiding, motivating, restraining, and unifying roles of corporate culture. Rely on company portals, internal information platforms, and establish official company Weibo or WeChat accounts to vigorously promote the company's achievements and practices, enabling employees to gain a deeper understanding of the company's corporate culture and development strategy. Secondly, through distinctive corporate culture series activities such as speeches, essay contests, and training, unify the thoughts and actions of employees with the overall work deployment of the company, enhancing the cultural radiation, infection, and penetration, and improving the sense of responsibility and mission of employees to "love the company as home."

Leverage the guiding and disciplinary roles of corporate culture cases: By shaping advanced models and exploring exemplary individuals and typical cases that embody the Longsheng spirit and core values in the new era, create corporate culture publicity resources. In addition, attention should be paid to collecting and compiling negative cases that undermine the company's values, ensuring that the company's corporate culture concepts are instilled from both positive and negative aspects.

The company compiled the "Business Philosophy," which serves as the "outline" for corporate management, achieving the goal of overall planning and leading corporate development. Senior leaders instructed relevant departments to decompose the "Business Philosophy" into several cultural element implementation requirements, and these requirements should be decomposed into corporate systems, processes, and improvement projects to guide the work of various systems. The corporate culture concept is reflected in the system processes,

giving the system processes a soul, while the system processes also strengthen the guiding role of the corporate culture concept. The work style guided by the "Business Philosophy" is gradually reflected in the work of various systems in the company, and the concepts in the "Business Philosophy" gradually become the company's specific language.

The company attaches great importance to the construction of daily mechanisms for corporate culture and the construction of cultural management teams. The employee activity clubs initiated by the administrative management department, such as the volunteer club, are being established, and a national cultural management team is being planned to be responsible for the dissemination and implementation of the company's culture.

Transmit corporate culture externally, influencing partners and other stakeholders.

Implemented a corporate culture external dissemination project, communicating the company's values, development direction, and performance goals to suppliers, partners, and customers through meetings, publicity media, publicity materials, and market visits and surveys; utilizing suppliers, media, and business locations, mainstream social media, and professional media resources to convey the company's corporate culture to all sectors of society.

4. Constructing "Rule of Law Shangyou Cutting Tools" ”

In 2024, Shangyou Cutting Tools accelerated the promotion of the "Rule of Law Shangyou" construction, aiming to enhance the rule of law thinking, governance capabilities, compliant operation capabilities, standardized management capabilities, and legal work capabilities of cadres and employees.

Conduct a comprehensive "physical examination" of existing regulations and systems, strengthen internal control system construction, improve risk management capabilities, and revise important basic systems such as the "Three Major and One Major Decision-Making System" and the "Regulations Management Regulations."

Establish a legal counsel system, hiring a professional legal team as permanent legal counsel to provide the company with comprehensive legal services such as legal consultation, contract review, and dispute resolution, ensuring the legality and compliance of the company's various business activities.

Strengthen legal publicity and education, improve the legal awareness and legal literacy of cadres and employees through legal knowledge lectures and legal knowledge competitions, and create a good atmosphere of respecting, learning, observing, and applying the law.

Improve the legal risk prevention and control mechanism, regularly conduct legal risk checks and assessments, promptly identify and resolve legal risks, and ensure the company's stable operation and sustainable development.

At the same time, Shangyou Cutting Tools also pays attention to communication and coordination with external institutions such as judicial organs and government departments, actively cooperating with government supervision and guidance to jointly create a good rule of law environment.

IV. Focus on Core Technological Breakthroughs Fulfilling Industrial Responsibilities

In 2024, facing the complex situation of international and domestic economic development, Shangyou Cutting Tools actively addressed problems and challenges, focusing on improving economic efficiency with the adjustment of industrial structure and the cultivation of core capabilities as the key, making the overall development more stable and the development foundation more solid.

Technological development capabilities are the core of the company's strategic development and the key to ensuring business development and enhancing competitive advantages. By continuously independently developing technologies and products, the company's technological strength has been continuously strengthened, establishing strong technological resources and maintaining technological leadership in the industry.

The company's technology center is responsible for patent application and declaration, and has issued the "Patent Management System" to incentivize patent applicants. For small technologies and tricks that do not meet the conditions for patent application but are very practical, they are promoted through internal training and experience exchange meetings.

Company Patent Summary (Partial)

Serial Number	Patent Name	Patent Number
1	A kind of rectangular spline alloy hob	ZL 2022 2 2223097.5
2	A kind of worm hob	ZL 2022 2 2157492.8
3	A kind of asymmetrical pressure angle worm wheel hob	ZL 2022 2 1096173.4
4	A kind of new rolling broach	ZL 2021 2 0868539.4
5	A kind of worm wheel hob invention patent that prevents chip damage	ZL 2020 1 1380532.4
6	A kind of pre-grinding rolling broach	ZL 2022 2 2196733.X
7	A kind of machine tool for processing the return knife groove of a shaving cutter	ZL 2017 1 1174434.3
8	A kind of direct injection quick cooling broaching tool assembly	ZL 2022 2 2521453.1
9	A kind of hob that eliminates tool wear and machining accuracy by adjusting the cutter head	ZL 2021 1 0536927.7
10	A kind of helical full-cut rolling broach	ZL 2023 2 0959621.7
11	A kind of high-precision cutting blade	ZL 2023 2 0983679.5
12	A kind of gear hobbing blade	ZL 2023 2 2351657.X
13	A type of double-ended rod-type hob	ZL 2023 2 2262893.4
14	A type of large helix angle worm hob	ZL 2023 2 2241265.8
15	A new type of hob with inserted teeth	ZL 2023 2 2624803.1
16	A type of full-cut hobbing cutter	ZL 2023 2 1853691.0
17	A hobbing cutter for gear processing	ZL 2024 2 1766897.4
18	A special-shaped inserted tooth cutter	ZL 2024 2 1766646.6

The company's R&D direction should follow the general direction of industry development, be forward-looking, and form a product R&D system of "producing one generation, reserving one generation, and developing one generation."

The company's R&D system of "producing one generation, reserving one generation, and developing one generation."

V. Open Cooperation Building a Win-Win Industrial Ecosystem

Shangyou Cutting Tools adheres to strategic leadership and open cooperation, actively aligning with national strategies, giving full play to its technological advantages in the cutting tool field, integrating external resources, and cooperating with well-known domestic and foreign enterprises, R&D institutions, and government departments to promote adjustments in industrial structure layout and continuously enhance the company's influence and brand appeal.

1. Jointly build a cutting tool system ecosystem

The company, together with research institutes, raw material suppliers, and accessory outsourcing manufacturers, actively builds an industrial ecosystem for cutting tools, promoting the rapid maturity and deployment of the industry. In 2024, the company will continue to pursue harmonious coexistence with the government, customers, value chain partners, peers, and the public, jointly creating value and sharing success; the company establishes a mechanism to protect the rights and interests of customers and suppliers, paying attention to communication and interaction with relevant parties, and building a foundation of trust and cooperation. While focusing on business operations, the company strives to take into account the different needs of relevant parties, regarding the protection of their rights and interests as its own responsibility, and making every effort to put it into action.

(1) Maintain a mutually beneficial and win-win relationship with suppliers.

1. Supplier Selection and Development

In accordance with the requirements of the "Supplier Management Procedure," the company has formed an effective and complete system for supplier investigation, application, evaluation, and supervision, standardizing the management of material suppliers and partners, establishing stable and reliable qualified suppliers, and ensuring that suppliers meet the company's requirements in terms of quality management, cost control, and delivery capabilities.

In the supplier selection and development phase, the company mainly consists of procurement, quality control, and technical personnel to form a supplier investigation team to conduct on-site audits of suppliers. The audit content includes the supplier's qualification level, technical level, quality assurance capabilities, production capacity, product price, etc. Based on the results of the investigation and evaluation and the sample submission, qualified suppliers are approved by relevant personnel.

2. Supplier Performance Management

Shangyou establishes a supplier directory. The evaluation team comprehensively evaluates suppliers according to the "Annual Performance Level Evaluation Form for Suppliers," including quality scores, delivery scores, price scores, and service scores, and conducts tiered management of suppliers: According to the scores in the "Supplier Assessment Form," supplier assessment results are divided into four levels: A, B, C, and D. Level A suppliers receive preferential treatment, Level B receives normal treatment, Level C has its supply ratio reduced, and Level D unqualified suppliers are eliminated. Shangyou adopts a series of reward and punishment systems for qualified suppliers based on different levels, allocating higher quantities to higher-level suppliers. At the end of each year, the procurement department organizes an evaluation team to conduct a follow-up re-evaluation of qualified suppliers, which is reviewed by relevant departments and finally approved by the general manager, and the records are entered into the "Qualified Supplier Directory."

。

For the management of qualified suppliers, it is required to establish archived document tables and electronic tables. Archived files include "Supply Quality Records," "Incoming Inspection Acceptance Rate Statistics Table," "Supply Contracts," "Qualified Supplier List," "Supplier Evaluation Report," "Quality Assurance Agreement," and other related documents.

Shangyou has established clear supplier interfaces and multi-channel planning and review processes to ensure that suppliers meet requirements, ensuring quality, cost, and delivery, and strengthening communication and cooperation with excellent suppliers to establish a "symbiotic and prosperous" strategic partnership.

(2) The company actively establishes a good image in the minds of customers and enhances its brand image.

Shangyou Cutting Tools has always attached importance to brand reputation, implementing 100% inspection for each finished product and each process, and strictly controlling quality. The company incorporates the implementation of a brand-name strategy into its strategic development plan. In the process of implementing the brand-name strategy, it carries out brand-name creation work according to the "market, technology, and management" integrated business philosophy, closely linking the company's development strategy with the improvement of product quality and brand reputation, and striving to create "three famous enterprises." Shangyou also actively participates in various public welfare activities, public welfare publicity, and public relations marketing activities, guiding employees to practice the concept of "integrity-based, customer-first" in marketing work, promoting corporate culture, enhancing corporate image and brand image, and providing inexhaustible impetus for the development of the company's brand strategy.

(3) Upholding moral integrity and establishing a positive image.

The company attaches great importance to the construction of integrity and internal supervision against commercial bribery, strictly implements the integrity supervision system, improves the long-term mechanism for preventing and combating commercial bribery, strictly monitors and prevents various commercial bribery activities between the company or employees and customers and suppliers, establishes a positive atmosphere within the company, resolutely resists unhealthy trends, and strictly abides by business ethics and social morality. At the same time, the company does not rely on false publicity and advertising for profit, and does not infringe on the copyrights, trademarks, and patents of suppliers and customers. The company has been awarded the title of "Zhejiang Province Honest Enterprise."

(4) Ecosystem building.

In order to build a first-class industrial chain in the industry, Shangyou Cutting Tools has been committed to cultivating suppliers, distributors, and company members. This process is also the process of replicating Shangyou Cutting Tools culture. In cooperation with suppliers and distributors, Shangyou Cutting Tools conveys Shangyou Cutting Tools' ideas and values. Shangyou Cutting Tools accelerates the adjustment of its industrial structure, giving priority to the development of industries with high technological content, low energy consumption, and low pollution, which has become the future direction of industrial development in our Taizhou region. Relying on technological progress and utilizing internationally advanced production technologies and the company's independent innovation and R&D capabilities, it has achieved industrialized production of "Made in China." Products have high added value, low production pollution, and low energy consumption, which will greatly promote the upgrading of the local industrial level, promote the transformation of economic growth mode, and effectively promote the sustainable development of advanced equipment manufacturing in the local area, our province, and even China.

2. Building a highly efficient collaborative R&D system

The company regards technological R&D and product innovation as the core competitiveness for rapid enterprise development, and has always adhered to the development path of independent innovation and technological innovation. The technology R&D center collects relevant technological information from domestic and foreign benchmarks and competitors through various channels such as attending exhibitions, consulting associations, visiting customers and networks, and subscribing to publications. It establishes a technology database and conducts analysis and evaluation on a quarterly or irregular basis to accurately evaluate the current product technology level and development space, providing a basis for the formulation and adjustment of the company's strategic planning.

1) Develop, introduce, digest, and absorb advanced technologies and standards to improve the organization's technological innovation capabilities

With the development of science and technology, mechanical processing technology has entered a new stage of "high-speed, high-efficiency, intelligent, and environmentally friendly" development, with new technologies and equipment such as high-speed cutting, dry cutting, CNC composite machining, and green manufacturing emerging. To adapt to this rapidly developing situation, Shangyou has introduced top experts in the domestic industry to tackle technological challenges and continuously promotes technological innovation in terms of equipment, materials, processes, personnel, and testing instruments.

Shangyou attaches great importance to the construction of a team of scientific and technological talents and product R&D institutions, and strengthens close cooperation with universities and research institutes. It continuously uses independent technological innovation to occupy the commanding heights of the industry, promotes enterprise development, accelerates the improvement of independent innovation capabilities, effectively carries out the application of new materials and new processes, and the development of new technological fields, achieving industrial transformation and upgrading.

2) Formation and use of technical know-how and patents

The company has formulated relevant systems such as the "Intellectual Property Rights Reward Measures" and "Patent Management Measures," which have improved the enthusiasm of R&D and design personnel for continuous innovation. So far, the company has obtained 17 authorized patents.

In the years of production and R&D, a number of technical know-how have been formed, creating considerable economic benefits for the company. Given the special nature of technical know-how, the company has specially formulated strict "Confidentiality Management Regulations," which are explicitly stipulated in employment contracts with employees to strengthen technical confidentiality and protect the company's interests.

3) Formulate technical transformation goals and plans

The company pays attention to the technical transformation and upgrading of production processes and equipment. Each year, the production technology department is responsible for formulating a technical upgrading and transformation plan, determining the company's key transformation projects, products, or technologies each year, and implementing them after approval by the general manager. The company absorbs cutting-edge technological information through the introduction of advanced technologies, industry-university-research cooperation, etc., formulates technical development and transformation plans, and pays attention to the technical and economic feasibility demonstration of projects when planning projects. After the demonstration is qualified, a technical development and transformation plan is formed and implemented.

3. Drive industrial structure upgrading

In 2024, sales returns, output, and production profits were better than before, exceeding those of similar local enterprises and standing at the forefront of the industry. With strong professional technology, advanced production and manufacturing processes, rapid delivery capabilities, and years of industry accumulation, Shangyou cutting tools have become one of the largest cutting tool manufacturers in China. The continuous application of technological innovation will not only directly bring about increased efficiency in the cutting tool manufacturing industry, but will also provide a new engine for the development of high-end supporting industries such as raw materials, production automation, and information services, driving the transformation and upgrading of the industrial chain.

VI. Value the Market Accountable to Customers

In 2024, Shangyou Cutting Tools adhered to market orientation and took the initiative, with total annual operating revenue of 125.2 million yuan and actual total tax payments of 2.33 million yuan.

1. Provide high-quality products

Shangyou Cutting Tools adheres to the service philosophy of customer first, leverages its technological advantages, provides society with high-quality products, services, and solutions, and establishes its brand.

The performance of the company's products has steadily improved, and the main performance indicators are set according to international advanced levels. The company continuously increases its technology revenue each year, and product performance improves year by year.

Main technical indicators	Current product level (One of four international companies, the only one in China)	International advanced level Representative company name: Germany RTHURKLINK
Roller cutter hardness	HRC64~HRC67	HRC63~HRC65
Roller cutter inner hole error	0.01	0.015
Roller cutter front radial directionality	0.02	0.03
Cumulative error of roller cutter pitch	0.03	0.035
Roller cutter tooth shape error	0.01	0.015
Cumulative error of roller cutter tooth spacing	0.015	0.020
Roller cutter helix error	0.02	0.025
Roller cutter inner hole error	0.01	0.015

Performance results related to quality management level

2. High-performance service

The company adheres to a customer-centric approach and continuously improves its service level. To meet customers' requirements for timely delivery, the company strictly controls time in various aspects such as marketing, technology, production, and procurement, ensuring on-time delivery.

Recent trends in the overall quality and service quality of the company's products

Service performance indicators	2020	2021	2022
One-time inspection pass rate (%)	94.65	95.87	96.34
Return rate (%)	2.6	2.4	2.2
Customer customization achievement rate (%)	100.0	100.0	100.0
Contract fulfillment rate (%)	100.0	100.0	100.0
Customer complaint handling rate (%)	100.0	100.0	100.0
Customer complaint handling satisfaction (%)	95.5	96.0	98.0

Past levels and trends of key performance measurement indicators

Service performance indicators	Performance level and trend
Service performance indicators	2020	2021	2022
Number of cities covered	54	82	118
Service timeliness	94.5	95.0	96.5

Marketing services

Marketing values	Brand co-creation, benefit sharing
Marketing guiding ideology	Quality first, customer first, service first
Channel innovation model	Channel concept innovation, channel model innovation, operation model innovation
Four major service care systems	User satisfaction system, service technology system, spare parts sales system, service training system
Brand building	Brand positioning differentiation, four elements of brand marketing
Channel innovation	Dealer profit model innovation, network planning three principles, financial support, dealer credit rating management, EKP knowledge management platform, dealer key position certification
Service Care	“Shangyou WeChat Official Account”, high-quality service project, technical association construction

3. Features and Innovative Achievements

Product and Service Features

Category	Subcategory	Features
Product	Product Category	High-efficiency milling cutters, heavy-duty milling cutters, insert milling cutters, hobbing cutters, shaving cutters series of cutting tools
	Model	5 series, more than 300 varieties
	Application Areas	Can provide high-precision, high-tech, high-performance non-standard complex cutting tools for industries such as automobiles, motorcycles, electric vehicles, wind power, mining, heavy machinery, machine tools, and ships
Service	Marketing Network	The company is committed to the development of overseas markets.
Service	Special Development	Personalized development is implemented for customers by establishing project teams.

The company's technological innovation, new products are constantly launched, and products have won numerous awards.

VII. Care for Employee Growth

Human resources are the company's precious wealth. Shangyou Cutting Tools strives to create a good working atmosphere, build mechanisms and systems conducive to the development of employee value, create equal opportunities for competition, give full play to the value of employees, and strengthen the selection of high-quality personnel in scientific research and technology, business management, and market development. In 2024, there were 125 employees.

7.1 Human Resources

7.1.1 Summary

To achieve the company's strategic development goals, the company has established a human resource development and management system composed of five major systems: job analysis and evaluation system, compensation and incentive system, performance evaluation system, training and development system, and quality and ability identification system. The incentive mechanism is constantly improved, enterprise culture construction and employee training and education are strengthened, employee career development channels are designed, the potential of employees is fully utilized and mobilized, a good working environment and humanistic environment are actively created, and the common development of the enterprise and employees is effectively promoted.

7.1.2 Organization and Management of Work

a) Efficient organizational operation mechanism

The company adheres to the scientific principle of "positioning according to tasks and assigning personnel according to positions," implementing dynamic job analysis and dynamic staffing methods, and flexibly adjusting job settings and personnel allocation. Currently, department heads have formulated, described, and stipulated the job responsibilities of employees in their respective departments based on the characteristics of their work, and reported them to the Human Resources and Administration Department, establishing a functional responsibility system centered on "Departmental Responsibilities" and "Job Descriptions," clarifying the functions, responsibilities, qualifications, work authority division, and organizational relationships at all levels. In addition, to promote the full authorization and exercise of power by various functional organizations, the authority of managers at all levels is clearly defined each year according to business development.

In order to mobilize the initiative and enthusiasm of employees, the company can reasonably allocate work and authorize power, and each functional department has relatively independent authority to carry out work and is responsible for performance. In order to create an organizational culture atmosphere of full participation in management and mobilize the initiative and enthusiasm of employees, the company has carried out flexible and diverse cross-departmental organizational activities.

Table 7-1 Examples of Cross-Functional Teams at Shangyou Cutting Tools

Name	Function		Participating Departments	Management Department
Trade union	Guarantee of employees' legitimate rights and interests and implementation of various welfare policies		Representatives of various departments	Human Resources and Administration Department
Name	Function	Participating Departments		Management Department
Excellent Performance Model Promotion Committee	Promote the excellent performance model and continuously improve the maturity of enterprise management	All departments		Human Resources and Administration Department
Quality Improvement Team	Established according to technological breakthroughs, on-site improvements, and management breakthroughs, using the PDCA method to identify problems and design new methods and innovations Solutions	All departments		Human Resources and Administration Department
Safety Production Team	Responsible for the enterprise's safe production operation management	All departments		Human Resources and Administration Department

Compensation and Performance Management

Team

Regularly conduct performance evaluations

Company senior management and related

Department leaders

Human Resources and Administration Department

Energy Conservation and Emission Reduction Work Leading Group

Guide and promote energy conservation and emission reduction work

Company senior management, production

and related functional departments

Human Resources and Administration Department

Clean Production Work Leading Group

Regular and irregular inspections of the company's clean production work implementation

Human Resources and Administration Department and related

functional departments

Human Resources and Administration Department

b) Employee capabilities

The company pays great attention to cultivating employee capabilities. According to the company's strategy and human resource planning, the demand for employee types and quantities is determined, job analysis is conducted, the characteristics and skills required for employees are identified, job descriptions are formed, and employees are recruited, appointed, and retained. After analyzing the current overall situation of human resources, the future demand for human resources is predicted to meet the company's current and future human resource needs.

1. Comparative analysis of the company's current and future employee capability needs and existing capabilities

The company evaluates and identifies employee capabilities through a series of methods such as recruitment screening, internships, individual performance appraisals, and proficiency in specialized skills operations. At the same time, based on strategic development, the company compares the quality and ability requirements for employees at all levels with the capabilities of existing personnel. To shorten the gap, the company conducts internal training to improve personnel quality through internal training and external training; at the same time, it participates in various training courses organized by the government, industry associations, and professional training institutions.

Table 7-2 Comparison of Current Employee Capabilities and Future Employee Capability Needs

Analysis Object	Future Capability Needs	Capability Evaluation Method	Gap	Ways to Improve Capabilities
Senior Management Personnel	Possessing a far-sighted strategic vision, accurately grasping the characteristics of the macroeconomic situation, discerning market economic hotspots and opportunities, and making good development plans for the company in the near and long term	Economic Indicator Assessment Quality Evaluation Indicator System	The ability to grasp the macroeconomic situation needs to be further improved, and development planning should be more scientific and strategic	Strengthen the study and research of political and economic theories High Level management courses and seminars Training
Middle Management Personnel	Possessing comprehensive, systematic, and professional management knowledge, possessing excellent management and innovation capabilities, becoming an expert and authority in a certain field within the company	Performance Interviews Job Review	Management professional knowledge and innovation capabilities need further improvement	Cadre Rotation Overseas Training
Professional and Technical Personnel	Requires systematic and solid professional knowledge,	Professional Title Review	Professional skills level and	University-sponsored training

Analysis Object

Future Capability Needs

Capability Evaluation Method

Gap

Ways to Improve Capabilities

Master the current situation and development trends of the industry at home and abroad, possess high project research capabilities, and the scientific research and technological innovation are at the leading level in the industry

Skills Appraisal

Project R&D capabilities need further improvement, and innovative thinking needs further expansion

Professional and technical learning career

Qualification training mentoring system

Degree

Administrative Support Personnel

Possessing profound professional theoretical knowledge and management knowledge, strong team awareness and good public credibility, possessing good communication skills and the ability to organize and complete work processes

Performance Appraisal

Professional Title Review

Public Evaluation

Execution needs to be strengthened, theoretical knowledge needs further learning, team cooperation awareness and innovative thinking awareness needs further improvement

Job rotation education

Management literacy training

Marketing Personnel

Possessing certain technical professional knowledge, good interpersonal relationships and interpersonal communication skills, excellent market marketing capabilities and keen market insight

Performance Appraisal

Market Development

Customer Maintenance

Market development capabilities and customer maintenance awareness need further improvement

Sales training project management training

All Employees

Good ideological and political quality, high cultural quality, leading professional skills, identification with the company's corporate culture, good at learning, and willing to innovate

Performance Appraisal

Professional Title Review

Skills Appraisal

Overall cultural quality and professional and technical level need to be improved

External training in-house training

2. Clarify the characteristics and skills required of employees by the company

The company conducts in-depth investigations into the personnel needs of various functional departments. Through job evaluation and job analysis, it determines job qualifications and job capability requirements, evaluates employee job capabilities in terms of professional knowledge, skills, education, and experience, conducts skills training, and optimizes human resources reasonably to ensure that employee capabilities match job capability requirements. Human resource demand planning mainly predicts personnel demand within the next 5 years, mainly including: regular personnel demand, professional and technical personnel demand, and special personnel demand.

3. Improve employee skills and business level

Through job analysis, the company identifies key positions and adopts differentiated capability improvement training for personnel in different positions, such as in-company job skills training, business knowledge training, external training, apprenticeship system, and internal departmental learning system, establishing a mechanism of survival of the fittest to improve the business and skills level of existing personnel and ensure that employee capabilities meet the company's development requirements.

4. Attract and recruit talents through multiple channels

For many years, Shangyou Cutting Tools has adhered to the concept of "recruiting, retaining, and utilizing well." Based on the established human resource management work ideas, it continuously promotes the optimization of labor combinations and "finds the most suitable people." The company does not restrict regions and vigorously attracts and introduces talents from all over the country. It adopts various effective measures to reasonably allocate human resources and conducts screening for personnel recruitment and employment through written examinations, interviews, and probationary period assessments to ensure that employees meet the job requirements. The company improves welfare benefits, advances the focus of training, strengthens the introduction and cultivation of high-level talents, and continuously strives towards the goal of building a team of "loyalty, responsibility, and dedication," providing continuous impetus for the company's development.

7-3

Table Examples of Shangyou Cutting Tools Recruitment Channels Recruitment Method

Main Content	Online Recruitment
Includes Zhejiang Talent Network, Wenling Talent Network, Zhuobo Network, 51job, and the company website, etc.	On-site Recruitment
Participating in various recruitment fairs held by Zhejiang Provincial Talent Market and Wenling Talent Market	Campus Recruitment
Cooperating with universities to directly absorb outstanding graduates to work at Shangyou Cutting Tools	Internal Employee Recommendation
内部员工推荐	Encourage all employees to participate in recommending excellent talent to join the company, while preventing unqualified applicants from entering the company through personal connections
Internal Competition	Encourage employees who meet the job requirements to compete for higher or more suitable positions through fair competition

Target	Recruitment and Introduction Methods	Specific Measures
Senior Management Personnel	Internal promotion, external headhunting	Promote from outstanding reserve talents within the company. Headhunt through headhunting firms.
Middle Management Personnel	Internal recruitment, external search	Post internal recruitment advertisements within the company, and reserve talents who meet the basic conditions will participate in the competition. Recruit through recruitment websites, headhunters, and targeted searches.
Technical Talent	Internal recommendation, school-enterprise cooperation	Recruit through internal employee recommendations and cooperation with vocational colleges.
Technical Workers	Graduates come to the company for internships	Contact students from vocational colleges and technical schools to intern at the company, receive advance job skills training, and shorten the employee maturity cycle. After the internship, select and employ the best based on a comprehensive assessment.
Ordinary Employees	Direct recruitment from the place of origin	Establish a long-term and stable cooperative relationship with local government labor departments where migrant workers gather.

Table 7-4 Shangyou Tool Innovation Recruitment and Introduction Methods

5. Multiple ways to retain key employees

The company provides a relaxed environment, a good atmosphere, and a development platform for talents, and truly achieves retaining people through treatment, emotion, career, and system. It also uses excellent corporate culture to motivate and retain key employees, enhance employee cohesion, and help them grow with the company.

Table 7-5 Company's Employee Retention Strategy

Strategy	Specific Implementation
Retention through Remuneration	Through the implementation of the salary system and performance appraisal system, employees receive reasonable compensation, and continuously improve employee benefits to make them feel the superiority of talent treatment, enhance the sense of responsibility and dedication of key personnel, and achieve retention through remuneration.
Retention through Emotion	Through organizing meetings, employee birthday wishes, employee cultural and sports activities, visits to employees in difficulty, and helping employees solve problems such as children's schooling and family employment, create a working environment with humanistic care, care for employees, enhance their sense of belonging, and achieve emotional retention.
Retention through Career	The company sets clear strategic development goals, allowing employees to feel that their work is closely related to achieving the company's development goals.
Strategy	Specific Implementation

By designing career development plans for various talents, integrating talent development with enterprise development, enhancing the sense of ownership of talents, and thus achieving career retention.

Retention through System

In the use of talents, the company introduces a market competition mechanism, adheres to the principles of fairness, competition, and selection, allowing talents to stand out. In terms of talent selection standards, it adheres to the principle of both ability and political integrity, insisting on filling management positions with people who have good conduct, real skills, and high prestige among the masses. It adheres to the combination of professional assessment and comprehensive examination. It emphasizes performance and highlights ability. Through the implementation of the system, talents feel that they have status in their positions, economic benefits, life security, and respect at work.

In addition, the company adopts targeted measures based on the individual needs of employees, allowing talents at all levels to have no worries in life and fully realize their self-worth in their work, treating work as an enjoyment. This attracts and retains a large number of key talents, providing continuous impetus for the development of Shangyou Tools.

Table 7-6 Overview of Retention Measures for Different Personnel Categories

Employee Category	Retention Measures
Ordinary Workers	Provide a stable and safe working environment and implement a fair and reasonable performance appraisal mechanism.
Skilled Technicians	Excellent salary and benefits, labor protection, various activity venues, and career development channels.
Technical Engineers	Salary and benefits, special allowances, career development platform, learning and training opportunities, and various activity venues.
Middle Managers	Highly competitive annual salary, provision of stock options, and opportunities for further education.
Senior Managers	Highly competitive annual salary, corporate culture, and development prospects.
Sales Personnel	Fair performance appraisal, generous bonuses, corporate culture, and development prospects.
New College Graduates	Establish a sound training mechanism to improve personal abilities, a smooth career development channel, a people-oriented corporate culture, a harmonious talent growth environment, and provide various activity venues.

c) Adopt suggestions from relevant parties through multiple channels to achieve communication and skills sharing.

1. Multi-channel communication, reasonable adoption of suggestions from relevant parties.

The company emphasizes two-way communication between leaders, employees, and partners, establishes a variety of communication methods with Shangyou Tool's characteristics, actively listens to various opinions and suggestions, and reasonably adopts them to promote the improvement of business skills and work level, laying the groundwork for the promotion of fairness, justice, and competition mechanisms, and facilitating personnel stability and the continuous advancement of various businesses.

7-7 Shangyou Tool Communication Channels Table

Communication Targets	Communication Methods		Communication Content	Frequency
Internal Employees	Regular Meeting	Executive Meeting	To solve the company's overall business decisions and coordination issues	Daily
		Weekly Meeting	Report production and sales status, other departments cooperate and coordinate	Weekly
		System Improvement Meeting	Analysis and improvement of problems in the monthly operation process	Monthly
	Employee Satisfaction Survey		Survey on company culture, work, canteen, logistics, etc.	Quarterly
	Performance Interviews		Monthly communication of employee performance effectiveness and shortcomings	Monthly
	Work Discussion		Discuss internal work arrangements	Daily
	Corporate Email		Daily work contact	At any time
	Company Website		Internal and external communication of company information	At any time

Communication Targets	Communication Methods	Communication Content	Frequency
Suppliers	Visiting suppliers and high-level leaders	The company and key suppliers conduct irregular high-level mutual visits	Twice a year or more
	Meeting and communication	The purchasing department conducts irregular on-site inspections and supervision of the supplier's quality management status, conducts face-to-face communication, and puts forward written quality improvement requirements. The improvement effect is verified at the next inspection.	Irregular
	Written form	When purchasing personnel sign contracts and agreements with suppliers, they directly include the reasonable opinions and suggestions put forward by the suppliers in the contract and agreement text.	At any time
	Phone and Email	In the daily production process, timely feedback to the supplier on the discovered procurement quality problems, and propose subsequent improvement measures.	At any time
Customer	See 4.3 "Customer and Market"

2. Communication and knowledge and skills sharing methods

In order to further improve the efficiency of organizational operations, the company requires various departments and positions to carry out various forms of communication and exchange. The company has established various communication platforms to achieve instant communication and skills sharing between various functional departments and positions in the company, thereby effectively enhancing the company's affinity and cohesion, and effectively promoting effective communication and learning between the company and customers, processes and processes, and functional departments.

Form	Communication Methods	Content	Target	Purpose
Network	Company Website	New product information, company development, policies and regulations, work dynamics, talent information, etc.	Various functional departments and employees	Effectively obtain the company's product information and development dynamics
Network	Information System	Production, Procurement, Sales	Various functional departments	Rapid response, customer satisfaction
Meeting Communication	Weekly meetings, monthly business meetings, advanced commendation meetings, annual business work and summary meetings, etc.	Progress of production and operation work, technical quality issues, employee development, knowledge and experience, customer needs, sales experience, advanced deeds, etc.	Various functional departments and employees	Resource allocation, information transmission, skills sharing, mutual cooperation, mutual learning
Master-apprentice	Passing on, helping, and bringing up	Operational skills and experience	Between positions	Inheritance and innovation, skills sharing
Internal Communication	Inter-process visits, workshop exchanges, functional department exchanges, seminars and talks	Product and service quality, technical experience exchange, etc.	Functional departments and processes	Improve management level and solve problems between processes, and achieve skills sharing
Spare time Exchange	文艺晚会、体育竞赛等	Harmonious internal atmosphere, expanding internal communication channels	Between employees	To build a relaxed communication channel for leaders and employees

7-8 Table of organizational information communication channels

7.3 Employee Performance Management

The company implements the Balanced Scorecard (BSC) to decompose the company's strategy and annual business goals into KPI indicators, ultimately quantifying and assigning responsibilities to various departments and positions to ensure the achievement of overall goals. The Balanced Scorecard uses four dimensions for evaluation,

including customers, finance, internal operations, and learning and growth, ensuring customer-centricity while considering the development of the company and employees.

a) Establish a performance evaluation system based on KPI indicators

Based on the company's strategy, the Human Resources and Administration Department formulates annual business goals and decomposes them into departmental KPI indicators. Departmental KPI indicators are implemented to department heads through departmental performance indicator documents.

Each department, based on its employee performance appraisal methods, conducts quarterly and annual appraisals of ordinary employee KPI indicators and the completion of job process management.

To ensure the achievement of the company's performance goals, the company has formulated assessment methods for production, quality, and safety processes, monitoring various factors in the process of achieving the company's performance goals, reflecting the principle of performance appraisal that gives equal weight to process management and target effectiveness.

b) Performance appraisal implementation process

The performance appraisal KPIs for Shangyou cutting tools are all numerically represented. Quantitative assessment can more intuitively and concisely inform employees of the company's goals, while also reducing the potential for disputes that may arise from qualitative assessments. The performance score ultimately affects performance-based pay. Performance-based pay is divided into two parts: one part is paid according to the appraisal cycle based on the corresponding proportion of the job level.

c) Performance feedback and application

At the monthly work report meeting, the Human Resources and Administration Department is responsible for feeding back the quarterly performance evaluation results of each department to all middle and senior leaders attending the meeting, and the departments then feed back to their subordinate employees. If an employee believes that they have been treated unfairly or are dissatisfied with the assessment results, they have the right to appeal directly to the Human Resources and Administration Department during or within 10 days after the assessment period. After accepting the performance appeal, the Human Resources and Administration Department should promptly verify and handle it according to the appeal handling procedure. By establishing and improving a "fair, just, and ability-based" performance appraisal system, linking the assessment results to employees' salaries and benefits, job adjustments, training and development, and vacations, etc., a mechanism for employing people that allows for promotion, demotion, entry, and exit, and self-discipline within the enterprise is established. This fully mobilizes employee enthusiasm, optimizes the allocation of talent within the company's various positions, and promotes the building of a high-quality, lean, and efficient workforce.

In addition, the company also provides a relatively rich range of welfare programs to meet employees' needs for health factors.

Table 7-9 Existing welfare programs of Shangyou cutting tools

Project	Target	Standard
High-temperature allowance	All employees	According to relevant national policies
Five insurances and one fund	All employees	In accordance with relevant national and local government regulations, five insurances and one fund are paid for employees, and the individual portion is deducted from their wages. Social insurance: Trial employees purchase work injury insurance, and formal employees purchase full insurance;
Travel expenses for visiting relatives	Department managers and above employees	Reimbursement once a year
Festival bonus	All employees	Enjoy a certain amount of festival bonus or gifts during the Spring Festival/Mid-Autumn Festival/Dragon Boat Festival
Wedding bonus	Employees who have worked for 2 years Employees	Employees who have worked in the company for more than two years can enjoy a certain amount of wedding bonus when they get married.
Birthday gift	All employees	Employees enjoy a birthday gift in their birthday month.
Physical examination	Special positions, supervisors and above employees	Once a year for special positions, and once every two years for supervisors and above.
Years of service Benefits	Employees who have worked for more than 5 years	Employees who have worked in the company for five years are rewarded with 5000 yuan, those who have worked for 10 years are rewarded with 8000 yuan, and those who have worked for 15 years are rewarded with 10,000 yuan.
Travel	All employees	Employees travel once a year.
Other	All employees	New Year's Eve dinner/Year-end gathering

7.4 Employee learning and development

a) Employee education and training

Shangyou cutting tools regards employee learning and development as an "investment," and considers the creation of a learning organization and the fostering of a learning atmosphere for all employees as an important part of the company's long-term development strategy. Based on the company's strategic goals, annual development plans, job responsibilities, and performance improvement needs, the company assesses employee skill gaps and career development needs, and through comprehensive balancing, promotes employee learning and development in a direction that both promotes the achievement of the company's overall goals and promotes individual abilities and career development, enabling the company and individuals to develop together and achieve a win-win situation.

The company purposefully and systematically promotes the orderly implementation of training at all levels, strengthens training coverage, standardizes the daily operation of training management, and enhances the guidance of the company's strategic and management levels on employee quality cultivation.

1. Training needs determination

To meet the needs of human resource planning, based on the company's strategic planning, human resource planning, the need to cultivate market competitiveness, the company's annual business objectives, performance, and behavioral performance assessments, etc., balancing long-term and short-term goals with employee development, personalized needs, and the needs of training and career development, according to the "Training Management System," through investigation, analysis, and comparison, the "Employee Training Needs Table" is formulated, and the training needs of four modules: operation, skills, quality, and education are determined.

Figure

7.4-1 Training needs determination workflow chart 7-10

Table Training needs survey methods Method

Investigate personnel files	Purpose
Investigate personnel's basic information and historical records to understand training needs.	Questionnaire survey
Understand employees' own interests and hobbies to discover training needs.	Observation
Go to the workplace to understand the specific situation of employees, thereby obtaining the most original hand data on training needs.	Report record
A method for determining training needs through the analysis and evaluation of organizational effectiveness indicators.	Interview
Conduct face-to-face communication with employees to deepen understanding of their work and obtain training needs information.	与员工进行面对面的交流，加深对员工工作的了解以获取培训需求信息
Training Evaluation	Determine if further strengthening is needed through the evaluation of training effectiveness

While conducting the training needs survey, the company determines training needs through analysis at three levels: organizational, business, and individual, based on the current employee capabilities and human resource planning

Table 7-11 Training Needs Analysis Table

Levels of Needs Analysis	Main Analysis Content	Purpose
Organizational Analysis	Based on the company's development strategy, determine training needs through comparative analysis of internal and external factors, and by comparing the company's current production and operation status and problems	Meet the needs of the company's long-term development strategy and performance improvement
Business Analysis	Focus on comparing business conditions, technological changes, job description standards, and current job holders to determine training needs	Meet the needs of the company's business development and technological innovation
Individual Analysis	Focus on analyzing the qualities and work skills of personnel in key jobs and positions to determine training needs	Meet the needs of employee performance improvement and career development

2. Training Plan Determination

Based on training needs in four modules: operations, skills, aptitudes, and education level, an education and training plan is formulated, covering training objectives, target audience, methods, content, time, location, budget, and facilities. The Shangyou Tools education and training plan is divided into company-level, departmental annual, and monthly training plans, which are respectively formulated and organized for implementation by the Human Resources and Administration Department and various departments. When implementing various training plans, monitoring measures are proposed to ensure training effectiveness, addressing various constraining factors and predicting training outcomes. Specific practices are as follows:

The Human Resources and Administration Department conducts a company-wide training needs survey every December. Survey methods include questionnaires (online, paper), interviews with department heads, interviews with key employees, performance data analysis, and analysis of business capability requirements based on company strategy. Through the training needs survey, the overall company training needs are obtained. After prioritizing the needs, the Human Resources and Administration Department formulates the training plan for the next year. The plan content includes training organization methods, training course plans, training credit arrangements, and other aspects

Each functional department shall submit its training needs plan and training expense budget for the following month before the 1st of each month. After review by the Human Resources and Administration Department, it shall be submitted to the主管领导 (supervisor in charge) for approval. Implementation may proceed only after approval. Training projects that do not involve expenses shall be directly approved by the department head and can be implemented upon approval, but training records must be promptly submitted to the Human Resources and Administration Department for archiving, and the training supervisor is responsible for calculating training credits; the Human Resources and Administration Department will compile the training needs of all departments, create a summarized training plan, and make it public for facilitating inter-departmental communication and learning

3. Training Implementation

To ensure the effective implementation of the training plan, the company, based on its overall training strategy, has established a tiered training system. This system defines appropriate training objectives, content, and primary methods for senior executives, middle managers, and grassroots employees, ensuring that training projects are implemented in alignment with the company's overall strategic development plan

Table 7-12 Training Tier System Table

Training Level	Training Objectives	Main Training Content	Training Method
Senior Executives	Enable them to grasp changes in the operating environment, industry development trends, and decision-making procedures and methods, thereby enhancing their insight, decision-making, and leadership abilities to ensure decision-makers correctly fulfill their responsibilities	Focus on concepts and philosophies, in addition to systematic management theories and skills required by a market economy, such as management, organizational behavior, marketing, corporate business strategy, corporate operation process control, and the science and art of leadership	Primarily external training arranged by the company, with planned arrangements for senior managers to participate in studies, overseas visits, etc
Middle Management	Possess diverse talents and higher-level management capabilities, improve management work performance, enhance management level and quality, and cultivate successors for the company's decision-making level	Basic management knowledge and skills, knowledge and skills in areas such as technology and sales, work allocation, improvement of work methods, and improvement of work processes	Primarily in-company training, supplemented by external training
Front-line Employees	Improve their professional and technical skills and business capabilities, and master new knowledge and technologies in their respective fields	Conduct repeated intensive training on in-service employees' job responsibilities, professional skills, operating procedures, business processes, etc., to enable employees to freely apply, utilize, and improve upon a solid theoretical foundation	Refer to Middle Management

According to the training plan, the company organizes and implements various levels and types of training through a three-tier training network

Table 7-13 Company Three-Tier Training Network

Training Network	Carrier/Platform	Undertaken Projects	Faculty System
Level 1	Various colleges and universities, social training institutions, etc	External Invitation, External Dispatch Training	External Lecturers
Level 2	Various Functional Departments of the Company	External Dispatch Training, Internal Training	External Lecturers, Internal Trainers
Level 3	Various Teams/Groups	External Dispatch Training, Internal Training	External Lecturers, Internal Trainers

4. Training Effectiveness Evaluation

To assess the quality and effectiveness of training and provide a basis for training improvement, the company collects employee training results through various methods such as questionnaires and learning reports. Based on the company's training concept, it is planned that in the next phase, a tiered evaluation approach will be attempted for some important courses and personnel, varying based on training audience, content, and objectives

Table 7-14 Evaluation of Training Effectiveness

Assessment Methods	Assessment Time	Applicable Training Types	Assessor	Assessment Focus
Understand employees' own interests and hobbies to discover training needs.	Before and After Training	All types of training	Human Resources and Administration Department	Applicability, Effectiveness
Interview	Probationary Period Confirmation After	Probationary Period Performance Appraisal	Human Resources and Administration Department	Notification of Strengths and Weaknesses and Improvement Measures Implementation
Learning Report	After Training	Quality and Management Training	Human Resources and Administration Department	Key Learning Outcomes and Action Plans Implementation
Personal Reflections	After Training	Quality and Management Training	Human Resources and Administration Department	Key Learning Outcomes and Action Plans Implementation
Performance Appraisal	Monthly	Work Ability	Department Manager	Monthly Plan Completion Status

Assessment Methods	Assessment Time	Applicable Training Types	Assessor	Assessment Focus
Training Implementation Record	After Training	All types of training	Human Resources and Administration Department	Training Management Procedures

5. Training Improvement

Shangyou Cutting Tools places great emphasis on evaluating training effectiveness and promptly improving relevant training methods. For the training work organized over the past year, the Human Resources and Administration Department spearheaded the organization of an annual training work summary meeting, combining employee and company performance, as well as training satisfaction and various training effects to comprehensively evaluate the effectiveness and practicality of education and training, improve shortcomings, and formulate, implement, track, and provide feedback again to continuously improve training effectiveness.

b) Employee Career Development

To meet the needs of the company's strategic development for human resources and the needs of employee career development, the company has gradually established a mechanism for talent cultivation and development, and has begun to effectively manage employee career development.

1. Combining Push and Pull to Leverage Employee Potential and Proactiveness

To enable employees to maximize their potential and proactiveness and establish correct career development plans, the company adopts a combination of push and pull methods, using multiple channels and perspectives to encourage employees to continuously learn and build a learning organization.

Push: The company establishes a mechanism for employee competition for positions and exit, putting pressure on employee performance and ability improvement; those who do not advance will regress. If performance and ability do not meet requirements, measures such as job transfers and retraining are adopted to encourage employees to continuously learn and take the initiative.

Pull: The company has established a compensation incentive system. It clarifies job responsibilities, delegates sufficient authority, and guides employees to work creatively and autonomously, fully leveraging employee potential.

2. Building a Broad Development Platform for Employees Through Multiple Avenues

To ensure that employees with different abilities, qualities, and career interests can find suitable career paths, the company has clarified the promotion evaluation and management methods for different job series, providing ample opportunities for employees to advance.

To enhance employee career planning awareness, the company's Human Resources and Administration Department has formulated a career planning system, and a dedicated person is responsible for guiding its implementation. After the probationary period, the company uses a variety of assessment tools and methods to evaluate employees' personal strengths, skills, and career inclinations, helping employees to understand themselves. This includes surveying employee career interests, qualifications, skills, and personal backgrounds, setting future career goals, and developing plans. At the same time, the dedicated personnel of the Human Resources and Administration Department are also responsible for regularly tracking and managing employee career goals, supervising employees' progress toward their set goals, and ultimately achieving their career goals.

I. Company Functional Departments Management Staff

II. Marketing System - Market Development Personnel Marketing Personnel

7.4-1 7.4-2 Employee Career Development Channels

3. Multifaceted Assistance for Employee Career Development

In addition to providing guidance on employee career development, the company also actively builds various learning and growth platforms, such as the company's three-level training, employee job rotation, and reserve talent cultivation plan, to help employees achieve career development. A virtuous cycle of pre-job training, post-job development, and training improvement has been initially formed, promoting the rapid and stable development of employee careers.

Table 7-15 Mechanisms to Promote Employee Career Development

Mechanism Category	Description
Internal Training	The company holds regular on-the-job knowledge and skills training every year, utilizing its technological advantages to provide highly targeted training to technical personnel and production personnel in relevant positions, enabling ordinary employees to quickly understand and learn advanced technologies and rapidly improve their technical level.
Job Rotation	Based on employees' abilities, their own wishes, and the company's personnel needs, the company provides an open and relaxed environment for employee job rotation. Job rotation not only improves employees' comprehensive quality and abilities but also enhances the value of the company's human resources.
Internal Competition	For some positions, the company publishes job responsibilities and requirements in advance, and uses employee self-reporting, competition for positions, and fair interviews to determine candidates, providing an effective internal promotion channel for employees.
External Training	For some sales personnel, after training at headquarters, the company sends personnel to work in various locations, working independently,

Mechanism Category	Description
	fully exercising employees' abilities and enabling rapid improvement.
System Support	The company has established a series of systems, including recruitment, compensation, performance, and training systems, allowing each employee to fully understand the situation and their entitlements.

7.5 Employee Rights and Satisfaction

Occupational health and safety is a fundamental guarantee provided by the company to all employees. The company has established an occupational health and safety management system to ensure that employees have a healthy and safe working environment, protect the rights of all employees, and ensure business continuity. The company's top management actively promotes mass quality management activities and provides the necessary resources. The diverse activities not only motivate the enthusiasm and creativity of all employees but also ensure the full realization of their self-worth, improving the satisfaction of all employees.

a) Employee Rights

1. Manage according to law and create a comfortable working environment

To ensure employee life safety and occupational health, the company provides safety knowledge training and organizes safety competitions to strengthen the safety awareness of all employees and reduce the accident rate. The company conscientiously implements the "Labor Law," "Safety Production Law," and "Occupational Disease Prevention and Control Law." Special protection measures are taken for special jobs, and necessary labor protection supplies are provided.

To standardize safe operations, regular 5S safety inspections are conducted in the workshop, and safety hazards are recorded promptly. Employees are encouraged to report unsafe factors and non-standard operations directly through the general manager's mailbox and submit improvement suggestions. The most influential factors affecting employees' health in the company's workshop environment are dust, noise, and high temperatures. An environmental management system and an occupational health and safety management system are established, implemented, and maintained to identify environmental factors and hazards in the workplace and take corresponding protective measures.

Table 7-16 Workplace Hazard Identification and Prevention Measures

Category	Hazards and Dangers	Preventive Measures
Safety Production	Damage to the factory building, products, equipment, and personnel caused by water pipe bursts and leaks	Turn off the main valve after work and conduct regular inspections during work hours
	Injuries caused by equipment malfunction or personnel operational errors	1. Regularly maintain and maintain equipment and establish a regular inspection system; 2. Implement equipment management by designated personnel and conduct pre-job training
	Injuries to personnel and goods caused by incorrect posture and methods during handling	1. Use the correct method to handle items according to their weight and shape; 2. Do not handle items beyond the load limit
	Aging of fire hydrants and fire extinguishers or inability to use them	1. Regularly inspect fire hydrants and fire extinguishers; 2. Conduct fire safety knowledge training and fire emergency evacuation drills for employees
	Fire damage caused by smoking in the factory area	1. Establish safety production management regulations; 2. Do not smoke in undesignated areas in the factory area;

Category

Hazards and Dangers

Preventive Measures

Public

Hygiene

Living garbage and solid waste will affect the health of employees and the surrounding environment

Adhere to the principle of "prevention first, combination of prevention and treatment" in public health work

Garbage is managed by classification, comprehensive governance, reducing employee and community concerns

In addition, for various safety situations encountered during production, the company has formulated detailed management regulations, operating procedures, and contingency plans, and regularly conducts safety training and inspections and assessments.

2. Prevention first, formulate various emergency plans

The company has established an emergency rescue and disaster relief leadership team and a rapid response mechanism. Based on the predicted possible emergencies and dangerous situations such as fires and typhoons, multiple emergency plans are quickly activated, including the "Special Equipment Accident Rescue Plan," "Major Accident Rescue Plan," "Fire Alarm and Fire Emergency Plan," "Personnel First Aid Emergency Plan," "Sudden Public Event Overall Emergency Plan," and "Sudden Environmental Event Emergency Plan." The emergency team's role is fully utilized to protect employee interests, prevent production shutdowns due to accidents, and promptly meet customer needs.

The company develops various emergency plans, provides corresponding training to relevant personnel, conducts irregular emergency plan drills annually, and regularly invites officers and soldiers from the local fire brigade to guide employees in fire drills and conduct drill effectiveness evaluations. Problems found during the drills are rectified to improve the organization's emergency response capabilities and employees' ability to handle various emergencies.

3. Ensure the continuity of production and operation and protect the interests of employees and customers

To ensure the continuity of production and operation and ensure that products are delivered to customers with guaranteed quality, quantity, and timeliness, the company is equipped with emergency equipment such as lighting equipment, fire-fighting equipment, communication equipment, and generator sets. When potential dangers and emergencies (such as fires and floods) occur, the corresponding emergency plans are quickly activated, and the command role of the emergency team is fully utilized. Technical support and material preparation measures are formulated to protect employee interests, prevent production shutdowns due to accidents, and meet customer needs for timely product supply.

To cope with business crises such as the bankruptcy of key suppliers and distributors, the procurement and sales departments constantly monitor the operating conditions of partners, regularly collect information on the financial credit and operating conditions of suppliers or distributors, promptly report anomalies, and establish a list of backup suppliers to prevent interruptions in raw material supply. In response to potential crises such as power outages and power restrictions caused by temporary national power shortages, the company has its own generator sets that can basically meet the normal needs of administration and production.

4. Encourage mass quality management activities and create an atmosphere of active participation

The company's mass quality management activities adhere to the principle of "wide mobilization and full participation," emphasizing the role of employees' initiative, with ordinary front-line employees as the main force of quality innovation. Energy-saving and emission-reduction projects, reasonable suggestions, and 5S activities are used as platforms for the company's mass quality activities. Various reasonable suggestion competitions are used to stimulate employee participation.

Enthusiasm, encourage employees to put forward reasonable suggestions, participate in mass quality management activities, and improve work processes. The company provides the resources needed for various activities and evaluates the results of the activities, recognizing and motivating employees to participate in quality management activities.

The company provides resources for all activities and evaluates the results, recognizing and motivating employees to participate in quality management activities.

Table 7-17 Resource Support for Quality Management Activities

Support Aspects	Support Measures
Clear organizational structure	The Human Resources and Administration Department is the company's quality management coordinating department, responsible for initiating, promoting, and supervising the full implementation of the company's mass quality activities.
Provide learning Exchange opportunities	Organize learning and exchange activities every six months and participate in advanced training; outstanding personnel will also be sent to other excellent companies in China for learning and exchange.
Establish an evaluation mechanism	The Human Resources and Administration Department organizes monthly evaluations and publishes rankings.
Incentive measures	Rationalization suggestion award; rewards are given after adoption based on the degree of performance improvement

b) Employee satisfaction level

Employee satisfaction is a goal that a successful enterprise should value. Employees are the internal customers of the enterprise. Only by taking care of both internal and external aspects can the enterprise achieve ultimate success. Our company's employee satisfaction has always been at a high level.

1. Identify key factors affecting employee rights, satisfaction, and motivation

To achieve the company's strategic goals, the company uses various channels such as the CEO's mailbox, rationalization suggestions, employee forums, opinion surveys, exit interviews, and special meetings to listen to and adopt employee suggestions. Through analysis and evaluation, key factors affecting employee rights, satisfaction, and motivation are identified and determined. Senior leaders promptly listen to the voices of employees, understand the effectiveness of employee support and security measures, and further address practical problems and difficulties in employees' work and lives.

Table 7-18 Key factors affecting employee rights, satisfaction, and motivation

Key factors	Affected parties	Possible impacts	Countermeasures
Work intensity, temperature, dust, noise, etc.	Production operators	Physical health, satisfaction	Improve processes, improve work environment 境
Salary, benefits	Production operators	Satisfaction, work motivation	Fair and reasonable compensation system
Salary, benefits	Professional and Technical Personnel	Satisfaction, work motivation	Fair and reasonable compensation system
Training opportunities		Work quality, career development	Personalized training
Career development		Work passion, talent loss	Career planning, development channels
Salary, benefits	Junior and middle-level managers	Satisfaction, work motivation	Fair and reasonable compensation system
Training opportunities		Work quality, career development	Personalized training
Career development		Work passion, talent loss	Career planning, development channels
Teamwork		Work passion, talent loss	Strengthen team building

Key factors	Affected parties	Possible impacts	Countermeasures
Living environment		Work passion, talent loss	Improve the living area environment and organize various entertainment activities
Respect and recognition	Senior Management Personnel	Sense of achievement	Incentive policies
Corporate culture	Senior Management Personnel	Sense of belonging	Cultural integration

2. Employee satisfaction measurement

In order to understand employee satisfaction in a timely manner, the company uses questionnaires, interviews, and other methods to measure employee satisfaction. A satisfaction survey targeting employees in some departments is conducted every quarter. The survey content mainly involves work environment, corporate atmosphere, salary and benefits, and corporate culture. For common problems with low satisfaction, the responsible department, the implementation time, and improvement measures are specified. An annual satisfaction survey for the entire company is conducted every year. By understanding employee satisfaction, the company can promptly understand the employees' psychological dynamics, allowing senior leaders to make adjustments in strategies. In addition, the company also requires the Human Resources and Administration Department to conduct interviews with key personnel who have voluntarily left their positions to hear their feedback on their satisfaction and dissatisfaction during their work, so as to make subsequent improvements.

3. Provide targeted and personalized support for employees

The company actively advocates a people-oriented management philosophy. Through employee satisfaction surveys, rationalization suggestions, and employee forums, while identifying the needs of personnel in different job categories, it also pays special attention to special groups among these people, such as focusing on the work environment, working hours, work intensity, long-term career development, and equal opportunities for female employees. At the same time, the company has formulated various security measures for the needs of employees at different levels and provides comprehensive, targeted, and personalized support for employees, making the company a true growth platform. For example, in response to the needs of frontline employees who are very concerned about material rewards, the company implements a clear reward and punishment system for different types of work, taking into account external fairness while ensuring internal fairness; for managers who are particularly concerned about growth and development factors, the company has established a relatively scientific and reasonable training and promotion system to support managers' needs in this area.

Table 7-19 Employee personalized needs and support

Employee Category	Key influencing factors	Support Measures
Production frontline personnel	Health needs	Strengthen on-site management, distribute labor protection supplies, distribute high-temperature subsidies, increase investment in dust removal, ventilation, and other environmental protection equipment; occupational health checkups
	Work reward needs	Implement performance-based wages, link salary to performance; establish special allowances; provide hardship subsidies to employees in difficulty
	Need for job stability	Adopt contract management, clarify labor relations, and clearly define rewards and punishments
	Need for learning and growth	Improve employees' business skills through internal training classes and job rotations; provide application-oriented training and technical sharing

Employee Category	Key influencing factors	Support Measures
Administrative frontline personnel	Need for work remuneration, benefits, and social recognition	Provide competitive salaries and generous benefits
Administrative frontline personnel	Need for a sense of accomplishment at work	Establish a competitive incentive mechanism, link promotion and job advancement to individual performance, and use various forms of commendation to enhance employees' sense of accomplishment
Marketing frontline personnel	Work remuneration and social recognition needs	Provide attractive salaries, rich employee benefits, and holiday benefits
	Need for work support	Equip technical service personnel, provide new product knowledge training, customer production process analysis, and analysis of product usage needs
	Need for learning and growth	Provide professional knowledge training on marketing management, negotiation strategies and techniques, and business etiquette
Technical frontline personnel	Learning, growth, and development opportunities needs	Assist in designing career development plans, provide forward-looking training; conduct internal company training; closely monitor professional and technical qualification promotions
	The need for a good environment	Improve office conditions and living area environments, build activity centers, rent sports fields, etc.
	Need for work remuneration, benefits, and social recognition	Provide competitive salaries and generous benefits; provide external training
Middle and senior managers	The need for a sense of accomplishment The need for social recognition	Provide competitive salaries; implement performance-based annual salaries
Middle and senior managers	Need for learning and growth	External training, etc.
Female employees	Work environment	Offer condolences to female employees on holidays such as International Women's Day, and also pay attention to their living conditions; the Human Resources and Administration Department regularly monitors the workload and work environment of female employees on the front lines, and maintains their physical and mental health through job adjustments and rotations

The company uses various methods, such as National Day celebrations, annual gatherings, skills competitions, cultural and sports activities, etc., to enrich employees' work and leisure lives, create a harmonious work environment, and also organized donations for the Wenchuan and Ya'an earthquakes, inspiring employees' love, enthusiasm, and creativity, and promoting the harmonious development of the company. The company has also built basketball courts, reading rooms, and employee activity rooms, etc., to meet the multi-level needs of employees, allowing employees to truly feel the happiness and warmth brought by the Shangyou Tool family.

4. Understand employee opinions and suggestions, and provide timely and positive feedback and handling

Senior leaders investigate and understand employee opinions and suggestions through employee satisfaction surveys, meetings, visits to grassroots levels to participate in departmental meetings, employee emails, etc. Clear issues are tracked and supervised by the Human Resources and Administration Department, requiring relevant functional departments to handle them within the specified time. Senior leaders pay attention to understanding the situation on-site and provide timely and positive feedback within the promised time.

VIII. Innovative Technology Building a Green Environment

In 2024, Shangyou Tool adhered to the principle of "energy saving, low carbon, and green development." Based on the actual situation, various energy-saving and emission-reduction work was carried out in terms of publicity and education, technological innovation, and scientific management. The company actively developed energy-saving and environmentally friendly technologies for equipment, continuously built a green supply chain, and earnestly carried out energy conservation and consumption reduction in scientific research and office work, effectively shouldering its social responsibilities. A total of 320,000 yuan was invested in energy-saving and emission-reduction work in 2024.

1. Create green products and solutions

As an innovative high-tech enterprise, Shangyou Tool closely integrates technological innovation with green development, is committed to developing green technologies, creating green products and solutions, and helping users save energy and reduce emissions. It is a Taizhou Green Factory.

2. Build a green supply chain

Shangyou Tool actively promotes the construction of a green supply chain, including green manufacturing and green logistics. Through energy-saving transformation of production equipment, increasing the proportion of green packaging, conducting external logistics cooperation, and optimizing production processes and technologies, it has effectively promoted energy saving and emission reduction in the supply chain.

In the production of self-developed products, the company has always integrated the low-carbon concept into the entire product design and production process. The raw materials and auxiliary materials and outsourced parts purchased need to undergo component analysis to ensure that they meet the requirements of production, processing, and sales; the design and development process uses FMEA for analysis, identifying potential failure modes and risk assessments; by providing technology to suppliers, helping suppliers improve the energy efficiency of their production processes to produce more products that meet green and environmental protection requirements.

With the goal of building a smart manufacturing demonstration enterprise, the company accelerates the innovation of management methods, develops intelligent processing equipment, applies for smart manufacturing projects, and establishes a positive and effective green and intelligent manufacturing system. In addition, improvements always follow ecological principles and ecological economic laws, saving resources and energy, avoiding ecological environmental pollution and damage, reducing waste generation from the source, and considering the production process to achieve technological innovation with the goal of minimizing the total life cycle cost of products.

3. Promote energy saving and emission reduction through refined management

The company always regards environmental protection as an important part of its sustainable development. Adhering to technological innovation, energy saving, and emission reduction, striving to minimize the impact of the company's development on the environment. Through continuous technological innovation, the consumption of energy and resources has been reduced, and the emission of waste has also been reduced. The company has a complete organizational structure and environmental management system, the pollution control work is remarkable and operates in a standardized manner, and is committed to guiding the improvement of the company's environmental protection and sustainable development according to the requirements of the ISO14001 environmental management system.

The company actively responds to the relevant requirements of the environmental protection department, eliminating outdated equipment and high-energy-consuming equipment, replacing them with low-emission, green, and high-efficiency equipment, reducing emission concentrations, and significantly reducing energy consumption compared to the previous year.

In 2024, the company's noise detection value was 55 decibels, meeting the Class III emission standard, a decrease of 3 decibels compared to 2023. Wastewater was reduced by more than 100 tons, with basically no waste gas emissions, and energy consumption per 10,000 yuan of output value decreased by 0.004 tons of standard coal, a decrease of 5.2% compared to 2023.

In 2024, the company successfully introduced the industry's most advanced fully automatic production equipment, realizing online detection. One production line can reduce the number of workshop personnel by 10, increase overall labor productivity by 20%, make the production process dust-free, and reduce waste emissions.

The company uses bulletin boards, internal publications, banners, etc., to continuously enhance employees' awareness of energy saving, emission reduction, and environmental protection, and cultivate employees' habit of consciously saving electricity, water, paper, and oil in their work and lives. The company has established a complete ERP, OA office system, and resource management system software. Through the paperless office system, by unifying the management of printing and copying, double-sided comprehensive reuse of paper, and the exchange of old ink cartridges and drums for new ones, a large amount of paper and ink cartridge consumption has been saved, reducing resource occupation.

In the daily production process, the company separately recycles and centrally processes usable and unusable waste. Waste oil generated during the production process is collected uniformly, and a qualified waste disposal company is hired for unified recycling and processing, strictly operating according to national environmental protection requirements, minimizing the impact of the enterprise on the environment.

IX. Promoting People's Livelihoods Focusing on Harmonious Social Development

As a member of the social family, Shangyou Tool always adheres to the concept of giving back to society, not only promoting advanced technologies and solutions to improve the high-performance needs of a wide range of users for products, but also actively and enthusiastically participating in community construction, promoting economic and social harmonious development.

1. Poverty alleviation Sharing in the era of moderate prosperity

For many years, Shangyou Tool has actively practiced the "pairing" work, helping to improve the economic development conditions of assisted areas and improve the living standards of the local people. Based on the resource characteristics and development status of the counterpart units, the company formulates poverty alleviation plans, provides poverty alleviation funds, gradually implements poverty alleviation projects, and deeply helps solve poverty problems.

2. Scientific assistance: Enhance self-sufficiency

Shangyou Tools, through increased technological and management output, helps regional supporting industrial chain suppliers improve their skills and management. A total of 50,000 yuan was invested in supplier support training. Through this series of support measures, core supplier companies have added more than 10 employees. Furthermore, through technological, quality, and management improvements, they continuously receive more orders from companies like Shangyou Tools, promoting healthy and orderly business development.

3、 Charitable Donations: Spreading Love and Warmth

Each year, the company participates in the city's Red Cross charity donation activities. In 2024, 100,000 yuan was donated to promote the concept of public welfare and spread love and warmth.

5、Volunteer Service Caring for Socially Vulnerable Groups

The company established a "Youth Volunteer Service Team" and continuously expands its volunteer service areas. To date, the company has seen a large number of employees enthusiastically engaged in public welfare, working with social welfare organizations on a long-term basis, carrying out activities such as donations and donations of books and clothing, caring for vulnerable groups in society. Since 2020, company volunteers have assisted impoverished students, providing scholarships to help them successfully complete their junior high school education. Subsequently, to help more impoverished students alleviate their concerns about their studies, company employees once again donated to the school's impoverished students, contributing their love and spreading positive energy.

6、Cultivating and Training Highly Educated Talents

The company encourages its management team and technical personnel to participate in education and EMBA training through "scholarships" and "paid study leave" to improve talent quality and increase the proportion of highly educated personnel in the company.

Improving talent quality and increasing the proportion of highly educated personnel in the company.

(1) School-Enterprise Cooperation for Engineering Practice and Training

Shangyou Tools integrates internal and external educational resources to explore new models of engineering education and school-enterprise cooperation in multiple dimensions. In 2024, Shangyou Tools collaborated with Zhejiang University of Technology to conduct engineering practice training for undergraduate students, hosting more than ten university students; at the same time, Shangyou Tools instructors went to vocational colleges to conduct engineering practice training for students, helping college students gain social experience and improve their professional skills.

(2) Cultivating Highly Educated Talents

In the past four years, Shangyou Tools has recruited a total of 23 university graduates, cultivating a large number of talents for the company.

X. Realizing Shareholder Rights

1、The company's rapid and stable development and strong operating performance protect shareholder interests.

In 2024, the company achieved product sales of 112.5 million yuan and a total profit of 19.98 million yuan.

2、Standard corporate governance, forming an effective check and balance corporate governance structure.

In accordance with the Company Law of the People's Republic of China and other laws, regulations, and the company's articles of association, the company has established a standardized corporate governance structure, continuously improving the shareholder meeting, board of directors, and supervisory board systems, forming an effective check and balance corporate governance structure between the power organs, decision-making organs, supervisory organs, and management. The shareholders' meeting enjoys the legal rights and powers stipulated by laws, regulations, and the company's articles of association, and legally exercises its powers to determine the company's business policies, major financing, investment, and profit distribution. The board of directors is responsible to the shareholders' meeting and legally exercises the company's business decision-making power. The supervisory board is responsible to the shareholders' meeting and supervises the directors and other senior management personnel of the company in performing their duties in accordance with the law. The operation of the "three meetings" is continuously standardized, and the system is continuously improved and perfected, forming a complete set of internal management and control systems that are mutually checked and balanced and effective. The company's perfect corporate governance structure fundamentally protects the legitimate rights and interests of shareholders and creditors. In 2022, the company held one shareholder meeting, two board of directors meetings, and two supervisory board meetings. The convening, notification, convening, deliberation of matters, voting procedures, and resolutions of the company's "three meetings" all comply with the provisions of laws, regulations, and the company's articles of association. The company treats all shareholders fairly and ensures that shareholders fully enjoy all the legitimate rights and interests stipulated by laws, regulations, and rules.

3、Continuously improving the level of corporate governance.

The company follows the requirements of relevant laws and regulations, combines the actual operating conditions of the company, revises various rules and regulations, continuously improves the company's corporate governance structure, improves the internal control system, further standardizes the company's operation, and improves the level of corporate governance. The company has done a lot of work in strengthening various systems, improving the company's decision-making procedures, and protecting the interests of shareholders, and has faithfully and diligently fulfilled the company's social responsibilities.

The company constantly pays attention to the latest laws and regulations issued by regulatory authorities and continuously improves its internal control system. By continuously improving the internal control system, the company's governance level is effectively improved. At the same time, combined with the company's actual situation, the control system at various levels and aspects of the company's business processes and business management has been continuously improved and refined.

Outlook

Report Conclusion

Implementing social responsibility management is an important measure for Shangyou Tools to adapt to the global trend of enterprise development, enhance its competitiveness, and influence. As a leading enterprise in the cutting tool industry, Shangyou Tools learns from and draws on the advanced management experience of world-class enterprises, regards the fulfillment of social responsibility as an important way to enhance the company's comprehensive strength, actively responds to various opportunities and challenges, promotes the scientific development of the enterprise, and strives to create a cutting tool enterprise with unique characteristics and competitiveness, promoting the rapid development of the national high-tech industry and truly achieving "Made in China".

Reader Feedback

Thank you for taking the time to read Zhejiang Shangyou Tools Co., Ltd.'s 2022 Corporate Social Responsibility Report.

There may be some flaws and omissions in the preparation of this report. We are very willing to listen to your opinions and suggestions to help us continuously improve the way we prepare reports and our social responsibility performance.

This report is in Chinese. For a printed copy, please contact:

Company: Zhejiang Shangyou Tools Co., Ltd.

Address: No. 9, 25th Street, Eastern New District, Wenling City, Zhejiang Province

Postcode: 317527

Tel: 0576-86997666

Fax: 0576-86985688

Email: cici＠shangyoutools.com sales＠shangyoutools.com

You can also download the electronic version of this report from the Shangyou website:

Report Compilation Date: February 2025 www.shangyoutools.com

Zhejiang Shangyou Cutting Tools Co., Ltd.

报告编制日期：2025年 2 月

2024 Annual Quality and Integrity Report