Company Code：600690.SH, 690D.DE Short Name：Haier Smart Home
Haier Smart Home Co., Ltd.
2023 Annual Report
Haier Smart Home Co., Ltd. Annual Report 2023
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (‘the Company’) hereby assure that the content
set out in the annual report is true, accurate and complete, and free from any false record,
misleading representation or material omission, and are individually and collectively
responsible for the content set out therein.
II. All Directors of the Company have attended the board meetings.
III. Hexin Certified Public Accountants Limited LLP has issued a standard and unqualified audit
report for the Company.
IV. Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of the
Company) and Ying Ke (the person in charge of accounting department) hereby certify that
the financial report set out in the annual report is true, accurate and complete.
V. Proposal of profit distribution or proposal of capitalizing capital reserves for the reporting
period resoluted and adopted by the Board
Proposal of profit distribution for the reporting period are examined and reviewed by the Board: to
declare a cash dividend of RMB8.04 per 10 shares (tax inclusive) to all shareholders based on the total
number of shares held on record date and after deducting the repurchased shares from the
repurchase account upon the execution of distribution proposal, with proposed distribution amounting
to RMB7,471,472,992.22 (tax inclusive). The proportion of cash distribution is 45.02% of the net profit
attributable to shareholder of parent company of the Company for the year. If there is any change in
the total share capital of the Company during the period from the date of this report to the record
date of the equity distribution, the total distribution amount will be remained unchanged with
corresponding adjustment to the proportion of distribution per share.
VI. Disclaimer in respect of forward-looking statements
√ Applicable □ Not Applicable
Forward-looking statements such as future plans, development strategies as set out in this report do
not constitute the Company’s substantial commitment to investors. Investors are advised to pay
attention to investment risks.
VII. Is there any fund occupation by controlling shareholders and other related parties for non-
operational purposes?
No
VIII. Is there any provision of external guarantee in violation of the prescribed decision-making
procedures?
No
Haier Smart Home Co., Ltd. Annual Report 2023 1
Important Notice
IX. Are there more than half of the Directors who are unable to guarantee the truthfulness,
accuracy and completeness of the annual report disclosed by the Company?
No
X. Important Risk Warnings
For the possible risks which the Company may encounter, please refer to the relevant information set
out in the section of ‘MANAGEMENT DISCUSSION AND ANALYSIS’ in this report.
XI. Others
□ Applicable √ Not Applicable
2 Haier Smart Home Co., Ltd. Annual Report 2023
Contents
LETTER TO SHAREHOLDERS 4
SECTION I DEFINITIONS 7
SECTION II GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS 9
SECTION III MANAGEMENT DISCUSSION AND ANALYSIS 16
SECTION IV CORPORATE GOVERNANCE 63
SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES 100
SECTION VI SIGNIFICANT EVENTS 113
SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS 130
SECTION VIII RELEVANT INFORMATION OF PREFERENCE SHARES 143
SECTION IX RELEVANT INFORMATION OF BONDS 144
SECTION X FINANCIAL REPORT 145
(I) Financial statements with signatures and seals of the legal representative,
chief accountant and person in charge of accounting department.
DOCUMENTS (II) Original audit report with seals of accounting firm, signatures and seals of
AVAILABLE FOR registered accountants.
INSPECTION
(III) Originals of all documents and announcements of the Company which have
been publicly disclosed on the newspaper designated by China Securities
Regulatory Commission during the reporting period.
Haier Smart Home Co., Ltd. Annual Report 2023 3
Letter to shareholders
The pandemic might seem to be a thing of the past; however slowdown in the property sector took its toll
on demand for appliances in China throughout last year. High interest rate and inflation weighed on
sentiment as well as residential construction and remodelling activity in the US and Europe, resulting in more
consumers postponing purchases of appliances. Haier Smart Home made resolute effort to implement
premium brand strategy and accelerated digital transformation to deliver another year of unprecedented
performance amid these challenges.
In 2023, Haier Smart Home achieved a global revenue of RMB261.428 billion, marking a year-on-year
growth of 7.3%. Our net profit attributable to shareholders grew 12.8% to RMB16.597 billion; the net profit
attributable to shareholders deducting non-recurring items under PRC GAAP amounted to RMB15.824
billion, a growth of 13.3% year-on-year.
Through the year, our entire management honoured their faith in the founding principle of “RenDanHeYi” (人
單 合 一), as they went above and beyond to achieve quality growth with innovative product despite macro
challenges. On the other hand, our organization has become leaner, more agile, and more efficient with
growth in sales revenue and profitability. The management also became more aware of what paves ways
towards profitable growth and greater return on investments is user-centric and profit-driven digitalization.
Haier Smart Home provides over 100 million units of home appliances in more than two hundred countries
and regions in 2023 including major appliances, HVAC products, water heaters, and small appliances.
Rather than chasing short-term gains, we prioritise sustainable growth through a relentless focus on
stakeholder experiences — be it our distributors, suppliers, consumers, or employees. In the domestic
market, we nurture strong bonds with distribution partners, I also spend a great deal of time listening to our
distributors who share our inspiration in building a more competitive ecosystem. We started to evaluate sales
network using sell-through figures, to minimize inefficient short-term stock piling. In 2023, the Company
generated a net cash flow of RMB25.262 billion from operating activities, a growth of 24.7% year-on-year,
leveraging digital management system that improves turnovers and enhances transparency in rebate policies
to enhance store performance.
This year, we have developed a logistics and inventory management system with suppliers, to make delivery
schedules more predictable and our distributors’ resource allocation more efficient. Leveraging on digital
delivery and service dispatch systems, we minimised waiting time of logistics service providers, thus
improving service and installation efficiency, all of which aim at elevating logistics and service experiences
while reducing our selling and administrative expense ratios.
We are currently undertaking numerous initiatives on R&D, manufacturing and marketing integration and
digitalised procurement management. We intend to replicate what we have learned from transforming
domestic business to overseas operations soon. I believe our sustainable development will remain intact
against macro downturn as long as we focus on improving experience and enhancing profitability, which
should better position us in the competition when the market turns around.
Haier Smart Home continued to be named as the Most Admired Company by Fortune Magazine in 2023,
and GE Appliances, our subsidiary in the US was once again recognised as the Great Place to Work. We
strive to build a place that inspires young Gen Z to take pride in generating amazing value for our users
without bureaucracy. At Haier Smart Home, employees are listened to, as we believe their satisfaction
generates significant operational benefits.
4 Haier Smart Home Co., Ltd. Annual Report 2023
Letter to shareholders
Looking ahead to 2024, I have full confidence in Haier Smart Home’s positioning and growth potential.
Let’s take a closer look at our businesses.
Strengthening leadership
We have over 40% domestic market share in refrigerators and washing machines. Future growth depends on
product innovation. Our built-in refrigerators provide users with a whole new experience by seamlessly
blending in with home décor, catalysing a surge in demand for product upgrades. Additionally, our washer-
dryer combo disruptively solves users’ pain points and leads the industry in the US. We have made some
progress in Europe and Southeast Asia, although we are yet to become one of the top three. Significant
potential could be unlocked by leveraging on our global R&D platform with local supply chain.
Haier’s dishwasher business is poised to accelerate with growing market penetration, which is only 4% in
China. The complementary nature of dryers and washers has laid down solid foundation for the strong
momentum to continue leveraging on our strengths in washing machines.
In the white goods category, Haier Smart Home has established a leading position with technological
platform and innovative system. Starting from 2024, Haier will focus on breaking down organisational barriers
and integrating our global planning platforms to introduce more competitive products and implement more
efficient market strategy.
Gearing up
Another important pillar is HVAC and water heaters. Our residential and commercial air conditioning
businesses currently rank among second-tier players in domestic market while water heaters have become
domestic market leader with little overseas exposure. I believe substantial growth potential could be
unlocked in these sectors.
In the home air conditioner business, in the past two years, we have been making efforts to address
absence and shortage of components. By establishing a compressor joint venture and developing proprietary
computer boards, we improved integration efficiency of R&D and manufacturing to increase profitability. We
also accelerated MRV units and residential air conditioner business with expansions in distribution network.
In commercial air conditioners, we continue to draw inspirations from original technologies that are future-
proof and pioneer the industry in high-efficiency magnetic levitation air conditioners. Moreover, we were the
industry’s first to adopt air suspension technology, which gives our systems a lifespan of 30 years with little
maintenance required.
We run a highly profitable water appliance business with the largest share in both gas and electric water
heater, and a steadily growing purifiers unit in China. Our next step is to expand into the global arena,
particularly in emerging markets with investments committed in HVAC and water heater to grow market
share and profitability.
Haier Smart Home Co., Ltd. Annual Report 2023 5
Letter to shareholders
Investing in Future
Our Company’s strategic vision is to become the number one choice for smart home solutions. In the IoT
era, Haier Smart Home is positioned to capitalise on the integration of smart home appliances and
furnishing on one hand, and small appliances equipped with smart capabilities on the other hand. Our
strategic approach entails providing integrated design solutions leveraging on San Yi Niao’s platform, while
promoting smart small appliances supported by brand, ecosystem, and technologies.
In 2023, we made the strategic decision to acquire the commercial refrigeration business of Carrier Global
Corporation, who is also our joint venture partner in China. The food refrigeration and commercial cold chain
sectors present opportunities that could be unlocked by technological advancement and digital
transformation. Carrier’s commercial refrigeration business has a strong customer base, established
operational systems, leading engineering expertise, and experienced management team. Following the
completion of the transaction, we will make further investment to grow cold chain business leveraging on
supply chain advantages in China and Haier’s ‘RenDanHeYi (人 單 合 一)’ management approach.
Since Haier Smart Home’s IPO, our dividend payout ratio has increased gradually as planned. In the
financial year 2023, the cash dividend pay out ratio will reach 45.02%, and a total of RMB1.6 billion were
used to buy back A and H shares. Starting from financial year 2024, we will raise dividend payout
continuously, and in for financial years 2025 and 2026, the cash dividend payout ratio will not be less than
50%.
What we achieved in 2023 was merely a beginning. Our board of directors is committed to enhancing
consumer experience and improving profitability by consolidating existing advantages and unlocking new
potentials while laying down foundations for long term development. The management and employees are
confident that we could take the business to new heights.
6 Haier Smart Home Co., Ltd. Annual Report 2023
Section I Definitions
I. DEFINITIONS
Unless otherwise stated in the context, the following terms should have the following meanings in this
report:
Definition of frequently used terms
CSRC China Securities Regulatory Commission
SSE Shanghai Stock Exchange
The Company, Haier Smart Home Co., Ltd., its original name is ‘Qingdao Haier Co.,
Haier Smart Home Ltd.’, and the original short name is ‘Qingdao Haier’.
Four Major Securities China Securities Journal, Shanghai Securities News, Securities Times,
Newspapers Securities Daily
Haier Electrics, 1169 Haier Electronics Group Co., Ltd. (a company originally listed in Hong
Kong, stock code: 01169.HK), a subsidiary as accounted for in the
consolidated statement of the Company. Haier Electrics has been
privatized by way of H shares issuance on 23 December 2020 and
became a wholly owned subsidiary of the Company since then.
GE Appliances Household appliances assets and business of General Electric Group,
have currently been owned by the Company.
FPA Fisher & Paykel Appliances Holdings Limited (Chinese name: 斐雪派克),
was established in 1934 and is known as the national appliance brand
of New Zealand, the global top-level kitchen appliance brand and the
famous luxury brand of the world. It has products including ventilator,
gas stove, oven, dishwasher, microwave oven, built-in freezer, washing
machine, clothes dryer and etc. Its business covers over 50 countries/
regions across the world. FPA is a wholly-owned subsidiary of the
Company.
Candy Candy Group (Candy S.p.A), is an international professional appliances
manufacturer from Italy. Since its establishment in 1945, it has been
committed to enabling the global users to enjoy a higher quality of life
through innovative technologies and quality services. Candy Group has
been prestigious in the global market with users all over the world via its
ten self-owned professional household appliance brands. In January
2019, Candy became a wholly-owned subsidiary of the Company.
CMM China Market Monitor Co., Ltd., as an authoritative market research
institute in Chinese household appliances area, was established in 1994
and has been focusing on research of retail sales in China consumption
market ever since.
Haier Smart Home Co., Ltd. Annual Report 2023 7
Section I Definitions
Euromonitor Euromonitor, established in 1972, is the leading strategic market
information supplier and has over 40 years of experience in respect of
publishing market report, commercial reference data and on-line
database. They create data and analysis on thousands of products and
services around the world.
Gfk Gfk Group, the world’s leading market research company. After a long
period of development and accumulation, Gfk Group’s global market
research business covers consumer durables research, consumer
research, media research, healthcare market research and special
studies.
All View Cloud All View Cloud (AVC) is a big data integrated solution provider to the
smart home field, providing enterprises with big data information
services, regular data information services and special data services.
IEC The International Electrotechnical Commission, founded in 1906, is the
world’s first organization for the preparation and publication of
international electrotechnical standardization and is responsible for
international standardization for electrical engineering and electronic
engineering. The goals of the commission include: to effectively meet
the needs of the global market; to ensure that the standards and
conformity assessment programs are applied globally in a prioritized
manner and to the greatest extent; to assess and improve the quality of
products and services involved in its standards; to create conditions for
the common use of complicated systems; to improve the effectiveness
of the industrialization process; to improve human health and safety,
and to protect the environment.
IEEE The Institute of Electrical and Electronics Engineers, an international
association of electronic technology and information science engineers,
is currently the largest non-profit professional technology society in the
world. It is committed to the development and research of electrical,
electronic, computer engineering and science-related fields, and has
now developed into an international academic organization with great
influence in terms of the fields of space, computer, telecommunications,
biomedicine, power and consumer electronics.
Model of RenDanHeYi The concept of ‘Achieving win-win via RenDanHeYi’is the guarantee of
Haier’s sustainable operation and the driving force of the Company
featuring a self-motivated and empowering corporate culture. “Ren” is an
employee who has the spirit of entrepreneurship and innovation; “Dan”
is to create value for users. The “RenDanHeYi “management model
encourages employees to create value for users with an entrepreneurial
mindset, and to achieve self-value in line with the those of the
Company and its shareholders.
8 Haier Smart Home Co., Ltd. Annual Report 2023
Section II General Information of the
Company and Key Financial Indicators
I. INFORMATION OF THE COMPANY
Chinese name 海尔智家股份有限公司
Chinese short name 海尔智家
English name Haier Smart Home Co., Ltd.
English short name Haier Smart Home
Legal representative Li Huagang
II. CONTACT PERSON AND CONTACT INFORMATION
Secretary to the Representative of Company Secretary
Board securities affairs (D/H shares) Others
Name Liu Xiaomei Liu Tao Ng Chi Yin, Trevor Global Customer
Service Hotline
Address Department of Department of Unit 1908, 19th /
Securities of Haier Securities of Haier Floor, Harbour
Smart Home Co., Smart Home Co., Centre, 25 Harbour
Ltd., Haier Science Ltd., Haier Science Road, Wan Chai,
and Technology and Technology Hong Kong
Innovation Innovation
Ecological Park, Ecological Park,
No.1 Haier Road, No.1 Haier Road,
Qingdao City Qingdao City
Tel 0532–88931670 0532–88931670 +852 2169 0000 4006 999 999
Fax 0532–88931689 0532–88931689 +852 2169 0880 /
Email finance@haier.com finance@haier.com ir@haier.hk /
Haier Smart Home Co., Ltd. Annual Report 2023 9
Section II General Information of the Company and Key Financial Indicators
III. SUMMARY OF THE GENERAL INFORMATION
Registered Address Haier Industrial Park, Laoshan District, Qingdao City (now known as
Haier Science and Technology Innovation Ecological Park, Laoshan
District, Qingdao City)
Historical Changes to the Prior to the Company’s listing in 1993, the registered address of the
Registered Address Company was No.165 Xiaobaigan Road, Sifang District, Qingdao City,
Shandong Province, and has changed to the current address since
1994, during which the address name was adjusted in line with the
change of name of the industrial park but the actual site remains
unchanged.
Business address Haier Science and Technology Innovation Ecological Park, Laoshan
District, Qingdao City
Postal code of the business 266101
address
Website https://smart-home.haier.com/cn/
Email 9999@haier.com
IV. PLACE FOR INFORMATION DISCLOSURE AND DEPOSIT
Newspapers and websites Shanghai Securities News, Securities Times, China Securities Journal,
for annual report Securities Daily
disclosure
Stock Exchange Website for www.sse.com.cn
annual report disclosure
as designated by the
CSRC
Other websites for annual https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,
report disclosure https://www.hkexnews.hk
Deposit place of annual Department of Securities of Haier Smart Home Co., Ltd., Haier Science
report and Technology Innovation Ecological Park, No.1 Haier Road, Qingdao
City
V. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY
Summarized information of shares of the Company
Stock Short
Stock Exchange of Name Before
Type of Shares Shares Listed Stock Short Name Stock Code Variation
A-shares Shanghai Stock Haier Smart Home 600690 Qingdao Haier
Exchange
D-shares Frankfurt Stock Haier Smart Home 690D Qingdao Haier
Exchange
H-shares Hong Kong Stock Haier Smart Home 6690 /
Exchange
10 Haier Smart Home Co., Ltd. Annual Report 2023
Section II General Information of the Company and Key Financial Indicators
VI. OTHER RELATED INFORMATION
Accounting firm engaged Name Hexin Certified Public Accountants LLP
by the Company Business Address 24th Floor, Century Building,
(domestic) No.39 Donghai Road West, Qingdao City
Name of signing Zhao Bo, Li Xiang Zhi
accountant
Accounting firm engaged Name HLB Hodgson Impey Cheng Limited
by the Company Business address 31st Floor, Gloucester Tower, The Landmark,
(overseas) 11 Pedder Street, Central, Hong Kong Special
Administrative Region
Name of signing Jack, Tia Sun Kit
accountant
Note:
Accounting firm engaged by the Company (domestic and overseas): Pursuant to the motion for the appointment of an auditor
approved at the Company’s 2022 Annual Shareholders’ Meeting, the Company engaged Hexin Certified Public Accountants LLP and
HLB Hodgson Impey Cheng Limited to issue the China Accounting Standards and International Accounting Standards auditing
report respectively for the Company’s 2023 annual report.
VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS IN THE
RECENT THREE YEARS
(I) Key accounting data
Unit and Currency: RMB
2023 2022 Yoy change (%) 2021
Key accounting data After adjustment Before adjustment
Operating revenue 261,427,783,050.10 243,578,924,958.47 243,513,563,670.73 7.33 227,105,817,641.69
Net profit attributable to
shareholders of the listed
company 16,596,615,045.87 14,712,054,763.24 14,710,923,491.99 12.81 13,078,840,517.10
Net profit after deduction of
non-recurring profit or loss
attributable to shareholders of
the listed company 15,824,164,161.43 13,962,931,853.78 13,962,931,853.78 13.33 11,831,272,558.29
Net cash flows from operating
activities 25,262,376,228.30 20,256,557,145.86 20,153,505,783.35 24.71 23,235,380,690.95
Haier Smart Home Co., Ltd. Annual Report 2023 11
Section II General Information of the Company and Key Financial Indicators
At the end of 2023 At the end of 2022 Yoy change (%) At the end of 2021
After adjustment Before adjustment
Net assets attributable to
shareholders of the listed
company 103,514,153,535.04 93,459,437,602.44 93,422,647,664.43 10.76 79,985,092,528.06
Total assets 253,379,859,977.97 236,017,821,177.50 235,842,254,826.77 7.36 217,741,133,577.31
(II) Key financial indicators
2023 2022 Yoy change (%) 2021
Key financial indicators After adjustment Before adjustment
Basic earnings per share (RMB/
share) 1.79 1.58 1.58 13.29 1.41
Diluted earnings per share (RMB/
share) 1.78 1.57 1.57 13.38 1.40
Basic earnings per share after
deducting non-recurring profit
or loss (RMB/share) 1.71 1.50 1.50 14.00 1.27
Weighted average return on net Increased by 0.05
assets (%) 16.85 16.80 16.81 percentage points 17.26
Weighted average return on net
assets after deducting Increased by 0.11
non-recurring profit or loss (%) 16.06 15.95 15.95 percentage points 15.65
Explanation of the key accounting data and financial indicators of the Company as at the end of
the reporting period for the previous three years
□ Applicable √ Not Applicable
12 Haier Smart Home Co., Ltd. Annual Report 2023
Section II General Information of the Company and Key Financial Indicators
VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND
OVERSEAS ACCOUNTING STANDARDS
(I) Differences in net profit and net asset attributable to shareholders of listed
company in financial report disclosed in accordance with International
Accounting Standards and China Accounting Standards
□ Applicable √ Not Applicable
There is no difference between the net profit and net assets attributable to shareholders of the
listed company presented in the consolidated financial statements disclosed in accordance with
International Accounting Standards and China Accounting Standards.
(II) Differences in net profit and net asset attributable to shareholders of the listed
company in financial statements disclosed in accordance with overseas
accounting standards and China Accounting Standards
□ Applicable √ Not Applicable
Apart from the financial statements prepared in accordance with International Accounting
Standards, the Company did not prepare any financial statements in accordance with other
overseas accounting standards.
(III) Explanation on the difference between the domestic and overseas accounting
standards:
□ Applicable √ Not Applicable
IX. KEY FINANCIAL DATA OF 2023 BY QUARTER
Unit and Currency: RMB
Q4
Q1 Q2 Q3 (October-
(January-March) (April-June) (July-September) December)
Operating revenue 65,066,477,648.79 66,560,103,857.77 67,030,721,048.16 62,770,480,495.38
Net profit attributable to shareholders of
the listed Company 3,971,103,084.94 4,992,772,914.90 4,185,343,372.78 3,447,395,673.25
Net profit after deduction of non-
recurring profit or loss attributable to
shareholders of the listed Company 3,699,833,649.61 4,904,144,114.97 4,116,766,925.02 3,103,419,471.83
Net cash flows from operating activities 1,354,792,344.20 5,435,738,118.34 6,412,585,338.25 12,059,260,427.51
Explanation on the difference between quarterly data and disclosed regular reporting data
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 13
Section II General Information of the Company and Key Financial Indicators
X. NON-RECURRING PROFIT AND LOSS ITEMS AND AMOUNT
Non-recurring profit and loss items Amount in 2023 Amount in 2022
Profit or loss from disposal of non- current assets, including the
write-off of provision for asset impairment –97,873,276.66 209,436,774.95
Government subsidies included in current profit or loss, except for
government subsidies that are closely related to the Company’s
normal business operations, conformed to requirements of state
policies and granted according to specific criteria, and have a
sustained impact on the Company’s profit or loss 1,093,584,406.07 766,426,467.17
Profit or loss arising from changes in fair value of financial assets
and financial liabilities held by non-financial entities, and profit or
loss arising from disposal of financial assets and financial
liabilities, except for effective hedging activities related to the
Company’s normal business operations 20,829,305.37 –23,321,060.42
Net profit or loss of subsidiaries arising from business combinations
under common control of the current period from the beginning
of the period to the date of consolidation –2,581,701.76 14,065,886.76
Other non-operating income and expenses apart from the aforesaid
items –71,400,519.77 –29,750,173.25
Less: Effect of income tax 150,225,774.23 167,413,005.22
Effect of minority interests (after tax) 19,881,554.58 20,321,980.53
Total 772,450,884.44 749,122,909.46
For the Company’s recognition of items that are not listed in the “Explanatory Announcement on
Information Disclosure for Companies Offering Their Securities to the Public No.1 — Non-recurring
Profit or Loss” as non-recurring profit or loss items and the amount of which is significant, and for
non-recurring profit or loss items as illustrated in the “Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 — Non-recurring Profit or Loss”
designated as recurring profit or loss items, reasons shall be specified.
□ Applicable √ Not Applicable
14 Haier Smart Home Co., Ltd. Annual Report 2023
Section II General Information of the Company and Key Financial Indicators
XI. ITEMS MEASURED BY FAIR VALUE
√ Applicable □ Not Applicable
Unit and Currency: RMB
Affected amount
Changes in the to profit of current
Items Opening balance Closing balance current period period
Wealth management products 14,638,968.26 487,936,101.81 473,297,133.55 52,484,639.54
Investment in other equity instruments 5,851,882,930.20 6,403,694,954.77 551,812,024.57 58,671,224.25
Investment in trading equity instruments 336,843,065.02 243,224,439.64 –93,618,625.38 –20,876,582.33
Investment funds 168,430,847.63 222,803,002.38 54,372,154.75 38,833,850.27
Derivative financial instruments 61,674,330.75 –101,059,175.53 –162,733,506.28 54,086,291.94
Total 6,433,470,141.86 7,256,599,323.07 823,129,181.21 183,199,423.67
XII. OTHERS
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 15
Section III Management Discussion and
Analysis
I. DISCUSSION AND ANALYSIS ON OPERATIONS
The Company’s revenue for the 2023 financial year amounted to RMB261.428 billion, representing an
increase of 7.3% from 2022. The growth was driven by: multi-brand strategy and extensive product
offerings which captured opportunities in different market segments; enhanced retail capabilities and
product premiumization; more competitive water heater, HVAC and kitchen appliances contributed
strong revenue growth in China; enhanced user values from San Yi Niao’s improved scenario-based
suite products; development of new categories including tumble dryers, dishwashers, home cleaning
robots and heat pumps to capture opportunities in quality living and the low-carbon economy.
For the financial year ended 31 December, 2023, the net profit attributable to shareholders of the
Company was RMB16.597 billion, representing a 12.8% increase from 2022. The net profit attributable
to shareholders of the Company after deducting non-recurring items amounted to RMB15.824 billion,
representing a growth of 13.3% compared to the same period in 2022.
The Company’s gross profit margin reached 31.5% in 2023, up 0.2 percentage points compared to the
same period in 2022. Margin improvement in domestic market was driven by lower commodity prices,
digitalisation in procurement and R&D, development of a digitalised production and sales coordination
system, and improved product mix. In overseas markets, benefits from better product mix and
production capacity utilisation were partly offset by intensified competition in key regions, resulting in a
year-on-year decline in gross profit margin.
The selling expense ratio was 15.7% in 2023, a reduction of 0.2 percentage points compared to the
same period in 2022, selling expense ratio has improved resulting from digitally enhanced efficiency in
resource allocation, logistics and fulfilment in China. On the other hand, overseas selling expense ratio
went up due to intensified competition, increased spending in network expansion, promotions, and
store upgrades.
The administrative expense ratio went down by 0.1 percentage points to 4.4% in 2023, driven by
optimised business processes and improved organisational efficiency through digitalisation.
The finance expense ratio was 0.2% (“+” as expenses, “ — ” as income) in 2023, representing an
increase of 0.3 percentage points compared to 2022, mainly because increases in interest payment as
a result of overseas interest rate hike, offsetting interest income generated from improved capital
management.
In 2023, the Company’s net cash flow from operating activities was RMB25.262 billion, an increase of
RMB5.006 billion year-on-year.
16 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
I. Household Food Storage and Cooking Solutions
(1) Refrigerator business
In 2023, the refrigerator business of the Company remained committed to leading the
global industry in the IoT era. By constantly innovating freshness preservation and built-in
technologies, expanding high-end products, and accelerating retail transformation, the
Company was able to strengthen its leadership in the industry. In 2023, sales revenue of
the global refrigerator business was RMB81.910 billion, a growth of 5.2% compared to the
same period in 2022.
According to Gfk, the Company’s share of retail revenue reached 45.2% offline and 40.3%
online in China in 2023, up 1.3 and 1.1 percentage points year-on-year, respectively.
According to Euromonitor, the Company held a 14.1% share of retail volume overseas.
The domestic market
The Company has significantly increased its share in the high-end market. Casarte built-in
refrigerator achieved a remarkable 120% year-on-year volume growth. Haier refrigerator
expanded Boguan (博 觀) series with full-space freshness preservation technology and
compartmentalised storage design, dominating the market in the price range above
RMB20,000 per unit. According to CMM, the share of offline retail with unit price of
RMB10,000 and above reached 52.8%, an increase of 4 percentage points year-on-year.
Enhancing retail capabilities has been a key focus. By strengthening network coverage in
underserved areas, leveraging digital marketing to improve customer acquisition, and
upgrading end-user experience, the Company enhanced efficiency in customer engagement
and improved conversion by 8%.
The Company also prioritised end-to-end cost reduction and efficiency improvement. To
scale up production and in-house manufacturing of basic components, the first phase of
Shanghe Refrigeration Park was put into operation in 2023, adding 1.5 million units in
capacity. Manufacturing efficiency has improved by over 10% via integrating advanced
manufacturing technologies and digitalising manufacturing, inspection, and logistics.
Overseas markets
The Company remained committed to high-end brand strategy and synergising global
resources to strengthen product leadership and enhance user experience. In North
America, we launched the integrated Built-in French Door refrigerator with Monogram and
Café brand, Internal Dispenser Multi-door refrigerator with Profile and Café brand. In
Europe, our clean ice-making technology and grade-a silent operation elevated user
experiences and captured the largest market share in high-end multi-door refrigerators.
Haier also raised price index to 122. In the Japanese market, upgrade in product and
brand portfolio contributed to the strong growth of ultra-large refrigerators.
Haier Smart Home Co., Ltd. Annual Report 2023 17
Section III Management Discussion and Analysis
On 14 December 2023, the Company announced the acquisition of Carrier Refrigeration
Benelux B.V., the commercial refrigeration business of Carrier Global Corporation, for
approximately USD 640 million in cash. This move signified the Company’s expansion from
residential into commercial refrigeration, opening the door to new growth opportunities. The
acquisition will enhance the Company’s foothold in the European market and strengthen
global competitiveness, while capturing opportunities in China and Asia Pacific. The
transaction is expected to close in 2024.
(2) Kitchen appliance business
In 2023, the Company focused on becoming the global leader in high-end smart kitchen by
enhancing in-store experience of smart product suites and introducing product innovations,
built-in technologies, and scenario-based solutions. In 2023, the kitchen appliance business
recorded global revenue of RMB41.654 billion, up 6.9% compared to the same period in
2022.
According to Gfk, the Company’s offline retail sales accounted for 8.8% of market sales,
up 0.5 percentage points year-on-year, ranking third in China, where our share of high-end
built-in products reached 17.9%. Online retail sales accounted for 4.3%, up 0.8 percentage
points year-on-year. According to Euromonitor, our shares continued to perform well in key
markets overseas: we achieved double-digit growth in Europe despite industry downturn;
and grew market share by 3 percentage points in Australia through the dual-brand strategy
of FPA and Haier.
18 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
The domestic market
Sales revenue grew over 10% with sequential improvement every quarter in 2023 by seizing
opportunities in product upgrades, kitchen renovations and property completions,
developing partnerships with cabinet and home improvement companies, and increasing
presence in home improvement channels.
Casarte kitchen appliances focused on increasing product competitiveness. The launch of
ultra-slim built-in retractable range hoods, ultra-slim built-in five-ring stoves, and
humidity-controlled ovens led to a 30% increase in retail sales, driving high-end market
share to 10%.
Haier’s smart kitchen appliance factory in Laiyang was the first to win the ROI-EFESO
Industry 4.0 Award since 2013, a recognition of our substantial improvement in supply
chain competitiveness. The Company enhanced cost competitiveness by increasing
in-house component manufacturing from 30% to 54% and establishing a digitalised material
cost model.
Overseas markets
In North American market, in collaboration with eco-partners such as Google Cloud, the
Company uses a generative AI platform to help users generate customized recipes based
on the food in their kitchens. In Australia and New Zealand, FPA brand elevated retail
experience by launching sleek, minimalist oven suites and enhancing in-store product
displays. In the commercial sector, the Company focused on providing high-end design
solutions, establishing partnerships with designers to drive growth.
Haier Smart Home Co., Ltd. Annual Report 2023 19
Section III Management Discussion and Analysis
II. Household Laundry Management Solutions
The laundry business aimed to become number one choice globally during the IoT era and
strived to maintain leadership through innovations in garment care, integration of home
appliances and furnishing, energy efficiency, and eco-friendly technologies, while expanding new
categories including tumble dryers. In 2023, the laundry business achieved a global revenue of
RMB61.491 billion, representing an increase of 6.2% from 2022.
According to Gfk, the Company’s retail market share went up 1.5 percentage points year-on-year
to 47.5% offline in China, while remaining unchanged at 40.4% online. Euromonitor ranked us
number one in ten countries, including Australia, New Zealand, and Vietnam.
The domestic market
Consumers’ desire for quality living has created demand for specialized products such as tumble
dryers, wall-mounted washing machines, and fabric care cabinets. The Company proactively
shifted from selling individual washing machine to providing laundry solutions, encompassing
washing machines, tumble dryers, and fabric care cabinets. This upgrade aimed to offer a more
refined and professional laundry experience to enhance user value. In 2023, the completion of
tumble dryer factory in Shanghai added capacity of 2 million units. Tumble dryer revenue grew
20% year-on-year in 2023. According to Gfk, the Company topped the retail market with 40.4%
share offline, and 34% share online.
The Company pressed ahead with retail transformation, and enhanced capabilities by directing
distributors to focus on improving in-store experiences to improve user acquisition and
conversion, while attracting younger consumers and increasing user recognition with innovative
content on new social media platforms such douyin and Xiaohongshu.
A series of end-to-end cost reduction and efficiency improvements were implemented, including
discontinuing low-efficiency models, and increasing the proportion of mid to high-end products to
enhance competitiveness.
Overseas markets
The Company focused on implementing high-end brand strategies, leveraging on local market
insights and global R&D strengths to enrich product pipeline and grow market share.
20 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
In North America, the Company introduced Combo with washer and dryer all-in-one machine, it
disruptively solves users’ pain points through one machine by completing a full load of wash and
dry within two hours, and leads in the industry. In Western Europe, the launch of Haier’s highly
differentiated IPRO helped increase in market share by 4 percentage points for products with unit
price above EUR 599. In India, market share in selected channels grew from 4% to 16% with
price index increasing from 89 to 101 leveraging on improved in-store display and brand
recognition.
III. Air Solutions
During the reporting period, the Company’s air solution business achieved revenue of
RMB46.104 billion, up 13.1% year-on-year.
(1) Home air conditioner business
In 2023, the home air conditioner business concentrated on implementing smart and
healthy air solution strategy via innovating user-centred scenarios, enhancing technological
capabilities, developing retail-end capabilities and end-to-end digitalisation, to boost market
competitiveness.
The domestic market
Focusing on providing air solutions with outstanding quality, taste, and performance, the
home air conditioner business ramped up R&D investment to attract top talents, deploy
technological resources and enhanced competitiveness in core functions. The innovative
Variable Shunt Technology has earned the Energy Saving and Emission Reduction Science
and Technology Progress Award from China Energy Conservation Association. In 2023, we
introduced the Casarte Nebula (星雲) series, the industry’s first integrated high-powered air
conditioner, 110,000 units have been sold since their first introduction, driving us to the
first place in the market segment priced above RMB10,000 with 37% share.
Haier Smart Home Co., Ltd. Annual Report 2023 21
Section III Management Discussion and Analysis
We continued to enhance network coverage and develop omnichannel retail and marketing
capabilities. We prioritised franchised sales networks and increased store count offline,
while promoting best-sellers, creating new social media content, and improving
monetization online. During the reporting period, we ranked among top 10 best-sellers for
the first time. In the commercial channel, we developed an operating framework integrating
customer service, technical support, and installation management to improve conversion
efficiency, contributing to contract revenue exceeding RMB10 billion.
The Company focused on improving supply chain and boosting in-house component
manufacturing to strengthen cost competitiveness. In March 2023, our computer board
factory in Zhengzhou commenced mass production with an annual capacity of 2 million
sets and potential cost savings of over RMB10 million. The Company’s compressor joint
venture with Shanghai Highly is expected to begin production in the first quarter of 2024,
contributing to overall supply chain capabilities.
Overseas markets
The home air conditioner business aims to provide health-conscious, smart, and
energy-efficient products tailored to meet local demand and promote sustainability in the
global market. In the European market, we expanded the lineup of R290 with the use of
eco-friendly refrigerant to address growing environment concerns. In Pakistan, our
solar-powered air conditioners tackled rising electricity prices by reducing daytime billing to
zero, fulfilling demand for affordable energy-efficiency. We also built a new factory in Egypt
and enhanced manufacturing capabilities in India, Pakistan, and Thailand, leveraging
first-mover advantage in the global supply chain.
In 2023, the Company became number one in Pakistan and Thailand, and grew retail
market share in Southeast Asia and Western Europe.
22 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
(2) Smart building business
In 2023, the smart building business strategically focused on developing smart low-carbon
building solutions. By leveraging existing HVAC business, the Company expanded into heat
pumps, energy management, and smart building management, thus seizing the
opportunities from energy efficiency standard upgrade and growing demand for clean
energy. In 2023, the global revenue of smart building business increased by over 14%
compared to the same period in 2022, with revenue in the domestic market exceeding
RMB5 billion. According to China IoL, our domestic market share rose 0.8 percentage
points to 9.5%, ranking fourth in the industry in 2023.
The domestic market
Leveraging technological advantages in magnetic levitation, air suspension, and
high-efficiency heat exchange, the Company strengthened its leadership in high-speed
variable-frequency and smart IoT technologies, while creating efficient HVAC workshop
solutions. We were world’s first to implement static pressure air suspension technology on
central air conditioning systems that could last for a period of 30 years and require little
maintenance while saving up to 50% energy. The MX-super IoT-based multi-split system
was the industry’s first smart solution for large spaces, utilizing four units of 24 HP
modules running in parallel to maximize output of 96 HP, effectively reducing floor space
by 50% while improving energy efficiency.
The Company’s heat pump business captured industrial demand for clean energy with
expanded product application to achieve sales growth of 20%. The new variable frequency
high-temperature heat pump could provide hot water up to 90C. It has been widely used
by clients from electroplating, slaughterhouses, petroleum, food processing, textile printing
and dyeing industries, as well as on existing housing renovation projects.
To accelerate the transition towards one-stop low-carbon solution provider, the Company
completed the acquisition of Tongfang Energy Technology Development Company in
September 2023, which is expected to enhance our integrated heating and cooling
services, clean energy, and waste heat recycling solutions.
Overseas markets
The smart building business centred on expanding product portfolio and upgrading product
mix. For example, we received over RMB100 million orders from clients in the Middle East
for T3 variable frequency series that could operate under high-temperature. In Europe, we
focused on the integration of heat pump products with Haier Smart hOn platform of local
storage data and energy storage systems, accelerating the transition from single product to
multiple energy source solutions to smart energy management.
Haier Smart Home Co., Ltd. Annual Report 2023 23
Section III Management Discussion and Analysis
We also accelerated the development of store network integrating consumer experience,
product display and marketing, as well as staff training to enhance design and installation
capabilities.
IV. Household Water Solutions
In 2023, the water heater and purifier business strategically focused on becoming the global
leader in household water heating, cooling, and purification solutions. We achieved steady growth
in water purifiers, softeners and filters leveraging innovations to create health-conscious, high
capacity and comfortable experience. In 2023, the global water heater and purifier revenue was
RMB15.336 billion, representing an increase of 8.5% from 2022.
The domestic market
To address concerns of ageing products, water quality and additional demand from families with
two children, the Company focused on product iterations and grew sales revenue to over
RMB12 billion in 2023. The Company’s Casarte Crystal Tank electric water heater seamlessly
moulded aerospace-grade crystal fibres and industrial-grade polymer materials to deliver a
mineral spring experience with water that is rich in strontium. Our gas water heaters pioneered
the use of gas-electric hybrid constant temperature technology, automatically switching between
two energy sources to reduce heating time and stabilize water temperature, sales revenue
recorded a compounded annual growth of over 20% from 2021 to 2023.
On the market side, we also captured replacement demand by cleaning ageing products in
existing neighbourhoods, capturing demands through showcasing solutions in new buildings,
while accelerating commercial business with comprehensive water purification and heating/cooling
solutions.
24 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
We promoted end-to-end cost reduction and efficiency improvement by strengthening vertical
supply chain integration to grow in-house manufacturing by 10% and reduce cost with additional
19 module components. Meanwhile, we enhanced proportion of shared modules to enhance
efficiency in R&D and improve average contribution per SKU.
Overseas markets
Water heater and purifier business has significant potential in overseas market where the current
exposure remains limited. The Company remained committed to meeting consumer demand with
improving product offerings to cater for local tastes. We have made several breakthroughs in the
more mature markets including North America where we introduced gas storage water heater
and in Europe we offered gas water heaters and boilers. The Company also grew revenue by
developing comprehensive solutions and enhancing presence in specialists’ channels for building
materials, bathroom fixtures and installation.
V. China operation: Driving brand transformation, optimising distribution network,
and winning recognition from users.
During the reporting period, the Company strengthened multi-brand strategic transformation and
improved user experiences to enhance traffic acquisition and conversion. Our home appliances
market share in China amounted to 28% in 2023, up 1 percentage point year-on-year.
The Company implemented a series of digital transformation initiatives to improve distributors’
operational efficiency, marketing, and promotional resource deployment, while enhancing
decision-making capabilities using big data tools, all of which aimed at effectively showcasing
smart scenario-based solutions in stores and promoting local community outreach campaigns at
zero distance to boost user experience and recognition.
Haier Smart Home Co., Ltd. Annual Report 2023 25
Section III Management Discussion and Analysis
In addition, the Company also strengthened omnichannel presence and enhanced operating
capabilities. In first and second-tier markets, we targeted shopping malls and home improvement
channels to capitalise on user traffic. In third and fourth-tier markets, we transformed stores from
selling individual products to offering scenario-based solutions, while assisting and encouraging
distributors to actively engage users online instead of waiting for customers in store, thus grew
sales revenue and enhanced resource utilisation. The Company created social media releases
containing product information and engaged customers across multiple platforms, to improve
conversion while cutting the cost of acquiring traffic by 7%. In 2023, the Company achieved
double-digit growth in retail sales revenue online. Leveraging on digital platform, we were able to
customize scenario-based solutions for corporate clients. We also set up a task force specializing
in collaborating with enterprises, and leading local companies, to increase penetration in these
markets.
The Company actively adopted a multi-brand operation strategy to cater to different segments.
An upgrade plan has been launched under high-end Casarte brand to achieve stable growth of
14% in retail revenue in 2023. During the reporting period, the Company associated our brands
with smart & quality living, by enriching product portfolio, strengthening social media presence,
and upgrading store experiences. In 2023, Casarte ranked first in brand awareness on
Xiaohongshu. 240 experience stores have been set up in shopping malls all over the country. We
also built the Casarte Art Centre inside the prestigious Deji Plaza in Nanjing to create brand new
shopping experience by combining home appliances with artistic home improvement. Leveraging
on local market advantages, the Company was able to accelerate the development of luxury
home appliance brand Fisher & Paykel. By targeting designers, equestrians, and food
enthusiasts, a series of brand communication strategies were implemented to craft its luxurious
image. In 2023, five experiential stores were opened in high-end building materials market and
shopping malls, highlighting ultra-high-end scenario solutions including social kitchen and
personal care.
In 2023, San Yi Niao focused on enhancing its design platform and store digitalisation to
improve scenario-based solutions and sales capabilities. Retail sales surged 84% year-on-year,
with product suites accounting for over 60% of total sales. The Company’s proprietary Nesting
Interior Design Platform consists of over 500 3D-modules of home appliance designs, and floor
plans covering 90% of residential districts across the country. Nearly 1,500 new outlets were
added, facilitating product suite sales growth by localized scenario solutions and professional
finishing standard.
26 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
VI. Overseas markets: Harnessing global resources to develop high-end brands,
outgrowing the industry.
In 2023, the Company’s revenue from overseas market amounted to RMB136.412 billion, up
7.6% from 2022. The increase in revenue is attributed to the Company’s commitment to
high-end brand and strengthened market leadership by integrating global R&D, introducing
original technologies; continuous upgrade of product mix which drove up price indices; and
diversified portfolio encompassing high-end, mid-range and entry-level products to meet diverse
demands. In terms of market development, the Company optimised user experience and
enhanced brand reputation by expanding retail presence, increasing visibility in mainstream
channels, and establishing professional HVAC sales channels. Efforts have also been made to
strengthen production capacity in countries along the Belt and Road Initiative to grasp
development opportunities.
1. North America
GE Appliances continued outperforming the industry and gained share in core appliances in
2023. In 2023, sales revenue went up by 4.1% reaching RMB79.751 billion.
The Company persists in promoting its leadership in premium brands and products and has
successfully launched innovative core appliances, such as Profile Combo with heat pump
washer and dryer, integrated Built-in French Door refrigerator with Monogram and Café
brand, Internal Dispenser Multi-door refrigerator with Profile and Café brand, high-end
customized Range Hood with Monogram brand, and the next generation stainless steel
dishwasher with GE and Profile brand, to fully meet the needs of local users. Take Combo
with washer and dryer all-in-one machine as an example, it disruptively solves users’ pain
points through one machine by completing a full load of wash and dry within two hours,
and leads in the industry. As a result, it has been honoured with dozens of awards,
including the Best Product Award — Best Home Technology Product in 2023 KBIS/IBS,
the Sustainable Product of the Year 2023, and the CES Innovation Award of Home
Appliance.
The Company has earned the house share in Big Box and Costco and gained Lowe’s
“Partner of the Year” award due to innovative products and win-win solutions.
The Company persists in laying out new industries and channels. At AHR Show of 2023,
the Company launched Air & Water solutions with Unitary/DFS/VRF and gas storage water
heater, which were widely recognized by professional channels.
The Company is actively exploring smart ecosystem transformation to enhance users’
experience. In collaboration with eco-partners such as Google Cloud, it uses a generative
AI platform to help users generate customized recipes based on the food in their kitchens.
It also provides optimal energy management solutions for Net Zero homes. The Company
was recognized as IoT Breakthrough’s “Smart Appliance Company of the Year” for sixth
consecutive year.
Haier Smart Home Co., Ltd. Annual Report 2023 27
Section III Management Discussion and Analysis
The Company continually implements RenDanHeYi to activate employees’ vitality ，thus
achieving zero distance from the users. The Company received a score of 100 on the
Human Rights Campaign Foundation’s 2023–2024 Corporate Equality Index (CEI) for sixth
consecutive year. CEI is the premier benchmark survey and report in the United States,
measuring corporate policies and practices related to LGBTQ and workplace equality. And
once again it was selected for Fortune Manufacturing and Production The Best
Workplace List, meanwhile received the “Best Workplace for Innovators” award from Fast
Company.
2. Europe
In the European market, the Company recorded sales revenue of RMB28.544 billion, up
23.9% year-on-year, with retail volume share increased by 1 percentage point to 9.1%.
Dedicated efforts have been made to enhance product and supply chain competitiveness.
The Company established strategic partnership with local testing centres including LGA,
CTTN and Intertek, repositioned R&D facilities in Nuremberg to promote German design.
The Company launched New Candy Project to raise brand positioning, leveraging global
cooperations in developing new modules and products, including Chef@Home refrigerator
with large screen, smart oven with smart recipe recognition, dish washer with industry’s
fastest programme setting, 959/979 washing machine series with class A energy efficiency
that grew price index from 118 to 127. On the distribution front, we strengthened
partnerships with leading retailers across Europe including Boulanger and Darty.
Thanks to high profile sport events sponsorship including Roland-Garros tournament, Haier
brand’s price index grew to 131 with 3.1 percentage points increase in brand awareness.
28 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
3. Australia and New Zealand
Amid weak consumer sentiment in Australia and New Zealand, the Company still managed
to increase market share through product innovation, retail transformation and dual-brand
operation. In Australia, the Company’s market sales in sales volume grew by 1 percentage
point while sales revenue market share grew by 0.7 percentage points. In New Zealand,
market share of kitchen appliance and dish washers grew by 4% and 2%, respectively. The
growth was achieved by continuing launching of innovative products including Haier H600 T
door refrigerator which helped our market share in unit with capacity of 500–600L grow to
15.2%, Series 11 high-end washing machines strengthened FPA’s luxury market leadership,
Haier introduced first top-loading washing machine with auto dispenser in the industry.
4. South Asia
During the period, revenue from South Asia grew 14.9% year-on-year to RMB9.521 billion.
In India, our high-end market share increased by 4 percentage points supported by
innovations such as the five-star inverter air conditioner. Targeting vegetarian consumers in
India, we introduced T-door refrigerator, over 30,000 units have been sold, ranking us first
in terms of local market share. We strengthened network coverage, particularly in the
western and northern regions, to enhance touchpoints and product promotion to solidify
our market position. We improved automation and product competitiveness through
end-to-end upgrade and optimisation of manufacturing and sales coordination at Northern
Industrial Park.
Despite inflation and currency fluctuations in Pakistan, we managed to grow sales revenue
by 20% and added more than 300 franchised stores, both of which helped us maintain
leadership with 40% market share.
5. Southeast Asia
During the reporting period, sales revenue grew 11.6% to RMB5.78 billion in the Southeast
Asian market.
By adjusting product mix, we successfully increased price indices and boosted
competitiveness in Vietnam and Thailand, where our air conditioners ranked number one
leveraging product mix upgrade and introduction of new series with sterilisation
technologies. In Vietnam, the Color AI washing machine was well received for its colour
touch screen and smart washing features. The new unit has a price index of 150 which
helped us rank first in the industry with over 20% market share.
We developed franchise channels by adding 150 new exclusive brand zones in Indonesia
and the Philippines and opening 15 new franchised stores in Malaysia. We also raised
brand profile through product launches and sponsoring top sports games, while using
targeted marketing strategies online and offline to deepen user engagement, positioning us
as the most dynamic brand in the market.
Haier Smart Home Co., Ltd. Annual Report 2023 29
Section III Management Discussion and Analysis
6. Japan
During the period, sales revenue amounted to RMB3.662 billion, up 2.6% year-on-year, or
5.1% in Japanese Yen.
In response to demand for large refrigerators and washers, we launched TX ultra-slim large
refrigerator and the large-volume heat pump front-load washer which helped volume market
share grow in those two categories. We also established presence in all mainstream
channels and secured prime shelf space by differentiating product display and in-store
experience. Leveraging product iterations and IoT technology upgrade, Installed base of
smart appliance from community laundry business exceeded 53,000 units, with more than
2 million active users. In addition, we enhanced profitability through implementing
end-to-end cost reduction measures.
VII. Digital transformation
During the reporting period, the Company strategically tackled challenges in the transformation,
to enhance market operations, R&D efficiency, cost competitiveness, and turnovers.
To improve market competitiveness, the Company launched an experience cloud platform that
enabled real-time monitoring of the entire customer journey, starting from purchase to delivery,
installation, usage, and service. The platform boosted business competitiveness through a
structured feedback mechanism, resulting in a 24% reduction in user complaints. We helped
distributor improve the management of distribution, inventory, and store operations using digital
distribution systems and customer analysis tools. As a result, our digital retail sales increased by
22% year-on-year.
To enhance R&D competitiveness, the Company established an integrated R&D platform,
enabling efficient collaboration in terms of planning, development, and procurement. This resulted
in a 19% increase in revenue contribution of individual models in the domestic market. By
promoting the share of common component parts, total number of components was reduced by
8%, thereby increasing the procurement scale per component and cut down purchasing costs.
To enhance manufacturing competitiveness, the Company centred on precise and efficient order
execution. By streamlining information flow between material planning and logistic dispatch
planning, we established a digitalized production model with unified scheduling system. This
enabled transparent operations and smart scheduling throughout the manufacturing process,
resulting in a 4% reduction of manufacturing cost and a 16% increase in output per worker.
To improve product turnover efficiency, our focus was on rapid order delivery and efficient
inventory turnover. We accelerated order models upgrade and established end-to-end digital
capabilities by integrating marketing, production, procurement, and logistics planning. By
leveraging data models, we were able to review orders, optimise assignments and resource
allocation, resulting in an 8% improvement in domestic DIO (days inventory outstanding).
30 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
II. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATES
DURING THE REPOTING PERIOD
(I) Industry Overview for 2023
1. The domestic market
In 2023, the Chinese household appliance industry experienced steady growth. According
to AVC data, the retail sales of household appliances in China1 (excluding 3C & digital
products) reached RMB849.8 billion in 2023, marking a year-on-year increase of 3.6%.
Demand for traditional products like refrigerators, washing machines, and air conditioners
remained stable, while categories with lower penetration rates such as tumble dryers and
dishwashers maintained rapid growth.
Home air conditioning industry: Benefiting from hot weather, fulfilment of pent-up
demand for renovation and installation during the pandemic, and low industry inventory
levels, growth of the air conditioning outperformed the rest in the market. Annual retail
volume reached 60.85 million units, up 6.5% year-on-year; retail sales amounted to
RMB211.7 billion, an increase of 7.5% year-on-year.
Refrigerator industry: Consumers’ increasing demand for large-capacity, freshness
preservation, and built-in features, along with advancements in related technologies, has
fuelled the rapid growth of built-in refrigerator products and a steady rise in average prices.
Retail volume of the refrigerator industry reached 38.31 million units, a 1.5% year-on-year
increase; retail revenue amounted to RMB133.3 billion, representing a 7% year-on-year
growth.
Laundry care industry: The rising consumer demand for high-quality laundry has fuelled
the adoption of tumble dryers, leading to an increased share of washer-dryer combo suites
and revitalising the industry’s recovery. In 2023, the total retail sales of the laundry industry
reached RMB106.2 billion, a year-on-year increase of 7.7%. Specifically, (1) the washing
machine sector recorded a retail volume of 40.05 million units, up 3.4% year-on-year, with
retail sales amounting to RMB93.3 billion, representing a 5.8% increase. (2) the tumble
dryer sector recorded a retail volume of 2.17 million units, up 16.4% year-on-year, with
retail sales reaching RMB12.9 billion, a growth of 23.8% year-on-year.
Kitchen appliance industry: Benefitting from the release of pent-up demand during the
pandemic and product mix upgrades, retail sales of range hoods, stoves, and disinfection
cabinets reached RMB52.5 billion, up 5.1% year-on-year. Integrated stoves, impacted by
the downturn in the third and fourth-tier real estate markets, recorded a retail revenue of
RMB24.9 billion, a decrease of 4.0% year-on-year. The growing consumer emphasis on
convenience and health has propelled the sustained popularity of dishwashers. In 2023,
retail sales in the dishwasher industry amounted to RMB11.2 billion, marking a 9.6%
increase year-on-year.
1
Including refrigerator, freezer, washing machine, dryer, air-conditioner, kitchen appliances (range hoods, stoves, and disinfection
cabinets), integrated range hoods, electric water heater, gas water heater, small home appliances, televisions, dishwasher,
microwave oven, electric oven, vacuum cleaner, air purifier, water purifier, electric fans, electric heater, etc.
Haier Smart Home Co., Ltd. Annual Report 2023 31
Section III Management Discussion and Analysis
Water heater industry: Driven by increased demand for gas water heaters, energy
efficiency upgrades, and a rise in demand for large-volume water heaters, the water heater
industry experienced steady growth. In 2023, the industry’s retail sales totalled RMB50.5
billion, up 7.4% year-on-year. Specifically, retail sales of electric water heaters amounted to
RMB23.3 billion, up 4.0% year-on-year, while retail sales of gas water heaters reached
RMB27.2 billion, a growth of 10.4% year-on-year.
Water purifier industry: Benefitting from the recovery of the offline market and product
mix upgrades of POU (point of use) water purifiers, retail sales continued to grow, with
revenue reaching RMB20.5 billion, an increase of 10.7% year-on-year.
In 2023, consumer purchasing power and willingness to spend have recovered. Due to
differences in purchasing power and attitudes among consumer groups, there was a
noticeable segmentation in the home appliance market. Driven by innovative experiences
brought about by the integration of home appliances and furnishing, design aesthetics,
smart features, and health-conscious options, the high-end home appliance market
outperformed the industry average, with a continuous increase in market share. According
to Gfk’s 2023 retail data, refrigerators priced above RMB10,000 per unit accounted for
38% of total retail revenue, up 2.9 percentage points from 2022; washing machines priced
above RMB10,000 per unit accounted for 13.8% of total retail revenue, up 0.1 percentage
points from 2022, and dishwashers priced above RMB8,000 per unit accounted for 42.5%
of total retail revenue, a 3.4 percentage point increase from 2022.
Distribution network has become increasingly diversified, with emerging channels gaining a
larger share of traffic. This trend posed challenges to existing distribution networks and
operational models for businesses, while also fuelling innovation in user management and
unlocking new development opportunities. As consumers became more accustomed to
shopping online, along with enhanced integration of online and offline services, the share of
online sales volume continued to rise. At the same time, live streaming in offline experiential
stores facilitated the integration of online and offline channels. The combination of online
traffic and offline experience has become the future direction of retail development. Short
video/content sharing platforms such as Douyin, Kuaishou, and Xiaohongshu were rapidly
developing, playing an increasingly significant role in user acquisition and education.
According to AVC retail data, retail revenue on Douyin surged 121% for refrigerators and
164% for air conditioners in 2023.
In 2023, commodity prices in the domestic market substantially declined compared to
2022. Meanwhile, market competition in the white goods industry became more rational
and prices were more stable. These factors collectively contributed to an improvement in
the profitability of the industry.
32 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
2. Overseas markets
According to Euromonitor, global home appliances retail revenue (including major
appliances and small appliances) totalled USD 530.106 billion in 2023, representing a 1.5%
increase year-on-year. Of this total, the retail revenue of major appliances reached USD
287.023 billion, at the same level as the previous year; while the retail revenue of small
home appliances amounting to USD 243.084 billion, up 3.3% year-on-year. The surge in
demand for home appliances in developed countries during the pandemic eventually
subsided in the post-pandemic period. Additionally, in a high-interest-rate environment, real
estate loan rates continued to rise, resulting in reduced willingness in buying homes, further
dampening demand in the home appliance market.
By market:
(1) The U.S.: Impacted by high interest rates, new home construction and home sales
declined. According to data from the Association of Home Appliance Manufacturers
(AHAM), core appliance shipments in 2023 remained flat year-on-year. Intensified
competition within the industry led to lower unit prices.
(2) Europe: According to Gfk data, consumer confidence remained low amid high interest
rates and inflation, leading to a 3.8% decline in industry sales volume year-on-year.
Due to the frequent occurrence of extreme hot weather resulted in air conditioner
industry outperforming the overall home appliance industry, and more consumers are
looking for health-conscious and energy-efficient products.
(3) South Asia: ① In India, consumer demand became more segmented. Growth was
stable but slowed in the mid-range to high-end market. As purchasing power in the
third- and fourth-tier markets slowly recovered, demand for energy-saving entry-level
products increased. Chain retailers expanded rapidly across the country, and the
market share of e-commerce channels continued to climb. The sales volume of the
home appliance industry increased by 4.6%. ② In Pakistan, consumer purchasing
power declined due to inflation and exchange rate fluctuations, resulting in a 25%
drop in the home appliance industry volume, and an increasing demand for low-end
budget-friendly products.
(4) Southeast Asia: According to Gfk data, the Thai market recorded a sales volume
growth of over 20% in air conditioners as driven by hot weather, while refrigerators
and washing machines experienced a slight decline. In the Vietnamese market, export
demand decreased due to weakened global economy, coupled with intensified
industry competition, resulting in a 4.5% decline in sales volume. In the Indonesian
market, consumer spending levels decreased in 2023, leading to an 8.2% decline in
sales volume for the home appliance industry.
(5) Australia & New Zealand: Performance of the home appliance market in Australia
and New Zealand fell short of expectations due to adverse effects from the global
economic slowdown and inflation. Both markets have shown varying degrees of
decline.
Haier Smart Home Co., Ltd. Annual Report 2023 33
Section III Management Discussion and Analysis
(6) Japan: The white goods market was sluggish in Japan due to inflation and currency
depreciation. Annual sales volume of refrigerators, freezers and washing machines
dropped by 5.1% year-on-year. Consumer demand for high value-added products
such as large capacity and energy-saving options was on the rise.
(II) Industry Outlook for 2024
1. The domestic market
The domestic home appliance industry has shifted into a new phase driven by replacement
demand. According to data from the China Household Electric Appliance Research
Institute, the total ownership of air conditioners, refrigerators, and washing machines in
China in 2022 amounted to 780 million, 580 million, and 550 million units respectively,
underscoring the existence of a massive replacement market. The 2024 Government Work
Report advocated and incentivised the replacement of old appliances to unleash consumer
spending power, promote energy conservation, and mitigate safety risks associated with
outdated appliances. The government is committed to promoting large-scale recycling and
reuse of home appliances, strengthen the development of a new “replace + recycle”
logistics system, and coordinate central finance and local government efforts to support the
implementation to benefit consumers.
At present, China’s leading home appliance companies are dedicated to enhancing the safe
recycling, eco-friendly processing, and resource reuse of outdated appliances. Trade-in
programs not only drive the market sales of energy-efficient and eco-friendly products but
also facilitate the recycling of metals and other materials to minimise waste pollution.
Relevant national policies will further mobilize collective societal efforts to stimulate
replacement demand, promote a circular economy, and bring new vitality into the industry’s
sustainable growth.
2. Overseas markets
In 2024, developed countries are expected to enter a rate cut cycle, and the real estate
market is expected to gradually rebound, thereby increasing demand for home appliances,
and creating a more favourable market environment for home appliance exports. According
to Euromonitor, global home appliances’ retail revenue (including major appliances and
small appliances) will be USD 540.6 billion in 2024, up 2% year-on-year, of which, the retail
revenue of major appliances is estimated to reach USD 292.5 billion, up 1.9%
year-on-year, and the retail revenue of small home appliances amounting to USD 248.2
billion, up 2.1% year-on-year.
As IoT technologies progress and consumers continue to seek to improve their quality of
life, the home appliance industry is trending towards smart and high-end products,
amplifying the added value of home appliances. In addition, amidst the backdrop of energy
scarcity, there is a growing consumer preference for energy-efficient products, which fuels
the development of high-efficiency products such as heat pumps.
34 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
III. INTRODUCTION OF THE COMPANY’S BUSINESS DURING THE
REPORTING PERIOD
Founded in 1984, the Company is committed to being an enterprise of the times. Through relentless
innovation and iterations, we seize opportunities in the industry by continuously launching innovative
products that steer market development. After more than 30 years, the Company has become a global
leader in the major home appliance industry, as well as a pioneer in global smart home solutions.
Global leader of the major home appliance industry: According to data from Euromonitor —
an authoritative market researcher, the Company ranked first in terms of sales volume in global
major appliance market for 15 consecutive years. The Company has a global portfolio of brands,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to
2023, Haier brand refrigerators and washing machines ranked first among global major home
appliance brands in sales volume for 16 and 15 consecutive years respectively.
Pioneer of global smart home solutions: Capitalizing on our full-range home appliances
products, the Company is recognized by Euromonitor as one of the first in the industry to
introduce smart home solutions. San Yi Niao remained committed to the mission of “providing
smart home experience for a better home”, by enhancing three major capabilities in respect of
design tools, store digitalisation and the Smart Home APP, we have been dedicated to providing
customised and specialised smart home appliance solutions for users.
Over the years, the Company has established a business layout that includes smart solutions for food
storage and cooking, laundry, air and water, the Overseas Home Appliance and Smart Home
Business, and Other Business.
Haier Smart Home Co., Ltd. Annual Report 2023 35
Section III Management Discussion and Analysis
The Company provides a full range of home appliance products and value-added services in global
market through Haier Smart Home APP and San Yi Niao APP, supplemented by our offline experience
centres, to cater for users’ needs for different lifestyle scenarios. Smart Home Business comprises
Household Food Storage and Cooking Solutions, Household Laundry Management Solutions, Air
Solutions (Internet of Air), and Household Water Solutions (Internet of Water).
Household Food Storage and Cooking Solutions: Through selling products such as
refrigerators, freezers, kitchen appliances in global market, as well as providing one-stop smart
kitchen scenario solutions and ecosystem solutions including smart cooking and nutrition
planning, the Company fully addresses users’ need for convenient, healthy and tasteful gourmet
experiences.
Household Laundry Management Solutions: Haier’s washing machine focuses on applying
original technologies to directly solve users’ pain points in home living scenarios and create new
experiences and value for users. With a product lineup of washing machines, tumble dryers, all-
in-one laundry machines, garment care machines, and heated drying racks, the Company has
evolved from selling individual products to providing scenario-based solutions and offering end-
to-end laundry care services. For example, the Zhongzihemei (中 子 和 美) three-in-one washer
combines washing, drying, and fabric care functions into a single unit, and the Essence Wash
washing machine reduces washing time and improves cleaning effectiveness by producing a
highly concentrated detergent solution that can quickly soak into clothes through detergent pre-
mixing and high pressure spraying.
Air Solutions (Internet of Air):
Home air conditioners: Through worldwide sales, the Company provides products such as
home air-conditioners and fresh air systems, as well as a comprehensive range of full-cycle
solutions including coordination of multiple air-conditioners and purifiers, adaptive air flow, air
quality monitoring and air disinfection, thereby delivering a healthy and comfortable experience at
home and during commute that caters to the user needs in terms of air temperature, humidity
and quality.
Smart buildings: The Company is committed to becoming a leader in efficient, sustainable and
smart building solutions based on the state’s “carbon peaking and carbon neutrality” strategy.
Focusing on the business areas of smart control, environment, energy and system integration of
buildings, the Company provides green and smart building solutions integrating “technology +
experience + space” for government and commercial buildings, railways, schools, and hospitals.
Household Water Solutions (Internet of Water): Through providing worldwide users with electric
water heaters, gas water heaters, solar water heaters, air energy heat pump water heaters, POE
water purifiers, POU water purifiers, water softening equipment, the Company offers smart water
solutions including interactions between water heaters and purifiers, and between heating
appliances and water heaters, so as to comprehensively cater to users’ needs for water
purification, softening and heating.
36 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
The Company manufactures and sells a comprehensive portfolio of home appliance products and
provides value-added services in more than 200 countries and regions, including North America,
Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan, Middle East and
Africa.
In the overseas markets, the Company has been manufacturing and selling proprietary appliance
products catering for local users’ demands for more than 20 years. During the time, a number of
acquisitions contributed to our growth including acquisition of Haier Group Corporation’s
overseas white goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan and
Southeast Asia) in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and
Candy in 2019. The development of the Company’s overseas businesses has been fuelled by
synergies among our self-developed business and our acquired businesses.
At present, the overseas business of the Company has entered a stage of promising growth,
having achieved a multi-brand, cross-product and cross-regional presence on a global basis.
According to Euromonitor, the Company’s share of the global market (retail volume) for major
home appliances in key regions market share in 2023 is as follows: ranked first in Asia in terms
of retail volume, with a market share of 26%; ranked second in America, with a market share of
15.8%; ranked first in Australia and New Zealand, with a market share of 14.6%. The Company
ranked fourth in Europe with a market share of 8.8%.
Other Businesses
Building on our established smart home businesses, the Company has also developed small home
appliances, cleaning robots, channel distribution and other businesses. In particular, the small home
appliance business primarily involves small home appliances designed by the Company, produced by
outsourced third-party manufacturers and sold under the Company’s brands, which serve to enrich our
smart home solutions product mix. The channel distribution business primarily offers distribution services for
products such as televisions and user electronics for the Haier Group or third-party brands, which leverages
the Company’s sales network.
During the reporting period, the Company was once again listed among the Top 500 World’s Companies
and named again as the 2023 World’s Most Admired Companies by the Fortune Magazine. We are the only
company being selected in Europe and Asia in the home appliances industry and are the only selected
company incorporated outside the US. Meanwhile, the Company is also the world’s only Internet-of-Things
(IoT) ecosystem brand being named again as BrandZTM Top 100 Most Valuable Global Brands in 2023.
At the same time, the Company was named again among Fortune’s China ESG Impact list and Forbes’ The
World’s Best Employers 2023 list. The Company’s ESG effort has also been recognized by external rating
agencies, receiving an MSCI ESG rating of A, which is at leading levels within home appliance sector in
China. Haier Smart Home was selected into the three major ESG indices of the Hang Seng Index, including
the HSI ESG Enhanced Index, the HSI ESG Enhanced Select Index and the HSCEI ESG Enhanced Index.
Haier Smart Home Co., Ltd. Annual Report 2023 37
Section III Management Discussion and Analysis
IV. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING
PERIOD
√ Applicable □ Not applicable
The Company has established a solid strategic presence and competitive advantage in global market.
In China’s major home appliance market, the Company has long maintained a leading position across
all product categories. According to CMM’s report, the Company has established a continued leading
market position in key major home appliance categories in 2023. In overseas markets, the Company
has adhered to its high-end brand creation strategy, building capacity to create leading sustainable
growth, which has continuously improved its market share. Building on this foundation, the Company
will further consolidate its leadership position in the industry by leveraging integrated synergies of its
global unified platforms, through efficiency transformation driven by digitalization, and by leveraging its
technological strength and innovative capabilities. As cornerstone for sustainable development, our
“Rendanheyi (人 單 合 一)” Model also provided management guidance to the Company and enabled us
to replicate successful experiences. It is believed that the following advantages will help the Company
to continue to strengthen its leading position:
(i) Building up excellent high-end brand operation capabilities and creating a well-recognized
high-end brand through forward-looking layout and long-term investment in the global
market to achieve a leading market position.
To better meet the need of consumers in pursuit of quality life, the Company has started to
develop the high-end brand Casarte in the Chinese market more than 10 years ago. The creation
of high-end brands requires not only focus, experience and patience, but also continuous
innovation of technological standards and differentiated service capabilities to fulfil user demand
for high-quality experiences. The Casarte brand combined the Company’s global technological
strengths, product development capabilities and manufacturing craftsmanship, as well as privilege
marketing and differentiation services, which has won the trust of users in China’s high-end
market. According to data from CMM, the Casarte brand has assumed a definitive leading
position in China’s high-end major home appliance market in 2023, ranking first in the retail sales
of refrigerator, washing machine and air conditioner categories in the high-end segment.
Specifically, in terms of offline retail sales, shares of the Casarte brand of refrigerators and air
conditioners reached 50% and 28% respectively in the market with product priced above
RMB15,000 in China, while its share of washing machines priced above RMB10,000 in the
China’s market reached 84%.
In the North American market, the Company owns high-end brands such as Monogram, Café,
and GE Profile. In collaboration with the Qingdao headquarters, we enhanced our high-end brand
profile through launching leading products including Combo washers and dryers. Through the
creation of luxurious, customizable and smart technology-enabled user experience, our high-end
brands Monogram, Café and GE Profile have grown rapidly.
38 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
(ii) Providing users with specialised and customised smart household solutions
through the San Yi Niao brand with cross-household design focusing on
scenario-based experience to carry out the mission of “providing smart home
experience for a better home”.
As users continued to demand for higher living quality, coupled with the development of
technologies such as Internet of Things and big data, the industry has shown a smart and high-
end development trend that prioritized product suites, based upon scenarios, and home
appliances integrated with home furnishings. With leading user insights, extensive product
coverage and technological accumulation from algorithms, big data models and IoT equipment
technology, the Company enhanced its three major capabilities in respect of design tools, store
digitalisation and the Smart Home APP to create a new home appliances sales method with
cross-household design focusing on scenario-based experience, and develop high-end, package,
and front-end sales capabilities. Focusing on the mission of “providing smart home experience for
a better home”, the Company has been dedicated to providing customised and specialised smart
home appliance solutions for users.
(iii) Extensive and solid global presence with localized operational capability
In respect of overseas markets, the Company seeks overseas expansion of its own brands as
well as synergies with acquired brands to develop overseas markets. Such business strategy has
guided the Company to establish R&D, manufacturing and marketing three-in-one structure
across multiple brands, products and regions, as well as the model of self-development,
interconnection and synergized operation.
The Company’s extensive global presence depends on its localized business teams as well as its
flexible and autonomous management mechanisms established in various overseas markets,
which have enabled the Company to gain rapid insights and respond swiftly to local user
demands. The Company also proactively integrates into local markets and cultures and has
established a corporate image that is recognized by local communities in the overseas regions
where the Company operates.
In 2023, the Company established 10+N innovative ecosystems, 122 manufacturing centres, and
108 marketing centres around the world, and achieved a coverage of nearly 230,000 points of
sales in global markets.
(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiers
Through organic growth and acquisitions, the Company has formed seven brand clusters,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To address
the needs of users from different tiers in various markets around the world, the Company has
adopted a differentiated multi-brand strategy in different regions that centred around users, to
achieve an extensive and in-depth user coverage. For example, in the Chinese market: the three
brands of Casarte, Haier and Leader achieved the coverage of high-end, mainstream and niche
market groups respectively; in the U.S. market, the six major brands such as Monogram, Café,
GE Profile, GE, Haier, Hotpoint comprehensively covered all segments of high-end, mid-range
and low-end markets, thereby meeting the preferences and needs of different types of users.
Haier Smart Home Co., Ltd. Annual Report 2023 39
Section III Management Discussion and Analysis
(v) Cross-border acquisition and synergy realisation capabilities
The Company has an excellent track record of acquisition and integration. The Company has
acquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,
Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliance
business of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (which
has been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in
2019. The Company’s capability to perform acquisition and integration is reflected in the
following: First of all, the Company implements the ‘Rendanheyi (人 單 合 一)’ Model in the
acquired companies, which is a value-added sharing mechanism for the whole-process team
under a common goal. Such model can motivate the acquired companies and their employees
and enable them to generate more value. Secondly, the Company made use of its global
platform to empower the acquired companies in terms of strategic planning, R&D and
procurement in order to enhance their competitiveness. Thirdly, the Company’s open and
inclusive corporate culture can support the acquired companies in establishing a flexible and
autonomous management mechanism, which can easily earn recognition from the acquired
companies and is conducive to the promotion of integration.
(vi) Comprehensive and in-depth global collaborations and empowerment
The Company has made full use of its global collaborative platform, as well as its integrated
functions of R&D, product development, procurement, supply chain, sales and brand marketing.
It was able to share and expand development experience to various markets around the world.
By strengthening the synergies among its global businesses, the Company has created a strong
driving force for its future development.
Global collaborative R&D: The Company has a global collaborative R&D system and has
established global technology R&D mechanisms to share common modules, utilize common
technologies, and share patents within the scope of compliance. For example, the
Company’s R&D team in China joined hands with FPA’s and CANDY’s R&D teams to
develop the H20 spray technology, which has been applied to freestanding and built-in
dishwashers of Haier, Fisher&Paykel, CANDY and HOOVER, hence strengthening the
Company’s product leadership.
Global collaborative product development: The Company has established a global
product development mechanism to facilitate regional collaboration and supplementation
across product categories. For example, the R&D teams in South Asia and China
embarked on a 10-month collaboration, breaking away from the traditional product
development model by innovating on team organisation, quality control, product testing and
cost control leveraging complementary local resources, in order to develop the HRT-683
refrigerator which has become a mainstream high-end product in the local market.
40 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
Global collaborative procurement: The Company has established a global procurement
committee to coordinate procurement activities. The committee has built a digital sourcing
platform that brought together partners across industries and regions to develop an
autonomous and controlled global supply chain ecosystem. The committee also created a
global database of preferred suppliers and materials to achieve cost reduction by
aggregating resources at the Company level. By unifying procurement rules and processes,
the Company established a standardised operating system with differentiated procurement
strategies to enhance efficiency while lowering risks. We have also developed a Company-
level digital procurement platform to enhance shared capabilities through connecting
“materials, businesses, people and mechanisms” to the platform, thereby improving the
resilience of our global supply chain.
Global collaborative supply chain: The Company has built an end-to-end digital
management system for the global supply chain that spanned from marketing to suppliers
to production and logistics. Using intelligent algorithms, the system enabled real-time
flexible deployment of production capacity, and factories across the globe could share and
develop smart manufacturing technologies to boost competitiveness.
Global collaborative marketing and brand promotion: The Company operates a multi-
level brand portfolio with collaborative brand promotions. The Company also promotes and
introduces successful marketing strategies among regional markets. For example, the
Company successfully replicated its sales and marketing model of China’s third and fourth-
tier markets to markets such as India, Pakistan, and Thailand, strengthening the company’s
brand image and regional market competitiveness.
(vii) Industry-leading R&D and technological capabilities
Haier Smart Home delves into technological innovation to expedite the development of
innovation-driven productivity that aims for high-end, smart and green upgrade. Leveraging on
our industry-leading and comprehensive R&D presence, we constantly provide global users with
home appliances that meet their needs and customise their smart and convenient way of living,
thus enriching users’ life experience as well as cementing our leading position in high-end
brands, scenario brands and ecosystem brands.
Leadership in original technologies:
In 2023, Haier Smart Home adopted an user-oriented approach to tackle users’ pain points
with continuous innovation efforts, and achieved a series of technological innovations:
successfully researched and developed the magnetically-controlled chilled technology that
saw us become the first to create a full-coverage, even and constant magnetic space
within the freezer, bridging the gap in the industry; originated the first 3D see-through
drying technology that can directly penetrate cloth surface to gauge the dryness level inside
the machine and stop drying when the clothes are dry; unveiled the X11 washing machine
with the highest energy efficiency standards in Europe, with an energy efficiency standard
of A-40%; created the first vertical domain model for smart home that scooped the highest
industry rating of “Double 4+”.
Haier Smart Home Co., Ltd. Annual Report 2023 41
Section III Management Discussion and Analysis
Certification from authorities:
As of the end of 2023, the Company received a total of 16 State Science and Technology
Progress Award, more than any other company in the industry. The Company won the
Disruptive Technology Innovation Competition of the Ministry of Science and Technology for
two consecutive years, the highest accolade in the industry.
Leadership in patent quality:
As of the end of 2023, Haier Smart Home has accumulated more than 103,000 patents
applications globally, including more than 67,000 invention patents. The Company also
accumulated 12 state patent gold awards, ranking first in the domestic market. In the
‘Global Smart Home Invention Patent Ranking’ in 2023, Haier Smart Home once again
topped the list with 6,152 published patent applications, ranking first in the world for the
tenth consecutive times.
Leadership in international standards:
As of the end of 2023, Haier Smart Home has cumulatively led and participated in the
drafting of 97 international standards and 678 state/industrial standards. We are the only
company in the industry to have participated in smart home standards from international
organizations including the IEC, ISO, IEEE, OCF and Matter. We are also the only
enterprise in the world to serve on both the IEC Board and the IEC Market Strategy Board,
which have enabled the Company to stay actively involved in the formulation of international
standards.
Leadership in experience design:
Haier won over 600 accolades, including international design awards such as the German
IF Design Award and the Red Dot Design Award. The Company won the most international
design gold awards in the industry with six in total and won 3 China Excellent Industrial
Design Gold Awards from the Ministry of Industry and Information Technology, which is the
only enterprise in China that have earned three consecutive gold awards.
42 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
(viii) Sustainability
① Global ESG governance structure: Haier Smart Home has established a global ESG
governance structure, including the ESG Committee of the Board of Directors, the ESG
Global Executive Office, and the Global ESG Executive Working Group, which provides
organisational support for the in-depth practice of ESG.
② Green development and low-carbon operation: Haier Smart Home has formulated the
“6 Green” strategy of green management throughout the entire life cycle, which includes
“green design, green manufacturing, green marketing, green recycling, green disposal, and
green procurement”, and promotes green actions throughout the entire life cycle. Haier
Smart Home has integrated low-carbon, recycling, energy saving and emission reduction
into its daily operations to promote green upgrading of the industry.
③ Social responsibility and charity work: Haier Smart Home actively participates in public
welfare projects such as the Hope Project, rural revitalisation, and emergency relief on a
global scale, and continues to give back to society through donations and volunteer
services.
④ Leading ESG rating: Haier Smart Home has the leading rating among its peers in China
in respect of the ESG ratings issued by three major organizations, namely CSI, MSCI and
Wind, which demonstrates its excellent performance in environmental, social responsibility
and corporate governance.
(ix) Staying committed to the principle of ‘value of people comes first’
‘Value of people comes first’ has always been a guiding principle for Haier’s development. From
the autonomous operation team at the start of the venture to the current ‘Rendanheyi’ (人 單 合
一) model, Haier encourages every employee to maximize their own values while creating values
for users. In Haier’s ‘Rendanheyi’ (人單合一) model, ‘Ren’ refers to creators; ‘Dan’ refers to user
value; ‘Heyi’ refers to the integration of values realized by employees and the values created for
users. ‘Value of people comes first’ is the highest purpose of the ‘Rendanheyi’ (人 單 合 一)
model.
Haier Smart Home adheres to the values of recognizing users’ demand as priority and denying
our own perceptions and is committed to the ‘two creative spirits’ of entrepreneurship and
innovation. We turned employees into creators, implementers into entrepreneurs, and transformed
enterprises into open ecosystem platforms, which have supported the Company to become a
global leader of smart home in the Internet of Things era.
Haier Smart Home Co., Ltd. Annual Report 2023 43
Section III Management Discussion and Analysis
V. MAJOR OPERATIONS DURING THE REPORTING PERIOD
Please refer to “I. DISCUSSION AND ANALYSIS ON OPERATIONS” and “III. INTRODUCTION OF THE
COMPANY’S BUSINESS DURING THE REPORTING PERIOD” under this section.
(I) Analysis of principal business
1. Table of movement analysis on the related items in income statement and cash flow
statement
Unit and Currency: RMB
Amount for
Amount corresponding
Items for current period period of last year Change (%)
Operating revenue 261,427,783,050.10 243,578,924,958.47 7.33
Operating cost 179,053,959,580.31 167,263,342,432.05 7.05
Selling expenses 40,978,039,605.37 38,600,298,275.47 6.16
Administrative expenses 11,489,640,885.88 10,846,346,796.51 5.93
Financial expenses 514,155,779.97 –241,752,219.47 N/A
R&D expenses 10,221,013,589.28 9,507,384,787.81 7.51
Net cash flow from operating
activities 25,262,376,228.30 20,256,557,145.86 24.71
Net cash flow from investing activities –17,085,065,181.85 –8,925,734,712.45 N/A
Net cash flow from financing activities –7,841,032,853.05 –3,900,450,140.92 N/A
Other income 1,558,864,654.36 1,070,103,842.60 45.67
Gains on changes in fair value 19,753,663.05 –122,442,933.65 N/A
Credit impairment loss –242,642,129.31 –431,377,480.82 N/A
Gains on disposal of assets –15,342,697.67 206,742,815.79 –107.42
Non-operating expenses 295,802,566.43 190,706,969.79 55.11
Profit or loss attributable to minority
shareholders 135,454,728.88 21,258,126.54 537.19
Reasons for significant changes in certain indicators:
(1). Reasons for the changes in financial expenses: the increase of 312.68% in financial
expenses over the corresponding period was mainly due to the additional interest
expenses incurred overseas as a result of higher interest rates on borrowings due to
interest rate hikes during the current period;
(2). Reasons for the changes in other income: the increase of 45.67% in other income over
the corresponding period was mainly due to the year-on-year increase in government
grants;
44 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
(3). Reasons for the changes in the gains on changes in fair value: the increase of 116.13%
in gains on changes in fair value over the corresponding period was mainly due to the
year-on-year increase in fair value change of forward contracts;
(4). Reasons for changes in credit impairment loss: the decrease of 43.75% in credit
impairment loss over the corresponding period was mainly due to the decrease in the
provision for bad debts of receivables during the current period;
(5). Reasons for changes in non-operating expenses: the increase of 55.11% in non-
operating expenses over the corresponding period was mainly due to the year-on-
year increase in expenses incurred during the current period that were not directly
related to the Company’s ordinary operation;
(6). Reasons for changes in profit or loss attributable to minority shareholders: the increase
of 537.19% in profit or loss attributable to minority shareholders over the
corresponding period was mainly due to the increase in earning of some subsidiaries
with minority interest during the current period.
Detailed explanation of significant changes in the operation types and the components of
profit or sources of profit of the company during the current period
□ Applicable √ Not Applicable
2. Analysis of Income and Cost
√ Applicable □ Not Applicable
(1). Principle Operating Activities by Sector, Product, Region and Sales Mode
Unit and Currency: RMB
Principal operating activities by product
Operating revenue Operating cost Gross profit
Gross profit increased/ increased/ margin increased/
By Product Operating revenue Operating cost margin (%) decreased yoy (%) decreased yoy (%) decreased yoy (%)
Air conditioner 45,659,954,167.67 32,250,291,838.55 29.37 13.98 12.77 0.76
Refrigerator 81,640,696,197.18 55,335,233,549.67 32.22 5.16 4.64 0.34
Kitchen appliances 41,588,961,234.83 28,293,408,033.92 31.97 7.42 8.03 –0.39
Water Appliances 15,010,842,426.77 8,089,006,857.41 46.11 8.88 8.67 0.10
Washing Machine 61,272,315,753.28 40,872,967,073.73 33.29 6.15 5.93 0.14
Equipment parts and channel
integrated services 15,119,945,331.23 13,816,209,393.14 8.62 3.74 5.22 –1.29
Haier Smart Home Co., Ltd. Annual Report 2023 45
Section III Management Discussion and Analysis
Principal operating activities by region
Operating revenue Operating cost Gross profit
Gross profit increased/ increased/ margin increased/
By region Operating revenue Operating cost margin (%) decreased yoy (%) decreased yoy (%) decreased yoy (%)
Domestic 124,614,230,011.11 79,297,163,609.40 36.37 7.06 6.20 0.52
Overseas 135,678,485,099.85 99,359,953,137.02 26.77 7.60 7.81 –0.15
Principal operating activities by sales mode
Operating revenue Operating cost Gross profit
Gross profit increased/ increased/ margin increased/
Sale mode Operating revenue Operating cost margin (%) decreased yoy (%) decreased yoy (%) decreased yoy (%)
Domestic — direct sale
customers 12,071,968,855.83 6,481,694,994.39 46.31 8.90 7.60 0.65
Domestic — distribution and
others 112,542,261,155.28 72,815,468,615.01 35.30 6.87 6.07 0.48
Overseas — direct sale
customers 5,384,503,473.21 4,677,974,737.53 13.12 14.68 11.86 2.19
Overseas — trading companies
sales 130,293,981,626.64 94,681,978,399.49 27.33 7.32 7.62 –0.20
Explanation of principle operating activities by sector, product, region and sales mode
(2). Table of production and sales analysis
√ Applicable □ Not Applicable
Production volume Sales volume Inventory
Production increased/ increased/ increased/
Main products Units volume Sales Volume Inventory decreased yoy (%) decreased yoy (%) decreased yoy (%)
Home Appliance 10,000s units/sets 11,927 11,978 2,458 4.7 6.4 –1.7
(3). Performance of major purchase contracts and major sales contracts
□ Applicable √ Not Applicable
46 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
(4). Table of cost analysis
Unit: RMB10,000
By sector
Percentage of
change of the
Percentage of amount for the
the amount for current period
Percentage of the compared to
the amount for Amount for the corresponding the
the current corresponding period of last corresponding
Amount for the period in total period of last year in total period of last
By sector Cost component current period costs (%) year costs (%) year (%)
Home Appliance Primary operation 16,491,091 100.00 15,372,381 100.00 7.28
Industry costs
Raw materials 14,110,764 85.6 13,135,824 85.5 7.42
Labor 1,122,334 6.8 950,481 6.2 18.08
Depreciation 280,770 1.7 254,004 1.7 10.54
Energy 65,982 0.4 81,621 0.5 –19.16
Others 911,241 5.5 950,450 6.2 –4.13
(5). Change of consolidation scope due to changes on shareholdings of major
subsidiaries during the reporting period
□ Applicable √ Not Applicable
(6). Relevant information on significant changes or adjustments in the Company’s
business, products or services during the reporting period
□ Applicable √ Not Applicable
(7). Major distributors and major suppliers
A. Major distributors of the Company
√ Applicable □ Not Applicable
Revenue from the top five distributors was RMB60,945.63 million, representing
23.3% of the total sales for the year; among the revenue from the top five
distributors, the revenue from related parties was RMB0 million, representing
0% of the total sales for the year.
The proportion of sales to a single distributor exceeded 50% of the total during
the reporting period, and new distributor or depending heavily on a few
distributors were seen among the top five distributors.
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 47
Section III Management Discussion and Analysis
B. Major suppliers of the Company
√ Applicable □ Not Applicable
The purchase amount from the top five suppliers amounted to RMB41,251.38
million, representing 23.6% of the total purchase amount for the year; among
the purchase amount from the top five suppliers, the purchase amount from
related parties was RMB18,643.33 million, representing 10.6% of the total
purchase amount for the year.
The proportion of purchase from a single supplier exceeded 50%of the total
during the reporting period, and new supplier or depending heavily on a few
suppliers were seen among the top five suppliers.
□ Applicable √ Not Applicable
3. Expenses
√ Applicable □ Not Applicable
The increase of 312.68% in financial expenses over the corresponding period was mainly
due to the additional interest expenses incurred overseas as a result of higher interest rates
on borrowings due to interest rate hikes during the current period.
4. R&D expenditure
(1). Table of R&D expenditure
√ Applicable □ Not Applicable
Unit: RMB
Expensed R&D expenditure for the current period 10,219,284,796
Capitalized R&D expenditure for the current period 601,960,544
Total R&D expenditure 10,821,245,340
Total R&D expenditure as a percentage in
operating revenue (%) 4.14
Proportion of capitalization of R&D expenditure (%) 5.56
(2). Table of R&D Personnel
√ Applicable □ Not Applicable
Number of R&D personnel 23,889
Percentage of R&D personnel took up in the total employees
(%) 21
48 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
Educational structure of R&D personnel
Number of
Categories of educational structure personnel
Doctor’s degree 130
Master’s degree 4,508
Bachelor’s degree 12,936
College Diploma 4,605
High School diploma or below 1,710
Age structure of R&D personnel
Number of
Categories of age structure personnel
Under 30 years old (not including 30) 8,139
30–40 years old (including 30 and not including 40) 10,244
40–50 years old (including 40 and not including 50) 4,306
50–60 years old (including 50 and not including 60) 1,057
60 years old and above 143
(3). Explanation
√ Applicable □ Not Applicable
Haier Smart Home always focuses on user experience. Under the guidance of
adhering to the strategy of original technology, it has continuously increased its
innovation investment, established a global leading R&D system, and has seen a
continuous emergence of innovative achievements. Original technologies have
supported the overall industry-leading positions of the Company’s high-end brands,
scenario brands and ecosystem brands. In terms of products, in 2023, the Company
created a series of excellent solutions that were beyond users’ expectations with
lifestyle embodied in technology, such as flat-back refrigerator, Casarte’s Zhongzi (中
子) F2 washer-dryer combo, variable split air conditioner, and seamless build-in lifting
ultra-thin range hood, etc. In the next step, we will continue to increase investment in
basic research and subversive technology research. In terms of intelligence
promotion: focusing on all-scenario solutions such as whole house intelligence, we
have constructed smart living scenarios based on user demand. In terms of green
and dual-carbon: we will undertake the national dual-carbon strategy and actively
implement the ESG concept. In 2023, the Company strived to enhance the
sustainability of its products and solutions by integrating low carbon and energy
saving into the whole life cycle of products, remaining its efforts in promoting
technological and product innovation and developing green and low-carbon products
extended from commodity to industry, with a view to driving the green and high-
quality development of the whole industry chain.
Haier Smart Home Co., Ltd. Annual Report 2023 49
Section III Management Discussion and Analysis
(4). Reason for significant change in the composition of R&D personnel and its
impact on the future development of the Company
□ Applicable √ Not Applicable
5. Cash flow
√ Applicable □ Not Applicable
(1). The increase of 91.41% in net cash outflow from investing activities over the
corresponding period was mainly due to an increase in cash payments for the
investment and construction and purchase of fixed assets, intangible assets, and
other long-term assets during the current period;
(2). The increase of 101.03% in net cash outflow from financing activities over the
corresponding period was mainly due to the increase in cash payments for dividend
distribution or interest payments and the additional borrowings during the current
period.
(II) Explanation for major changes in profit caused by non-principal businesses
□ Applicable √ Not Applicable
(III) Analysis of assets and liabilities
√ Applicable □ Not Applicable
1. Assets and liabilities
Unit: RMB
Change in the
Percentage of Percentage of Amount at the
Amount at the Amount at the end of Current
Amount at the End of Current Amount at the End of Previous Period to the
End of Current Period to Total End of Previous Period to Total End of Previous
Name of Item Period Assets (%) Period Assets (%) Period (%) Description
Trading financial liabilities 953,963,543.83 0.38 519,912,880.91 0.22 83.49 Mainly due to the increase
in short-term wealth
management products
measured at fair value
Derivative financial assets 67,565,829.44 0.03 183,185,160.51 0.08 –63.12 Mainly due to the
fluctuation in fair value
of forward foreign
exchange contracts
Debt investments 8,841,233,078.66 3.49 1,034,222,222.22 0.44 754.87 Mainly due to the new
long-term deposits
Construction in progress 5,403,469,596.76 2.13 4,094,712,417.61 1.73 31.96 Mainly due to the increase
in factory under
construction and
equipment
Development expenses 266,490,235.10 0.11 154,480,515.67 0.07 72.51 Mainly due to the
investment in
development projects
50 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
Change in the
Percentage of Percentage of Amount at the
Amount at the Amount at the end of Current
Amount at the End of Current Amount at the End of Previous Period to the
End of Current Period to Total End of Previous Period to Total End of Previous
Name of Item Period Assets (%) Period Assets (%) Period (%) Description
Derivative financial liabilities 168,625,004.97 0.07 104,594,040.66 0.04 61.22 Mainly due to the
fluctuation in fair value
of forward foreign
exchange contracts
Non-current liabilities due 3,732,550,549.23 1.47 6,294,750,667.08 2.67 –40.70 Mainly due to the
within one year repayment of long-term
borrowings due within
one year
Long-term borrowings 17,936,302,925.77 7.08 13,590,866,873.43 5.76 31.97 Mainly due to the
replacement of
long-term borrowings
due within one year and
new borrowing
Treasury stock 5,034,065,107.42 1.99 3,857,807,196.38 1.63 30.49 Mainly due to the share
repurchase by the
Company
Minority interest 2,397,589,814.47 0.95 1,290,895,044.45 0.55 85.73 Mainly due to the capital
contribution by minority
shareholders of certain
subsidiaries
2. Overseas Assets
√ Applicable □ Not Applicable
(1) Scope of assets
Among the assets, overseas assets amounted to 11,771,244 (unit and currency:
RMB10,000), representing 46.5% of the total assets.
(2) Explanation of high percentage of overseas assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
Operating revenue
Name of overseas during the reporting Net profit of the
asset Reason for Formation Operating mode period reporting period
Overseas Home Overseas mergers & Localized Operations 136,411,896,001 6,370,417,298
Appliance and acquisitions and the with the integration of
Smart Home Company’s own R&D, manufacturing
Business development and marketing
Note: Net profit stated in the above table represents operating profit.
Haier Smart Home Co., Ltd. Annual Report 2023 51
Section III Management Discussion and Analysis
3. Restrictions on major assets as of the end of reporting period
□ Applicable √ Not Applicable
4. Other Explanations
□ Applicable √ Not Applicable
(IV) Analysis of industry operating information
□ Applicable √ Not Applicables
(V) Analysis of investment
Overall analysis on external equity investment
√ Applicable □ Not Applicable
During the reporting period, the Company made investments in respect of the establishment of a
compressor joint venture and the acquisition of the commercial refrigeration business of Carrier
Global Corporation. For details, please refer to the Indicative Announcement of Haier Smart
Home Co., Ltd. on Establishment of A Compressor Joint Venture disclosed on 20 January 2023
and the Voluntary Announcement of Haier Smart Home Co., Ltd. on Acquisition of The
Commercial Refrigeration Business of Carrier Global Corporation disclosed on 14 December
2023 by the Company.
1. Significant equity investment
□ Applicable √ Not Applicable
2. Significant non-equity investment
□ Applicable √ Not Applicable
52 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
3. Items measured at fair value
√ Applicable □ Not Applicable
Unit and Currency: RMB
Profits or Losses Cumulative Provision for
of Changes in Changes in Fair Impairment of Purchases Sold/Redeemed
Opening Fair Value during Value Included in during the during the Amount during
Asset Type Balance the period equity Period period the period Other Changes Closing Balance
Wealth management 14,638,968.26 3,105,706.34 1,093,550,000.00 623,358,572.79 487,936,101.81
products
Investment in other equity 5,851,882,930.20 550,686,416.89 5,738,403.78 23,115,128.61 18,502,332.51 6,403,694,954.77
instruments
Investment in trading equity 336,843,065.02 7,973,424.95 72,742,043.05 -28,850,007.28 243,224,439.64
instruments
Investment funds 168,430,847.63 38,833,850.27 30,275,372.74 15229617.11 492,548.85 222,803,002.38
Derivative financial 61,674,330.75 –58,026,743.85 –117,694,592.98 12,987,830.55 –101,059,175.53
instruments
Total 6,433,470,141.86 –8,113,762.29 432,991,823.91 0 1,129,563,776.52 734,445,361.56 3,132,704.63 7,256,599,323.07
Investment in securities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Profit and loss
arising from Accumulated fair
Carrying amount changes in fair value changes Investment profit Carrying amount
Type of Securities Securities Initial investment Sources of at the beginning value during the included in Purchases during Disposals during or loss during the at the end of the
securities code abbreviation cost funding of the Period Period equity the Period the Period period Period Accounting items
Stock 601328 Bank of 1,803,769.50 Self-funding 6,457,074.48 1,362,252.00 7,819,326.48 Investments in other
Communications equity instruments
Stock 600827 Bailian Group 154,770.00 Self-funding 477,382.56 –103,590.44 373,792.12 Investments in other
equity instruments
Stock 300183 Neusoft Carrier 18,713,562.84 Self-funding 9,419,316.30 2,376,325.44 11,795,641.74 Investments in other
equity instruments
Stock 000959 Beijing Shougang Self-funding 70,074,347.20 29,925,649.60 71,149,989.52 –28,850,007.28 Trading financial assets
Stock 688455 KENGIC 29,450,000.00 Self-funding 157,181,890.00 –10,393,845.80 146,788,044.20 Trading financial assets
Total / / 50,122,102.34 / 243,610,010.54 19,531,803.80 3,634,987.00 — 71,149,989.52 –28,850,007.28 166,776,804.54 /
Explanation of investment in securities
□ Applicable √ Not Applicable
Private equity investment
√ Applicable □ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 53
Section III Management Discussion and Analysis
By the end of the reporting period, the Company has historically invested in private equity
funds as follows: the Company invested 63.13% share in Qingdao Haier SAIF Smart Home
Industry Investment Center (Limited Partnership); Qingdao RRS Huitong Investment
Management Co., Ltd. (青 島 日 日 順 匯 通 投 資 管 理 有 限 公 司), a subsidiary of the Company,
invested 49% share in Guangzhou Heying Investment Partnership (Limited Partnership);
Qingdao Haishang Chuangzhi Investment Co., Ltd. (青 島 海 尚 創 智 投 資 有 限 公 司) ，a
subsidiary of the Company, invested 30% share in Huizhixiangshun Equity Investment Fund
(Qingdao) Partnership (Limited Partnership), a private equity fund, and 50% equity of
Qingdao Ririshun Huizhi Investment Co., Ltd., a managing partner of funds; Qingdao Haier
Technology Investment Co., Ltd. (青 島 海 爾 科 技 投 資 有 限 公 司), a subsidiary of the
Company, invested in private equity funds: 1.265% share in Beijing-Tianjin-Hebei Industrial
Coordinated Development Investment Fund (Limited Partnership) (京津冀產業協同發展投資
基 金（有 限 合 伙）), 14.85% share in Shenzhen TopoScend Capital Phase I Fund (Limited
Partnership) (深 圳 市 投 控 東 海 一 期 基 金（有 限 合 伙）), 24% share in Qingdao Haimu Smart
Home Investment Partnership (Limited Partnership), and invested in fund management
companies: 5.01% equity of CMG-SDIC Capital Co., Ltd. (國 投 招 商 投 資 管 理 有 限 公 司),
15% equity of Shenzhen TopoScend Capital Co., Ltd. (深 圳 市 投 控 東 海 投 資 有 限 公 司),
49% equity of Qingdao Haimu Investment Management Co., Ltd.
Derivative investment
√ Applicable □ Not Applicable
(1). Derivatives investments for hedging purposes during the reporting period
√ Applicable □ Not Applicable
Unit and Currency: RMB10,000
Proportion of
closing amount
to net assets of
Gains or losses Accumulative Amount the Company at
on fair value changes in fair purchased Amount sold the end of the
Type of derivatives Initial investment Opening changes for the value included in during the during the Closing reporting period
investment amount amount current period equity reporting period reporting period amount (%)
Forward foreign exchange 1,247,880 1,247,880 –5,631.26 –12,508.67 1,178,657 11.39
contracts
Forward commodity 20,806 20,806 –171.41 739.21 11,009 0.11
contracts
Total 1, 268,686 1,268,686 –5,802.67 –11,769.46 1,189,666 11.50
Explanation on any Accounting principles are based on the Accounting Standards for Business Enterprises. The Company carried out the accounting treatment for its business in
significant changes in accordance with the relevant regulations of “Accounting Standards for Business Enterprises No. 22 — Recognition and Measurement of Financial
the accounting policies Instruments”, “Accounting Standards for Business Enterprises No. 24 — Hedge Accounting”, “Accounting Standards for Business Enterprises No. 37
and specific accounting — Presentation of Financial Instruments” and “Accounting Standards for Business Enterprises No. 39 — Fair Value Measurement” published by the
and auditing principles Ministry of Finance and its guidance, to reflect the relevant items in the balance sheet and the statement of profit or loss, which are consistent with those
for the hedging of the previous reporting period.
business during the
reporting period as
compared to the last
reporting period
54 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
Proportion of
closing amount
to net assets of
Gains or losses Accumulative Amount the Company at
on fair value changes in fair purchased Amount sold the end of the
Type of derivatives Initial investment Opening changes for the value included in during the during the Closing reporting period
investment amount amount current period equity reporting period reporting period amount (%)
Explanation on actual profit The actual profit and loss for the reporting period amounted to RMB112.5567 million.
or loss during the
reporting period
Explanation on the effect of Under the premise of ensuring normal production and operation, the Company carried out hedging business to reduce the impact of exchange rate
hedging fluctuations on the Company’s production and operation and to realize the Company’s long-term stable development.
Source of funds for Self-owned funds
derivative investments
Risk analysis and I. Foreign exchange hedging business
explanations on risk
control measures for 1. Risk Analysis
positions in derivatives
during the reporting
The Company and its holding subsidiaries conduct foreign exchange derivatives business in accordance with the principle of stability, and do not conduct the
period (including but
foreign exchange transaction for speculative purposes. All foreign exchange funds businesses are based on normal production and operation and rely on
not limited to market
specific business operations to avoid and prevent exchange rate risks. However, there are also certain risks in conducting foreign exchange funds
risk, liquidity risk, credit
business:
risk, operational risk,
legal risk, etc.)
(1) Market risk: Forward settlement of foreign exchange: the Company will determine whether to sign a forward contract based on the cost of the product
(basically consisting of RMB) and market risk. Signing the contract equals to fixing the price of currency exchange. It is effective to resist market
fluctuation risk and ensure a reasonable and stable profit level of the Company through forward settlement of foreign exchange.
Forward purchase of foreign exchange: according to the import contract entered with the customer and exchange rate risk, the future currency exchange
cost will be fixed through the unilateral forward purchase of foreign exchange. Although there is a certain risk of loss, the forward purchase of foreign
exchange will effectively reduce the market fluctuation risk and fix procurement costs.
Other NDF and options businesses are mainly carried out when failed to sign the ordinary forward settlement/purchase of foreign exchange or the costs are
too high, only serving as the supplement of the above businesses.
Exchange rate fluctuation risk in currency swap business is avoided by adjusting the currency of assets and liabilities in order to match the currency of the
assets with the currency of liabilities. Interest rate fluctuation risk in interest rate swap business is avoided by transfer the floating-rate business to fix-rate
business or transfer the fixed-rate business to floating-rate business when the rate is going downward to reduce the costs. All of the above businesses
have a real business background and there is no speculation.
Haier Smart Home Co., Ltd. Annual Report 2023 55
Section III Management Discussion and Analysis
Proportion of
closing amount
to net assets of
Gains or losses Accumulative Amount the Company at
on fair value changes in fair purchased Amount sold the end of the
Type of derivatives Initial investment Opening changes for the value included in during the during the Closing reporting period
investment amount amount current period equity reporting period reporting period amount (%)
(2) Exchange rate fluctuation risk: After the Company fixing the forward exchange rate according to the foreign exchange management strategy, if the actual
trend of the foreign exchange rate deviates significantly from the direction of the Company’s fixed exchange rate fluctuation, the cost of the Company
after fixing the exchange rate expenditure may exceeds the cost of not fixing the exchange rate, thus forming a loss of the Company. When the foreign
exchange rate changes greatly, if the fluctuating direction of the Company’s fixed foreign exchange hedging contract is inconsistent with that of the
foreign exchange rate, the foreign exchange loss will be formed; if the exchange rate does not fluctuate in the future, the vast deviation from the foreign
exchange hedging contract will also form a foreign exchange loss.
(3) Internal control risk: The foreign exchange derivatives business is highly specialized and complex so it may cause risks due to imperfect internal control
systems.
(4) Transaction default risk: In the event of a default in the counterparty of foreign exchange derivative transaction, the Company would not be able to obtain
hedging profits as agreed to hedge the Company’s actual exchange losses, resulting in a loss of the Company.
(5) Customer default risk: The overdue of customer’s accounts receivable and the customer’s order adjustment will make the actual payment inconsistent with
the expected payment, which may result in the actual cash flow could not match the carried out foreign exchange derivative business term or amount
completely, leading to a loss of the Company.
2. Risk Control Measures Taken by the Company
(1) The Company may not engage in any foreign exchange derivative transactions except those carried out for the purpose of avoiding exchange rate risks,
and only for foreign exchange operations related to the Company’s import and export business and overseas asset/liability management.
(2) The Company implemented approval process in strict compliance with the Foreign Exchange Risk Management Policy and the Foreign Exchange
Derivatives Transaction Management Rules. The general meeting of shareholders of the Company and the Board of Directors delegate the President/
President Office to take responsibility for the operation and management of the foreign exchange derivatives business, the Treasury Department shall act
as the handling department, and finance department shall act as the daily review department.
(3) The Company conducts foreign exchange derivatives business with financial institutions such as large banks with legal qualifications. The financial
department timely tracks the changes in the transaction and strictly controls the occurrence of closing default risk.
(4) The Company conducts foreign exchange derivatives business must base on the Company’s cautious forecast on the foreign currency receipts and
payments and actual business exposure. The delivery date of the foreign exchange derivatives business must match with the Company’s predicted receipt
time, deposit time or payment time of the foreign currency, or match with the corresponding redemption term of the foreign currency bank borrowing.
II. Bulk Hedging Business
1. Risk Analysis
(1) Market risk: The futures and derivatives market itself has certain systematic risks, while hedging requires certain level of price trend prediction. If the price
prediction is directionally incorrect, it may cause losses to the Company.
(2) Policy risk: Significant changes in laws and regulations of the futures and derivatives markets may cause market fluctuations or make trading impossible,
which may result in risks.
56 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
Proportion of
closing amount
to net assets of
Gains or losses Accumulative Amount the Company at
on fair value changes in fair purchased Amount sold the end of the
Type of derivatives Initial investment Opening changes for the value included in during the during the Closing reporting period
investment amount amount current period equity reporting period reporting period amount (%)
(3) Funding risk: Due to the strict margin system and daily mark-to-market system in the futures market, there may be corresponding funding floating loss
risks. The Company will reasonably allocate its own funds for hedging business, control the scale of funds, and conduct funding projections while
formulating trading plans to ensure sufficient funds. In the process of business operations, the Company will plan and utilize margins reasonably, and
adjust funds appropriately to avoid risks.
(4) Operational risk: There may be cases in which suppliers violate their agreements and cancel or delay deliveries, resulting in a mismatch between the actual
hedging quantity and period, causing losses to the Company.
(5) Internal control risk: Futures and derivatives transactions are more specialized and complex, which may give rise to risks caused by inadequate internal
control systems or human errors in operations. The Company has formulated the Management Measures for Hedging Business of Bulk Raw Materials,
which contains clear provisions on the authorization scope, approval procedures, risk management and other aspects of hedging transactions. The
Company shall strengthen internal control management and improve professionalism, implement risk prevention measures and improve the management
standard of hedging business.
2. Risk control measures adopted by the Company
(1) Matching hedging business with the Company’s production and operation to maximize hedging against the risk of market fluctuations.
(2) Strictly control the scale of hedging funds and reasonably plan and use margins. The Company will reasonably allocate its own funds for hedging
business, and will not use raised funds directly or indirectly for hedging.
(3) The Company has formulated the Management Measures for Hedging Business of Bulk Raw Materials, which contains clear provisions on the
organizational structure and its responsibilities, business processes, risk management, file management, etc. The Company will strictly follow the
provisions of the internal control system to control all aspects of the business, and will implement the Management Measures in accordance with the
established regulations.
(4) The Company will strengthen the training of relevant personnel to enhance their professionalism and overall quality; strengthen research on the futures and
derivatives market to grasp market changes and design specific operational plans for trading business.
(5) The internal audit department of the Company will conduct regular and irregular inspections of hedging trading business, supervise hedging trading
business personnel in the implementation of the risk management system and risk management procedures, and prevent operational risks in the business
in a timely manner.
Changes in market price or In respect of changes in market prices or fair value of products, gains or losses actually realized from the invested derivatives amounted to RMB112.5567
fair value of invested million during the reporting period. As for the specific methodology used and the related assumptions and parameter settings: Foreign exchange and
derivatives during the interest rate swap forward quotations from financial institutions were used.
reporting period, where
specific methodology
used and the settings
of relevant assumptions
and parameters should
be disclosed in the fair
value analysis of
derivatives
Litigation case (if Nil
applicable)
Haier Smart Home Co., Ltd. Annual Report 2023 57
Section III Management Discussion and Analysis
Proportion of
closing amount
to net assets of
Gains or losses Accumulative Amount the Company at
on fair value changes in fair purchased Amount sold the end of the
Type of derivatives Initial investment Opening changes for the value included in during the during the Closing reporting period
investment amount amount current period equity reporting period reporting period amount (%)
Disclosure date of 30 March 2023
announcement in
relation to the
consideration and
approval of derivatives
investment by the
Board (if any)
Disclosure date of 26 June 2023
announcement in
relation to the
consideration and the
approval of derivatives
investment by
shareholders’ general
meeting (if any)
(2). Derivatives investments for investment purposes during the reporting period
□ Applicable √ Not Applicable
4. Detailed progression of material asset regrouping and integration during the
reporting period
□ Applicable √ Not Applicable
(VI) Sale of material assets and equity
□ Applicable √ Not Applicable
(VII) Analysis on major subsidiaries and Investees
√ Applicable □ Not Applicable
For details, please refer to the relevant contents of “(2) Explanation of high percentage of
overseas assets” under “(III) Analysis of assets and liabilities” in this section.
(VIII) Structured entities controlled by the Company
□ Applicable √ Not Applicable
58 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
VI. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTURE
DEVELOPMENT
(I) Setup and trend of the industry
√ Applicable □ Not Applicable
For details, please refer to the relevant contents of “II. INTRODUCTION OF THE INDUSTRY
WHERE THE COMPANY OPERATES DURING THE REPORTING PERIOD” under “Section III
Management Discussion and Analysis” in this report.
(II) Development strategy of the Company
√ Applicable □ Not Applicable
The Company is committed to become a user-oriented digital enterprise in the IoT era, and
become the world’s first IoT-based smart home ecosystem brand.
(1) Consumer appliance business
Refrigerators and washing machines: The Company is committed to driving
technological innovation and refining scenario-based solutions to strengthen and
expand our leading position in the domestic market. We will enhance competitiveness
in local markets overseas to increase our market share and profitability globally.
Kitchen appliances: In overseas markets, we aim to maintain and expand our leading
positions in the United States, Australia, and New Zealand. Domestically, we plan to
rapidly increase our market share by enhancing the Casarte product line and
optimising home improvement channels.
Emerging product categories: We will accelerate R&D as well as marketing efforts for
new product categories such as tumble dryers and dishwashers. We are determined
to enter into new business areas, such as lifestyle appliances and cleaning
appliances, to keep up with the growing consumer demand for high-quality living.
(2) Heating, Ventilation and Air Conditioning (HVAC) business
Air conditioners: The Company will enhance the R&D of core technologies and refine
our product lineup to establish professional solution capabilities that lead the industry.
By fostering integration within the industrial chain and streamlining production
processes, we will lower costs and improve operational efficiency. In addition, we will
strengthen the development of our professional sales channels to deliver more
convenient and effective customer service.
Water heaters and purifiers: By leveraging our leading position in the water heater
industry, we are actively expanding into new product lines, such as whole-house
water purification and whole-house heating and cooling systems, to provide
comprehensive household water solutions. In overseas markets, we will accelerate
business expansion globally by developing products that cater to local market
demands, expanding professional sales channels, and establishing localised
production bases.
Haier Smart Home Co., Ltd. Annual Report 2023 59
Section III Management Discussion and Analysis
(III) Business plan
√ Applicable □ Not Applicable
In 2024, the Company will continue to advance digital transformation. By innovating business
models, operational mechanisms, and organisational platforms, we aim to enhance user
experience and operational efficiency and achieve leadership objectives.
In established businesses such as refrigerators, washing machines, and water heaters, we will
concentrate on product iteration, innovation of scenario-based solutions, and market
transformation to expand our competitive edge in the domestic market; while introducing new
high-end products and reinforcing local market presence to increase market share and enhance
profitability in overseas markets.
For growing businesses such as air conditioners, kitchen appliances, and smart buildings, we will
enhance competitiveness by establishing industry-leading R&D systems, improving industrial chain
integration, and actively expanding professional sales channels, to lay a solid foundation for the
Company’s long-term stability and growth.
To enhance our ability to acquire user traffic in the domestic market, we will strengthen our
distribution networks and retail capabilities to boost sales, while establishing an effective system
to acquire and monetize traffic on emerging media platforms like Douyin. We will also roll out the
warehouse-to-consumer model to improve supply chain and ensure prompt fulfilment of
consumer demands. The Casarte brand will undergo a brand enhancement, expand into niche
markets, and strengthen its capabilities in product innovation, retail, marketing, and top-notch
services. The objective is to strengthen Casarte’s position as a leader in the domestic high-end
market, increase brand influence, and capture a larger market share.
We will strengthen the SAN YI NIAO model as our core offering, continuously improving its user
experience on home appliance and home furnishing integration, end-to-end digital services, and
smart living features. We aim to boost its sales of home appliance product suites, which would
result in higher average ticket prices and market conversion rates.
For overseas markets, we will focus on driving growth in market share and profitability across
different regions. (1) Develop product iteration systems tailored to local consumer needs,
achieving continuous innovation and upgrades, enhancing competitiveness in high-end markets,
and improving price indices and gross profit margins. (2) Accelerate the localisation of regional
supply chains by optimising local production, warehousing, and logistics processes, to lower
costs and increase responsiveness. (3) Drive retail transformation in distribution networks by
enhancing efficiency through digitalisation, and harness cutting-edge technologies such as big
data and artificial intelligence to streamline business operations and enhance user experience. (4)
Foster global collaboration across branding, R&D, procurement, supply chain, and logistics to
optimise global resource allocation, reduce costs and boost efficiency, and bolster global
competitiveness.
60 Haier Smart Home Co., Ltd. Annual Report 2023
Section III Management Discussion and Analysis
(IV) Potential risks of the Company
√ Applicable □ Not Applicable
1. Risk of decreasing market demand due to macroeconomic slowdown. Sales of white
goods as durable consumer appliances are subject to users’ income levels and their
expectations of future income growth which will have a certain impact on their willingness
to purchase products. A slowdown in macroeconomic growth causing a decline in users’
purchasing power will have a negative impact on industry growth. In addition, a slowdown
in real estate market will also have a negative impact on market demand, which will
indirectly affect end-user demand for home appliances.
2. Risk of price war caused by intensified industry competition. The white goods industry
is highly competitive with a high degree of product homogeneity. While industry
concentration has been on the rise in recent years, certain sub-sectors may face increased
inventory levels due to supply-demand imbalance, potentially leading to risks such as price
wars. Additionally, rapid technological advancements, a shortage of industry talent,
shortened product life cycles and ease of imitation are making it increasingly challenging to
generate profit. Although new products, services and technologies often command higher
selling prices, the Company finds itself compelled to invest more in R&D. The Company will
actively invest in R&D to introduce innovative products and services, thereby attracting
more users and establishing a lasting brand influence.
3. Risk of fluctuations in raw material prices. The Company’s products and core
components use metal raw materials such as steel, aluminium, and copper, as well as
commodities such as plastics and foam. If raw materials prices continue to rise, it will put
certain pressure on the Company’s production and operations. Additionally, the Company
relies on third party manufacturers and suppliers for key raw materials, components,
manufacturing equipment, and OEM suppliers. Any disruption in supply or significant price
increases by these suppliers will have a negative impact on the Company’s business. As a
leader in the industry, the Company will take measures including volume & price adjustment
mechanism as well as hedging to reduce the risk of raw material fluctuations on its
operations.
4. Operational risks in overseas business. The Company has steadily developed its global
business and has established production bases, R&D centres, and marketing centres in
many parts of the world, with the proportion of overseas revenue increasing year by year.
Overseas markets are subject to local political and economic situations (including events
such as military conflicts and wars), legal systems and regulatory regimes of those
countries and regions. Significant changes in these factors will pose certain risks to the
Company’s local operations in these markets. The Company has taken various measures to
mitigate the relevant impacts, including collaborating with suppliers and distributors,
improving production efficiency to offset the impact on the overall cost of sales, potentially
expanding the Company’s supply resources to other countries, and adopting safety
measures to protect its people and assets.
Haier Smart Home Co., Ltd. Annual Report 2023 61
Section III Management Discussion and Analysis
5. Risk of exchange rate fluctuations. As the Company expands its global footprint, the
import and export of the Company’s products involve the exchange of foreign currencies
such as the U.S. dollar, the Euro, and the Japanese yen. If the exchange rates of the
relevant currencies fluctuate, it will have a certain impact on the Company’s financial
position and increase its financial costs. In addition, the Company’s consolidated financial
statements are denominated in Renminbi, while the financial statements of its subsidiaries
are measured and reported in the currency of their primary economic environment in which
the entity operates and are therefore subject to currency exchange risk. In this regard, the
Company uses hedging instruments to reduce its exposure to exchange rate fluctuations.
6. Risk of policy changes. The home appliance industry is closely related to the consumer
market and the real estate market. Changes in macroeconomic policies, consumption
investment policies, real estate policies and relevant laws and regulations will affect product
demand from distributors, which in turn will affect product sales of the Company. The
Company will closely monitor changes in the relevant policies, laws, and regulations, and
make forecasts of market changes, to ensure further development of the Company.
7. Credit risk. There is possibility that the Company will be unable to collect all trade receivables
from its distributors, or distributors are not able to settle the Company’s trade receivables
in a timely manner, in which the Company’s business, financial status, and operation
performance may be affected. In relation to this risk, the Company will maintain flexibility by
offering credit period of 30 to 90 days to certain distributors based on their credit history
and transaction amount.
8. Inventory risk. Excess inventory might occur as the Company cannot always accurately
predict trends and events and maintain appropriate inventory levels; thus, the Company
may be forced to offer discounts or promotions to manage the slow-moving inventory. On
the other hand, a shortage of inventory may lead to loss of sales opportunities for the
Company. However, the Company will manage its inventory and adjust according to market
situation and will conduct regular impairment assessment of its inventory.
(V) Others
□ Applicable √ Not Applicable
VII. EXPLANATION OF CIRCUMSTANCES AND REASONS FOR NON-
DISCLOSURE BY THE COMPANY IN CONSIDERATION OF
INAPPLICABLE REGULATIONS, STATE SECRETS AND COMMERCIAL
SECRETES
□ Applicable √ Not Applicable
62 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
I. EXPLANATION OF CORPORATE GOVERNANCE
√ Applicable □ Not Applicable
During the reporting period, the Company has strictly complied with the requirements of the relevant
laws and regulations, including the Company Law of the People’s Republic of China, Securities Law of
the People’s Republic of China, Code of Corporate Governance of Listed Companies and the listing
rules of its listed jurisdictions. While maintaining high quality development in terms of performance, the
Company has been continuously improving its governance structure, regulating its operation, enhancing
the transparency and quality of its information disclosure, treating various investors fairly, focusing on
shareholder return, implementing its equity incentive mechanism and upgrading the level of its
corporate governance.
1. Improving the governance structure
The Company has set up a standardized and orderly corporate governance structure composed
of the general meeting of shareholders, the Board of Directors and its special committees
(including the Strategy Committee, Audit Committee, Nomination Committee, Remuneration and
Assessment Committee and ESG Committee (i.e. Environmental, Social and Governance
Committee)), the Board of Supervisors, and the senior management. We have established a
governance mechanism with clear lines of authority and responsibility, mutual coordination and
checks and balances, which has guaranteed efficient and compliant corporate governance.
General meeting of shareholders
Strategy Committee
Board of Supervisors
Audit Committee
Board of Directors
Nomination Committee
Senior management Remuneration and Assessment Committee
ESG Committee
Governance structure
During the reporting period, the Company has convened a total of four general meeting of
shareholders, five Board meetings, five meetings of the Board of Supervisors, one meeting of the
Strategy Committee, five meetings of the Audit Committee, five meetings of the Remuneration
and Assessment Committee, one meeting of the Nomination Committee and two meetings of the
ESG Committee. All meetings and voting procedures complied with relevant provisions specified
in laws and regulations, the Articles of Association and rules of negotiation, and all voting results
were legal and valid. These laid a solid foundation for the Company’s standardized operation.
Haier Smart Home Co., Ltd. Annual Report 2023 63
Section IV Corporate Governance
2. General meetings
The Company has strictly complied with the provisions of the Articles of Association and the
Rules of Procedure for the General Meetings in convening and holding general meetings. General
meetings are witnessed by lawyers on site and legal opinions are issued on their legality. The
Company has established and improved effective channels of communication between
shareholders and the Board of Directors to ensure the shareholders’ right to information,
participation and voting in respect of any significant issues of the Company. During the reporting
period, the Company has held a total of four general meetings.
3. Board of Directors
The Board of Directors is mainly responsible for deciding the Company’s operational and
investment plans, formulating the Company’s annual financial budget and final account plans,
formulating the Company’s profit distribution plan and loss recovery plans, formulating the
Company’s plans for the increase or reduction of registered capital, issuance of bonds or other
securities and listing, as well as the powers as stipulated in other laws and regulations and the
Articles of Association. During the reporting period, the Board of Directors has held 5 meetings.
The Board of Directors operated in accordance with rules and were able to perform their duties
under Articles of Association and relevant laws and regulations and practically implement relevant
decisions at the general meetings. The decision-making procedure and particulars of the
resolutions of the Board of Directors were in compliance with Articles of Association and relevant
requirements under laws and regulations, and the resolutions made were legal and valid.
(1) Board Diversity
The Company is fully aware that board diversity will help to improve the efficiency in
decision-making of the Board of Directors, reduce management risks, and make better
decisions for the sustainable and healthy development of the Company. In determining the
composition of the Board of Directors, the Company took full account of the diversity of the
members of the Board, including but not limited to gender, age, culture, education
background, industry experience, professional skills, knowledge, term of service and other
relevant factors. The Nomination Committee is responsible for reviewing the effectiveness
and implementation of the Board Diversity Policy and conducting regular annual diversity
assessments.
During the reporting period, the Board of Directors of the Company consists of 9 directors,
including 2 executive directors, 3 non-executive directors and 4 independent directors. 2
directors are female, accounting for 22.2% of the Board of Directors, representing an
increase of 13.2% as compared with the previous Board of Directors (9%); 4 of whom are
independent directors, accounting for 44.4% of the Board of Directors, representing an
increase of 8.1% as compared with the previous Board of Directors (36.3%). The members
of the Board of Directors have extensive knowledge and experience in industry experience,
Internet of Things, corporate governance, global market experience, financial management
and risk management, which will help the Board of Directors to make the best decisions
and promote the sustainable and healthy development of the Company.
64 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
(2) Board Independence
The independent directors of the Company are all senior professionals with expertise in
accounting, finance and business management. During the reporting period, the
independent directors of the Company performed specific duties in accordance with the
Articles of Association and the listing rules of its listed jurisdictions, including participating in
the meetings of each of the Company’s special committees, providing advice to the
Company on its operation and management; and providing independent opinion on
connected transactions, profit distribution plans and other significant transactions of the
Company. By performing their duties as mentioned above, the independent directors help
protect the interests of the Company and the shareholders as a whole, and promote the
development of the Company. The chairman of each of the Company’s special committees
(except the Strategy Committee and ESG Committee) are all independent directors. The
number of independent directors present at the meetings of the Audit Committee, the
Remuneration and Assessment Committee, the Nomination Committee and the Strategy
Committee accounted for at least one-half of the quorum of such meeting (inclusive).
4. Board of Supervisors
During the reporting period, the Board of Supervisors operated in accordance with rules and
were able to perform their duties under Articles of Association and relevant laws and regulations.
The number and composition of the members of the Board of Supervisors complied with
requirements under laws and regulations. During the reporting period, the Supervisors of the
Company performed their duties earnestly and supervised finance matters of the Company and
performance of duty by the Company’s director and senior management in accordance with
requirements under Articles of Association and Rules of Procedure for the Board of Supervisors.
5. ESG Governance Structure
Good ESG governance is important in ensuring the stability of a company’s operations,
responding to unexpected crises and seizing development opportunities. The Company has
formed an ESG governance structure comprising governance, management and execution
covering its global business units. The ESG Committee has been established by the Board of
Directors of the Company to conduct comprehensive supervision over the ESG related matters of
the Company and perform relevant ESG governance duties on behalf of the Board of Directors.
The ESG Executive Office and Working Group have been set up under the ESG Committee to
take charge of specific ESG work of the Company.
The Company’s overseas subsidiaries, GE APPLIANCES, FPA, CANDY and the subsidiary in
India, have also established sustainable development management structures to promote the
relevant ESG work in accordance with their applicable laws and regulations. For details, please
refer to relevant information in 2023 Environmental, Social and Governance Report of Haier Smart
Home Co., Ltd. published on the same date of this report.
Haier Smart Home Co., Ltd. Annual Report 2023 65
Section IV Corporate Governance
6. Information disclosure
Haier Smart Home has strictly complied with the regulatory requirements on information
disclosure in China and overseas and fulfilled its information disclosure obligations. During the
reporting period, on the basis of improving the level of mandatory information disclosure, the
Company increased voluntary disclosure on matters of key concern to domestic and overseas
investors and the capital market, such as corporate strategy, strategic investment and acquisition
project, corporate governance, ESG, so as to continuously enhance the quality and transparency
of disclosure.
7. Treating various investors fairly and focusing on shareholder return
During the reporting period, the Company strengthened communication and exchange with
investors in an active, open, innovative and professional manner so as to enhance investors’
understanding and recognition of, among others, the Company’s strategy and business
operations and safeguard the legal rights of investors. In accordance with guideline of the
Management System for Investor Relation, the Company integrated business and financial
resources by the office of the Board of Directors and realized positive and all-around access to
investors in a multi-layer and diversified format through introduction reference, annual investor
conference, result announcement conference, and online forum. Meanwhile, the Company replied
investors on a timely basis by ways of interview, e-mail, phone, fax and the website (http://sns.
sseinfo.com) and enhanced interaction with investors, so as to respect and protect the interests
of investors, with the aim of achieving harmonious and mutual success with the Company, staff
and investors.
The Company has always applied a stable and sustainable profit distribution policy. During the
reporting period, the Company strictly followed the requirements set out in the Articles of
Association and in the Shareholder Return Plan for the Next Three Years of the Company in
implementing the profit distribution policy. As at 31 December 2023, the Company had achieved
cumulative cash dividends of approximately RMB29,700 million since the listing of A-share in
1993. During the reporting period, the Company repurchased a total of 63,980,252 shares in the
A-share market, with a payment of RMB1,430 million; in the H-share market, a total of
8,483,600 shares were repurchased, with a payment of HK$200 million.
8. Incentive mechanisms
The Company has been adhering to the management model of “RenDanHeYi”, and taking the
“maximization of the value of people” as the core. In line with the global landscape of the capital
market, the Company has established a short-term plus mid to long-term incentive system which
aligns the interests of employees and all shareholders. During the reporting period, the Company
has continued its incentive plan for the previous period and continued to introduce and
implement domestic and overseas incentive plans with various appraisal cycle, multi-level and
all-round benefits, including A-Share Core Employee Stock Ownership Plan, H-Share Core
Employee Stock Ownership Plan, H-Share Overseas Trust Incentive Plan, and A-Share Option
Incentive Scheme. The Company has also optimized its relevant assessment indicators according
to the Company’s situation to ensure a deeper and more effective alignment of interests between
the participants and the Company.
66 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Whether there is a significant difference between the corporate governance and requirements in
respect of corporate governance of listed companies of laws, administrative regulations and the
CSRC; if so, the reasons should be explained
□ Applicable √ Not Applicable
II. SPECIFIED MEASURES ADOPTED BY THE CONTROLLING
SHAREHOLDERS AND ULTIMATE CONTROLLERS TO MAINTAIN
INDEPENDENCE WITH RESPECT TO ASSETS, PERSONNEL, FINANCE,
ORGANIZATION, BUSINESS, AND THE SOLUTIONS ADOPTED,
WORKING PROGRESS AND SUBSEQUENT WORKING PLANS IN CASE
OF THE COMPANY’S INDEPENDENCE BEING AFFECTED
□ Applicable √ Not Applicable
Controlling shareholders, ultimate controllers and other parties controlled by them engaged in business
that are same as or similar to the company, peer competition and impact of significant changes in
peer competition on the company, solutions adopted, working progress and subsequent solution plans
□ Applicable √ Not Applicable
III. BRIEF INTRODUCTION TO THE GENERAL MEETINGS OF
SHAREHOLDERS
Index for details of websites designated
Meetings Date for publishing resolutions Date of disclosure Resolutions approved
2022 Annual General 26 June 2023 For details, please refer to the Announcement 27 June 2023 Considered and approved the
Meeting on Resolutions Passed at the 2022 Annual resolutions related to annual
General Meeting, 2023 First A Shares report, internal control audit
Class Meeting, 2023 First D Shares Class report, profit distribution
Meeting and 2023 First H Shares Class proposal, reappointment of
Meeting of Haier Smart Home Co., Ltd. auditor, external guarantees,
(L2023–027) published by the Company on renewal of financial-related
the website of Shanghai Stock Exchange daily connected transactions,
(www.sse.com.cn) and the four major general mandate to additional
securities Newspapers. issue/repurchase, employee
stock ownership plans, etc.
2023 First A Shares Class Considered and approved the
Meeting resolutions for general
mandate to repurchase
2023 First D Shares Class
Meeting
2023 First H Shares Class
Meeting
Preferred shareholders whose voting rights have been restored requested an extraordinary general
meeting
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 67
Section IV Corporate Governance
Explanation of Shareholders’ general meeting
√ Applicable □ Not Applicable
The 2022 Annual General Meeting and the 2023 First A/D/H Shares Class Meetings of the
Company was held in successive order by way of on-site voting, off-site voting and network voting by
poll at Room B101, Haier RenDanHeYi Research Center, Haier Science and Technology Innovation
Ecological Park, No.1 Haier Road, Qingdao, the PRC, in the afternoon on 26 June 2023, considering
the annual report and other relevant resolutions. The total number of the shares of the Company
carrying voting right amounted to 9,328,695,050 shares (of which 6,199,132,811 shares were A
shares, 271,013,973 shares were D shares and 2,858,548,266 shares were H shares). 1,031
shareholders and proxies, representing 6,422,740,689 shares or 68.85% of the total number of the
shares of the Company carrying voting right, were present at the 2022 Annual General Meeting. 955
shareholders and proxies, representing 4,126,409,131 shares or 66.56% of the total number of A
shares of the Company carrying voting rights, were present at the 2023 First A Shares Class Meeting;
66 shareholders and proxies, representing 175,964,322 shares or 64.93% of the total number of D
shares of the Company carrying voting rights, were present at the 2023 First D Shares Class Meeting;
9 shareholders and proxies, representing 2,122,075,173 shares or 74.24% of the total number of H
shares of the Company carrying voting rights, were present at the 2023 First H Shares Class Meeting.
The Directors, supervisors and senior management of the Company as well as the lawyers engaged by
the Company also attended the abovementioned four meetings. The abovementioned four meetings
were convened by the Board of the Company, and Chairman Mr. Li Huagang presided over these
meetings. The Company had 9 Directors, of whom 9 Directors attended the meetings; the Company
had 3 supervisors, of whom 3 supervisors attended the meetings. The secretary of the Board of the
Company attended the abovementioned meetings and other members of senior management of the
Company were invited to attend the abovementioned meetings.
68 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
IV. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period
√ Applicable □ Not Applicable
Unit: share
Total
remuneration
received from
the Company Whether
during the receive
Increase/ reporting remuneration
Shareholdings Shareholdings decrease in period from the
Appointment Expiration date at the beginning at the end shares Reason for (RMB0’000) Company’s
Name Title Gender Age date of appointment of the year of the year for the year increase/decrease (before tax) related party
Li Huagang Chairman, president Male 55 28 June 2022 27 June 2025 814,245 919,710 105,465 Employee stock 256.63 NO
ownership plan vested
Shao Xinzhi Vice Chairman Female 54 28 June 2022 27 June 2025 101 101 Not paid by YES
the Company
Gong Wei Director, Chief Financial Male 51 28 June 2022 27 June 2025 1,943,498 2,004,724 61,226 Employee stock 195.02 NO
Officer, vice president ownership plan vested
Yu Hon To Director Male 76 28 June 2022 27 June 2025 32 NO
Li Kam Fun Director Female 72 28 June 2022 27 June 2025 32 NO
Chien Da-chun Independent director Male 71 28 June 2022 27 June 2025 32 NO
Wong Hak Kun Independent director Male 68 28 June 2022 27 June 2025 32 NO
Li Shipeng Independent director Male 57 28 June 2022 27 June 2025 32 NO
Wu Qi Independent director Male 57 28 June 2022 27 June 2025 32 NO
Liu Dalin Chairman of the Board of Male 44 28 June 2022 27 June 2025 11,470 36,676 25,206 Employee stock Not paid by YES
Supervisors ownership plan vested the Company
Ma Yingjie Supervisor Female 55 28 June 2022 27 June 2025 7,045 12,719 5,674 Employee stock 28.2 NO
ownership plan vested
Yu Miao Employee supervisor Male 42 28 June 2022 27 June 2025 2,479 6,436 3,957 Employee stock 40.4 NO
ownership plan vested
Xie Juzhi Vice president Male 58 28 June 2022 27 June 2025 33,695 101,641 67,946 Employee stock 179.95 NO
ownership plan vested
Li Pan Vice president Male 48 28 June 2022 27 June 2025 567,225 598,480 31,255 Employee stock 147.09 NO
ownership plan vested
Zhao Yanfeng Vice president Male 47 28 June 2022 27 June 2025 81,229 146,458 65,229 Employee stock 259.66 NO
ownership plan vested
Li Yang Vice president Male 48 28 June 2022 27 June 2025 23,020 71,262 48,242 Employee stock 168.03 NO
ownership plan vested
Song Yujun Vice president Male 49 28 June 2022 27 June 2025 130,345 191,182 60,837 Employee stock 203.95 NO
ownership plan vested
Guan Jiangyong Vice president Male 46 28 June 2022 27 June 2025 95,609 163,555 67,946 Employee stock 216.75 NO
ownership plan vested
Wu Yong Vice president Male 46 28 June 2022 27 June 2025 176,208 238,964 62,756 Employee stock 198.01 NO
ownership plan vested
Huang Xiaowu Vice president Male 47 28 June 2022 27 June 2025 26,234 76,708 50,474 Employee stock 111.72 NO
ownership plan vested
Liu Xiaomei Secretary to the Board of Female 39 28 June 2022 27 June 2025 5,106 13,953 8,847 Employee stock 43.44 NO
Directors ownership plan vested
Total / / / / / 3,917,509 4,582,569 665,060 / 2,240.85 /
Note: all the shares in the above table are A-shares.
Haier Smart Home Co., Ltd. Annual Report 2023 69
Section IV Corporate Governance
Name Major working experience
Li Huagang Male, born in 1969. He graduated from Huazhong University of Science
and Technology in 1991 with a Bachelor’s degree of Economics, and
from China Europe International Business School in 2014 with a degree
of Executive Master of Business Administration (EMBA). He is currently
chairman and president of Haier Smart Home Co., Ltd. Mr. Li Huagang
joined Haier in 1991 and served as the sales head of the Marketing and
Promotion Division of Haier (海爾商流本部銷售事業部長) and the general
manager of China operations of Haier Smart Home. From August 2017 to
March 2019, he served as the chief executive officer of Haier Electronics.
Since March 2019, Mr. Li Huagang has been appointed as an executive
director of Haier Electronics. He has been an executive director and
president of the Company since 2019. Mr. Li Huagang has extensive
experience in the fields of corporate management, marketing, brand
operation, and global business operation. Mr. Li Huagang was
successively awarded 2015 China Home Appliance Marketing Leader,
Award of Outstanding Contribution in 40-Years Development of China’s
Home Appliance Industry 2018, 2019 Person of the Year of China’s Top
Ten Brands, 2021 Taishan Industry Leading Talent and 2023 Model
Worker in Shandong Province.
Shao Xinzhi Female, born in 1970, holds a Master of Business Administration degree,
and is a senior accountant. She currently serves as the vice president
and Chief Financial Officer of Haier Group, as well as the vice chairman
of Haier Smart Home. Ms. Shao adheres to the goal of innovation and
value-enhancement, empowering the high-quality development of the
industry, and comprehensively builds the group’s financial ecosystem
through financial strategy formulation, financial system construction and
operation, asset management, capital operation and other financial full
value chain management. In 2000, Ms. Shao served as the chief
accountant of Haier Air Conditioning Division and the general manager of
the strategy center of Haier Group’s financial management department.
In 2007, Ms. Shao established the first financial sharing center in the
home appliance industry, pioneering the “cloud + end” financial
management innovation model with Chinese characteristics to provide
enterprises with comprehensive financial best solutions, becoming one of
the industry benchmarks and winning the first prize of the National
Enterprise Management Modernization Innovation Achievement. In 2019,
Ms. Shao was appointed as the vice president of Haier Group and the
operator of the Big Sharing Empowerment Platform. In 2020, Ms. Shao
was appointed as vice president and Chief Financial Officer of Haier
Group. Ms. Shao has been honored as “National Advanced Accounting
Worker”, “Qingdao Top Talent”, “ACCA Outstanding Achievement Award”
and “IMA Outstanding Contribution Leader in Management Accounting”
over the years.
70 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Name Major working experience
Gong Wei Male, born in 1973. He graduated from the University of International
Business and Economics in 2011, and obtained a degree of Executive
Master of Business Administration. He also holds membership in the
CIMA Chartered Institute of Management Accountants. Mr. Gong Wei
served as the financial manager of Haier Smart Home Co., Ltd, the senior
finance manager and senior financial analyst of Haier Group, the Chief
Financial Officer of Haier Washing Machine Division, the Chief Financial
Officer of Haier Air Conditioning Division, the Chief Financial Officer of
Haier White Goods Group, with extensive experience in financial
management. Mr. Gong Wei was granted honorary titles such as Young
Post Expert in Qingdao City (青 島 市 青 年 崗 位 能 手), Qingdao Top Talent
(青 島 市 拔 尖 人 才), Outstanding Accounting Workers in Shandong
Province (山 東 省 優 秀 會 計 工 作 者) and National Outstanding Accounting
Workers (全 國 優 秀 會 計 工 作 者), and received several awards, including
2011 Top Ten CFO in China by “New Money” Magazine 《新理財雜志》),
2020 International Finance Leaders of the Year in China. He is currently a
director, the Chief Financial Officer and vice president of Haier Smart
Home Co., Ltd.
Yu Hon To Male, born in 1948. He holds a Bachelor of Social Science degree from
Chinese University of Hong Kong. He is a Fellow of the Institute of
Chartered Accountants in England and Wales and an Associate Member
of Hong Kong Institute of Certified Public Accountants. Mr. Yu is a
chartered accountant with over 40 years’ experience in the fields of
auditing, corporate finance (including advisory on IPO, mergers &
acquisitions and financial restructuring), financial investigation and
corporate governance. Mr. Yu was formerly a partner of a renowned
international accounting firm with extensive experience in the corporate
finance advisory assignments in Greater China for Hong Kong
corporations, private equity groups and multinationals. He is currently a
director of 11th session of the Board of Directors of Haier Smart Home
Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2023 71
Section IV Corporate Governance
Name Major working experience
Li Kam Fun Female, born in 1952. She graduated from University of Hong Kong with
Bachelor of Arts and Master of Business Administration degrees. She was
conferred with the degree of Doctor of Business Administration, honoris
causa, from the Hong Kong Metropolitan University in 2014. Ms. Li Kam
Fun served as an independent non-executive director in the board of
Haier Electronics Co., Ltd., from 2013 to 2020 and currently serves as a
director of the 11th session of the Board of Directors of Haier Smart
Home Co., Ltd. Prior to that, Ms. Li Kam Fun had a distinguished career
that spanned 34 years with Amway Corporation. When she resigned in
2011, she held the concurrent positions of Executive Vice President of
Amway Corporation and Executive Chairman of Amway China Co. Ltd.
responsible for Amway Greater China & Southeast Asia Region. Four
years later after her retirement from Amway, Ms. Li Kam Fun took up the
role of president of Our Hong Kong Foundation in early 2015, and held
the position until the end of 2022. Ms. Li Kam Fun had also been an
independent non-executive director of numerous world-renowned
business corporations including Nestle S.A, (a publicly listed company on
the SIX Swiss Exchange) from 2012 to 2023, Amcor Limited (a company
listed on the Australian Securities Exchange) from 2014 to 2019, Trinity
Limited (a company listed on the Main Board of the Hong Kong Stock
Exchange) from 2011 to 2020. Ms. Li Kam Fun’s leadership was well
recognised in the business community. She was twice named the
“World’s 100 Most Powerful Women” by Forbes Magazine in 2008 and
2009. CNBC awarded Ms. Li Kam Fun with the “China Talent
Management Award” in its 2007 China Business Leaders Awards. Ms. Li
Kam Fun currently serves as a member of the Election Committee of
Hong Kong Special Administration Region (“HKSAR”), a member of the
Social Development Expert Group of the Chief Executive’s Policy Unit of
HKSAR, an honorary special representative, a conference consultant and
honorary president of All-China Women’s Federation, a permanent
honorary director of The Chinese General Chamber of Commerce 、a
court member of the Hong Kong Metropolitan University and a member
of the advisory panel of the Xiqu Centre of the West Kowloon Cultural
District Authority.
Chien Da-chun Male, born in 1953. He served as Chief Executive Officer of IBM ASEAN/
South Asia, Chairman and Chief Executive of IBM Greater China region.
He graduated from the Department of Mathematics of Tamkang
University of Taiwan, and studied advanced management courses in the
Institute of Business Administration of Harvard University, as well as the
global senior manager courses of International Business Machines
Corporation (IBM). He is currently an independent director of the 11th
session of the Board of Directors of Haier Smart Home Co., Ltd, a
director of ENN Group and professor of Management Practice at the
School of Business of Renmin University of China/Academic Director of
EE Centre.
72 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Name Major working experience
Wong Hak Kun Male, born in 1956. He received a Bachelor’s of Social Science degree
from University of Hong Kong. He has over 36 years of experience in
auditing, assurance and management in Deloitte China. He has been a
partner of Deloitte China since 1992 and served as a member of the
board of directors of Deloitte China from 2000 to 2008. Prior to his
retirement in May 2017, Mr. Wong was Deloitte China’s National
Managing Partner of Audit & Assurance. Mr. Wong is an associate of the
Hong Kong Institute of Certified Public Accountants (HKICPA), an
associate of the Association of Chartered Certified Accountants (ACCA),
an associate of the Chartered Institute of Management Accountants
(CIMA), an associate of The Chartered Governance Institute (previously
known as “The Institute of Chartered Secretaries and Administrators”). He
currently serves as an independent non-executive director of Yue Yuen
Industrial Holdings (Limited), Lung Kee (Bermuda) Holdings Limited,
Guangzhou Automobile Group Co., Ltd., Hangzhou SF Intra-City
Industrial Co., Ltd. and Haier Smart Home Co., Ltd.
Li Shipeng Male, born in 1967. He holds a bachelor’s and Master’s degree from
University of Science and Technology of China, and a PhD degree from
Lehigh University, USA. Mr. Li has extensive experience in Internet of
Things technology and artificial intelligence. Mr. Li is currently a chair
scientist at the International Digital Economy Academy and an executive
director of the Low Altitude Economic Branch. Prior to that, he served as
the Chief Researcher and Deputy Dean of Microsoft Research Asia, Chief
Technology Officer of Cogobuy Group, Vice President of iFlytek Group,
Executive President and Chief Scientist of Shenzhen Institute of Artificial
Intelligence and Robotics. Mr. Li is a member of the International
Eurasian Academy of Sciences and a fellow of the International Institute
of Electrical and Electronics Engineers (IEEE fellow). He was listed as one
of the world’s top 1,000 computer scientists by Guide2Research and
ranked top 20 in Mainland China in 2020. Mr. Li is a renowned expert in
Internet, computer vision, cloud computing, Internet of Things and
artificial intelligence. He is currently an independent director of the 11th
session of the Board of Directors of Haier Smart Home Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2023 73
Section IV Corporate Governance
Name Major working experience
Wu Qi Male, born in 1967. He has 25 years of (New PCEBG) experience in
world-class management and consulting companies. He is currently an
independent director of the 11th session of the Board of Haier Smart
Home Co., Ltd. He served as the vice president (Global) and vice
chairman (Greater China) of Accenture, and the chairman of Shun Zhe
Technology Development Co., Ltd. He was a member and the president
(Greater China) of Roland Berger’s Global Management Committee, a
member of Roland Berger’s Global Supervisory Board, a senior
consultant for Foxconn’s D sub-business group strategy and intelligent
manufacturing and a consultant of Xnode, a famous accelerator for
startups. He was awarded 2015 Outstanding Talent in Jing’an District,
Shanghai. Mr. Wu Qi’s experience in consulting industry involves
transportation/logistics, high-tech manufacturing, tourism, finance,
consumer goods, real estate, government departments and other
industries. He has extensive experience in development strategy,
organizational change, sales and brand strategy, corporate innovation,
digital transformation and intelligent manufacturing, post-merger
integration, regional industrial and economic development and upgrading.
Mr. Wu Qi is a well-known expert in China in Industry 4.0, transportation
and regional planning and development. He served as a consultant for
Hangzhou Bay Development Planning, a member of the Intelligent
Manufacturing Expert Committee of Municipal Government, deputy head
of the 13th Five-Year Planning Expert Committee of Zhengzhou City,
Henan Province, vice chairman of China Cold Chain Alliance.
Liu Dalin Male, born in 1980, Chinese nationality with no right of permanent
residency abroad. He graduated from the School of Mechanical
Engineering of Jinan University and holds a Master’s degree in Business
Administration from Renmin University of China. He is a senior engineer.
Since August 2005, he served as a designer of water heater department
of Heater Head Office at Haier Group, an assistant R&D engineer, a R&D
engineer and a R&D model manager of the heater R&D center of the
Heater Head Office of Haier Group successively, among other things.
From July 2020 to March 2021, he served as the president of the Board
of Supervisors of Gooday Supply Chain Technologies Co., Ltd., among
other things. Mr. Liu has been the chairman of the Board of Supervisors
of Haier Smart Home Co., Ltd. since June 2021.
Ma Yingjie Female, born in 1969. She is a political engineer, once served as the
secretary of the Youth League Committee of Haier Smart Home Co., Ltd.,
the secretary of the labour union of Haier Smart Home Co., Ltd., the
contact person of the customer service department of Qingdao Haier
Dishwasher Co., Ltd. Currently, she is the head of Society and
Community department and the supervisor of the 11th session of the
Board of Supervisors of Haier Smart Home Co., Ltd.
74 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Name Major working experience
Yu Miao Male, born in 1982, Chinese nationality. Mr. Yu holds a master’s degree.
He serves as the legal manager of Haier Smart Home Co., Ltd. since
April 2012, and serves as the employee supervisor of Haier Smart Home
Co., Ltd. since January 2019.
Xie Juzhi Male. He graduated from Shandong University of Finance and Economics
in July 1989 with a Bachelor’s degree, and joined Haier in the same year.
Mr. Xie has experience in whole-process product management, product-
wide services and product-wide marketing. Mr. Xie has held senior
positions in Electrothermal Division of Haier Group and East China
Marketing and Promotion Division of the Haier Group. Since August
2002, he has been the general manager of Haier Customer Service
Company (海 爾 顧 客 服 務 公 司). Since July 2012, he has been the Vice
President of Haier Group in charge of the Group’s integration of
community sales services in first and second-tier cities, and developing
the online and offline sales of new household products. Since December
2015, he has been managing the newly developed business segments of
Haier Group, including water purification, logistics, Haier home and
Gooday services. He is also in charge of the water heater business since
2019 and has been appointed as the Chief Executive Officer and an
executive director of Haier Electronics since 27 March 2019. Since April
2021, he is responsible for supervising the smart living appliances
segment. Mr. Xie was awarded honorary titles including the Gold Award
of Outstanding Contribution Award of China’s Home Appliance Services
Industry (中 國 家 電 服 務 行 業 突 出 貢 獻 獎 金 獎) and Outstanding
Entrepreneur of Shandong Province (山 東 省 優 秀 企 業 家). He is currently
responsible for supervising the intelligent industrial platform and is the
vice president of Haier Smart Home.
Li Pan Male, born in 1976, is a senior engineer. He graduated from Wuhan
University in 1997 and obtained the double degree in economics and
international business administration. He obtained a Master’s degree from
China Europe International Business School in 2017. He joined Haier in
1997 and currently serves as the general manager of the overseas
platform of Haier Smart Home. Mr. Li Pan has held various positions in
Haier Group, including the assistant director of Asia-Pacific Division, the
manager of the Haier ASEAN Center, the manager of the Overseas
Brands Marketing Center, the manager of the Overseas Strategic Center
and the director on the operation of overseas markets. He has held
important positions of the overseas platform of Haier Group since 2004
with extensive frontline management experience in product planning,
brand marketing, market exploration and corporate operation. He is
currently the vice president of Haier Smart Home Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2023 75
Section IV Corporate Governance
Name Major working experience
Zhao Yanfeng Male, born in 1977. He graduated from Tianjin Institute of Light Industry
and obtained a Bachelor’s degree in Mechanical and Electronic
Engineering in 2001. He graduated from Renmin University of China and
obtained an Executive Master degree in Business Administration in 2019.
He is currently the vice president and general manager of the washing
business of Haier Smart Home Co., Ltd. Mr. Zhao Yanfeng joined Haier
in 2001 and served as the general manager of Haier Group’s regional
branch, general manager of the refrigeration business in China and
general manager of the refrigeration business. He possesses whole-
process management experience in product planning, research and
development, manufacturing and marketing.
Li Yang Male, born in 1976, is a senior engineer. He currently serves as the
general manager of the integrated supply chain of Haier Smart Home and
vice president of Haier Smart Home Co., Ltd. Mr. Li Yang graduated from
Qingdao University of Science & Technology in 1998 and obtained a
Bachelor’s degree in Fine Chemical Engineering. He joined Haier in
August of the same year. Mr. Li Yang has held positions of the head of
the quality department of Haier Smart Home, the manufacturing director,
the general manager of the internet of clothing platform, the general
manager of the integrated supply chain. He has served as the general
manager of the integrated supply chain of Haier Smart Home since 2023,
and has been engaged in management concerning end-to-end process
and digital transformation of the integrated supply chain of Haier Smart
Home. He obtained a degree of Executive Master of Business
Administration (EMBA) from Xi’an Jiaotong University in 2022. The
ecological platform of the internet of clothing incubated under his
leadership was awarded the first prize for “Innovation Results in Modern
Management of National Light Industry Enterprises” (全 國 輕 工 業 企 業 管
理 現 代 化 創 新 成 果) in 2019. Haier Smart Home was selected as one of
the “2023 Intelligent Supply Chain Cases” (2023數智化供應鏈案例) by the
Alliance of Industrial Internet, and he received the “Most Promising
Entrepreneur in Qingdao in 2018” and the “Advanced Individual in
Management Innovation of National Light Industry Enterprises”.
76 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Name Major working experience
Song Yujun Male, born in 1975. He graduated from Shandong University of
Technology with a bachelor’s degree in equipment engineering and
management in 1998, and received a degree of Executive Master of
Business Administration from Tsinghua University in 2015. He joined Haier
in 1998 and served as general manager of the Operation Department of
Haier Overseas Promotion Headquarters, director and general manager of
Haier Pakistan Company, executive director of Haier India Company,
director of Haier Overseas businesses in South Asia and Southeast Asia
region, and vice president of Haier Home Appliance Industry Group.
Since 1998, he has held various important positions in Haier overseas
companies and has rich experience in product, manufacturing, R&D and
marketing. He was awarded the Labor Model of Qingdao City, the
Outstanding Talent in Professional Technology in Qingdao City, Qingdao
High-level Service Talent, the first prize of the 2023 Science and
Technology Advancement Award of China National Light Industry Council
(2023年 度 中 國 輕 工 業 聯 合 會 科 技 進 步 獎) and the first prize of the
Innovation Award 2023 of Energy Conservation Association (2023年 節 能
協 會 創 新 獎) and other honorary titles. He is currently the general
manager of Haier Air Industry Group and vice president of Haier Smart
Home Co., Ltd.
Guan Jiangyong Male, born in 1978. He graduated from Northeast Electric Power
University in 2001 and obtained a Bachelor’s degree in Management
Information System. Mr. Guan Jiangyong joined Haier in 2001 and
currently serves as the general manager of water heater and the internet
of water platform. Mr. Guan Jiangyong has been responsible for product
management, production and manufacturing, product marketing and
industrial pipeline management and served as a regional general
manager, the market director of the water heater business and the
general manager of the internet of water platform and the water heater
business. He possesses whole-process management experience in
product manufacturing, marketing, corporate planning management and
industrial platforms. He is currently the vice president of Haier Smart
Home Co., Ltd.
Wu Yong Male, born in 1978. He graduated from Tianjin College of Commerce in
2001 and obtained a Bachelor’s degree in Heat Supply, Ventilation and
Air-conditioning Engineering. He obtained the double degree of EMBA
from the School of Economics and Management of Tsinghua University
and the INSEAD in 2015. Mr. Wu Yong joined Haier Group in 2001 and
currently serves as the general manager of the kitchen appliances of
Haier Smart Home. Mr. Wu Yong has served as the general manager of
the PRC Region on manufacturing and production of refrigerators,
overseas marketing and the air-conditioning business since joining the
Group and possesses whole-process management experience in high-
end manufacturing, marketing and industrial platforms. He is currently the
vice president of Haier Smart Home Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2023 77
Section IV Corporate Governance
Name Major working experience
Huang Xiaowu Male, born in 1977. He graduated from the College of Photoelectric
Engineering, Chongqing University with a Bachelor’s degree in
engineering in 1998 and graduated from the Faculty of Business and
Economics of the University of Hong Kong with a master’s degree in
business administration in 2004. Mr. Huang has many years of extensive
working experience in commercial banking, strategic investment, industrial
fund, corporate finance and capital market operation and management,
and has participated in and led important strategic investment and
financing projects involving numerous fields such as marketing channels,
logistics, home appliances and technology industry. Mr. Huang was
appointed as the vice president of the Company in 2021, responsible for,
amongst others, investor relations, capital market, equity financing and
strategic investment, and served as the Director of the ESG Executive
Office of Haier. Prior to that, Mr. Huang worked as the deputy general
manager of Haier Electronics Group Co., Ltd., a company listed on the
Stock Exchange, which is controlled by the Company. Before joining
Haier Group, Mr. Huang worked at the Ningbo branch and Shanghai
branch of the Industrial and Commercial Bank of China, Investment
Banking Division of Guosen Securities and Anglo Chinese Investment
Banking Group (英 高 投 資 銀 行 集 團).
Liu Xiaomei Female, born in 1985. She graduated from the Law School of Minzu
University of China with a double bachelor’s degree in law and literature
in 2009, and graduated from the Department of International Law of the
China Foreign Affairs University with a master’s degree in international
law in 2011, and is qualified to practice law in China. Ms. Liu joined the
Company in June 2015 and has been in charge of legal and compliance
matters of corporate governance, capital market, M&A and corporate
finance at Haier Electronics Group Co., Ltd. and Haier Smart Home. She
is currently the Board Secretary of the Company. Prior to joining the
Company, Ms. Liu worked for Jingtian & Gongcheng in Beijing. Ms. Liu
has accumulated extensive work experience in corporate governance,
capital market, industrial fund, and investment and financing.
Other information
□ Applicable √ Not Applicable
78 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
(II) Appointment of current and departing of Directors, Supervisors and Senior
Management during the reporting period
1. Appointment in shareholder units
√ Applicable □ Not Applicable
Start date of End date of
Name Name of shareholder unit Position appointment appointment
Shao Xinzhi Haier Group Corporation Vice president and Chief 2020
Financial Officer of
Haier Group
Shao Xinzhi Qingdao Haier Venture & Supervisor
Investment Information
Co., Ltd.
Liu Dalin Haier Group Corporation Member of the Party June 2022
Committee, chairman
of the Board of
Supervisors, head of
the organization
department
Explanation of Nil
appointment
in shareholder
units
2. Appointment in other units
√ Applicable □ Not Applicable
Start date of End date of
Name Name of other unit Position appointment appointment
Li Huagang Qingdao Haier Multimedia Co Ltd. Chairman
Gong Wei Pegasus Telecom (Qingdao) Co., Director
Ltd.
Gong Wei Pegasus Electronic (Qingdao) Co., Director
Ltd.
Gong Wei Qingdao Haier Communications Director
Co., Ltd.
Gong Wei Qingdao Haier Multimedia Co., Director
Ltd.
Gong Wei Haier Group Finance Co., Ltd. Director
Yu Hon To Keck Seng Investments (Hong Independent non-executive April 2013
Kong) Limited director
Yu Hon To MS Group Holdings Limited Independent non-executive May 2018
director
Yu Hon To China Resources Gas Group Independent non-executive December 2012
Limited director
Yu Hon To One Media Group Limited Independent non-executive June 2005
director
Haier Smart Home Co., Ltd. Annual Report 2023 79
Section IV Corporate Governance
Start date of End date of
Name Name of other unit Position appointment appointment
Yu Hon To Playmates Toys Limited Independent non-executive May 2021
director
Wong Hak Kun Yue Yuen Industrial (Holdings) Independent director June 2018
Limited
Wong Hak Kun Lung Kee (Bermuda) Holdings Independent director June 2018
Limited
Wong Hak Kun Guangzhou Automobile Group Independent director May 2020
Co., Ltd.
Wong Hak Kun Hangzhou SF Intra-City Industrial Independent director December 2021
Co., Ltd.
Li Shipeng Applied Artificial Intelligence Director (concurrently) August 2020 To date
Research Center Of the
Suzhou Industrial Technology
Research Institute
Li Shipeng The Chinese University of Hong Visiting Professor (concurrently) February 2021 February 2024
Kong (Shenzhen)
Li Shipeng ENN Group Co., Ltd. Director September 2021 September 2024
Li Shipeng International Digital Economy Chair scientist May 2022 To date
Academy (Futian)
Li Shipeng The Hong Kong University of Part-time Professor (concurrently) July 2022 July 2024
Science and Technology
(Guangzhou)
Li Shipeng Communication University of Director of the Engineering February 2023 February 2026
Zhejiang Department (concurrently)
Li Shipeng Suzhou Beiang Technology Co., Independent director March 2023 October 2023
Ltd.
Li Shipeng Jiangsu Hichain Logistics Co., Chief Scientist (concurrently) October 2023 To date
Ltd.
Huang Xiaowu Qingdao Overseas Chinese Director October 2022 To date
Industrial Co., Ltd.
Explanation of Nil
appointment in
other units
80 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
(III) Compensation of Directors, Supervisors and Senior Management
√ Applicable □ Not Applicable
Decision-making process of The Remuneration and Assessment Committee of the
compensation of Directors, Company shall formulate the standards, adjust principles,
Supervisors and Senior and assess and implement the principles of the
Management remuneration of directors, supervisors and senior
management personnel and submit to the Board of
Directors for consideration and approval.
Directors abstain from discussions Yes
on their remuneration at the
Board of Directors
The Remuneration and During the reporting period, the Remuneration and
Assessment Committee or Assessment Committee of the Company considered and
special meeting of independent approved the 2022 Annual Report of Haier Smart Home
directors provided Co., Ltd. on Incentives for Senior Management of the
recommendation on Company and Implementation of Remuneration
compensation of Directors, Assessment for Directors and Senior Management, and
Supervisors and Senior considered that the incentive mechanism for senior
Management management of the Company and the implementation of
Remuneration Assessment for Directors and Senior
Management of 2022 were effectively carried out in
accordance with the principles and mechanisms
established by the Board of Directors at the beginning of
the year; the 2023 Annual Report of Haier Smart Home
Co., Ltd. on Remuneration and Assessment Scheme of
Directors and Senior Management was considered and
approved and arrangements were made for the 2023
Remuneration and Assessment Scheme of Directors and
Senior Management with proposed resolution submitted to
the Board of Directors for consideration and approval.
Haier Smart Home Co., Ltd. Annual Report 2023 81
Section IV Corporate Governance
Determining basis of matrix The cash remuneration of executives in 2023 consists of
compensation of Directors, monthly remuneration, bonuses and sharing, and is linked
Supervisors and Senior to orders triggered by the upgrade of the Company’s
Management Internet of Things from “high-end brands” to “scenario
brands” to “ecological brands”. Focusing on the rapid
impr ov e me nt of pr ofit a bilit y a nd t hr ough digital
transformation, the Company enhanced its competitiveness
in the whole process, and achieved sharing of high added-
value. Through the innovation of the mechanism, the
Company encouraged its executives to achieve higher
market goals, thus achieving a win-win situation for users,
employees, enterprises and stakeholders. At the same
time, the Company continues to promote the
implementation of the employee stock ownership and other
long-term incentive plans; multiple incentive tools will be
effectively utilised to mobilise competent management,
frontline managers and business and technical backbones
on a wider scale, further aligning the interests of
shareholders, the Company and incentive recipients, and
bringing more efficient and sustainable returns to
shareholders. After the approval by the general meeting,
the allowance for directors is RMB320,000/year before tax.
The travelling expenses of directors attending Board
meetings and general meetings and the expenses required
for performing their duties and according to the Articles of
Association will be reimbursed.
Actual compensation paid to Paid as prescribed
Directors, Supervisors and Senior
Management
Total of actual compensation paid RMB22,408,500
to all Directors, Supervisors and
Senior Management at the end
of the reporting period
82 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
(IV) Changes in of Directors, supervisors and senior management of the Company
□ Applicable √ Not Applicable
(V) Explanation of penalties imposed by securities regulators in the past three years
□ Applicable √ Not Applicable
(VI) Others
□ Applicable √ Not Applicable
V. RELEVANT INFORMATION ON THE BOARD MEETINGS HELD DURING
THE REPORTING PERIOD
Meeting Date Resolutions approved
The 4th meeting of the Eleventh session of 30 March 2023 Considered and approved the following resolutions: the 2022 Financial Statements of Haier
the Board of Directors Smart Home Co., Ltd., the 2022 Annual Report and Annual Report Summary of Haier Smart
Home Co., Ltd., the 2022 Report on the Work of the Board of Directors of Haier Smart
Home Co., Ltd., the 2022 Report on Internal Control Assessment of Haier Smart Home Co.,
Ltd., the Report on Internal Control Audit of Haier Smart Home Co., Ltd., the 2022 Profit
Distribution Plan of Haier Smart Home Co., Ltd., the Resolution on the Re-appointment of
PRC Accounting Standards Auditing Firm of Haier Smart Home Co., Ltd., the Resolution on
the Re-appointment of International Accounting Standards Auditing Firm of Haier Smart
Home Co., Ltd., the 2022 Risk Assessment Report on Haier Group Finance Co., Ltd. of
Haier Smart Home Co., Ltd., the Resolution on Renewal and its Expected Related-Party
Transaction Limit with Haier Group Corporation and Haier Group Finance Co., Ltd. of Haier
Smart Home Co., Ltd., the Resolution on the Anticipated Guarantees’ Amounts for Haier
Smart Home Co., Ltd. and its Subsidiaries in 2023, the Resolution on Conduct of Foreign
Exchange Fund Derivatives Business of Haier Smart Home Co., Ltd., the Feasibility Analysis
Report on Conducting Foreign Exchange Fund Derivatives Business of Haier Smart Home
Co., Ltd., the Resolution on Conducting Commodity Hedging Business of Haier Smart Home
Co., Ltd., the Feasibility Analysis Report on Conducting Commodity Hedging Business of
Haier Smart Home Co., Ltd., the Resolution on the Special Report on the Deposit and
Actual Use of Raised Funds in 2022 of Haier Smart Home Co., Ltd., the Resolution on
Closing Investment Projects with Funds Raised from Convertible Corporate Bonds and
Permanently Supplementing Working Capital with Surplus Proceeds of Haier Smart Home
Co., Ltd., the Resolution on the Purchase of Liability Insurance for Directors, Supervisors
and Senior Management of Haier Smart Home Co., Ltd., the 2022 Report on Environmental,
Social and Governance of Haier Smart Home Co., Ltd., the Resolution on the Proposal to
the General Meeting to Grant a General Mandate to the Board of Directors on Additional
Issuance of A Shares of Haier Smart Home Co., Ltd., the Resolution on the Proposal to the
General Meeting to Grant a General Mandate to the Board of Directors on Additional
Issuance of H Shares of Haier Smart Home Co., Ltd., the Resolution on the Proposal to the
General Meeting to Grant a General Mandate to the Board of Directors on Additional
Issuance of D Shares of Haier Smart Home Co., Ltd., the Resolution on the Proposal to the
General Meeting to Grant a General Mandate to the Board of Directors on the Repurchase
of no more than 10% of the total H Shares issued of Haier Smart Home Co., Ltd., the
Resolution on the Proposal to the General Meeting to Grant a General Mandate to the
Board of Directors on the Repurchase of no more than 10% of the total D Shares issued of
Haier Smart Home Co., Ltd., the Resolution on Convening the 2022 Annual General
Meeting, 2023 1st A/D/H Shareholders’ Class Meeting of Haier Smart Home Co., Ltd., the
Report on Remuneration and Assessment Scheme for the Senior Management for 2023 of
Haier Smart Home Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2023 83
Section IV Corporate Governance
Meeting Date Resolutions approved
The 5th meeting of the Eleventh session of 27 April 2023 Considered and approved the following resolutions: the 2023 First Quarter Report of Haier
the Board of Directors Smart Home Co., Ltd., the 2023 A Share Core Employee Stock Ownership Plan (draft) of
Haier Smart Home Co., Ltd. and its Summary, the 2023 H Share Core Employee Stock
Ownership Plan (draft) of Haier Smart Home Co., Ltd. and its Summary, the Resolution on
Authorizing Haier Shareholdings (Hong Kong) Limited to Sign Agreements Related to the
Restricted Share Unit Scheme on Behalf of the Company, the Resolution on Partial
Cancellation of Share Options under the 2021 A-share Option Incentive Scheme of Haier
Smart Home Co., Ltd., the Resolution on Partial Cancellation of Share Options under the
2022 A-share Option Incentive Scheme of Haier Smart Home Co., Ltd., the Resolution on
the Repurchase Plan of a Portion of Public Shares of A Shares of Haier Smart Home Co.,
Ltd., the Resolution on Amendments to the Implementation Rules for the Remuneration and
Assessment Committee Haier Smart Home Co., Ltd.
The 6th meeting of the Eleventh session of 30 August 2023 Considered and approved the following resolutions: the 2023 Interim Ongoing Risk
the Board of Directors Assessment Report on Haier Group Finance Co., Ltd. by Haier Smart Home Co., Ltd., the
Resolution on Partial Cancellation of Share Options under the First Grant of 2021 A-share
Option Incentive Scheme of Haier Smart Home Co., Ltd., the 2023 Interim Report of Haier
Smart Home Co., Ltd. and its Summary
The 7th meeting of the Eleventh session of 30 October 2023 Considered and approved the following resolution: the 2023 Third Quarter Report of Haier
the Board of Directors Smart Home Co., Ltd.
The 8th meeting of the Eleventh session of 13 December 2023 Considered and approved the following resolutions: the Resolution on Partial Cancellation of
the Board of Directors Share Options under the Reserved Grant of 2021 A-share Option Incentive Scheme of Haier
Smart Home Co., Ltd.
VI. PERFORMANCE OF DUTIES BY DIRECTORS
(I) Attendance of board meetings and general meetings by directors
Whether an Attendances at
Independent general
Name of director director or not Attendance of Board meetings meetings
Absence from Number of
Required two consecutive attendance of
attendances of Attendance in Attendance by Attendance by meetings in general
Board meetings person telecommunication proxy Absence person or not meetings
Li Huagang NO 5 5 0 0 0 NO 4
Shao Xinzhi NO 5 5 0 0 0 NO 4
Gong Wei NO 5 5 0 0 0 NO 4
Chien Da-chun YES 5 5 1 0 0 NO 4
Wong Hak Kun YES 5 5 2 0 0 NO 4
Li Shipeng YES 5 5 1 0 0 NO 4
Wu Qi YES 5 5 2 0 0 NO 4
Yu Hon To NO 5 5 3 0 0 NO 4
Li Kam Fun NO 5 5 3 0 0 NO 4
84 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Explanation for absence from two consecutive Board meetings in person
□ Applicable √ Not Applicable
Number of Board meetings held in the year 5
Of which: Number of on-site meetings 1
Number of meetings held by telecommunication 0
Number of meetings held both on site and by telecommunication 4
(II) Directors’ objection to the relevant matters of the Company
□ Applicable √ Not Applicable
(III) Others
□ Applicable √ Not Applicable
VII. THE SPECIAL COMMITTEES OF THE BOARD
√ Applicable □ Not Applicable
(I) Personnel of The Special Committees of the Board
Categories of
The Special Committees Name of Personnel
Audit Committee Wong Hak Kun, Yu Hon To, Chien Da-chun, Wu Qi, Shao Xinzhi
Nomination Committee Wu Qi, Li Shipeng, Li Huagang
Remuneration and Appraisal Chien Da-chun, Li Shipeng, Li Huagang
Committee
Strategy Committee Li Huagang, Li Shipeng, Wu Qi, Gong Wei
ESG (“Environment, Society Li Kam Fun, Chien Da-chun, Gong Wei
and Governance”)
Committee
Haier Smart Home Co., Ltd. Annual Report 2023 85
Section IV Corporate Governance
(II) The Company convened 5 Audit Committee meetings during the reporting period
Major Opinions and Other Notes on
Date of Meeting Contents of Meeting Suggestions Performance of Duty
28 March 2023 Considered and approved the following resolutions: No objections Nil
the 2022 Financial Statements of Haier Smart
Home Co., Ltd., the 2022 Report on Internal
Control Assessment of Haier Smart Home Co.,
Ltd., the 2022 Report on Internal Control Audit
of Haier Smart Home Co., Ltd., the Resolution
on the Re-appointment of PRC Accounting
Standards Auditing Firm of Haier Smart Home
Co., Ltd., the Resolution on the Re-appointment
of International Accounting Standards Auditing
Firm of Haier Smart Home Co., Ltd., the
Resolution on the Anticipated Guarantees’
Amounts for Haier Smart Home Co., Ltd. and its
Subsidiaries in 2023, the 2022 Profit Distribution
Plan of Haier Smart Home Co., Ltd., the 2022
Risk Assessment Report on Haier Group
Finance Co., Ltd. of Haier Smart Home Co.,
Ltd., the Resolution on Renewal of the Financial
Services Framework Agreement and its
Expected Related-Party Transaction Limit with
Haier Group Corporation and Haier Group
Finance Co., Ltd. of Haier Smart Home Co.,
Ltd., the Resolution on Conduct of Foreign
Exchange Fund Derivatives Business of Haier
Smart Home Co., Ltd., the Feasibility Analysis
Report on Conducting Foreign Exchange Fund
Derivatives Business of Haier Smart Home Co.,
Ltd., the Resolution on Conducting Commodity
Hedging Business of Haier Smart Home Co.,
Ltd., the Feasibility Analysis Report on
Conducting Commodity Hedging Business of
Haier Smart Home Co., Ltd., the Resolution on
the Special Report on the Deposit and Actual
Use of Raised Funds in 2022 of Haier Smart
Home Co., Ltd., the Resolution on Closing
Investment Projects with Funds Raised from
Convertible Corporate Bonds and Permanently
Supplementing Working Capital with Surplus
Proceeds of Haier Smart Home Co., Ltd., the
2022 Report on Performance of Duties of the
Audit Committee of the Board of Haier Smart
Home Co., Ltd.
26 April 2023 Considered and approved the following resolution: No Objections Nil
the 2023 First Quarter Financial Report of Haier
Smart Home Co., Ltd.
86 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Major Opinions and Other Notes on
Date of Meeting Contents of Meeting Suggestions Performance of Duty
28 August 2023 Considered and approved the following resolutions: No Objections Nil
the 2023 Interim Financial Report of Haier
Smart Home Co., Ltd., the 2023 Interim
Ongoing Risk Assessment Report on Haier
Group Finance Co., Ltd. by Haier Smart Home
Co., Ltd.
26 October 2023 Considered and approved the following resolution: No Objections Nil
the 2023 Third Quarter Financial Report of
Haier Smart Home Co., Ltd.
12 December Considered and approved the following resolution: No Objections Nil
2023 the 2023 Annual Report on Audit Work Plan of
Haier Smart Home Co., Ltd.
(III) The Company convened 1 Nomination Committee meeting during the reporting
period
Major Opinions and Other Notes on
Date of Meeting Contents of Meeting Suggestions Performance of Duty
29 March 2023 Considered and approved the following resolutions: No Objections Nil
the Report of the Nomination Committee of the
Board of Directors of Haier Smart Home Co.,
Ltd. on the Performance of Duty of Current
Directors, Supervisors and Senior Management,
the 2022 Annual Report on the Performance of
Duty of the Nomination Committee of the Board
of Haier Smart Home Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2023 87
Section IV Corporate Governance
(IV) The Company convened 5 Remuneration and Appraisal Committee meetings
during the reporting period
Major Opinions and Other Notes on
Date of Meeting Contents of Meeting Suggestions Performance of Duty
29 March 2023 Considered and approved the following resolutions: No Objections Nil
the 2022 Annual Report of Haier Smart Home
Co., Ltd. on Incentives for Senior Management
of the Company and Implementation of
Remuneration Assessment for Directors and
Senior Management, the 2023 Annual Report of
Haier Smart Home Co., Ltd. on Remuneration
and Assessment Scheme of Directors and
Senior Management, the 2022 Annual Report of
Haier Smart Home Co., Ltd. on Performance of
Duties of the Remuneration and Appraisal
Committee of the Board
23 April 2023 Considered and approved the following resolutions: No Objections Nil
the 2023 A Share Core Employee Stock
Ownership Plan (draft) of Haier Smart Home
Co., Ltd. and its Summary, the 2023 H Share
Core Employee Stock Ownership Plan (draft) of
Haier Smart Home Co., Ltd. and its Summary,
the Resolution on Authorizing Haier
Shareholdings (Hong Kong) Limited to Sign
Agreements Related to the Restricted Share
Unit Scheme on Behalf of the Company, the
Resolution on Partial Cancellation of Share
Options under the 2021 A-share Option
Incentive Scheme of Haier Smart Home Co.,
Ltd., the Resolution on Partial Cancellation of
Share Options under the 2022 A-share Option
Incentive Scheme of Haier Smart Home Co.,
Ltd.
21 July 2023 Considered and approved the following resolution: No Objections Nil
the Resolution on the Vesting of the First Phase
of the 2022 A Share and H Share Core
Employee Stock Ownership Plan of Haier Smart
Home Co., Ltd.
29 August 2023 Considered and approved the following resolution: No Objections Nil
the Resolution on Partial Cancellation of Share
Options under the First Grant of 2021 A-share
Option Incentive Scheme of Haier Smart Home
Co., Ltd.
8 December Considered and approved the following resolution: No Objections Nil
2023 the Resolution on Partial Cancellation of Share
Options under the Reserved Grant of 2021
A-share Option Incentive Scheme of Haier
Smart Home Co., Ltd.
88 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
(V) The Company convened 1 Strategy Committee meeting during the reporting
period
Major Opinions and Other Notes on
Date of Meeting Contents of Meeting Suggestions Performance of Duty
30 March 2023 Considered and approved the following resolution: No Objections Nil
the 2022 Annual Report on the Performance of
Duties of the Strategy Committee of the Board
of Haier Smart Home Co., Ltd.,
(VI) The Company convened 2 ESG Committee meetings during the reporting period
Major Opinions and Other Notes on
Date of Meeting Contents of Meeting Suggestions Performance of Duty
28 March 2023 Considered and approved the following resolutions: No Objections Nil
the 2022 Corporate Environmental, Social and
Governance Report of Haier Smart Home Co.,
Ltd., 2022 Annual Report on the Performance
of Duties of the ESG Committee of Haier Smart
Home Co., Ltd.
31 August 2023 Theme Sharing and Presentation: Business No Objections Nil
Opportunities Brought by Sustainable
Development, Short, Medium and Long-Term
Planning for Green Products of the Company
(VII) Details of Disagreements
□ Applicable √ Not Applicable
VIII. BOARD OF SUPERVISORS EXPLANATION ON RISKS ABOUT THE
COMPANY
□ Applicable √ Not Applicable
Board of Supervisors had no objections to the supervising items during the reporting period.
Haier Smart Home Co., Ltd. Annual Report 2023 89
Section IV Corporate Governance
IX. INFORMATION ON STAFF OF THE PARENT COMPANY AND PRINCIPAL
SUBSIDIARIES AT THE END OF THE REPORTING PERIOD
(I) Staff Information
Number of staff of the parent company 58
Number of staff of Principal subsidiaries 112,400
Total number of staff 112,458
Number of employees whose retirement expenses are borne by the parent 0
company and the principal subsidiaries
Breakdown by Function
Function Number
Production 66,120
Sales 18,424
Technical 23,889
Financial 1,769
Administrative 2,256
Total 112,458
Breakdown by Education Background
Education Number (person)
Bachelor and above 36,813
College Diploma 30,140
Secondary vocational training diploma and below 45,505
Total 112,458
(II) Remuneration policies
√ Applicable □ Not Applicable
Under the guidance of the “RenDanHeYi” management model, the Company adheres to the
remuneration philosophy of uniting user pay, value creation and value sharing, and provides
employees with a short, medium and long-term remuneration incentive system that combines
labour income, super-profit sharing and capital gain, as well as all-rounded welfare policies and
employee caring schemes. The Company encourages its employees to work with an
entrepreneurial mindset, aligning employee value with company value and shareholder value,
continuously improving user experience and achieving a win-win development for both the
Company and its employees.
The Company has established a rich and multi-dimensional incentive mechanism and continues
to implement the “A+H” global incentive system covering both domestic and overseas employees
to attract, motivate and stabilise the Company’s core talent.
90 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
(III) Personnel Training
√ Applicable □ Not Applicable
The Company puts high priority on talent cultivation and has set up a hierarchical system for
talent training accordingly. By providing employees with rich learning resources through
diversified methods such as course training, special training and temporary exchange, the
Company promotes talent growth in multiple dimensions for employees with different needs, thus
assisting them in improving their professionalism, expertise and leadership skills. In 2023, the
Company organized a number of trainings with courses covering corporate culture, office
management, professional skills and other contents, and adopted live broadcast, community
forums and other learning methods.
For details, please refer to relevant information in 2023 Environmental, Social and Governance
Report of Haier Smart Home Co., Ltd. published on the same date of this announcement.
(IV) Labor Outsourcing
□ Applicable √ Not Applicable
X. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF
CAPITAL RESERVE
(I) Formulation, implementation or adjustment of the cash dividend policies
√ Applicable □ Not Applicable
The Company’s 2022 profit distribution plan was passed on its 2022 Annual General Meeting
held on 26 June 2023: based on the Company’s total existing shares (deducting the repurchased
shares) of 9,344,557,950 (including 6,214,995,711 A shares, 271,013,973 D shares and
2,858,548,266 H shares), it was proposed that the Company would distribute cash dividends of
RMB5.6692 (tax inclusive) per 10 shares to all shareholders, with a total amount before tax of
RMB5,297,529,553.10(tax inclusive). The plan was implemented and completed in August 2023.
Details were set out in the Announcement on Implementation of Rights and Interests Distribution
of A-shares for 2022 of Haier Smart Home Co., Ltd. (No: L2023–041) published by the Company
on the four major securities newspapers and the website of Shanghai Stock Exchange on
19 August 2023 and relevant announcements in respect of dividend distribution of D shares and
H shares published on the Company’s website, Hong Kong Stock Exchange and other
publication platforms.
Haier Smart Home Co., Ltd. Annual Report 2023 91
Section IV Corporate Governance
The Company has always applied a stable and sustainable profit distribution policy. During the
reporting period, the Company strictly followed the requirements set out in the Articles of
Association and in the Shareholder Return Plan for the Next Three Years of the Company. During
the formulation of the profit distribution plan, the Company took full account of return for
investors, the long-term interests of the Company, overall interests of all shareholders and
sustainable development of the Company, and continued to implement the stable dividend
distribution policy to provide investors an opportunity to share the growth of value, so that
investors could form the expectation of a stable return. The procedures and mechanisms for
decision-making such as Articles of Association and planning of return of shareholders
implemented by the Company were complete in compliance with laws and regulations. The
process was open and transparent while the standard and ratio of dividends was clear.
Responsibilities of independent directors were clear during the policy-making process, and
independent directors were given the opportunities to play their roles. Minority shareholders were
also given the opportunity to fully express their views and demands, and the legitimate interests
of minority shareholders were adequately protected.
The dividend distribution plan of 2023 of the Company: based on the total number of shares
after deducting the repurchased shares on equity interest record date for future profit
distribution, it is proposed that the Company will distribute cash dividend of RMB8.04 per 10
shares (tax inclusive) with cash dividend of RMB7,471,472,992.22. The retained undistributed
profit will be mainly used for project construction, foreign investment, R&D investment and daily
operation related to the Company’s principal business in order to maintain sustainable and stable
development and to create more value for investors. The proportion of this distribution is 45.02%
of the net profit attributable to owners’ parent company in 2023 (In 2023, the Company spent
RMB1.430 billion and HK$200 million on the purchase of A shares and H shares; if this is
included in cash dividends, the ratio of cash dividends to net profit attributable to owners’ parent
company for the year would be over 54.7%).100% dividend is paid in cash. If there is any
change in the total share capital of the Company during the period from the date of this report
to the record date of the equity distribution, the total distribution amount will remain unchanged
with corresponding adjustment to the proportion of distribution per share.
(II) Notes to the cash dividend policies
√ Applicable □ Not Applicable
Whether in compliance with regulations of the Articles of Association and √ Yes □ No
requirements of the resolutions of the general meeting
Whether the standard and ratio of dividends were clear √ Yes □ No
Whether relevant procedures and mechanisms for decision-making were √ Yes □ No
complete
Whether independent directors performed their duties and responsibilities √ Yes □ No
Whether minority shareholders were given the opportunity to fully express their √ Yes □ No
views and demands, and whether their legitimate interests were adequately
protected
92 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
(III) The Company made profits and the profits for distribution to the owners’ Parent
Company was positive during the reporting period, but no cash profit
distribution plan was proposed; the Company should disclose the reasons in
detail and the purpose of undistributed profits
□ Applicable √ Not Applicable
(IV) Plan for profit distribution and conversion of capital reserve into share capital
for the reporting period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Number of shares to be distributed for every ten shares (share) /
Amount to be distributed for every ten shares (RMB) (tax inclusive) 8.04
Number of shares to be converted into share capital for every ten /
shares (share)
Amount of cash dividend (tax inclusive) 7,471,472,992.22
Net profit attributable to ordinary shareholders of listed company in the 16,596,615,045.87
consolidated financial statement during the year of distribution
Percentage of the net profit attributable to the ordinary shareholders of 45.02
the listed companies in the consolidated financial statement (%)
Repurchase of shares by cash included in the amount of cash dividend 1,613,104,573.271
Total dividend amount (tax inclusive) 9,084,577,565.50
Percentage of total dividend amount to the net profit attributable to the 54.74
ordinary shareholders of the listed companies in the consolidated
financial statement (%)
Note: The above share repurchases involving foreign currencies were converted at a uniform exchange rate at the end of
2023.
Haier Smart Home Co., Ltd. Annual Report 2023 93
Section IV Corporate Governance
XI. THE COMPANY’S SHARE OPTION INCENTIVE SCHEME, EMPLOYEE
SHAREHOLDING PLAN OR OTHER EMPLOYEE INCENTIVE MEASURES
AND ITS INFLUENCE
(I) Matters disclosed in temporary announcements and without any subsequent
progress or change
√ Applicable □ Not Applicable
Summary of matters Query index
Cancellation of certain 2021 and 2022 For details, please refer to the
equity incentive options: In view of the fact Announcement of Haier Smart Home Co.,
that the second exercise period of the first/ Ltd. on the Cancellation of Certain Share
reserved grant portion of the 2021 A-share Options Granted under the 2021 A-share
Option Incentive Scheme and the first Option Incentive Scheme, the 2022
exercise period of the 2022 A-share Option A-share Option Incentive Scheme
Incentive Scheme of the Company did not disclosed by the Company on 28 April
meet the exercise conditions, and due to the 2023, the Announcement of Haier Smart
resignation of some of the participants, the Home Co., Ltd. on the Completion of
Company cancelled the corresponding Cancellation of Certain Share Options
11,391,979 share options and 27,934,987 Granted under the 2021 A-share Option
share options that had been granted but had Incentive Scheme, the 2022 A-share
not yet been exercised. Option Incentive Scheme and relevant
contents disclosed by the Company on
31 May 2023.
Introduction of New Phase of A Share and For details, please refer to the 2023 A
H Share Employee Stock Ownership Share Core Employee Stock Ownership
Plan: In order to further improve the Plan of Haier Smart Home Co., Ltd.
governance mechanism of the Company, (Draft), the 2023 H Share Core Employee
create shareholder value and promote the Stock Ownership Plan of Haier Smart
comprehensive implementation of the Home Co., Ltd. (Draft) disclosed by the
Company’s IoT smart home ecological brand Company on 28 April 2023, the
strategy, the Company considered and Announcement of Resolutions at the
introduced the 2023 H Share Core General Meeting disclosed by the
Employee Stock Ownership Plan of Haier Company on 27 June 2023 and the
Smart Home Co., Ltd. (Draft) and the 2023 Announcement of Completion of Share
A Share Core Employee Stock Ownership Purchase and relevant contents
Plan of Haier Smart Home Co., Ltd. (Draft) at disclosed by the Company in July 2023.
the 5th meeting of the 11th session of the
Board of Directors held by the Company on
27 April 2023 and the 2022 Annual General
Meeting held by the Company on 26 June
2023. During the reporting period, the
Company completed the position opening for
the abovementioned employee stock
ownership plans.
94 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
Summary of matters Query index
Vesting of interests in the Core Employee For details, please refer to relevant
Stock Ownership Plan: During the contents in the Announcement of Haier
reporting period, certain conditions for Smart Home Co., Ltd. on Vesting of
vesting of interests in the Company’s 2021 Interests in Core Employee Stock
A Share/H Share Core Employee Stock Ownership Plan disclosed by the
Ownership Plan and 2022 A Share/H Share Company on 1 August 2023.
Core Employee Stock Ownership Plan were
satisfied, and the Company has completed
relevant vesting matters.
Cancellation of certain share options For details, please refer to relevant
granted under the first grant of the 2021 contents in the Announcement of Haier
Share Option Incentive Scheme: Since Smart Home Co., Ltd. on the
there was no suitable exercise window Cancellation of Certain Share Options
period for shares corresponding to the first Granted under the First Grant of the
exercise period of certain share options 2021 A-share Option Incentive Scheme
granted under the first grant of the 2021 disclosed by the Company on 31 August
Share Option Incentive Scheme, the 2023.
Company cancelled the corresponding
9,047,052 share options granted but not yet
exercised.
Cancellation of certain share options For details, please refer to relevant
granted under the reserved grant of the contents in the Announcement of Haier
2021 Share Option Incentive Scheme: Smart Home Co., Ltd. on the
Since there was no suitable exercise window Cancellation of Certain Share Options
period for shares corresponding to the first Granted under the Reserved Grant of the
exercise period of certain share options 2021 A-share Option Incentive Scheme
granted under the reserved grant of the disclosed by the Company on 14
2021 Share Option Incentive Scheme, and December 2023.
due to the resignation of some of the
participants, the Company cancelled the
corresponding 860,072 share options
granted but not yet exercised.
(II) Incentive events not disclosed in provisional announcements or with subsequent
development
Equity incentive
□ Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
Employee stock ownership plan
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 95
Section IV Corporate Governance
Other Incentives
□ Applicable √ Not Applicable
(III) Share option granted to directors and senior management during the reporting
period
√ Applicable □ Not Applicable
Unit: 10,000 shares
Number of Shares Number of
Number of new stock subject to stock Market
stock options Exercisable stock option Stock options held value at the
options held granted shares exercised options at the end end of the
at the during the during the during the exercise of the reporting
beginning of reporting reporting reporting price reporting period
Name Position the year period period period (RMB) period (RMB)
Li Huagang Chairman, President 91.39 18.28 –36.56 25.63 54.83 21.00
Gong Wei Director, Chief 45.70 9.14 –18.28 25.63 27.42 21.00
Financial Officer,
Vice President
XieJuzhi Vice President 91.39 18.28 –36.56 25.63 54.83 21.00
Li Pan Vice President 45.70 9.14 –18.28 25.63 27.42 21.00
Song Yujun Vice President 31.21 6.24 –12.49 25.63 18.72 21.00
Zhao Yanfeng Vice President 46.82 9.36 –18.73 25.63 28.09 21.00
Huang Xiaowu Vice President 45.70 9.14 –18.28 25.63 27.42 21.00
Wu Yong Vice President 22.85 4.57 –9.14 25.63 13.71 21.00
Li Yang Vice President 45.70 9.14 –18.28 25.63 27.42 21.00
Guan Jiangyong Vice President 22.85 4.57 –9.14 25.63 13.71 21.00
Liu Xiaomei Secretary to the Board 11.65 2.91 –2.91 23.86 8.74 21.00
of Directors
Total / 500.96 100.77 –198.65 / 302.32 /
(IV) Establishment and implementation of appraisal and incentive mechanism for
senior management during the reporting period
√ Applicable □ Not Applicable
The cash remuneration of executives in 2023 consists of monthly remuneration, bonuses and
sharing, and is linked to orders triggered by the upgrade of the Company’s Internet of Things
from “high-end brands” to “scenario brands” to “ecological brands”. Focusing on the rapid
improvement of profitability and through digital transformation, the Company enhanced its
competitiveness in the whole process, and achieved sharing of high added-value. Through the
innovation of the mechanism, the Company encouraged its executives to achieve higher market
goals, thus achieving a win-win situation for users, employees, enterprises and stakeholders. At
the same time, the Company continues to promote the implementation of the employee stock
ownership and other long-term incentive plans; multiple incentive tools will be effectively utilised
to mobilise competent management, frontline managers and business and technical backbones
on a wider scale, further aligning the interests of shareholders, the Company and incentive
recipients, and bringing more efficient and sustainable returns to shareholders.
96 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
XII. CONSTRUCTION AND IMPLEMENTATION OF INTERNAL CONTROL
SYSTEM DURING THE REPORTING PERIOD
√ Applicable □ Not Applicable
In accordance with the “Rules for the Preparation and Reporting of Information Disclosure by Listed
Issuers of Securities No. 21— General Provisions on the Annual Internal Control Assessment Report”
jointly issued by the China Securities Regulatory Commission and the Ministry of Finance, the
“Guidelines for Self-regulation of Listed Companies on the Shanghai Stock Exchange No. 1 —
Regulation of Operations”, the “Guidelines for Self-Regulation of Listed Companies on the Shanghai
Stock Exchange No. 2 — Business Handling” and other relevant guidelines and requirements, the
Company has conducted a self-assessment of its internal control work. Based on the identification of
significant deficiencies in the Company’s internal control of financial reporting, no significant
deficiencies in the Company’s internal control of financial reporting were identified as at the basis date
of the internal control assessment report, and the Company had maintained effective internal control of
financial reporting in all material respects in accordance with the requirements of the internal control
regulatory system and relevant regulations. Based on the identification of significant deficiencies in the
Company’s internal control of non-financial reporting, no significant deficiencies in the Company’s
internal control of non-financial reporting were identified as at the basis date of the internal control
assessment report. No events have occurred between the basis date of the internal control
assessment report and the date of issuance of the internal control assessment report that would affect
the effectiveness of the internal control assessment.
For details, please refer to the 2023 Internal Control Assessment Report of Haier Smart Home Co.,
Ltd. disclosed on the same day of this report.
Explanations on material defects found in internal control during the reporting period
□ Applicable √ Not Applicable
XIII. CONTROL OVER MANAGEMENT OF SUBSIDIARIES DURING THE
REPORTING PERIOD
√ Applicable □ Not Applicable
The listed company established an internal control and management system covering all subsidiaries
within the scope of consolidated statement, which included four major areas of strategy, finance,
operation and compliance with a total of 22 primary business processes and control metrics. In
particular:
1. Unified control environment, such as strategy and culture, risk management system, internal control
manual, Rendanheyi remuneration system, unified accounting and information system in the
financial sharing center, etc.
Haier Smart Home Co., Ltd. Annual Report 2023 97
Section IV Corporate Governance
2. The company has clear selection methods and terms of reference in respect of appointment of
directors, supervisors and important senior management to their controlling subsidiaries.
Meanwhile, relevant departments of the parent company stipulate the criteria and scope of
authorization for major decision and important events, formulate the approval procedure for major
decision and important events beyond the scope of authorization. The management of
subsidiaries at different levels shall exercise their authority and take responsibility within the
scope of authorization.
3. Management of major events of subsidiaries: The relevant authority of the parent company of the
listed company stipulates the criteria and scope of authorization for major decision and important
events, formulate the approval procedure for major decision and important events beyond the
scope of authorization. If the Company and its subsidiaries provide external guarantees, the total
amount of which shall propose for consideration at the general meetings after approval by the
Board. Subject to the authorization by the general meetings, the Board decides the Company’s
external investment, acquisition and disposal of assets, external guarantees, entrusted wealth
management, related-party transactions and other events.
4. Management of budget: The finance and budget center formulates the budget preparation policy
and guidance for the following year at the end of each year, and distributes them to each
subsidiary together with the budget template, requiring the preparation of a comprehensive
budget in accordance with the unified budget preparation policy and guidance, which contains
details of the preparation principles, explanation of filling the template, submission process and
examination. Each subsidiary has prepared a comprehensive budget in accordance with the
unified budget preparation policy and guidance. Annual budgeting of the following year is
commenced in the third quarter every year by making profit and loss budgets for each industry
and subsidiaries based on market forecasts to ensure accurate estimation in advance. The
execution and adjustment of budgets are regularly monitored and evaluated.
For non-fixed assets investment projects, the person in charge of fund of each subsidiary will
summarize the actual investment situation and report it to the manager of the investment,
financing and fund management department of Haier Smart Home. The manager of the
investment, financing and fund management department will monitor the execution of the budget
of investment and financing by comparing the report with the corresponding budget of the
investment plan.
5. Operation analysis and performance evaluation: The Company regularly convenes global and
industry-specific performance and operations meetings to discuss the operations and
performance and carries out performance evaluation.
98 Haier Smart Home Co., Ltd. Annual Report 2023
Section IV Corporate Governance
6. Information transmission: The Company widely collects macroeconomic and industry development
information, market information, regulatory compliance and other external information through
various channels, and analyzes and organizes the collected information into research reports
every month, which are submitted to different levels of management after review. The
management of the parent company holds regular meetings with industries and segments to
convey the management requirements of the parent company and to be aware of the operation
status of subsidiaries in a timely manner. At the same time, the Company has formulated the
information security and internal report confidentiality system, which specifies the confidentiality
content, confidentiality measures, confidentiality level and transmission scope to prevent the
disclosure of commercial secrets.
7. Test and audit of internal control: During the reporting period, the parent company conducts test
and audit of internal control for subsidiaries, which account for more than 93% and 92% of
revenue and assets of the parent Company in aggregate, respectively, to identify problems in a
timely manner and facilitate the closed-loop rectification of problems.
During the reporting period, there were no new significant subsidiaries.
XIV. RELEVANT EXPLANATIONS ON THE AUDIT REPORT OF INTERNAL
CONTROL
√ Applicable □ Not Applicable
The Company’s auditor Hexin Certified Public Accountants LLP has audited the efficiency of internal
control relating to the financial report of the Company, and has issued its standard unqualified audit
report for the Company’s internal control (He Xin Shen Zi (2024) No.000187).
For the details of Audit Report of Internal Control of Haier Smart Home Co., Ltd., please refer to
relevant announcements published on the website of Shanghai Stock Exchange (www.sse.com.cn) on
the same day of this report.
Whether to disclose the audit report on internal control: Yes
Type of opinion on the audit report on internal control: Standard unqualified opinion
XV. RECTIFICATION OF THE SELF-ASSESSMENT PROBLEMS UNDER THE
GOVERNANCE SPECIAL ACTION OF THE LISTED COMPANY
Not Applicable
XVI. OTHERS
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 99
Section V Environmental and Social
Responsibilities
I. ENVIRONMENTAL INFORMATION
Established environmental protection related mechanism or not Yes
Environmental protection funds invested during the Reporting Period (Unit: 55,200
RMB10,000)
Note: During the reporting period, environmental protection funds were invested in aspects of R&D of environmental protection
technology, clean production, environmental protection equipment purchase and renovation, pollution control, ecological
protection, environmental management expenditure, etc.
(I) Explanation of the environmental protection status of companies and their
important subsidiaries that are key emission units announced by the
environmental protection department
√ Applicable □ Not Applicable
1. Information on pollutant discharge
√ Applicable □ Not Applicable
The Company’s direct/indirect non-wholly owned subsidiaries Hefei Haier Refrigerator Co.,
Ltd. (“Hefei Refrigerator”), Qingdao Haier Special Refrigerator Co., Ltd. (“Qingdao Special
Refrigerator”), Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan Haier
Freezer Co., Ltd (“Wuhan Freezer”), Wuhan Haier Electronics Holding Co., Ltd. (“Wuhan Air-
Conditioning”), Zhengzhou Haier Air-conditioning Co., Ltd. (“Zhengzhou Air-Conditioning”),
Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited (“Jiaozhou Air-Conditioning”), are
among the key emission units announced by the local environmental protection department.
The main information on pollutant discharge is as follows:
(1) Hefei Refrigerator
① Main pollutants：
Wastewater. According to the Integrated Wastewater Discharge Standard
(GB8978–1996), Hefei Refrigerator should apply for a pollutant discharge permit
and detect 9 types of pollutants (including specific pollutants), namely, total
nitrogen (as N), total phosphorus (as P), rate of flow, suspended solids, PH,
chemical oxygen demand (COD), ammonia nitrogen (NH3-N), five-day
biochemical oxygen demand (BOD5), and animal and vegetable oils.
Exhaust gas. According to Emission Standard of Pollutants for Synthetic Resin
Industry (GB 31572–2015), Hefei Refrigerator should apply for a pollutant
discharge permit and detect pollutants. Main types of atmospheric pollutants:
particle matter, non-methane hydrocarbon, styrene, toluene, ethylbenzene
② Way of discharge: continuous discharge
③ Number and distribution of discharge outlets: 1 for sewage, at the north entrance
of the Refrigerator Park; 20 for exhaust gas, at the Refrigerator Block A (9),
Block B (8) and Phase III Factory (3)
100 Haier Smart Home Co., Ltd. Annual Report 2023
Section V Environmental and Social Responsibilities
④ Concentration of discharge and discharge standard:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount (2023 data) are as
follows:
Whether
Approved total it is
Name of Concentration Total amount amount of excessive
No. pollutant of discharge of discharge discharge discharge
1 COD 70.35 mg/L 37.76 tons / No
2 Ammonia nitrogen 9.52 mg/L 5.71 tons / No
3 Total nitrogen 19 mg/L 10.77 tons / No
4 Total phosphorus 1.48 mg/L 0.82 tons / No
⑤ Pollutant discharge standards implemented: Integrated Wastewater Discharge
Standard (GB8978–1996)
(2) Qingdao Special Refrigerator
① Main Pollutants：
Exhaust gas. According to the Administrative Measures for Pollutant Discharge
Licensing (for Trial Implementation) (HJ 978–2018), Qingdao Special Refrigerator
should apply for a pollutant discharge permit and detect the primary type of
pollutant in the atmosphere, namely non-methane hydrocarbon (VOC), with the
maximum concentration of discharge not exceeding 60mg/m. A qualified third-
party testing unit is commissioned to conduct organic exhaust gas
concentration testing and issue a report on a quarterly basis.
Wastewater: There is no wastewater generated by the business department, and
the domestic wastewater is discharged into the municipal sewage network
through the sewage pipes in Haier Industrial Park.
② Way of discharge: continuous emission
③ Number and distribution of discharge outlets: two in total, one for absorption
exhaust port at the west side of the Special Refrigerator plant roof, which the
exhaust gas treatment facilities were updated, installed and put into use in
2023, with the upgrading and adoption of activated carbon adsorption and
desorption + regenerative combustion process; and one for foam exhaust port
at the west side of the Special Refrigerator plant roof.
Haier Smart Home Co., Ltd. Annual Report 2023 101
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as follows:
Whether
Approved total it is
Name of Concentration Total amount amount of excessive
No. pollutant of discharge of discharge discharge discharge
1 Non-methane 6.62 mg/m 1.43 tons No control No
hydrocarbon regarding the
total amount
of discharge
⑤ Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standards Part 7: Other Industries in Shandong Province
(DB37/2801.7–2019)
(3) Wuhan Water Heater
① Main Pollutant：
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Wuhan Water Heater should apply for a pollutant discharge permit and detect 9
types of pollutants (including specific pollutants), namely, COD, total zinc,
suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen
demand (BOD5), PH, anionic surface active agent, total phosphorus, and animal
and vegetable oils.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the southwest of the
wastewater treatment plant, pipeline discharge
102 Haier Smart Home Co., Ltd. Annual Report 2023
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as follows:
Whether
Approved total it is
Name of Concentration Total amount amount of excessive
No. pollutant of discharge of discharge discharge discharge
1 COD 13.74 mg/L 1.988 tons 9.075 tons No
2 Ammonia nitrogen 0.07 mg/L 0.204 tons 0.9075 tons No
3 Total phosphorus 0.09 mg/L 0.032 tons / No
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
(4) Wuhan Freezer
① Main pollutants：
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Wuhan Freezer should apply for a pollutant discharge permit and detect 9 types
of pollutants (including specific pollutants), namely, COD, total zinc, suspended
solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen demand (BOD5),
PH, anionic surface active agent, total phosphorus, and animal and vegetable
oils.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the south of the wastewater
treatment plant, pipeline discharge
Haier Smart Home Co., Ltd. Annual Report 2023 103
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as follows:
Whether
Approved total it is
Name of Concentration Total amount amount of excessive
No. pollutant of discharge of discharge discharge discharge
1 COD 23 mg/L 0.56 tons 4.35 tons No
2 Ammonia nitrogen 0.67 mg/L 0.02 tons 0.435 tons No
3 Total phosphorus 0.12 mg/L 0.003 tons / No
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
(5) Wuhan Air-Conditioning
① Main Pollutants：
Organic exhaust gas. Exhaust gas pollutant discharge refers to the Integrated
Emission Standard of Air Pollutants, and the primary type of pollutant in the
atmosphere detected are namely non-methane hydrocarbon (VOC), with the
maximum concentration of discharge not exceeding 120 mg/m. A qualified
third-party testing unit is commissioned to conduct organic exhaust gas
concentration testing and issue a report on a half-yearly basis.
② Way of discharge: continuous discharge
③ Number and distribution of discharge outlets: five in total, one degreasing exhaust
port at the south side of the plant roof, three stamping exhaust ports at the
south side of the plant roof and one spraying exhaust port at the north side of
the spraying workshop roof.
104 Haier Smart Home Co., Ltd. Annual Report 2023
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount of
discharge: No control regarding the total amount of discharge of organic
exhaust gas
Whether
Approved total it is
Name of Concentration Total amount amount of excessive
No. pollutant of discharge of discharge discharge discharge
1 VOC 2.27 mg/m 0.04464 tons No control No
regarding the
total amount
of discharge
⑤ Pollutant discharge standards implemented: Implementation of Grade 2 standards
according to Table 2 indicated in the national Integrated Emission Standard of
Air Pollutants (GB16297–1996)
(6) Zhengzhou Air-Conditioning
① Main Pollutant：
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Zhengzhou Air-Conditioning should apply for a pollutant discharge permit and
detect 9 types of pollutants (including specific pollutants), namely, COD, total
zinc, suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen
demand (BOD5), PH, total phosphorus, and animal and vegetable oils.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the north side of the air-
conditioning wastewater treatment plant, pipeline discharge
Haier Smart Home Co., Ltd. Annual Report 2023 105
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as follows:
Whether
Approved total it is
Name of Concentration Total amount amount of excessive
No. pollutant of discharge of discharge discharge discharge
1 COD 40.72 mg/L 0.22 tons / No
2 Ammonia nitrogen 6.16 mg/L 0.033 tons / No
(7) Jiaozhou Air-Conditioning
① Main pollutants：
Hazardous waste. According to the national directory, 9 types of hazardous
waste detected are namely: waste oil, sludge, computer boards, activated
carbon, cotton filters, lightning tubes, soldering flux buckets, paint buckets and
forklift battery.
② Way of discharge: Hazardous waste is transferred to a qualified hazardous waste
disposal unit for disposal
③ Total amount of discharge and approved total amount of discharge:
Total amount of Whether it is
Name of Total amount of managed plan excessive
No. hazardous waste transfer (tons) (tons) discharge
1 Cotton filters 0.15 0.5 No
2 Waste oil 16.98 35 No
3 Soldering flux buckets 0.68 1.5 No
4 Forklift battery 18.36 22 No
5 Sludge 41.42 45 No
6 Paint buckets 1.02 5 No
7 Activated carbon 3.62 8 No
8 Computer Boards 17.76 30 No
9 Lightning tubes 0.006 0.5 No
④ Pollutant discharge standards implemented: Directory of National Hazardous
Wastes (Version 2021), Law of the People’s Republic of China on the
Prevention and Control of Environmental Pollution by Solid Waste
106 Haier Smart Home Co., Ltd. Annual Report 2023
Section V Environmental and Social Responsibilities
2. Construction and operation of pollution prevention and treatment facilities:
√ Applicable □ Not Applicable
Jiaozhou Air-conditioning, Zhengzhou Air-conditioning, Wuhan Freezer, Wuhan Water
Heater, have one, one, one and two wastewater treatment plants with a designed
treatment capacity of 300 tonnes/day, 550 tonnes/day, 360 tonnes/day, 300 tonnes/day
and 260 tonnes/day, respectively. The construction, maintenance and daily operation of all
wastewater treatment facilities are conducted in accordance with the requirements of
national and local environmental laws and regulations. Information on all wastewater
discharge is subject to 24-hour online monitoring and such monitored information is
transmitted to environmental authorities in a real-time manner. All equipment is operating
normally, and the discharge of wastewater is steady and in compliance with standards. In
addition, the Company fully promotes all plants to install exhaust treatment facilities and
VOCs online monitoring facilities. All equipment is operating normally and exhaust produced
is treated by the prevention and treatment facilities before compliant release and is
monitored.
3. Environmental impact assessment of construction projects and other environmental
protection administrative permits
√ Applicable □ Not Applicable
The Company and its subsidiaries execute construction project implementation and
production in accordance with the requirements of laws and regulations and strictly comply
with the three simultaneous requirements of environmental protection for construction
projects in the process of environmental impact assessment, and have passed
environmental assessment acceptance and are not involved in any environmental illegal
conducts such as construction before approval.
4. Emergency plans for environmental incidents
√ Applicable □ Not Applicable
The Company and its subsidiaries have formulated Emergency Plans for Environmental
Incidents in accordance with the requirements of laws and regulations and organized drills,
and continue to improve and upgrade the plans based on drill results.
Haier Smart Home Co., Ltd. Annual Report 2023 107
Section V Environmental and Social Responsibilities
5. Self-monitoring environmental programs
√ Applicable □ Not Applicable
All pollutants of the Company are tested regularly, of which the discharge complies with
national and local environmental standard requirements. Wastewater collected is subject to
standard treatment and is released in a compliant manner. It is under real-time monitoring
through the automatic online wastewater monitoring system, which shares its information
with Haier Smart Energy System. In March 2017, the Company passed the upgraded
certification in relation to ISO14001 environment management system; In May 2021, a
professional certification firm was appointed to conduct a review and audit on the operation
of ISO14001 system in 2020, where satisfactory results were obtained to demonstrate its
good operating condition; In May 2022, a second review and audit was conducted on the
operation of system in 2021; In May 2023, a third review and audit was conducted on the
operation of system in 2022.
6. Administrative penalty due to environmental issues during the Reporting Period
□Applicable √ Not Applicable
7. Other environmental information that should be disclosed
□Applicable √ Not Applicable
(II) Explanation on environmental protection of companies other than major
pollutant emission units
√ Applicable □ Not Applicable
1. Administrative penalty due to environmental issues
□Applicable √ Not Applicable
2. Other environmental information disclosure with reference to major
pollutant emission units
√ Applicable □ Not Applicable
All divisions of the Company execute construction project implementation and
production in accordance with the requirements of laws and regulations and
strictly comply with the three simultaneous requirements of environmental
protection for construction projects in the process of environmental impact
assessment, and have passed environmental assessment acceptance and are
not involved in any environmental illegal conducts such as construction before
approval.
108 Haier Smart Home Co., Ltd. Annual Report 2023
Section V Environmental and Social Responsibilities
Through Haier Smart Energy Center, an industry leading energy big data
analysis system, the Company implements centralized dynamic monitoring and
digitalized management in respect of major energy consumption, such as water,
electricity and gas, of all plants across the country by utilizing automatized and
informationalized technology and an integrated management model. It
automatically collects precise information on energy resources and completes
prediction and analysis of energy consumption information to optimize energy
adjustment, reduce energy consumption per unit production to achieve low-
carbon production.
3. Reasons for failure to disclose other environmental information
□Applicable √ Not Applicable
(III) Relevant information favorable to ecological protection, pollution prevention
and control and environmental responsibility fulfillment
√ Applicable □ Not Applicable
During the reporting period, Hefei Refrigerator actively participated in the declaration
of “Zero-Waste factory” organized by the environmental protection department of the
local government. With the goal of “energy conservation, consumption reduction,
pollution reduction and efficiency enhancement”, it remained steadfast in ecological
and green development. The Company and its subsidiaries have been committed to
implementing national “dual carbon” strategy by integrating low-carbon, recycling,
energy conservation and emission reduction into daily operation and actively exploring
a model for achieving carbon reduction throughout the product lifecycle. We
continuously promoted green technologies upgrading in the industry by capitalizing on
our industrial leading role in green technologies, worked together to move towards a
greener, win-win and sustainable future, and jointly protected our home.
(IV) Measures taken during the Reporting Period to reduce its carbon emission and
their effectiveness
Whether carbon reduction Yes
measures were implemented
Reduction of carbon dioxide 8,965.68
equivalent emission
(unit: tonnes)
Types of carbon reduction The Company actively cooperates with parties
measures (such as using clean along the upstream and downstream
energy for power generation, industrial chain, from raw material
using carbon reduction manufacturers to logistics enterprises, from
techniques in the production consumers to recycling and dismantling
process, developing and factories, in order to explore carbon
producing new products reduction throughout the product lifecycle
which help reduce carbon centering around “R&D, raw materials,
emission, etc.) production, packaging and transportation,
and product recycling” Carbon reduction.
Haier Smart Home Co., Ltd. Annual Report 2023 109
Section V Environmental and Social Responsibilities
For details of the above-mentioned measures,
please refer to relevant information in 2023
Environmental, Social and Governance
Report of Haier Smart Home Co., LTD.
published on the same date of this report.
Note: The scope of the aforementioned CO2 equivalent emission reduction statistics is the scope 1 and scope
2 data for the Company’s domestic operations.
Specifications
□ Applicable √ Not Applicable
II. PERFORMANCE OF SOCIAL RESPONSIBILITIES
(I) Whether the social responsibility report, sustainable development report or ESG
report is disclosed individually
√ Applicable □ Not Applicable
Haier Smart Home has actively participated in health education, rural construction,
voluntary service, and other community public charity while striving to create social value
and practising social responsibility in order to make its contribution to promoting the
construction of a fairer and better society wholeheartedly and sincerely.
1. Caring about education and health
Over the years, Haier Smart Home has paid attention to the growth and development of
young people by helping young people and children of different ages receive quality
education, and continuously improving the quality of fundmental education and the health
level of children. In 2023, we launched the “Ocean Exploration Program” and the “Seed
Inspiring Program” with the aim of providing more children with deep spiritual care and
wisdom enlightenment, in order to continue to pass on the concept of green, healthy and
intelligent life to society.
2. Supporting rural construction in multiple ways
Haier Smart Home has been deeply involved in the cause of rural revitalization, establishing
an in-depth collaboration with the rural areas encompassing industry, employment,
education, health and other aspects. It also contributes to the construction of beautiful
villages and improvement of rural production and living standards with its own technical and
knowledge advantages.
3. Helping relief enthusiastically
In the face of extreme climate and natural disasters, Haier Smart Home has actively
participated in disaster rescue and relief actions to help the affected people overcome
difficulties as soon as possible. In 2023, the Company’s operating regions at home and
abroad donated materials and cash to public welfare organizations and charitable activities
in many regions, demonstrating the fulfilment of responsibility of Haier Smart Home with
actual actions.
110 Haier Smart Home Co., Ltd. Annual Report 2023
Section V Environmental and Social Responsibilities
4. Volunteering to serve the society
All members of the Company from operating regions at home and abroad insist on
practicing voluntary service activities with sincerity, devoting themselves to public
undertakings with professional skills and enthusiasm, and giving back to the society with
love.
For details, please refer to the 2023 Environment, Social and Governance Report of Haier
Smart Home Co., Ltd. disclosed on the date of this report.
(II) Details of social responsibility works
√ Applicable □ Not Applicable
External donation, public welfare projects Quantity/Content
Total Contribution (RMB10,000) 626.97
Among which: Funds (RMB10,000) 626.97
Specifications
√ Applicable □ Not Applicable
For details, please refer to the 2023 Environment, Social and Governance Report of Haier Smart
Home Co., Ltd. disclosed on the date of this periodic report.
III. PARTICULARS ON THE EFFORTS TO CONSOLIDATE AND EXPAND ITS
ACHIEVEMENTS IN POVERTY ALLEVIATION AND RURAL AREA
INVIGORATION
√ Applicable □ Not Applicable
Poverty alleviation and
rural revitalization projects Quantity/Content
Total Contribution (RMB10,000) 58.14
Among which: Funds (RMB10,000) 58.14
Forms of assistance (such as poverty alleviation poverty alleviation through industry
through industry development, poverty alleviation development, poverty alleviation through
through employment, poverty alleviation through education
education, etc.)
Specifications
√ Applicable □ Not Applicable
In accordance with the national targeted poverty alleviation plan and documents requirements, the
Company emphasizes poverty alleviation and conducts targeted poverty alleviation within the authority
granted on the general meeting in respect of, among others, donations.
Haier Smart Home Co., Ltd. Annual Report 2023 111
Section V Environmental and Social Responsibilities
For years, the Company has made genuine contributions to education to improve the basic cultural
quality of people in poverty and skills of families in poverty, with an emphasis on shoring up the weak
link of the education sector and stopping inter-generational poverty. As of now, the Company, Haier
Group Companies (the effective controller of the Company) and its subordinate enterprises (hereafter,
the “Haier Group”) have constructed over 300 hope primary schools and hope secondary schools,
covering 26 provinces, municipalities and autonomous regions in the PRC. It also offers continuous
resource assistance to such schools every year to effectively boost the base education capacity in
poverty regions and improve education quality. At the same time, in the face of natural disasters, the
Company actively participated in disaster rescue and relief actions: In August 2023, Haier Smart Home
Heilongjiang Branch joined hands with local Haier franchised stores to rush to severely affected areas
such as Wuchang City and Shangzhi City in Harbin to provide emergency aid materials and help
affected people overcome difficulties, taking up social responsibilities voluntarily. In addition, the
Company continues to launch effective measures to assist rural revitalization: In December 2023, Haier
Smart Home franchised stores, in collaboration with the Shanxi Provincial Government and the Retailer
Industry Association, successfully held the “Haier Franchised Store Better Life Sales — Large Scale
Technology Assisted Agriculture Live Broadcast China Tour” in Taiyuan. Haier Smart Home stores fully
leveraged the advantages of nationwide store layout to promote local specialty agricultural products to
the whole country.
In 2023, the Company’s capital expenditure in targeted poverty alleviation amounted to approximately
RMB6.85 million, primarily attributable to poverty alleviation through industry development, poverty
alleviation through education, etc., to proactively respond to the government’s call for social
responsibility fulfillment.
112 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
I. FULFILLMENT STATUS OF UNDERTAKINGS
(I) The undertakings made by the ultimate controller, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period
√ Applicable □ Not Applicable
Whether
Any performed in
Background of Date of deadline for Term of a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance undertakings strict way
Undertaking Eliminate the right defects Haier Group During the period from September 2006 to 27 September Yes Long-term Yes
related to in land property etc. Corporation May 2007, the Company issued shares 2006
significant to Haier Group Corporation (“Haier
reorganization Group”) to purchase the controlling
equity in its four subsidiaries, namely
Qingdao Haier Air-Conditioner
Electronics Co., Ltd. (青島海爾空調電
子有限公司), Hefei Haier Air-
conditioning Co., Limited (合肥海爾空
調器有限公司), Wuhan Haier Electronics
Holding Co., Ltd. (武漢海爾電器股份有
限公司), Guizhou Haier Electronics Co.,
Ltd. (貴州海爾電器有限公司). With
regard to the land and property required
in the operation of three companies,
namely Qingdao Haier Air-Conditioner
Electronics Co., Ltd. (青島海爾空調電
子有限公司), Hefei Haier Air-
conditioning Co., Limited (合肥海爾空
調器有限公司), Wuhan Haier Electronics
Holding Co., Ltd. (武漢海爾電器股份有
限公司) (the “Covenantees”), Haier
Group made an undertaking (the “2006
Undertaking”). According to the content
of 2006 Undertaking and current
condition of each Covenantee, Haier
Group will constantly assure that
Covenantees will lease the land and
property owned by Haier Group for free.
Haier Group will make compensation in
the event that the Covenantees suffer
loss due to the unavailability of such
land and property (Note).
Address peer competition Haier Smart Home Prior to the Transaction (hereinafter “the 31 July 2020 Yes Long-term Yes
Co., Ltd. Transaction” refers to the transaction in
relation to the privatization of Haier
Electronics by Haier Smart Home), Haier
Electric was a controlling subsidiary of
the Company and did not have peer
competition with the Company; after the
completion of the Transaction, Haier
Electric became a wholly-owned or
controlling subsidiary of the Company
and no new peer competition with the
Company existed or will arise. There is
no new peer competition or potential
competition between the Company and
other related parties controlled by the
controlling shareholders or the de facto
controller of the Company.
Haier Smart Home Co., Ltd. Annual Report 2023 113
Section VI Significant Events
Whether
Any performed in
Background of Date of deadline for Term of a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance undertakings strict way
Address connected Haier Group 1. The Transaction constitutes a connected 29 July 2020 Yes Long-term Yes
transactions Corporation transaction and the connected
transaction procedures performed under
the Transaction are in compliance with
the relevant regulations. The pricing of
the connected transaction is fair and
there are no circumstances under which
the interests of the listed company and
the non-connected shareholders are
prejudiced. 2. Upon completion of the
Transaction, the Company and its
affiliates will take lawful and effective
measures to minimize and regulate the
connected transactions with the listed
company, take the initiative to
safeguard the interests of the listed
company and all shareholders, and
refrain from taking advantages of
connected transactions for improper
benefits. 3. Provided that there is no
conflict with laws and regulations, if
connected transactions between the
Company and its affiliates and the listed
company occur or exist which cannot
be avoided or for which there are
reasonable reasons, the Company and
its affiliates will legally enter into a
transaction agreement with the listed
company to ensure strict compliance
with the procedures of connected
transactions required by the laws,
regulations, regulatory documents and
the articles of association of the
Company, conduct transactions in
accordance with the principles of
marketability and fair prices to ensure
the fairness and compliance of
connected transactions, and refrain from
taking advantages of such connected
transactions to engage in any acts that
are detrimental to the interests of the
listed company or its minority
shareholders, and at the same time,
comply with the information disclosure
obligations in accordance with relevant
regulations.
114 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
Whether
Any performed in
Background of Date of deadline for Term of a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance undertakings strict way
Address peer competition Haier Group 1. The Company and its controlling 29 July 2020 Yes Long-term Yes
Corporation subsidiary, Haier COSMO Co., Ltd.,
were principally engaged in investment
business during the reporting period,
and the Company and its controlling
subsidiary, Haier COSMO Co., Ltd.
(including its subsidiaries and entities
with more than 30% shareholding), have
no real or potential per competition with
Haier Smart Home; 2. the domestic and
overseas white goods businesses and
assets held by the Company (including
the Company’s subsidiaries and entities
with more than 30% shareholding) have
been injected into Haier Smart Home
through asset consolidation and equity
transfer in accordance with the
commitments made by the Company in
January 2011 and the requirements for
adjusting such commitments as
considered and approved by Haier
Smart Home at its 2014 annual general
meeting; 3. Since the acquisition of
100% of Haier New Zealand Investment
Holding Company Limited (which holds
100% of the shares in Fisher & Paykel
Appliances Holdings Limited) by Haier
Smart Home’s offshore subsidiary, Haier
Singapore Investment Holding Co., Ltd.,
following the completion in July 2018,
the Company (including the Company’s
subsidiaries and entities with more than
30% shareholding) and Haier Smart
Home do not have any peer competing
relationship in any business areas both
within and outside the PRC. During the
reporting period, the Company
(including the Company’s subsidiaries
and entities with more than 30%
shareholding) did not have any new
peer competition with Haier Smart
Home; 4. Upon completion of the
Transaction, the Company (including the
Company’s subsidiaries and entities with
more than 30% shareholding) and its
affiliates do not have any new or
potential peer competition with Haier
Smart Home; 5. During the period when
the company is the controlling
shareholder of Haier Smart Home and
the shares of Haier Smart Home are
listed on the Hong Kong Stock
Exchange, the company and its other
subsidiaries and entities with more than
30% shareholding will not operate any
business that competes with the
business engaged by Haier Smart Home
and will not engage in real or potential
peer competition with Haier Smart
Home.
Haier Smart Home Co., Ltd. Annual Report 2023 115
Section VI Significant Events
Whether
Any performed in
Background of Date of deadline for Term of a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance undertakings strict way
Others Haier Group Upon completion of the Transaction, the 29 July 2020 Yes Long-term Yes
Corporation company will strictly comply with the
Company Law, the Securities Law, the
relevant regulations of the China
Securities Regulatory Commission, the
Shanghai Stock Exchange and the
articles of association of Haier Smart
Home, etc., fairly exercise shareholders’
rights and fulfill shareholders’
obligations, refrain from taking
advantage of its shareholding position
for improper benefits, ensure the listed
company will continue to be completely
separate from the company and other
enterprises on which the company
exercises control and exerts significant
influence in terms of management,
personnel, assets, finance, organization
and business operations, and maintain
the continued independence of the
listed company in terms of
management, personnel, assets,
finance, organization and business
operations. Upon completion of the
Transaction, the company will comply
with the provisions of the Notice on
Several Issues concerning Regulating
Fund Transactions between Listed
Companies and Their Affiliates and the
External Guarantee of Listed Companies
and the Circular of China Securities
Regulatory Commission and China
Banking Regulatory Commission on
Regulating the External Guaranties
Provided by Listed Companies to
regulate the external guarantees by
listed companies and their subsidiaries,
and will not misappropriate the funds of
the listed company and their
subsidiaries. The company undertakes
to strictly fulfill the above commitments.
In the event that the interests of the
listed company are damaged as a result
of any breach of the above
commitments by the company and other
enterprises on which the company
exercises control and exerts significant
influence, the company will legally bear
the corresponding liability for damage.
116 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
Whether
Any performed in
Background of Date of deadline for Term of a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance undertakings strict way
Address connected HCH (HK) 1. The Transaction constitutes a connected 29 July 2020 Yes Long-term Yes
transactions INVESTMENT transaction and the connected
MANAGEMENT transaction procedures performed under
CO., LIMITED the Transaction are in compliance with
the relevant regulations. The pricing of
the connected transaction is fair and
there are no circumstances under which
the interests of the listed company and
the non-connected shareholders are
prejudiced. 2. Upon completion of the
Transaction, the company and other
enterprises on which the company
exercises control will take lawful and
effective measures to minimize and
regulate the connected transactions with
the listed company, take the initiative to
safeguard the interests of the listed
company and all shareholders, and
refrain from taking advantages of
connected transactions for improper
benefits. 3. Provided that there is no
conflict with laws and regulations, if
connected transactions between the
company and other enterprises on
which the company exercise control and
the listed company occur or exist which
cannot be avoided or for which there
are reasonable reasons, the company
and other enterprises on which the
company exercises control will legally
enter into a transaction agreement with
the listed company to ensure strict
compliance with the procedures of
connected transactions required by the
laws, regulations, regulatory documents
and the articles of association of the
company, conduct transactions in
accordance with the principles of
marketability and fair prices, and refrain
from taking advantages of such
connected transactions to engage in any
acts that are detrimental to the interests
of the listed company or its minority
shareholders, and at the same time,
comply with the information disclosure
obligations in accordance with relevant
regulations. 4. Any covenants and
arrangements between the company
and other enterprises on which the
company exercise control and the listed
company in relation to connected
transactions shall not prevent the other
party from conducting business or
dealing with any third party for its own
benefit and on equal competitive terms
in the market.
Haier Smart Home Co., Ltd. Annual Report 2023 117
Section VI Significant Events
Whether
Any performed in
Background of Date of deadline for Term of a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance undertakings strict way
Undertaking Eliminate the right defects Haier Group Haier Group Corporation undertakes that it 24 December Yes Long-term Yes
related to in land property and Corporation will assure Haier Smart Home and its 2013
refinancing etc. subsidiaries of the constant, stable and
unobstructed use of the leased
property. In the event that Haier Smart
Home or any of its subsidiaries suffers
any economic loss due to the fact that
leased property has no relevant
ownership certificate, Haier Group
Corporation will make compensation to
impaired party in a timely and sufficient
way and take all reasonable and
practicable measures to support the
impaired party to recover to normal
operation before the occurrence of loss.
Upon the expiration of relevant leasing
period, Haier Group Corporation will
grant or take practicable measures to
assure Haier Smart Home and its
subsidiaries of priority to continue to
lease the property at a price not higher
than the rent in comparable market at
that time. Haier Group Corporation will
assure Haier Smart Home and its
subsidiaries of the constant, stable, free
and unobstructed use of self-built
property and land of the Group. In the
event that Haier Smart Home or any of
its subsidiaries fails to continue to use
self-built property according to its own
will or in original way due to the fact
that self-built property has no relevant
ownership certificate, Haier Group
Corporation will take all reasonable and
practicable measures to eliminate
obstruction and impact, or will support
Haier Smart Home or its affected
subsidiary to obtain alternative property
as soon as possible, if Haier Group
Corporation anticipates it is unable to
cope with or eliminate the external
obstruction and impact with its
reasonable effort. For details, please
refer to the Announcement of Qingdao
Haier Co., Ltd. on the Formation,
Current Situation of the Defective
Property, the Influence on Operation of
Issuer Caused by Uncertainty of
Ownership, Solution for the Defect and
Guarantee Measures (L2014–005)
published by the Company on the four
major securities newspapers and the
website of Shanghai Stock Exchange
on 29 March 2014.
118 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
Whether
Any performed in
Background of Date of deadline for Term of a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance undertakings strict way
Undertakings Others Haier Smart Home The Company will not provide loans or any 15 September Yes The completion of Yes
related to Co., Ltd. other forms of financial assistance, 2021/28 equity incentive
Equity including guaranteeing their loans, to June 2022 implementation
incentive any incentive recipient for acquiring
relevant stock options under this
incentive plan.
Other Asset injection Haier Group Inject the assets of Haier Photoelectric to December Yes June 2025 Yes
undertakings Corporation the Company or dispose such assets 2015
through other ways according to the
requirements of the domestic
supervision before June 2025. For more
details, please refer to the
Announcement of Haier Smart Home
Co., Ltd. on the Changes of Some
Commitments on Asset Injection
(L2020- 024) published on the four
major securities newspapers and the
website of Shanghai Stock Exchange
on 30 April 2020.
Note: As at the date of this report, the undertaking was fulfilled since all Covenantees of the undertaking has obtained the
real property ownership certificates.
(II) The Company’s explanation on whether the earnings forecast on assets or
projects was met and its reasons in the situation that earnings in the
Company’s assets or projects have a forecast, and the period of which
includes the reporting period.
□ Reached □ Not Reached √ Not Applicable
(III) Completion of performance commitments and their impact on the impairment
test of goodwill
□ Applicable √ Not Applicable
II. NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLING
SHAREHOLDERS AND OTHER RELATED PARTIES DURING THE
REPORTING PERIOD
□ Applicable √ Not Applicable
III. INFORMATION ON NON-COMPLIANCE GUARANTEES
□ Applicable √ Not Applicable
IV. EXPLANATION OF THE BOARD OF THE COMPANY ON THE
‘NON-STANDARD AUDIT REPORT’ ISSUED BY THE ACCOUNTING
FIRM
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 119
Section VI Significant Events
V. EXPLANATION OF THE COMPANY’S ANALYSIS ON REASONS AND
EFFECTS OF CHANGES IN ACCOUNTING POLICIES AND
ACCOUNTING ESTIMATES OR CORRECTION OF SIGNIFICANT
ACCOUNTING ERRORS
(I) Explanation of the Company’s analysis on reasons and effects of changes in
accounting policies and accounting estimates
√ Applicable □ Not Applicable
Particulars of and reasons for changes in Date of
accounting policies Date of issue adoption
Accounting Standards for Business Enterprises
Interpretation No. 16 (“Interpretation No. 16”) November 2022 1 January 2023
The Company and its subsidiaries have adopted the standard of the Interpretation No. 16 on 1
January 2023. For deferred tax assets and liabilities recognised in respect of the lease liabilities
and right-of-use assets related to a single transaction at the beginning of the earliest period
when the Interpretation No. 16 was adopted for the presentation of the financial statements, the
net amount of the deferred tax assets and liabilities after offsetting was equal to the amounts
originally recognised on a net basis, with no impact on the consolidated balance sheet items
presented at the net amount after offsetting. The impact of the changes in accounting policies on
deferred tax assets and deferred tax liabilities before offsetting as at 1 January 2023 was as
follows:
Before policy After policy
Item changes Impact of changes changes
Deferred tax assets before offsetting 4,038,915,158.86 868,657,062.49 4,907,572,221.35
Deferred tax liabilities before offsetting 4,673,734,789.63 868,657,062.49 5,542,391,852.12
Offset amount –2,314,874,230.44 –868,657,062.49 –3,183,531,292.93
Deferred tax assets after offsetting 1,724,040,928.42 1,724,040,928.42
Deferred tax liabilities after offsetting 2,358,860,559.19 2,358,860,559.19
(II) Explanation of the Company’s analysis on reasons and effects of correction of
significant accounting errors
□ Applicable √ Not Applicable
(III) Communication with former accounting firm
□ Applicable √ Not Applicable
(IV) Approval processes and other explanations
□ Applicable √ Not Applicable
120 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
VI. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRM
Unit and Currency: RMB10,000
Current appointment
Name of domestic accounting firm Hexin Certified Public Accountants
LLP
Remuneration of domestic accounting firm 655
Audit period of domestic accounting firm 11 years
Names of certified public accountants of domestic accounting Zhao Bo, Li Xiang Zhi
firm
Number of accumulative years of audit services of certified 11 years, 2 years
public accountants in domestic accounting firms
Name of overseas accounting firm HLB Hodgson Impey Cheng Limited
Remuneration of overseas accounting firm 389
Audit period of overseas accounting firm 4 years
Name Remuneration
Accounting firm for Internal control audit Hexin Certified Public 223
Accountants LLP
Explanation of appointment and dismissal of accounting firm
□ Applicable √ Not Applicable
Explanation of change of accounting firm during the auditing period
□ Applicable √ Not Applicable
Explanation of audit fees falling by more than 20% (inclusive) compared with the previous year
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 121
Section VI Significant Events
VII. POSSIBILITY OF DELISTING
(I) Reasons of warning for delisting risks
□ Applicable √ Not Applicable
(II) Response measures to be taken by the Company
□ Applicable √ Not Applicable
(III) Circumstances and reasons for termination of listing
□ Applicable √ Not Applicable
VIII. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING
□ Applicable √ Not Applicable
IX. MATERIAL LITIGATION AND ARBITRATION MATTERS
□ Material litigation and arbitration matters during the year
√ No material litigation and arbitration matters during the year
X. PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITS
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
SHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECT
OF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION
□ Applicable √ Not Applicable
XI. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY AND
ITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLER
DURING THE REPORTING PERIOD
□ Applicable √ Not Applicable
122 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
XII. SIGNIFICANT RELATED-PARTY TRANSACTIONS
(I) Related-party transactions from daily operation
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
□ Applicable √ Not Applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
√ Applicable □ Not Applicable
Pursuant to the “Product and Materials Procurement Framework Agreement between Haier
Smart Home Co., Ltd. and Haier Group Corporation” 《海爾智家股份有限公司與海爾集團
公 司 之 產 品 及 物 料 採 購 框 架 協 議》 and the “Services Procurement Framework Agreement
between Haier Smart Home Co., Ltd. and Haier Group Corporation” 《海 爾 智 家 股 份 有 限
公司與海爾集團公司之服務採購框架協議》 considered and approved at the 28th meeting
of the 10th session of the Board of Directors and the 2021 Annual General Meeting, and
the “Resolution of Haier Smart Home Co., Ltd. on Renewing the Framework Agreement on
Financial Services with Haier Group Corporation and Estimated Amount of Connected
Transactions” 《海爾智家股份有限公司關於與海爾集團公司續簽〈金融服務框架協議〉暨預
計關聯交易額度的議案》 considered and approved at the 18th meeting of the 10th session
of the Board of Directors and the 2020 Annual General Meeting, the Company has made
estimation on the connected transactions for the next three years, as detailed in the
aforesaid announcements regarding the resolutions of the meetings.
For the actual performance of the Company’s connected transactions in the year of 2023,
please refer to “XII. Related parties and related-party transactions “under Section X —
Financial and Accounting Report set out in this regular report.
3. Matters not disclosed in temporary announcements
□ Applicable √ Not Applicable
(II) Related-party transactions regarding acquisition or disposal of assets/equity
1. Matter disclosed in temporary announcements and with no subsequent progress or
change
□ Applicable √ Not Applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
□ Applicable √ Not Applicable
3. Matters not disclosed in temporary announcements
□ Applicable √ Not Applicable
4. If performance agreement is involved, the performance achieved during the reporting
period shall be disclosed
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 123
Section VI Significant Events
(III) Significant related-party transactions of joint external investment
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
□ Applicable √ Not Applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
□ Applicable √ Not Applicable
3. Matters not disclosed in temporary announcements
□ Applicable √ Not Applicable
(IV) Amounts due to or from related parties
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
□ Applicable √ Not Applicable
2. Matters that have been disclosed in temporary announcement and with subsequent
progress or change
□ Applicable √ Not Applicable
3. Matters that haven’t been disclosed in temporary announcements
□ Applicable √ Not Applicable
(V) Financial business between the Company and the finance company with which
it has a related relationship, or it is the company’s controlling finance company
and related parties
√ Applicable □ Not Applicable
1. Deposit business
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the current period
Total amount Total amount
Balance as at the deposited during withdrawn during
Maximum daily Range of deposit beginning of the the current the current Balance as at the
Related party Relationship deposit limit interest period period period end of the period
Haier Finance Co., Subsidiary of Haier 34 billion 0.00012% to 5.32% 31,433,124,152.44 570,895,505,808.96 568,674,387,426.90 33,654,242,534.50
Ltd. Group
Total / / / 31,433,124,152.44 570,895,505,808.96 568,674,387,426.90 33,654,242,534.50
124 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
2. Lending business
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the current period
Total
Total loan repayment
Balance as at amount for amount for Balance as at
Range of loan the beginning the current the current the end of the
Related party Relationship Loan limit interest of the period period period period
Haier Finance Subsidiary of 10 billion 0–4.5% 60,000,000.00 60,000,000.00
Co., Ltd. Haier Group
Total / / / 60,000,000.00 60,000,000.00
3. Credit business or other finance businesses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Actual amount
Related party Relationship Type of business Total amount of occurrence
Haier Finance Co., Subsidiary of Haier Foreign exchange 5.5 billion 3,054,405,905.60
Ltd. Group derivatives
products
Haier Finance Co., Subsidiary of Haier Service charge 80 million 23,618,778.66
Ltd. Group
4. Other explanations
□ Applicable √ Not Applicable
(VI) Others
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 125
Section VI Significant Events
XIII. SIGNIFICANT CONTRACTS AND THEIR EXECUTION
(I) Trusteeship, contracting and leasing
1. Trusteeship
□ Applicable √ Not Applicable
During the reporting period, the Company had no material escrow matters. Up to now, the
following entrusted assets that have been approved by the Company’s shareholders’
meeting are still in effect:
According to Haier Group’s commitment in 2011 on further supporting the development of
Qingdao Haier and resolving peer competition to reduce connected transactions, based on
the fact that Qingdao Haier Optoelectronics Co., Ltd. (青 島 海 爾 光 電 有 限 公 司) and its
subsidiaries, the main body of Haier Group engaging in the color television business, are
still in a period of transformation and integration, and their financial performance has not
yet met the Company’s expectations, Haier Group is unable to complete the transfer before
the aforesaid commitment period. Haier Group intends to entrust the Company with the
operation and management of the escrow assets and pay the Company an annual escrow
fee of RMB1 million during the escrow period.
2. Contracting
□ Applicable √ Not Applicable
3. Leasing
□ Applicable √ Not Applicable
126 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
(II) Guarantee
√ Applicable □ Not Applicable
Unit and Currency: RMB10,000
External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date of
Relationship occurrence Whether
between the of the Whether the Overdue Whether related-
guarantor and guarantee Commencement Expiration guarantee Whether the amount of there is a party
the listed Secured Amount of (date of date of date of Type of Collateral (if has been guarantee is the counter- guarantee
Guarantor company party guarantee agreement) guarantee guarantee guarantee any) fulfilled overdue guarantee guarantee or not Relationship
Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period 1,384,017
Total balance of guarantees for subsidiaries at the end of the reporting period (B) 1,228,647
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total amount of guarantee (A + B) 1,228,647
Ratio of total amount of guarantees to net assets of the Company (%) 11.9
Including:
Amount of guarantees for shareholders, ultimate controllers and their related parties (C) 0
Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D) 15,923
The amount of total amount of guarantee in excess of 50% of net assets (E) 0
Total amount of the above three guarantees (C + D + E) 15,923
Explanation of possibly bearing related discharge duty for premature guarantees Nil
Explanation of guarantee status Nil
(III) Entrusted others to manage cash assets
1. Entrusted wealth management
(1) Overall of entrusted wealth management
√ Applicable □ Not Applicable
Unit and Currency: RMB
Past due
Sources of Premature uncollected
Type funds Amount balance amount
Others Self-owned funds 14,638,968 14,638,968
(Asset
management
account for
employee stock
ownership)
Wealth management Self-owned funds 8,942,000,000 1,988,000,000
in banks
Others
√ Applicable □ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 127
Section VI Significant Events
By the end of the reporting period, the balance of the Company’s entrusted wealth
management amounted to RMB2,002 million, including two parts:①Temporarily-idle
funds wealth management by certain subsidiaries of the Company: Under the premise
of ensuring sufficient capital required by the principal operating activities and daily
operations, some subsidiaries of the Company purchased some short-term principal-
guaranteed wealth management products and structured deposits from major
commercial banks to improve the yield of temporarily-idle funds and the return for
shareholders within the authority of the president’s office meeting and under the
condition of ensuring fund safety. By the end of the reporting period, the balance of
the entrusted wealth management amounted to RMB1,988 million; ②Idle funds in the
asset management account of the Employee Stock Ownership Scheme: the asset
management institution purchased cash products such as money funds according to
the liquidity of the products with some idle funds in the asset management account
of the Employee Stock Ownership Scheme of the Company. The balance of cash
assets amounted to RMB15 million.
(2) Individual entrusted wealth management
Commencement Any future Amount of
Type of Amount of date of Expiration date Whether plan for provision
entrusted entrusted entrusted of entrusted Whether Expected Actual Past due approved entrusted for
wealth wealth wealth wealth Sources there are Determination Annualized return gains or Undue uncollected by due wealth impairment
Trustee management management management management of funds Investment restrictions of return yield (if any) losses amount amount process management (if any)
Asset management account of Short-term wealth 14,638,968 14,638,968 YES YES
Industrial Bank CO., LTD. management
Qingdao Sub-branch of Linked structured 200,000,000 2023/12/15 2024/4/18 Self-owned 2.60% 200,000,000 YES YES
Bank of China deposit funds
Qingdao Sub-branch of China Linked structured 65,000,000 2023/11/27 2024/2/27 Self-owned 2.55% YES YES
Merchants Bank deposit funds
Qingdao branch of Bank of Linked structured 66,000,000 2023/10/18 2024/1/22 Self-owned 3.05% 66,000,000 YES YES
Communications deposit funds
Haier Road sub-branch of Linked structured 400,000,000 2023/10/13 2024/1/13 Self-owned 2.90% 400,000,000 YES YES
Construction Bank deposit funds
Qingdao branch of Bank of Linked structured 1,000,000,000 2023/10/18 2024/1/22 Self-owned 3.05% 1,000,000,000 YES YES
Communications deposit funds
Qingdao branch of Bank of Linked structured 257,000,000 2023/10/18 2024/1/22 Self-owned 3.05% 257,000,000 YES YES
Communications deposit funds
Others
□ Applicable √ Not Applicable
(3) Provisions for impairment of entrusted wealth management
□ Applicable √ Not Applicable
128 Haier Smart Home Co., Ltd. Annual Report 2023
Section VI Significant Events
2. Entrusted loans
(1) Overall entrusted loans
□ Applicable √ Not Applicable
Others
□ Applicable √ Not Applicable
(2) Individual entrusted loans
□ Applicable √ Not Applicable
Others
□ Applicable √ Not Applicable
(3) Provisions for impairment of entrusted loans
□ Applicable √ Not Applicable
3. Others
□ Applicable √ Not Applicable
(IV) Other Major Contracts
□ Applicable √ Not Applicable
XIV. EXPLANATION OF PROGRESS IN USE OF PROCEEDS
□ Applicable √ Not Applicable
XV. EXPLANATION OF OTHER SIGNIFICANT MATTERS THAT HAVE A
SIGNIFICANT IMPACT ON THE VALUE JUDGMENTS AND INVESTMENT
DECISIONS OF INVESTORS
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 129
Section VII Changes in Shares and
Information about Shareholders
I. CHANGES IN SHARE CAPITAL
(I) Table of Changes in shares
1. Table of Changes in shares
Unit: share
Prior to the change Increase and decrease of the change ( ,-) After the change
Shares
Percentage New shares Bonus converted Percentage
Number (%) issued shares from reserve Others Subtotal Number (%)
I. Shares with selling
restrictions
1. Shares held by
the state
2. Shares held by
the state-owned
legal entities
3. Shares held by
other domestic
investors
Including:
shares held
by Domestic
non-state-
owned legal
entities
Shares held by
domestic
individuals
4. Shares held by
foreign investors
Including:
shares held
by foreign
legal entities
Shares held by
foreign
individuals
II. Tradable shares
without selling
restrictions 9,446,598,493 100.00 –8,483,600 –8,483,600 9,438,114,893
1. RMB ordinary
shares 6,308,552,654 66.78 6,308,552,654
2. Domestic listed
foreign shares
3. Overseas listed
foreign shares 3,138,045,839 33.22 –8,483,600 –8,483,600 3,129,562,239
4. Others
III. Total shares 9,446,598,493 100.00 –8,483,600 –8,483,600 9,438,114,893
130 Haier Smart Home Co., Ltd. Annual Report 2023
Section VII Changes in Shares and Information about Shareholders
2. Statement on the changes in shares
√ Applicable □ Not Applicable
Cancellation of H share repurchase: On 28 June 2022, the 2021 Annual General
Meeting, the First Class Meeting of 2022 for A shares, the First Class Meeting of 2022 for
D shares and the First Class Meeting of 2022 for H shares of the Company considered and
approved the Resolution on Proposing the General Meeting to Grant the General Mandate
to the Board of Directors to Repurchase not more than 10% of the Total Number of H
shares of the Company in Issue of Haier Smart Home Co., Ltd., in which the Company
intends to repurchase H shares and cancel them within the agreed period. During the
reporting period, the Company repurchased a total of 8,483,600 H shares, which have
been cancelled. As such, during the reporting period, the share capital of the Company
was changed from 9,446,598,493 shares at the beginning of the reporting period to
9,438,114,893 shares.
3. Effect of changes in shares on the financial indicators such as earnings per share
and net assets per share (if any) over the last year and the last reporting period
√ Applicable □ Not Applicable
In 2023, the Company achieved net profit attributable to shareholders of the Parent
Company of RMB16,596,615,045.87, equity attributable to owners of the Parent Company
of RMB103,514,153,535.04 at the end of the reporting period, in terms of total share
capital of 9,446,598,493 shares at the beginning of the period, profit per share was
RMB1.757 and net asset was RMB10.958 per share accordingly; in terms of total share
capital of 9,438,114,893 shares at the end of the period, profit per share was RMB1.758
and net asset was RMB10.968 per share accordingly.
4. Other disclosure deemed necessary by the Company or required by securities
regulatory authorities
□ Applicable √ Not Applicable
(II) Changes in shares with selling restriction
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 131
Section VII Changes in Shares and Information about Shareholders
II. ISSUANCE AND LISTING OF SECURITIES
(I) Issuance of securities as of the reporting period
□ Applicable √ Not Applicable
Details of issuance of securities as of the reporting period (please specify separately for bonds
with different interest rates within the duration):
□Applicable √ Not Applicable
(II) Changes in total shares and shareholder structure as well as assets and liabilities
structure of the Company
√ Applicable □ Not Applicable
For the total number of ordinary shares of the Company and changes in shareholder structure,
please refer to the relevant explanations in ‘I. Changes in share capital’ and ‘III. Information on
shareholder and ultimate controllers’ in this section. For the impact of the aforesaid changes on
‘Paid-in capital (or share capital)’ in the Company’s balance sheet and other items, please refer
to the relevant content in ‘Section X Financial Report’ of this report.
(III) Information on existing shares specifically issued for staff
□ Applicable √ Not Applicable
III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS
(I) Total number of shareholders
Total number of ordinary shareholders up to the end of the reporting period 158,300
Total number of ordinary shareholders as at the end of the last month prior to 130,921
the disclosure day of the annual report
132 Haier Smart Home Co., Ltd. Annual Report 2023
Section VII Changes in Shares and Information about Shareholders
(II) Table of top ten shareholders, top ten common shareholders (or the shareholders
not subject to selling restrictions) by the end of the reporting period
Unit: share
Shareholdings of top ten shareholders (excluding the lending of shares under
refinancing)
Increase/
decrease Number of Number of
during the shares held shares held
Name of shareholder reporting at the end of Percentage with selling Status of shares pledged, Nature of
(full name) period the period (%) restrictions marked or frozen shareholder
Status Number
HKSCC NOMINEES LIMITED –9,009,310 2,230,825,242 23.64 Unknown Unknown
(Note)
Haier COSMO Co., Ltd. 1,258,684,824 13.34 None Domestic non-state-
(海爾卡奧斯股份有限公司) owned legal entity
Haier Group Corporation 1,072,610,764 11.36 None Domestic non-state-
owned legal entity
Hong Kong Securities Clearing –112,719,932 593,802,929 6.29 None Unknown
Co., Ltd.
HCH (HK) INVESTMENT 538,560,000 5.71 None Foreign legal entity
MANAGEMENT CO.,
LIMITED
China Securities Finance 182,592,654 1.93 None Unknown
Corporation Limited
Qingdao Haier Venture & 172,252,560 1.83 None Domestic non-state-
Investment Information Co., owned legal entity
Ltd. (青島海爾創業投資咨詢
有限公司)
Qingdao Haichuangzhi 13,168,642 133,791,058 1.42 None Domestic non-state-
Management Consulting owned legal entity
Enterprise (Limited
Partnership) (青島海創智管
理咨詢企業（有限合伙）
ALIBABA INVESTMENT LIMITED 83,823,993 0.89 None Foreign legal entity
National Social Security Fund 45,931,264 64,298,139 0.68 None Unknown
Portfolio 113
Haier Smart Home Co., Ltd. Annual Report 2023 133
Section VII Changes in Shares and Information about Shareholders
Shareholdings of top ten shareholders not subject to selling restrictions
Number of
tradable shares
without selling
Name of shareholder restrictions Class and number of shares
Class Number
HKSCC NOMINEES 2,230,825,242 Overseas listed foreign 2,230,825,242
LIMITED shares
Haier COSMO Co., Ltd. 1,258,684,824 RMB ordinary 1,258,684,824
(海爾卡奧斯股份有限
公 司)
Haier Group 1,072,610,764 RMB ordinary 1,072,610,764
Corporation
Hong Kong Securities 593,802,929 RMB ordinary 593,802,929
Clearing Co., Ltd.
HCH (HK) INVESTMENT 538,560,000 Overseas listed foreign 538,560,000
MANAGEMENT CO., shares
LIMITED
China Securities Finance 182,592,654 RMB ordinary 182,592,654
Corporation Limited
Qingdao Haier Venture & 172,252,560 RMB ordinary 172,252,560
Investment
Information Co., Ltd.
(青島海爾創業投資咨
詢 有 限 公 司)
Qingdao Haichuangzhi 133,791,058 RMB ordinary 133,791,058
Management
Consulting Enterprise
(Limited Partnership)
(青島海創智管理咨詢
企 業（有 限 合 伙）
ALIBABA INVESTMENT 83,823,993 Overseas listed foreign 83,823,993
LIMITED shares
National Social Security 64,298,139 RMB ordinary 64,298,139
Fund Portfolio 113
Explanation on The Company’s repurchase account held a total of 125,155,995
repurchase account of shares.
top ten shareholders
134 Haier Smart Home Co., Ltd. Annual Report 2023
Section VII Changes in Shares and Information about Shareholders
Number of
tradable shares
without selling
Name of shareholder restrictions Class and number of shares
Class Number
Explanation on Nil
delegated voting
rights, entrusted
voting rights,
abstained voting
rights of the aforesaid
shareholders
Related parties or (1) Haier COSMO Co., Ltd. (海爾卡奧斯股份有限公司) is a holding
parties acting in subsidiary of Haier Group Corporation. Haier Group
concert among the Corporation holds 51.20% of its equity. Each of Qingdao
aforesaid Haier Venture & Investment Information Co., Ltd. (青島海爾創
shareholders 業 投 資 咨 詢 有 限 公 司), HCH (HK) INVESTMENT
MANAGEMENT CO., LIMITED and Qingdao Haichuangzhi
Management Consulting Enterprise (Limited Partnership) (青島
海創智管理咨詢企業（有限合伙） is a party acting in concert
with Haier Group Corporation;
(2) The Company is not aware of the existence of any connections
of other shareholders.
Explanation of Not Applicable
preferential
shareholders with
restoration of voting
rights and their
shareholdings
Note: HKSCC NOMINEES LIMITED is the Banking Collection Account for the shareholders of the Company’s H-shares, which
is the original data provided by China Hong Kong securities registration agency to the Company after the merger
according to local market practices and technical settings, not representing the ultimate shareholder.
Top ten shareholders participating in the lending of shares under the refinancing business
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 135
Section VII Changes in Shares and Information about Shareholders
Changes in the top ten shareholders compared with the previous period
√ Applicable □ Not Applicable
Unit: share
Changes in the top ten shareholders compared with the end of the previous period
Shareholdings held through ordinary
account and credit account at the
Addition/exit Number of shares lent under end of the period and number of
Name of shareholder during the refinancing at the end of the period shares lent under refinancing that
(full name) reporting period that have not been returned have not been returned
Total number Percentage (%) Total number Percentage (%)
China Merchant Bank Co., Ltd. Exit 48,380,584 0.51
— Yifangda Consumer
Industry Equity Securities
Investment Fund
National Social Security Fund Addition 64,298,139 0.68
Portfolio 113
Number of shares held by the top ten shareholders with selling restrictions and selling
restrictions
□ Applicable √ Not Applicable
(III) Strategic investors or general legal persons who became the top ten
shareholders due to placing of new shares
□ Applicable √ Not Applicable
136 Haier Smart Home Co., Ltd. Annual Report 2023
Section VII Changes in Shares and Information about Shareholders
IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER
(I) Status of controlling shareholder
1 Legal person
√ Applicable □ Not Applicable
Name Haier COSMO Co., Ltd. (海 爾 卡 奧 斯 股 份 有 限 公 司)
Person in charge of Zhou Yunjie (周 雲 杰)
the Company or
legal representative
Establishment date 1988–06–30
Principal business Information technology integration and Internet of Things
technology services: industrial automation technology research
and development, technical consulting; research and
development and manufacturing of electrical appliances,
electronic products, mechanical products, communication
equipment and related accessories, industrial automation
control equipment, computer hardware and software and
auxiliary equipment; import and export business (operated
within the scope approved by MOFCOM); wholesale and
retail: domestic commerce (except for merchandises
prohibited by the state); investment in medical industry;
investment advisory services; enterprise management
consulting. (For projects subject to approval, business
activities can only be carried out after the approval by
relevant departments)
Shareholding of other Indirect controlling/participating Company: ‘Qingdao Haier
controlling and Biomedical Co., Ltd.’ (青島海爾生物醫療股份有限公司) (stock
participating name: ‘Haier Biomedical’, stock code: 688139), Yingkang Life
domestic and Technology Co., Ltd. (盈 康 生 命 科 技 股 份 有 限 公 司)(stock
overseas listed name: ‘Yingkang Life’, stock code: 300143), ‘Qingdao Bank
companies in the Co., Ltd.’ (青 島 銀 行 股 份 有 限 公 司) (stock name: ‘Bank of
reporting period Qingdao’, stock code: 002948 and 3866.HK), ‘China
International Capital Corporation Limited’ (stock name: ‘CICC’,
stock code: 601995 and 3908.HK) etc.
Other explanation Nil
2 Natural person
□ Applicable √ Not Applicable
3 Explanation on the absence of controlling shareholders of the Company
□ Applicable √ Not Applicable
4 Explanation on the change in controlling shareholders during the reporting period
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 137
Section VII Changes in Shares and Information about Shareholders
5 Framework of the ownership and controlling relationship between the Company and
its controlling shareholder
√ Applicable □ Not Applicable
Haier COSMO Co., Ltd.
( )
13.34%
Haier Smart Home Co., Ltd.
(II) Status of the ultimate controller
1 Legal person
√ Applicable □ Not Applicable
Name Haier Group Corporation
Person in charge of Zhou Yunjie (周 雲 杰)
the Company or
legal representative
Establishment date 1980–03–24
Principal business Technology development, technology consultation, technology
transfer and technology services (including industrial Internet,
etc.); data processing; digital technology, intelligent
technology, software technology; research and development,
sales and after-sales service of robots and automation
equipment products; logistics information service; research
and development and sales of software technology for smart
home products and solutions systems; manufacturing of
household appliances, electronic products, communication
equipment, electronic computers and accessories, general
machinery, kitchen utensils, industrial robots; wholesale and
retail of domestic commerce (except for the national
dangerous prohibition franchise exclusive control
merchandises); import and export business (see the foreign
trade enterprise finalized certification for details); economic
and technological consultation; research and development
and transfer of technological achievements; rental of owned
properties. (For projects subject to approval, business
activities can only be carried out after the approval by
relevant departments)
138 Haier Smart Home Co., Ltd. Annual Report 2023
Section VII Changes in Shares and Information about Shareholders
Name Haier Group Corporation
Shareholding of other Indirect controlling/participating Company: ‘Qingdao Haier
controlling and Biomedical Co., Ltd.’ (青島海爾生物醫療股份有限公司) (stock
participating name: ‘Haier Biomedical’, stock code: 688139), Yingkang Life
domestic and Technology Co., Ltd. (盈 康 生 命 科 技 股 份 有 限 公 司) (stock
overseas listed name: ‘Yingkang Life’, stock code: 300143), ‘Qingdao Bank
companies in the Co., Ltd.’ (青 島 銀 行 股 份 有 限 公 司) (stock name: ‘Bank of
reporting period Qingdao’, stock code: 002948 and 3866.HK), China
International Capital Corporation Limited’ (stock name: ‘CICC’,
stock code: 601995 and 3908.HK), ‘Qingdao Thunderobot
Technology. Co., Ltd.’ (stock name: ‘THUNDEROBOT’, stock
code: 872190) etc.
Other explanation Nil
2 Natural person
□ Applicable √ Not Applicable
3 Explanation on the absence of ultimate controller of the Company
□ Applicable √ Not Applicable
4 Explanation on the change in control over the Company during the reporting period
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 139
Section VII Changes in Shares and Information about Shareholders
5 Framework of ownership and controlling relationship between the Company and the
ultimate controllers
√ Applicable □ Not Applicable
Haier Group Corporation
100% parties 13% 100%
in concert 51.20%
Qingdao Haichuangzhi
Qingdao Haier Venture &
Management Consulting Haier COSMO HCH (HK)
Investment Information
Enterprise Co., Ltd.
67% INVESTMENT
Haier
Co., Ltd. International
(Limited Partnership) ( MANAGEMENT
( Co. Limited
( ) CO., LIMITED
)
)
1.83% 1.42% 11.36% 13.34% 5.71% 0.62%
(A Shares) (A Shares) (A Shares) (A Shares) (H Shares) (D Shares)
Haier Smart Home Co., Ltd.
6 The ultimate controller controls the Company by way of Trust or other assets
management
□ Applicable √ Not Applicable
(III) Introduction of controlling shareholders and ultimate controllers
√ Applicable □ Not Applicable
Haier Group Company is registered as a joint-stock enterprise. According to the statement
issued by the State-owned Assets Management Office of Qingdao on 1 June 2002, it is believed
that the enterprise nature of Haier Group Company is a collective owned enterprise.
140 Haier Smart Home Co., Ltd. Annual Report 2023
Section VII Changes in Shares and Information about Shareholders
V. THE PROPORTION OF THE ACCUMULATED NUMBER OF SHARES
PLEDGED BY THE CONTROLLING SHAREHOLDERS OR THE LARGEST
SHAREHOLDER OF THE COMPANY, TOGETHER WITH THE PARTIES
ACTING IN CONCERT WITH THEM, TO THE NUMBER OF SHARES OF
THE COMPANY HELD BY THEM AMOUNTS TO MORE THAN 80%
□ Applicable √ Not Applicable
VI. OTHER CORPORATE SHAREHOLDERS WITH A SHAREHOLDING
PERCENTAGE OVER 10%
□ Applicable √ Not Applicable
VII. EXPLANATION OF RESTRICTIONS ON SHAREHOLDING REDUCTION
□ Applicable √ Not Applicable
VIII. SPECIFIC IMPLEMENTATION OF SHARE REPURCHASE DURING THE
REPORTING PERIOD
√ Applicable □ Not Applicable
Unit and Currency: RMB
Name of share repurchase plan Haier Smart Home Co., Ltd.’s public share
proposal in relation to the partial repurchase
of A Shares
Date of disclosure of the share repurchase plan 31 March 2022
Number of shares proposed to be repurchased 42.86 million shares to 85.71 million shares,
and its percentage to the total share capital 0.45 to 0.91
(%)
Proposed amount of repurchase RMB1.5–3 billion
Proposed period of repurchase 31 March 2022–30 March 2023
Purpose of repurchase Used for employee stock ownership plans
Amount repurchased (share) 712,900
Repurchased amount as a percentage to the Not Applicable
underlying shares covered by the equity
incentive scheme (%) (if any)
Progress of the Company’s reduction of its Not Applicable
holdings of repurchased shares by way of
centralised bidding
Note: The above-mentioned “amount repurchased” only refers to the number of repurchases implemented during the period in 2023.
As at 31 January 2023, the implementation of the repurchase plan during the period was completed. During the entire
repurchase period, a total of 59,768,139 shares were repurchased during the period, and the amount of repurchase paid
was RMB1.510 billion.
Haier Smart Home Co., Ltd. Annual Report 2023 141
Section VII Changes in Shares and Information about Shareholders
Name of share repurchase plan Haier Smart Home Co., Ltd.’s public share
proposal in relation to the partial repurchase
of A Shares
Date of disclosure of the share repurchase plan 28 April 2023
Number of shares proposed to be repurchased 46.88 million shares to 93.75 million shares,
and its percentage to the total share capital 0.50 to 0.99
(%)
Proposed amount of repurchase RMB1.5 –3 billion
Proposed period of repurchase 28 April 2023–27 April 2024
Purpose of repurchase Used for employee stock ownership plans
Amount repurchased (share) 63,267,352
Repurchased amount as a percentage to the Not Applicable
underlying shares covered by the equity
incentive scheme (%) (if any)
Progress of the Company’s reduction of its Not Applicable
holdings of repurchased shares by way of
centralised bidding
Note: During the reporting period, the Company also implemented the H-share repurchase scheme. For details, please refer to “2.
Statement on the changes in shares” under “Section VII Changes in Shares and Information about Shareholders” of this
report and the Announcement on the Changes in Shares of Overseas Listed Foreign Shares (H Shares) of Haier Smart Home
Co., Ltd. 《海 爾 智 家 股 份 有 限 公 司 關 於 境 外 上 市 外 資 股 (H股) 股 份 變 動 情 況 的 公 告》 (No.: Lin 2023–029) disclosed by the
Company on 1 July 2023.
142 Haier Smart Home Co., Ltd. Annual Report 2023
Section VIII Relevant Information of
Preference Shares
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2023 143
Section IX Relevant Information of Bonds
I. ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIAL
CORPORATE DEBT FINANCING INSTRUMENTS
□ Applicable √ Not Applicable
II. CONVERTIBLE CORPORATE BOND
□ Applicable √ Not Applicable
144 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
I. AUDIT REPORT
√ Applicable □ Not Applicable
Audit Report
He Xin Shen Zi. (2024) No.000186
To all shareholders of Haier Smart Home Co., Ltd.:
I. AUDIT OPINION
We have audited the financial statements of Haier Smart Home Co., Ltd. (hereinafter referred to as the
‘Haier Smart Home Co.’), which comprise the Consolidated and the Company’s Balance Sheet as at
31 December 2023, the Consolidated and the Company’s Income Statement, the Consolidated and the
Company’s Cash Flow Statement, the Consolidated and the Company’s Statement of Changes in
Shareholders’ Equity for the year 2023, and notes related to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the
Consolidated and the Company’s financial position of the Haier Smart Home Co as at 31 December 2023,
and the Consolidated and the Company’s financial performance and cash flow for the year 2023 in
accordance with the requirements of Accounting Standards for Business Enterprises.
II. BASIS OF OUR AUDIT OPINION
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those
standards are further described in Auditor’s responsibilities for the Audit of Financial Statements section of
the report. We are independent of Haier Smart Home Co in accordance with the CICPA’s Code of Ethics for
Professional Accountants (the Code), and we have fulfilled our other ethical responsibilities in accordance
with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Haier Smart Home Co., Ltd. Annual Report 2023 145
Section X Financial Report
III. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. We identify the following matters as the key audit matters that need to
be communicated in the audit report:
Key Audit Matters Audit Response
(I) Provision for impairment of goodwill and intangible assets with indefinite useful lives
Relevant disclosures are included in Note V. 30 We mainly implemented the following audit
Other significant accounting policies and accounting procedures on the provisions for the impairment of
estimates and Note V.20 Impairment of long-term goodwill and intangible assets with indefinite useful
assets to the financial statements. life:
As of 31 December 2023, the book value of (1) Compared the actual operating results of the
goodwill was RMB24.290 billion, and the book related assets group with previous year’s
value of intangible assets with indefinite useful lives forecasted figures, to assess the reliability of
was RMB2.688 billion, without any provision for the management forecast on cash flow;
asset impairment. Whether the provision for
impairment of long-term assets was sufficient had (2) Compared the input of cash flow forecast with
great influence to the financial statements. historical data, approved budget and business
plan;
Significant management judgments are involved in
calculation of asset group’s recoverable amount, (3) Tested the calculation accuracy of the
such as revenue growth rate, gross margin, discounted cash flow model;
discount rate, etc.
(4) Assessed the appropriateness of parameters
Provision for impairment of goodwill and intangible in the cash flow conversion model, such as
assets with indefinite useful lives is considered as the discount rate and the perpetual growth
the key audit matter due to the significant amount rate. The assessment is based our
and management judgement involved in calculation. understanding of the Company’s businesses
and the industry.
146 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Key Audit Matters Audit Response
(II) Provision for impairment of inventory
Relevant disclosures are included in Note VII.8 We mainly implemented the following audit
Inventory to the financial statements. procedures on the provision for impairment of
inventories:
The Company’s inventories are measured at the
lower of cost and net realizable value. As of (1) Obtained the calculation table for provision for
31 December 2023, the inventory balance was impairment of inventory of the Company, and
RMB41.005 billion, and the provision for impairment reviewed the conditions and aging of the
of inventory was RMB1.481 billion and the book products models stated in the table to see
value was RMB39.524 billion. Whether the provision whether they are consistent with the
for the impairment of inventories was sufficient and information obtained through physical
accurate had great influence to the financial inventory on a sample basis;
statements.
(2) Compared the major parameters estimated by
The Company determines the net realizable value of management with historical data, and
inventory based on the estimated selling price assessed the appropriateness;
minus the estimated selling expenses and related
taxes. (3) Assessed the selling price estimated by the
management, and checked the inventory
Management estimates the selling price based on against the actual selling price after the
the status of inventory. The estimation process balance sheet date on a sample basis;
involves significant management judgments such as
inventory status, repair rate, discount rate, etc. (4) Assessed selling expenses and related tax
estimated by management and compared with
Provision for inventories is considered as the key actual amounts incurred.
audit matter due to the significant amount and
management judgement involved in calculation.
Haier Smart Home Co., Ltd. Annual Report 2023 147
Section X Financial Report
Key Audit Matters Audit Response
(III) Product warranty
Relevant disclosures are included in Note VII. 31 We mainly implemented the following audit
Non-current liabilities due within one year and Note procedures on the estimated liabilities:
VII. 37 Estimated liabilities to the financial
statements. (1) Obtained the calculation table on provisions of
the management;
Estimated liabilities of the Company are mainly
accrued due to current obligations arising from (2) Compared the main parameters estimated by
product warranty. As of 31 December 2023, the management with historical data;
balance of the estimated liabilities and non-current
liabilities due within one year related to product (3) Tested the accuracy of the calculation on
warranty was RMB3.809 billion, and whether the estimated liabilities;
provision for warranty was sufficient and accurate
had great influence to the financial statements. (4) Compared and analyzed the calculation results
of the estimated liabilities and the Company’s
Estimated liabilities for product warranty of the actual operation;
Company were measured in accordance with the
best estimate of the cost to fulfill the relevant
current obligations.
Calculation of the product warranty involves
management’s significant judgments based on
historical experience, such as: replacement rate,
repair rate, and loss due to disassemble product.
Estimated liabilities are considered as the key audit
matters due to the significant amount and
management judgement involved in calculation.
148 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
IV. OTHER INFORMATION
The management of Haier Smart Home Co (hereinafter referred to as the “Management”) is responsible for
other information. Other information includes the information covered in the 2023 annual report of Haier
Smart Home Co, but does not include the financial statements and our audit reports.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
V. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED
WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
The Management is responsible for the preparation of the financial statements that give a true and fair view
in accordance with the requirements as set out in the Accounting Standards for Business Enterprises, and
for such internal control as necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management are responsible for assessing the ability of Haier
Smart Home Co to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the management either intends to liquidate Haier
Smart Home Co or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial reporting process of Haier Smart
Home Co.
VI. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an audit report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Haier Smart Home Co., Ltd. Annual Report 2023 149
Section X Financial Report
As part of an audit in accordance with auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also perform the following tasks:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsible to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances.
(III) Evaluate the appropriateness of accounting policies used by the Management and the reasonableness
of accounting estimates and related disclosures made by the Management.
(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cause significant doubt on the ability of Haier Smart Home Co to continue as a
going concern. If we conclude that a material uncertainty exists, we are required by the auditing
standards to draw attention in our audit report to the related disclosures in the financial statements or;
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our audit report. However, future events or conditions may cause
Haier Smart Home Co to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or
business activities within Haier Smart Home Co to express an opinion on the financial statements. We
are responsible for the direction, supervision and performance of the group audit, and remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
150 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
From the matters communicated with those charged with governance, we determine those matters that are
of most significance in the audit of the financial statements of the current period and therefore constitute the
key audit matters. We describe these matters in our audit report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our audit report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Hexin Certified Public Accountants LLP
Certified Public Accountant: Zhaobo (Engagement Partner)
Certified Public Accountant: Li Xiang Zhi
Jinan, China
27 March 2024
Haier Smart Home Co., Ltd. Annual Report 2023 151
Section X Financial Report
II. FINANCIAL STATEMENTS
Consolidated Balance Sheet
31 December 2023
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
31 December 31 December
Items Notes 2023 2022
Current assets:
Monetary funds VII.1 54,486,452,841.14 54,162,212,155.31
Provision of settlement fund
Funds lent
Financial assets held for trading VII.2 953,963,543.83 519,912,880.91
Derivative financial assets VII.3 67,565,829.44 183,185,160.51
Bills receivable VII.4 8,621,434,831.39 9,624,191,838.15
Accounts receivable VII.5 20,268,099,436.43 15,886,748,811.81
Financing receivables
Prepayments VII.6 1,238,294,930.51 1,110,507,870.61
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables VII.7 2,649,558,985.05 2,401,113,902.55
Including: Interest receivables 748,496,020.24 513,320,376.79
Dividends receivables
Financial assets purchased under resale
agreements
Inventories VII.8 39,524,006,616.33 41,587,786,307.53
Contract assets VII.9 260,939,408.73 309,930,359.25
Assets held for sale
Non-current assets due in one year
Other current assets VII.10 4,550,167,668.68 4,693,309,967.86
Total current assets 132,620,484,091.53 130,478,899,254.49
152 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
31 December 31 December
Items Notes 2023 2022
Non-current assets:
Loans and advances granted
Debt investments VII.11 8,841,233,078.66 1,034,222,222.22
Other debt investments
Long-term receivables 350,409,496.85 305,070,001.45
Long-term equity investments VII.12 25,546,793,450.20 24,527,800,290.84
Investments in other equity instruments VII.13 6,403,694,954.77 5,851,882,930.20
Other non-current financial assets
Investment properties VII.14 98,631,080.77 103,041,751.52
Fixed assets VII.15 29,603,936,822.78 27,158,348,424.28
Construction in progress VII.16 5,403,469,596.76 4,094,712,417.61
Biological assets for production
Oil and gas assets
Right-of-use assets VII.17 4,367,081,679.74 3,795,225,353.89
Intangible assets VII.18 11,006,230,700.93 10,505,881,377.21
Development cost 266,490,235.10 154,480,515.67
Goodwill VII.19 24,289,726,694.80 23,643,595,643.87
Long-term prepaid expenses VII.20 741,745,517.64 759,883,174.20
Deferred income tax assets VII.21 1,805,945,632.16 1,724,040,928.42
Other non-current assets VII.22 2,033,986,945.28 1,880,736,891.63
Total non-current assets 120,759,375,886.44 105,538,921,923.01
Total assets 253,379,859,977.97 236,017,821,177.50
Haier Smart Home Co., Ltd. Annual Report 2023 153
Section X Financial Report
31 December 31 December
Items Notes 2023 2022
Current liabilities:
Short-term borrowings VII.23 10,318,351,841.88 9,672,223,522.36
Borrowings from central bank
Funds borrowed
Financial liabilities held for trading
Derivative financial liabilities VII.24 168,625,004.97 104,594,040.66
Bills payable VII.25 22,215,726,721.62 25,098,557,730.06
Accounts payables VII.26 47,061,789,173.62 41,885,313,890.79
Receipts in advance
Contract liabilities VII.27 7,731,916,491.54 9,353,173,914.03
Disposal of repurchased financial assets
Absorbing deposit and deposit in inter-
bank market
Customer deposits for trading in securities
Amounts due to issuer for securities
underwriting
Payables for staff remuneration VII.28 5,077,517,828.50 4,050,464,754.37
Taxes payable VII.29 2,841,215,524.73 2,876,496,090.84
Other payables VII.30 19,181,569,184.83 17,585,198,629.13
Including: Interest payables
Dividends payables 1,880,719.69 1,246,573.35
Fees and commissions payable
Reinsurance Accounts payables
Liabilities held for sale
Non-current liabilities due within one year VII.31 3,732,550,549.23 6,294,750,667.08
Other current liabilities VII.32 1,651,239,151.52 1,850,426,442.49
Total current liabilities 119,980,501,472.44 118,771,199,681.81
154 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
31 December 31 December
Items Notes 2023 2022
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowings VII.33 17,936,302,925.77 13,590,866,873.43
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities VII.34 3,286,801,426.17 2,824,477,670.61
Long-term payables VII.35 57,113,422.78 44,240,087.94
Long-term payables for staff remuneration VII.36 1,085,454,839.18 1,010,547,202.34
Estimated liabilities VII.37 1,935,014,042.24 1,611,029,220.17
Deferred income VII.38 1,050,319,606.44 948,935,134.05
Deferred income tax liabilities VII.21 2,028,390,554.20 2,358,860,559.19
Other non-current liabilities 108,218,339.24 107,332,101.07
Total non-current liabilities 27,487,615,156.02 22,496,288,848.80
Total liabilities 147,468,116,628.46 141,267,488,530.61
Owners’ equity (or shareholders’
equity):
Paid-in capital (or share capital) VII.39 9,438,114,893.00 9,446,598,493.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve VII.40 23,762,354,684.05 23,882,037,324.76
Less: treasury stock VII.41 5,034,065,107.42 3,857,807,196.38
Other comprehensive income VII.42 1,969,724,027.01 1,990,683,498.45
Special reserve
Surplus reserve VII.43 4,842,338,543.80 4,014,190,623.24
General risk provisions
Undistributed profits VII.44 68,535,686,494.60 57,983,734,859.37
Total equity attributable to owners (or
shareholders) of the Parent Company 103,514,153,535.04 93,459,437,602.44
Minority interests 2,397,589,814.47 1,290,895,044.45
Total owners’ equity (or shareholders’
equity) 105,911,743,349.51 94,750,332,646.89
Total liabilities and owners’ equity
(or shareholders’ equity) 253,379,859,977.97 236,017,821,177.50
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2023 155
Section X Financial Report
Balance Sheet of the Parent Company
31 December 2023
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
31 December 31 December
Items Notes 2023 2022
Current Assets:
Monetary funds 7,579,640,524.79 5,747,356,591.19
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable XIX.1 1,625,777,099.03 913,643,071.06
Financing receivables
Prepayments 3,212,938.83 3,116,793.21
Other receivables XIX.2 23,649,977,816.57 14,387,031,657.57
Including: Interest receivables 117,439,655.79 29,783,516.95
Dividends receivables 570,000,000.00 1,015,840,000.00
Inventories 5,400,498.27 9,245,507.97
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 1,530,274,566.66 1,642,423,149.85
Total current assets 34,394,283,444.15 22,702,816,770.85
Non-current assets:
Debt investments 2,884,204,032.25 1,034,222,222.22
Other debt investments
Long-term receivables
Long-term equity investments XIX.3 55,828,696,006.06 52,744,139,527.87
Investments in other equity instruments 1,619,260,874.04 1,618,513,056.48
Other non-current financial assets
Investment properties
Fixed assets 154,588,551.47 167,043,774.16
Construction in progress 6,054.40 2,667,680.62
Biological assets for production
Oil and gas assets
Right-of-use assets 357,996.03
Intangible assets 41,307,540.86 48,239,513.12
Development cost
Goodwill
Long-term prepaid expenses 3,777,722.63 3,910,065.39
Deferred income tax assets
Other non-current assets 1,501,734,455.48 1,302,773,743.02
Total non-current assets 62,033,575,237.19 56,921,867,578.91
Total assets 96,427,858,681.34 79,624,684,349.76
156 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
31 December 31 December
Items Notes 2023 2022
Current liabilities:
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payables 1,120,671,258.40 521,733,555.60
Receipts in advance
Contract liabilities 22,930,469.11 13,084,442.85
Payables for staff remuneration 28,602,784.57 9,696,654.18
Taxes payable 5,590,668.41 7,479,878.13
Other payables 45,012,683,942.96 32,659,845,830.05
Including: Interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one year 134,000,000.00
Other current liabilities 12,486,915.31 5,876,886.89
Total current liabilities 46,336,966,038.76 33,217,717,247.70
Non-current liabilities:
Long-term borrowings 3,779,500,000.00 2,195,000,000.00
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payables for staff remuneration
Estimated liabilities
Deferred income 12,973,300.00 12,355,000.00
Deferred income tax liabilities 420,053,312.58 420,805,600.57
Other non-current liabilities
Total non-current liabilities 4,212,526,612.58 2,628,160,600.57
Total liabilities 50,549,492,651.34 35,845,877,848.27
Haier Smart Home Co., Ltd. Annual Report 2023 157
Section X Financial Report
31 December 31 December
Items Notes 2023 2022
Owners’ equity (or Shareholders’
equity):
Paid-in capital (or share capital) 9,438,114,893.00 9,446,598,493.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 27,263,651,777.44 27,300,899,019.76
Less: treasury stock 3,175,293,942.36 2,308,138,558.42
Other comprehensive income 630,674,691.95 602,091,349.74
Special reserve
Surplus reserve 4,237,192,318.35 3,409,044,397.79
Undistributed profits 7,484,026,291.62 5,328,311,799.62
Total owners’ equity (or shareholders’
equity) 45,878,366,030.00 43,778,806,501.49
Total liabilities and owners’ equity (or
shareholders’ equity) 96,427,858,681.34 79,624,684,349.76
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
158 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Consolidated Profit Statement
January-December 2023
Unit and Currency: RMB
Items Notes 2023 2022
I. Total operating revenue 261,427,783,050.10 243,578,924,958.47
Including: Operating revenue VII.45 261,427,783,050.10 243,578,924,958.47
Interest income
Insurance premiums earned
Fee and commission income
II. Total cost of operations 243,273,007,696.61 226,789,500,960.55
Including: Operating cost VII.45 179,053,959,580.31 167,263,342,432.05
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for
insurance contract liability
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharges VII.46 1,016,198,255.80 813,880,888.18
Selling expenses VII.47 40,978,039,605.37 38,600,298,275.47
Administrative expenses VII.48 11,489,640,885.88 10,846,346,796.51
R&D expenses VII.49 10,221,013,589.28 9,507,384,787.81
Financial expenses VII.50 514,155,779.97 –241,752,219.47
Including: Interest expenses 2,109,996,018.29 988,036,369.52
Interest income 1,486,196,698.91 855,213,183.91
Add: Other income VII.51 1,558,864,654.36 1,070,103,842.60
Investment income
(losses are
represented by ‘–’) VII.52 1,909,917,817.25 1,832,656,952.60
Including: investment income of
associates and
joint ventures 1,786,573,842.34 1,582,178,829.86
Income generated
from the
derecognition of
financial assets
measured at
amortized cost
Exchange gain
(losses are
represented by
‘–’)
Haier Smart Home Co., Ltd. Annual Report 2023 159
Section X Financial Report
Items Notes 2023 2022
Gains on net
exposure hedges
(losses are
represented by
‘–’)
Gains on changes in
fair value (losses
are represented
by ‘–’) VII.53 19,753,663.05 –122,442,933.65
Loss on credit
impairment
(losses are
represented
by ‘–’) VII.54 –242,642,129.31 –431,377,480.82
Loss on assets
impairment
(losses are
represented
by ‘–’) VII.55 –1,505,153,026.02 –1,499,859,761.26
Gain from disposal
of assets (losses
are represented
by ‘–’) VII.56 –15,342,697.67 206,742,815.79
III. Operating profit (losses are represented
by ‘–’) 19,880,173,635.15 17,845,247,433.18
Add: non-operating income VII.57 127,886,961.44 136,595,298.10
Less: non-operating expenses VII.58 295,802,566.43 190,706,969.79
IV. Total profit (total losses are represented
by ‘–’) 19,712,258,030.16 17,791,135,761.49
Less: income tax expense VII.59 2,980,188,255.41 3,057,822,871.71
V. Net profit (net losses are represented
by ‘–’) 16,732,069,774.75 14,733,312,889.78
(1) Classification by continuous operation
1. Net profit from continuous operation
(net losses are represented by ‘–’) 16,732,069,774.75 14,733,312,889.78
2. Net profit from discontinued
operation (net losses are
represented by ‘–’)
(2) Classification by ownership of the
equity
1. Net profit attributable to
shareholders of the Parent
Company (net losses are
represented by ‘–’) 16,596,615,045.87 14,712,054,763.24
2. Profit or loss attributable to minority
shareholders (net losses are
represented by ‘–’) 135,454,728.88 21,258,126.54
160 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Items Notes 2023 2022
VI. Other comprehensive income, net of tax VII.60 –35,551,610.31 3,164,841,092.31
(I) Other comprehensive income
attributable to owners of the Parent
Company, net of tax –20,959,471.44 3,167,199,045.79
1. Other comprehensive income that
cannot be reclassified into the profit
or loss 503,462,953.84 –103,425,450.86
(1) Changes arising from re-
measurement of defined benefit
plans 40,317,053.23 33,063,471.15
(2) Other comprehensive income
that cannot be transferred into
profit or loss under equity
method
(3) Changes in fair value of
investments in other equity
instruments 463,145,900.61 –136,488,922.01
(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive income to be
reclassified into the profit or loss –524,422,425.28 3,270,624,496.65
(1) Other comprehensive income
that can be transferred into
profit or loss under equity
method –104,019,712.68 99,921,599.99
(2) Changes in fair value of other
debt Investments
(3) Reclassified financial assets that
are credited to other
comprehensive income
(4) Credit impairment provision for
other debt investments
(5) Reserve for cash flow hedging –98,556,869.01 2,308,423.98
(6) Exchange differences on
translation of financial
statements denominated in
foreign currencies –321,845,843.59 3,168,394,472.68
(7) Others
(II) Other comprehensive income
attributable to minority shareholders,
net of tax –14,592,138.87 –2,357,953.48
Haier Smart Home Co., Ltd. Annual Report 2023 161
Section X Financial Report
Items Notes 2023 2022
VII. Total comprehensive income 16,696,518,164.44 17,898,153,982.09
(I) Total comprehensive income
attributable to the owners of Parent
Company 16,575,655,574.43 17,879,253,809.03
(II) Total comprehensive income
attributable to the minority
shareholders 120,862,590.01 18,900,173.06
VIII.Earnings per share:
(I) Basic earnings per share (RMB/share) XXI.1 1.79 1.58
(II) Diluted earnings per share (RMB/share) XXI.1 1.78 1.57
For business combination under common control occurring in the current period, the net profit of the
acquiree before the combination was RMB–2,581,701.76, and the net profit of the acquiree for the
previous period was RMB1,131,271.25.
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
162 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Profit Statement of the Parent Company
January-December 2023
Unit and Currency: RMB
Items Notes 2023 2022
I. Operating revenue XIX.4 720,992,484.07 424,661,926.32
Less: operating cost XIX.4 626,285,718.42 370,625,212.62
Taxes and surcharges 5,260,953.75 3,356,878.04
Selling expenses 14,931,713.80 2,255,208.68
Administration expenses 629,589,430.69 844,381,395.30
R&D expenses 20,148,355.05 19,067,424.89
Financial expenses –194,423,911.53 –137,417,983.20
Including: interest expenses 81,607,850.71 33,870,759.40
Interest income 287,121,435.40 158,040,013.89
Add: other income 10,186,535.00 32,862,065.58
Investment income (losses are
represented by ‘–’) XIX.5 8,651,024,353.84 6,431,738,015.98
Including: investment income of
associates and
joint ventures 147,523,868.11 71,408,243.76
Derecognition income on financial
assets measured at amortized
cost
Gains on net exposure hedges
(losses are represented by ‘–’)
Gains on changes in fair value
(losses are represented by ‘–’)
Loss on credit impairment (losses
are represented by ‘–’) 74,824.58 –3,315,122.80
Loss on assets impairment (losses
are represented by ‘–’)
Gain from disposal of assets
(losses are represented by ‘–’) 34,882.70 102,421,078.92
II. Operating profit (losses are represented
by ‘–’) 8,280,520,820.01 5,886,099,827.67
Add: non-operating income 99,051.41 209,515.11
Less: non-operating expenses 78,702.83 149,806.55
III. Total profit (total losses are represented
by ‘–’) 8,280,541,168.59 5,886,159,536.23
Less: income tax expenses –938,036.98 130,412,402.20
IV. Net profit (net losses are represented
by ‘–’) 8,281,479,205.57 5,755,747,134.03
(I) Net profit from continuous operations
(net losses are represented by ‘–’) 8,281,479,205.57 5,755,747,134.03
Haier Smart Home Co., Ltd. Annual Report 2023 163
Section X Financial Report
Items Notes 2023 2022
(II) Net profit from discontinued operations
(net losses are represented by ‘–’)
V. Other comprehensive income, net of tax 28,583,342.21 –19,211,595.09
(I) Other comprehensive income that
cannot be reclassified into the profit or
loss 560,863.17 2,297,267.67
1. Changes arising from re-
measurement of defined benefit
plans
2. Other comprehensive income that
cannot be transferred into profit or
loss under equity method
3. Changes in fair value of investments
in other equity instruments 560,863.17 2,297,267.67
4. Changes in fair value of credit risks
of the enterprise
(II) Other comprehensive income to be
reclassified into the profit or loss 28,022,479.04 –21,508,862.76
1. Other comprehensive income that
can be transferred into profit or loss
under equity method 28,022,479.04 –21,508,862.76
2. Changes in fair value of other debt
investments
3. Reclassified financial assets that are
credited to other comprehensive
income
4. Credit impairment provision for
other debt investments
5. Reserve for cash flow hedging
6. Exchange differences on translation
of financial statements denominated
in foreign currencies
7. Others
VI. Total comprehensive income 8,310,062,547.78 5,736,535,538.94
VII. Earnings per share:
(I) Basic earnings per share (RMB/share)
(II) Diluted earnings per share (RMB/share)
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
164 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Consolidated Cash Flow Statement
January-December 2023
Unit and Currency: RMB
Items Notes 2023 2022
I. Cash flow from operating activities:
Cash received from the sale of goods and
rendering services 275,380,453,881.77 258,307,895,412.14
Net increase in distributor and inter-bank
deposits
Net increase in borrowing from the central
bank
Net cash increase in borrowing from other
financial institutes
Cash received from premiums under original
insurance contract
Net cash received from reinsurance business
Net increase in deposits of policy holders and
investment
Cash received from interest, fee and
commissions
Net increase in cash borrowed
Net increase in cash received from
repurchase operation
Net cash received from customer deposits for
trading in securities
Refunds of taxes 1,863,779,679.64 2,047,675,601.66
Cash received from other related operating
activities VII.61 2,502,260,865.46 1,670,029,049.93
Sub-total of cash inflows from operating
activities 279,746,494,426.87 262,025,600,063.73
Cash paid on purchase of goods and
services 184,741,840,867.86 179,426,790,100.90
Net increase in loans and advances of
distributors
Net increase in deposits in the PBOC and
inter bank
Cash paid for compensation payments under
original insurance contact
Net increase in cash lent
Cash paid for interest, bank charges and
commissions
Cash paid for insurance policy dividend
Haier Smart Home Co., Ltd. Annual Report 2023 165
Section X Financial Report
Items Notes 2023 2022
Cash paid to and on behalf of employees 29,275,161,426.81 27,244,686,728.12
Cash paid for all types of taxes 14,556,605,211.44 10,825,779,042.33
Cash paid to other operation related activities VII.61 25,910,510,692.46 24,271,787,046.52
Sub-total of cash outflows from operating
activities 254,484,118,198.57 241,769,042,917.87
Net cash flow from operating activities VII.62 25,262,376,228.30 20,256,557,145.86
II. Cash flow from investing activities:
Cash received from recovery of investments 8,146,370,206.35 12,147,228,999.62
Cash received from return on investments 825,794,185.05 686,445,555.44
Net cash received from the disposal of fixed
assets, intangible assets and other long-
term assets 168,067,958.90 228,856,132.92
Net cash received from disposal of
subsidiaries and other operating entities 18,224,929.86
Other cash received from investment activities
Sub-total of cash inflows from investing
activities 9,140,232,350.30 13,080,755,617.84
Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets 9,906,927,817.57 8,209,786,230.64
Cash paid for investments 16,162,057,602.71 13,538,237,214.16
Net increase in secured loans
Net cash paid on acquisition of subsidiaries
and other operating entities VII.62 156,312,111.87 40,026,037.55
Other cash paid on investment activities 218,440,847.94
Sub-total of cash outflows from investing
activities 26,225,297,532.15 22,006,490,330.29
Net cash flow from investing activities –17,085,065,181.85 –8,925,734,712.45
III. Cash flow from financing activities:
Cash received from capital contributions 945,787,071.73 987,339,004.94
Including: cash received from capital
contributions by minority shareholders of
subsidiaries
Cash received from borrowings 19,957,867,383.54 18,378,512,304.41
Other cash received from financing activities 1,000,000.00
Sub-total of cash inflows from financing
activities 20,903,654,455.27 19,366,851,309.35
Cash paid on repayment of loans 18,423,980,786.96 14,766,271,845.92
Cash paid on distribution of dividends, profits
or repayment of interest expenses 7,224,378,853.72 5,153,227,150.11
Including: dividend and profit paid to minority
shareholders by subsidiaries
Other cash paid to financing activities VII.61 3,096,327,667.64 3,347,802,454.24
166 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Items Notes 2023 2022
Sub-total of cash outflows from financing
activities 28,744,687,308.32 23,267,301,450.27
Net cash flow from financing activities –7,841,032,853.05 –3,900,450,140.92
IV. Effect of fluctuations in exchange rates on
cash and cash equivalents 248,822,600.22 760,094,284.39
V. Net increase in cash and cash equivalents 585,100,793.62 8,190,466,576.88
Add: balance of cash and cash equivalents at
the beginning of the period VII.62 53,392,209,857.41 45,201,743,280.53
VI. Balance of cash and cash equivalents at
the end of the period VII.62 53,977,310,651.03 53,392,209,857.41
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2023 167
Section X Financial Report
Cash Flow Statement of the Parent Company
January-December 2023
Unit and Currency: RMB
Items Notes 2023 2022
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering of services 87,985,716.98 72,931,789.11
Refunds of taxes 19,008,796.07
Other cash received from operating
activities 161,504,582.95 373,367,957.93
Sub-total of cash inflows from operating
activities 249,490,299.93 465,308,543.11
Cash paid on purchase of goods and
services 1,410,519.44 147,652.63
Cash paid to and on behalf of
employees 33,473,832.54 30,719,560.38
Cash paid for all types of taxes 23,469,049.21 9,583,573.15
Other cash paid to operation activities 166,310,707.28 35,896,845.76
Sub-total of cash outflows from operating
activities 224,664,108.47 76,347,631.92
Net cash flow from operating activities 24,826,191.46 388,960,911.19
II. Cash flow from investing activities:
Cash received from recovery of
investments 7,310,000,000.00 4,072,370,000.00
Cash received from return on
investments 9,221,548,256.67 9,114,011,850.11
Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assets 35,206,354.85
Net cash received from disposal of
subsidiaries and other operating
entities
Other cash received from investment
activities 38,509,682.22 792,521,903.31
Sub-total of cash inflows from investing
activities 16,570,057,938.89 14,014,110,108.27
Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets 11,225,015.05 29,560,476.49
Cash paid for investments 12,184,423,958.00 6,790,729,807.20
Net cash paid on acquisition of
subsidiaries and other operating
entities
168 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Items Notes 2023 2022
Other cash paid on investment activities 1,228,069,045.00 2,862,532,098.24
Sub-total of cash outflows from investing
activities 13,423,718,018.05 9,682,822,381.93
Net cash flow from investing activities 3,146,339,920.84 4,331,287,726.34
III. Cash flow from financing activities:
Cash received from capital injections 940,041,004.94
Cash received from borrowings 1,938,000,000.00 2,200,000,000.00
Other cash received from financing
activities 3,933,896,501.13
Sub-total of cash inflows from financing
activities 5,871,896,501.13 3,140,041,004.94
Cash paid on repayment of borrowings 219,500,000.00 5,000,000.00
Cash paid on distribution of dividends,
profits or repayment of interest
expenses 5,383,785,133.91 4,344,971,295.80
Other cash paid on financing activities 1,614,517,322.60 1,826,254,269.50
Sub-total of cash outflows from financing
activities 7,217,802,456.51 6,176,225,565.30
Net cash flow from financing activities –1,345,905,955.38 –3,036,184,560.36
IV. Effect of fluctuations in exchange
rates on cash and cash equivalents 7,023,776.68 19,756,778.54
V. Net increase in cash and cash
equivalents 1,832,283,933.60 1,703,820,855.71
Add: balance of cash and cash
equivalents at the beginning of the
period 5,747,356,591.19 4,043,535,735.48
VI. Balance of cash and cash equivalents
at the end of the period 7,579,640,524.79 5,747,356,591.19
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2023 169
170
Consolidated Statement of Changes in Owner’s Equity
January-December 2023
Unit and Currency: RMB
2023
Equity attributable to owners of the Parent Company
Other equity instruments
Other
Paid-in capital (or Less: treasury comprehensive General risk Undistributed Total owners’
Items share capital) Preference shares Perpetual bonds Others Capital reserve stock income Special reserve Surplus reserve provision profits Others Sub-total Minority interests equity
I. Closing balance for the previous year 9,446,598,493.00 23,852,037,324.76 3,857,807,196.38 1,990,683,498.45 4,014,190,623.24 — 57,976,944,921.36 93,422,647,664.43 1,290,895,044.45 94,713,542,708.88
Add: changes in accounting policies
Error correction for prior period
Business combination under common
Section X Financial Report
control 30,000,000.00 6,789,938.01 36,789,938.01 36,789,938.01
Haier Smart Home Co., Ltd. Annual Report 2023
Others
II. Opening balance for the current year 9,446,598,493.00 23,882,037,324.76 3,857,807,196.38 1,990,683,498.45 4,014,190,623.24 57,983,734,859.37 93,459,437,602.44 1,290,895,044.45 94,750,332,646.89
III. Increase/decrease for the current period
(decrease is represented by ‘ — ’) —8,483,600.00 –119,682,640.71 1,176,257,911.04 –20,959,471.44 828,147,920.56 10,551,951,635.23 10,054,715,932.60 1,106,694,770.02 11,161,410,702.62
(I) Total comprehensive income —20,959,471.44 16,596,615,045.87 16,575,655,574.43 120,862,590.01 16,696,518,164.44
(II) Capital injection and reduction by
owners —8,483,600.00 –119,682,640.71 1,176,257,911.04 –1,304,424,151.75 1,010,544,184.01 –293,879,967.74
1. Ordinary shares invested by
owners 1,010,544,184.01 1,010,544,184.01
2. Capital contribution by holders
of other equity instruments
3. Share-based payment included
in owners’ equity 179,238,533.70 179,238,533.70 179,238,533.70
4. Others —8,483,600.00 –298,921,174.41 1,176,257,911.04 –1,483,662,685.45 –1,483,662,685.45
(III) Profit distribution 828,147,920.56 –6,082,584,047.78 –5,254,436,127.22 –24,712,004.00 –5,279,148,131.22
1. Withdrawal of surplus reserves 828,147,920.56 –828,147,920.56
2. Withdrawal of general risk
provision
3. Distribution to owners (or
shareholders) —5,254,436,127.22 –5,254,436,127.22 –24,712,004.00 –5,279,148,131.22
4. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into capital
(or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for remedying
loss
4. Changes in defined benefit plans
carried forward to retained earnings
5. Other comprehensive income carried
forward to retained earnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others 37,920,637.14 37,920,637.14 37,920,637.14
IV. Closing balance for the period 9,438,114,893.00 23,762,354,684.05 5,034,065,107.42 1,969,724,027.01 4,842,338,543.80 68,535,686,494.60 103,514,153,535.04 2,397,589,814.47 105,911,743,349.51
2022
Equity attributable to owners of the Parent Company
Other equity instruments
Other
Paid-in capital Preference Less: treasury comprehensive General risk Undistributed Minority Total owners’
Items (or share capital) shares Perpetual bonds Others Capital reserve stock income Special reserve Surplus reserve provision profits Others Sub-total interests equity
I. Closing balance for the previous year 9,398,704,530.00 118,017,507.59 22,665,374,739.46 2,424,038,819.70 –1,176,851,699.92 3,438,615,909.84 47,965,270,360.79 79,985,092,528.06 1,289,500,808.72 81,274,593,336.78
Add: changes in accounting policies
Error correction for prior period
Business combination under
common control 30,000,000.00 20,658,666.76 50,658,666.76 50,658,666.76
Others
II. Opening balance for the current year 9,398,704,530.00 118,017,507.59 22,695,374,739.46 2,424,038,819.70 –1,176,851,699.92 3,438,615,909.84 47,985,929,027.55 80,035,751,194.82 1,289,500,808.72 81,325,252,003.54
III. Increase/decrease for the current period
(decrease is represented by ‘–’) 47,893,963.00 –118,017,507.59 1,186,662,585.30 1,433,768,376.68 3,167,535,198.37 575,574,713.40 9,997,805,831.82 13,423,686,407.62 1,394,235.73 13,425,080,643.35
(I) Total comprehensive income 3,167,199,045.79 14,712,054,763.24 17,879,253,809.03 18,900,173.06 17,898,153,982.09
(II) Capital injection and reduction by
owners 47,893,963.00 –118,017,507.59 1,353,547,865.69 1,433,768,376.68 –150,344,055.58 1,810,903.91 –148,533,151.67
1. Ordinary shares invested by owners 41,413,600.00 898,627,404.94 940,041,004.94 1,810,903.91 941,851,908.85
2. Capital contribution by holders of
other equity instruments 21,450,563.00 –118,017,507.59 457,962,768.76 361,395,824.17 361,395,824.17
3. Share-based payment included in
owners’ equity 693,835,462.71 693,835,462.71 693,835,462.71
4. Others –14,970,200.00 –696,877,770.72 1,433,768,376.68 –2,145,616,347.40 –2,145,616,347.40
(III) Profit distribution 575,574,713.40 –4,872,209,504.61 –4,296,634,791.21 –19,316,841.24 –4,315,951,632.45
1. Withdrawal of surplus reserves 575,574,713.40 –575,574,713.40
2. Withdrawal of general risk
provision
3. Distribution to owners
(or shareholders) –4,296,634,791.21 –4,296,634,791.21 –19,316,841.24 –4,315,951,632.45
4. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others –166,885,280.39 336,152.58 157,960,573.19 –8,588,554.62 –8,588,554.62
IV. Closing balance for the period 9,446,598,493.00 23,882,037,324.76 3,857,807,196.38 1,990,683,498.45 4,014,190,623.24 57,983,734,859.37 93,459,437,602.44 1,290,895,044.45 94,750,332,646.89
Legal representative of the Company: Person in charge of accounting function: Person in charge of accounting department:
Li Huagang Gong Wei Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
171
Section X Financial Report
Statement of Changes in Owners’ Equity of the Parent Company
January-December 2023
Unit and Currency: RMB
2023
Other equity instruments
Other
Paid-in capital (or Preference Less: treasury comprehensive Undistributed Total owners’
Items share capital) shares Perpetual bonds Others Capital reserve stock income Special reserve Surplus reserve profits equity
I. Closing balance for the previous
year 9,446,598,493.00 27,300,899,019.76 2,308,138,558.42 602,091,349.74 3,409,044,397.79 5,328,311,799.62 43,778,806,501.49
Add: changes in accounting
policies
Error correction for prior
period
Others
II. Opening balance for the
current year 9,446,598,493.00 27,300,899,019.76 2,308,138,558.42 602,091,349.74 3,409,044,397.79 5,328,311,799.62 43,778,806,501.49
III. Increase/decrease for the current
period (decrease is represented
by ‘ — ’) —8,483,600.00 –37,247,242.32 867,155,383.94 28,583,342.21 828,147,920.56 2,155,714,492.00 2,099,559,528.51
(I) Total comprehensive income — 28,583,342.21 8,281,479,205.57 8,310,062,547.78
(II) Capital injection and reduction
by owners —8,483,600.00 –37,247,242.32 867,155,383.94 –912,886,226.26
1. Ordinary shares invested
by owners
2. Capital contribution by
holders of other equity
instruments
3. Share-based payment
included in owners’ equity 135,995,049.35 135,995,049.35
4. Others —8,483,600.00 –173,242,291.67 867,155,383.94 –1,048,881,275.61
(III) Profit distribution 828,147,920.56 –6,125,764,713.57 –5,297,616,793.01
1. Withdrawal of surplus
reserves 828,147,920.56 –828,147,920.56 —
2. Distribution to owners (or
shareholders) —5,297,616,793.01 –5,297,616,793.01
3. Others
(IV) Internal transfer of owner’s
equity
1. Transfer of capital reserves
into capital (or share
capital)
2. Transfer of surplus reserves
into capital (or share
capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit
plans carried forward to
retained earnings
5. Other comprehensive
income carried forward to
retained earnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others
IV. Closing balance for the period 9,438,114,893.00 27,263,651,777.44 3,175,293,942.36 630,674,691.95 4,237,192,318.35 7,484,026,291.62 45,878,366,030.00
172 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
2022
Other equity instruments
Paid-in capital Other
(or share Preference Perpetual Less: treasury comprehensive Undistributed Total owners’
Items capital) shares bonds Others Capital reserve stock income Special reserve Surplus reserve profits equity
I. Closing balance for the previous
year 9,398,704,530.00 25,802,279,483.13 1,495,170,675.08 621,302,944.83 2,833,469,684.39 4,468,575,626.52 41,629,161,593.79
Add: changes in accounting
policies
Error correction for prior
period
Others
II. Opening balance for the
current year 9,398,704,530.00 25,802,279,483.13 1,495,170,675.08 621,302,944.83 2,833,469,684.39 4,468,575,626.52 41,629,161,593.79
III. Increase/decrease for the
current period (decrease is
represented by ‘–’) 47,893,963.00 1,498,619,536.63 812,967,883.34 –19,211,595.09 575,574,713.40 859,736,173.10 2,149,644,907.70
(I) Total comprehensive
income –19,211,595.09 5,755,747,134.03 5,736,535,538.94
(II) Capital injection and
reduction by owners 47,893,963.00 1,559,004,664.94 812,967,883.34 793,930,744.60
1. Ordinary shares invested
by owners 41,413,600.00 898,627,404.94 940,041,004.94
2. Capital contribution by
holders of other equity
instruments 21,450,563.00 339,945,261.17 361,395,824.17
3. Share-based payment
included in owners’
equity 639,163,385.88 639,163,385.88
4. Others –14,970,200.00 –318,731,387.05 812,967,883.34 –1,146,669,470.39
(III) Profit distribution 575,574,713.40 –4,896,010,960.93 –4,320,436,247.53
1. Withdrawal of surplus
reserves 575,574,713.40 –575,574,713.40 —
2. Distribution to owners
(or shareholders) — –4,320,436,247.53 –4,320,436,247.53
3. Others —
(IV) Internal transfer of owner’s
equity —
1. Transfer of capital
reserves into capital (or
share capital)
2. Transfer of surplus
reserves into capital (or
share capital)
3. Surplus reserves used
for remedying loss
4. Changes in defined
benefit plans carried
forward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others
(V) Special reserve
1. Withdrawal for the
period
2. Utilization for the period
(VI) Others –60,385,128.31 –60,385,128.31
IV. Closing balance for the period 9,446,598,493.00 27,300,899,019.76 2,308,138,558.42 602,091,349.74 3,409,044,397.79 5,328,311,799.62 43,778,806,501.49
Legal representative of the Company: Person in charge of accounting Person in charge of accounting
Li Huagang function: Gong Wei department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2023 173
Section X Financial Report
III. GENERAL INFORMATION OF THE COMPANY
1. Overview of the Company
√ Applicable □ Not Applicable
The predecessor of Haier Smart Home Co., Ltd (hereinafter referred to as the Company) was
Qingdao Refrigerator Factory, which was established in 1984. As permitted to offering by
People’s Bank of China, Qingdao Branch on 16 December 1989, with the document of Qing Ti
Gai [1989] No. 3 issued on 24 March 1989, based on the reconstruction of the original Qingdao
Refrigerator Factory, a limited company was set up by directional fund raising of RMB150 million.
In March and September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2
and No. 9 issued by the pilot leading team of Qingdao joint stock company, the Company was
converted from a directional offering company to a public subscription company and issued
additional 50 million shares to the public and listed with trading on Shanghai Stock Exchange in
November 1993. In October 2018, D-shares in issue of the Company were listed on the China
Europe International Exchange AG. In December 2020, H-shares in issue of the Company were
listed on the Stock Exchange of Hong Kong Limited by way of introduction.
The Company’s registered office is located at the Haier Science and Technology Innovation
Ecological Park of Laoshan District, Qingdao, Shandong Province, and the headquarters is
located at the Haier Science and Technology Innovation Ecological Park of Laoshan District,
Qingdao, Shandong Province.
The Company is mainly engaged in research and development, manufacturing and sales of home
appliances including refrigerators/freezers, kitchen appliances, air-conditioners, laundry appliances
and water appliances, and other smart home business, as well as providing smart home
packaged solutions.
The ultimate controlling parent company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on
27 March 2024.
2. Scope of consolidated statements
For details of changes in the scope of consolidated financial statements for the current period,
please refer to ‘IX. Changes in Consolidation Scope’ and ‘X. Interest in Other Entities’ of this
note.
174 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
IV. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial statements of the Company were prepared on the going concern basis according to
the transactions and matters actually occurred, in accordance with the Accounting Standards for
Enterprises — Basic Standards published by the Ministry of Finance, specific accounting
standards, and guidance on application of accounting standards for enterprises, interpretations to
accounting standards for enterprises and other relevant requirements (hereinafter collectively
referred to as the ‘Accounting Standards for Enterprises’) which issued subsequently, and in
combination with the disclosure provisions of the Rules for the Information Disclosure and
Compilation of Companies Publicly Issuing Securities No. 15: General Provisions for Financial
Report (Revised in 2023) of CSRC as well as the following significant accounting policies and
accounting estimation.
2. Going Concern
√ Applicable □ Not Applicable
The Company has ability to continue its operation for at least 12 months since the end of the
reporting period and there are no significant events affecting its ability to continue as a going
concern.
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
√ Applicable □ Not Applicable
According to the characteristics of its production and operation, the Company formulated a series of
specific accounting policies and accounting estimates, including the provisions for impairment for
accounts receivable (Note V.11); the measurement of inventories (Note V.12); the depreciation and
amortization of the investment properties (Note V.15); the depreciation of fixed assets (Note V.16), the
amortization of intangible assets (Note V.19), the criterion for determining of long-term assets
impairment (Note V.20); and the date of revenue recognition (Note V.26), etc.
1. Statement of compliance with Accounting Standards for Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting
Standards for Enterprises, which accurately and completely reflected information relating to the
financial position, results of operations, changes in shareholders’ equity and cash flows of the
Company.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same
year in solar calendar.
Haier Smart Home Co., Ltd. Annual Report 2023 175
Section X Financial Report
3. Operating period
√ Applicable □ Not Applicable
The Company takes the period from the acquisition of assets for processing to the ultimate
realization of cash or cash equivalents as a normal operating cycle. The Company takes 12
months as an operating period, which is also the classification basis for the liquidity of its assets
and liabilities.
4. Recording currency
Renminbi is the recording currency of the Company
5. Materiality criteria determination method and selection basis
√ Applicable □ Not Applicable
Case Materiality criteria
Material receivables for The amount of provision on an individual basis accounts for
which bad debt more than 10% of the total bad debt provisions for various
provision is individually types of receivables and is greater than RMB100 million
assessed
Material receivables and The amount of recovery or reversal on an individual basis
bad debt provisions accounts for more than 10% of the total amount of various
which are recovered or types of receivables and is greater than RMB100 million
reversed
Actual write-off of material The amount of write-off on an individual basis accounts for
accounts receivable more than 10% of the total bad debt provisions of various
types of receivables and is greater than RMB100 million
Material prepayments aged Prepayment aged more than 1 year on an individual basis
more than one year accounts for more than 10% of the total prepayments and is
greater than RMB100 million
Material projects under The ending balance of a project on an individual basis is
construction greater than RMB50 million
Material capitalized R&D The ending balance of a project on an individual basis
projects accounts for more than 10% of the ending balance of
development expenditure and is greater than RMB100 million
Material accounts payable Accounts payable/other payables with aged more than 1 year
and other payables aged on an individual basis account for more than 10% of the total
more than one year accounts payable/other payables and are greater than
RMB100 million
Material contract liabilities Contract liabilities aged more than 1 year on an individual basis
aged more than one account for more than 10% of the total contract liabilities and
year are greater than RMB100 million
Material non-wholly owned The net assets of the subsidiaries account for more than 5% of
subsidiaries the Company’s net assets or the net profits and losses of the
subsidiaries account for more than 10% of the Company’s
consolidated net profit.
Material joint ventures or The book value of long-term equity investment in an individual
associates invested unit accounts for more than 5% of the Company’s
net assets or the investment profits and losses under the
long-term equity investment equity method account for more
than 10% of the Company’s consolidated net profit.
176 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
6. Accounting methods of business combinations under common control and not
under common control
√ Applicable □ Not Applicable
A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business combinations
under common control and business combinations not under common control.
(1) Business combinations under common control
A business combination under common control is a business combination in which all of
the combining entities are ultimately controlled by the same party or parties both before
and after the combination, and that control is not transitory. For business combination
under common control, the party that obtains the control over the other parties on the
combination date is the acquirer, and other parties involving in the business combination
are the transferors. The combination date is the date on which the acquiring party
effectively obtains the control over the party being acquired.
For business combination under common control, the transferor’s assets and liabilities
obtained by the Company (as the acquirer) in a business combination are accounted for at
the carrying amount of the transferor in the ultimate controller’s consolidated financial
statements as at the date of combination, except for adjustments due to differences in
accounting policies. The difference between the carrying amount of the combination
consideration paid by the Company (or the aggregate nominal value of shares issued) and
the carrying amount of net assets obtained in a business combination shall be adjusted to
capital reserve, in case the capital reserve is insufficient for the elimination, the retained
earnings shall be adjusted.
Intermediary fees (such as audit, legal services and valuation consultancy) and other
relevant management fees incurred in the business combination by the Company (as the
acquirer) are credited in profit or loss in the period when they occurred. Trading expenses
in direct relation to the issuance of equity instrument as the consideration for the
combination is written down to the capital reserve (share premium), where the capital
reserve (share premium) is insufficient, and to surplus reserves and undistributed profits in
order. Trading expenses in direct relation to the issuance of debt instrument as the
consideration for the combination is included in the initial recognition amount of the debt
instrument.
Haier Smart Home Co., Ltd. Annual Report 2023 177
Section X Financial Report
(2) Business combinations involving entities not under common control
A business combination not under common control is a business combination in which all
of the combining entities are not ultimately controlled by the same party or parties both
before and after the combination. For business combination not under common control, the
party that obtains the control of the other parties at the combination date is the acquirer;
other parties involving in the business combination are the transferors. The combination
date is the date on which the acquirer effectively obtains control of the transferors.
In business combination involving entities not under common control, the cost of
combination of the Company (as the acquirer) shall be the sum of the assets paid,
obligations incurred or assumed and the fair value of the equity securities issued by the
Company for obtaining control of the transferor at the date of acquisition. Intermediary fees
(such as audit, legal services and valuation consultancy) and other relevant management
fees incurred by the Company for the purpose of business combination are credited in
profit or loss in the period when they occurred. Transaction fees for the equity instruments
or debt instruments issued by the Company as combination consideration is included in the
initial recognition amount of such equity instruments or debt instruments. Contingent
consideration involved shall be recorded as the combination cost based on its fair value on
the acquisition date. Should any new or further evidence arise within 12 months after the
acquisition date and makes it necessary to adjust the contingent consideration on the
acquisition date, the goodwill arising from the business combination shall be amended
accordingly.
The cost of combination and identifiable net assets obtained by the Company (as the
acquirer) in a business combination involving entities not under common control are
measured at fair value on the acquisition date. Where the cost of the combination exceeds
the acquirer’s interest in the fair value of the transferor’s identifiable net assets, the
difference is recognized as goodwill; where the cost of combination is lower than the
acquirer’s interest in the fair value of the transferor’s identifiable net assets, the difference
is initially recognized in profit or loss for the current year after the Company conducted a
review of computation for the identifiable assets, liabilities or fair value of contingent
liabilities and combination cost, and where the combination cost is still lower than the fair
value of the identifiable net assets of the transferor obtained during the course of
combination, then the difference is recorded in the profit and loss.
178 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
7. Judgement Criteria for Control and Preparation of Consolidated Financial
Statements
√ Applicable □ Not Applicable
Judgement Criteria for Control:
The scope of consolidation of consolidated financial statements is on the basis of control. Control
means that the Company has the power over the investee, enjoys variable returns by
participating in relevant activities of the investee, and has the ability to use its power over the
investee to influence the amount of its return. Control refers to the Company’s right over the
investee to enjoy variable returns through involvement in the investee and have the ability to exert
the right to affect those returns The Company will reassess when changes in relevant facts and
circumstances result in changes in the relevant elements involved in the definition of control.
Preparation method of consolidated statements:
(1) Scope of consolidated financial statements
The Company incorporated all subsidiaries under its control (including the separate entities
controlled by the Company) into the scope of consolidation financial statements, including
the enterprises under the Company’s control, divisible part in the investees and structured
entities. Control refers to the Company having power over the investee and is entitled to
variable returns from its involvement with the investee and has the ability to use its power
over the investee to affect the amount of those return.
(2) To unify the accounting policies, balance sheets date and accounting periods of the
Company and subsidiaries
When preparing consolidated financial statements, adjustments are made if subsidiaries’
accounting policies or accounting periods are different from that of the Company, in
accordance with the Company’s accounting policies and accounting periods.
Haier Smart Home Co., Ltd. Annual Report 2023 179
Section X Financial Report
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared by the Company on the basis of
the financial statements of the Company and subsidiaries and based on other relevant
information. In preparing the consolidated financial statements, all significant balances,
transactions and unrealized profits between the Company and subsidiaries and among
subsidiaries are eliminated. In preparing the consolidated financial statements, the Company
treats the entire enterprise group as one accounting entity and reflects the overall financial
position, operating results and cash flows of the Group in accordance with the
requirements for recognition, measurement and presentation of relevant accounting
standards for enterprises and consistent accounting policies. The owner’s equity of the
subsidiaries not attributable to the Company shall be presented separately as ‘minority
equity’ under the owner’s equity item in the consolidated balance sheet. The minority equity
attributable to net profit or loss of subsidiaries in the current period shall be presented as
‘minority interest’ under the ‘net profit’ item in the consolidated profit statement. Where the
amount of loss of a subsidiary attributable to the minority shareholders exceeds their share
of the opening balance of owner’s equity of the subsidiary, the excess shall be allocated
against minority equity. The long-term equity investment of the Company held by the
subsidiaries, deemed as treasury stock of the corporate group as well as the reduction of
owners’ equity, shall be presented as ‘Less: Treasury stock’ under the owner’s equity item
in the consolidated balance sheet.
(4) Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from business combination under common control of the
Company, the opening amount of the consolidated balance sheet is adjusted, as if the
business combination has taken place since the ultimate controller began its control. The
income, expenses and profits of subsidiaries or business combinations from the beginning
of the current period to the end of the reporting period are included in the consolidated
profit statement. The cash flows from the beginning of the current period to the end of the
reporting period of a subsidiary or business combination are included in the consolidated
cash flow statement, and the related items in the comparative statements are adjusted
Where control can be exercised over the investee under the same control due to additional
investment and other reasons, the Company shall deem the parties participating in the
business combination to have made adjustments in their current status when the ultimate
controller began its control. Equity investments held by the Company before control of the
transferor are recognised for profit or loss, other comprehensive income and other changes
in net assets between the later of the date on which the original equity interest is acquired
and the date on which the Company and the transferor are under the same control and the
date of combination, which are offset against the opening retained earnings or current profit
or loss, respectively, in the period of the comparative statements.
180 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
For subsidiaries acquired from business combination under non-common control, the
opening amount of the consolidated balance sheet is not adjusted. The income, expenses
and profits of the subsidiary or business from the date of purchase to the end of the
reporting period are included in the consolidated profit statement. The cash flows of the
subsidiary or business from the date of purchase to the end of the reporting period are
included in the consolidated statement of cash flows. Where control can be exercised over
an investee that is not under the same control due to additional investment or other
reasons, the Company remeasures the equity interest of the investee held before the
purchase date based on the fair value of the equity interest at the purchase date, and the
difference between the fair value and its carrying amount is included in the current
investment income. Where the equity interest in the transferor held before the purchase
date relates to other comprehensive income under the equity method and other changes in
owner’s equity other than net profit or loss, other comprehensive income and profit
distribution, other comprehensive income and other changes in owner’s equity relating
thereto are transferred to investment income of the current period as at the purchase date,
except for other comprehensive income arising from the remeasurement of net liabilities or
changes in net assets of defined benefit plans by the investee.
(5) Dispose of equity interests in subsidiaries achieved in stages until losing control
① General treatment
During the Reporting Period, when the Company disposes of a subsidiary or
business, the income, expenses and profits of that subsidiary or business from the
beginning of the period to the date of disposal are included in the consolidated
income statement of the Company; The cash flows from the beginning of the period
to the disposal date of the subsidiary or operation are included in the consolidated
statement of cash flows of the Company.
When control over the investee is lost due to the disposal of part of the equity
investment or other reasons, the Company remeasures the remaining equity
investment after disposal at its fair value at the date when control is lost. The
difference between the sum of the consideration obtained on disposal of the equity
interest and the fair value of the remaining equity interest, less the sum of the share
of the net assets of the original subsidiary calculated by the Company based on the
original shareholding ratio and goodwill calculated on a continuing basis from the date
of purchase or consolidation, is included in investment income in the period in which
control is lost and goodwill is written off. The Company converts other comprehensive
income relating to the equity investment in the original subsidiary, etc to investment
income in the current period when control is lost.
Haier Smart Home Co., Ltd. Annual Report 2023 181
Section X Financial Report
② Disposal of subsidiaries step by step
Where the Company disposed of equity investment in a subsidiary step by step
through multiple transactions until control is lost, for example, the terms, conditions
and economic impact of each transaction that disposes of the equity investment in a
subsidiary meet one or more of the following conditions, the Company accounts for
multiple transactions as a single transaction:
i. The transactions were entered into simultaneously or with mutual influence in
mind;
ii. The transactions as a whole are capable of achieving a complete commercial
outcome;
iii. The occurrence of one transaction depends on the occurrence of at least one
other transaction;
iv. The transaction is uneconomical by itself but economic when considered in
conjunction with other transactions.
Where each transaction that disposes of an equity investment in a subsidiary until
control is lost is a blanket transaction, the Company accounts for each transaction as
a transaction that disposes of the subsidiary and loses control; However, the
Company recognises the difference between each disposal price before the loss of
control and the share of net assets of the subsidiary corresponding to the disposal of
the investment as other comprehensive income in the consolidated financial
statements and is transferred to profit or loss in the period in which control is lost
when control is lost.
Where each transaction that disposes of an equity investment in a subsidiary until the
loss of control is not a blanket transaction, the relevant policy for partial disposal of
an equity investment in a subsidiary without loss of control is accounted for before
the loss of control by the Company; When control is lost, accounting is performed in
the same manner as would be done for a disposal subsidiary.
(6) Purchase of minority interests in subsidiaries
The difference between the Company’s costs of newly acquired long-term equity
investment resulting from the purchase of minority interests and the share of net assets
attributable to the subsidiary calculated on an ongoing basis from the date of purchase (or
the date of combination) based on the newly increased shareholding ratio, the equity
premium in the capital reserve in the consolidated balance sheet is adjusted, and if the
equity premium in the capital reserve is insufficient to offset, the retained earnings is
adjusted.
182 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(7) Partial disposal of equity investments in subsidiaries without loss of control
The Company adjusts the equity premium in the capital reserve in the consolidated balance
sheet for the difference between the disposal price obtained from the partial disposal of the
long-term equity investment in the subsidiary without loss of control and the share of the
net assets of the subsidiary that would continue to be calculated from the purchase date or
the combination date corresponding to the disposal of the long-term equity investment, or
adjust the retained earnings if the equity premium in the capital reserve is insufficient to
offset.
8. Classification of joint arrangement and accounting methods of joint operations
√ Applicable □ Not Applicable
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In
accordance with the Company’s rights and obligations under a joint arrangement, the Company
classifies joint arrangements into joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement in which the Company is a party and is
entitled to relevant assets and obligations of this arrangement.
The Company recognizes the following items in relation to its interest in a joint operation,
and accounts the same in accordance with relevant accounting standards for business
enterprises: ① recognize the assets held solely by the Company, and recognize assets
held jointly by the Company in appropriation to the share of the Company; ② recognize the
obligations assumed solely by the Company, and recognize obligations assumed jointly by
the Company in appropriation to the share of the Company; ③ recognize revenue from
disposal of joint operations in appropriation to the share of the Company; ④ recognize
revenue from disposal of joint operations in appropriation to the share of the Company; ⑤
recognize fees solely occurred by the Company and recognize fees from joint operations in
appropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (the
assets do not constitute a business, the same below) from joint operations, the Company
shall only recognize the part of profit or lost from this transaction attributable to other
parties of joint operations before these assets are sold to a third party. In case of an
impairment loss incurred on these assets which meets the requirements as set out in
Accounting Standards for Business Enterprises No. 8 — Asset Impairment, the Company
shall full recognize the amount of this loss in relation to its investment in or sale of assets
to joint operations or recognize the loss according to the Company’s share of commitment
in relation to the its purchase of assets from joint operations.
Haier Smart Home Co., Ltd. Annual Report 2023 183
Section X Financial Report
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net
assets of this arrangement. Investment in joint venture is accounted for using the equity
method according to the accounting policies referred to under ‘12. Long-term equity
investment’ of Note V.
9. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits available
for payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquid
investments held by the Company that are readily convertible to known amounts of cash and
which are subject to an insignificant risk on change in value.
10. Foreign currency businesses and translation of foreign currency statements
√ Applicable □ Not Applicable
(1) Foreign currency transactions
If foreign currency transactions occur, they are translated into the amount of functional
currency by applying the exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated by the Company into
functional currencies at the rates of exchange ruling at the balance sheet date. All foreign
exchange difference are credited in the profit or loss of the current period, except those
arising from the funds denominated in foreign currency specially borrowed for the
establishment of the qualifying assets are treated based on the principal of capitalization of
borrowing costs.
Non-monetary items in foreign currency measured at historical cost are translated by the
Company using the spot exchange rate prevailing on the date when transaction occurred
and its functional currency shall remain unchanged. Non-monetary items denominated in
foreign currencies that are measured at fair value are translated using the foreign exchange
rate at the date the fair value is determined; the exchange differences between the
translated and original amounts of functional currencies are recognized in the statement of
profit or loss or other comprehensive income as changes in fair value (including changes in
exchange rate).
184 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) Translation of foreign currency financial statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint
ventures and associates under the control of the Company are different from that of the
Company, their financial statements denominated in foreign currencies shall be translated to
perform accounting and prepare the consolidated financial statements.
The assets and liabilities of the foreign currency balance sheet of the Company are
translated using the spot exchange rate at the balance sheet date; all items except for
‘undistributed profits’ of the owner’s equity are translated at the spot exchange rate on the
transaction date. The revenue and expenses in the foreign currency income statement of
the Company are translated using the approximate rate of the spot exchange rate on the
transaction date. Exchange differences on translation of financial statements denominated in
foreign currencies are presented as the ‘other comprehensive income’ in the owner’s equity
of the balance sheet.
Foreign currency cash flow and cash flows of a foreign subsidiary of the Company is
translated using the approximate rate of the spot exchange rate on the date of the cash
flows. The impact of exchange rate changes on cash amount is regarded as a
reconciliation item and reflected separately in the cash flow.
When disposing overseas operations, the translation difference in the foreign currency
financial statements as shown in the owner’s equity of the balance sheet and related to the
overseas operation shall be transferred from owner’s equity to profit or loss in the current
period of disposal. If part of the overseas operations is disposed of, the translation
difference in the foreign currency financial statements of the disposal part shall be
calculated based on the proportion of the disposal and transferred to profit or loss in the
current period of disposal.
11. Financial instruments
√ Applicable □ Not Applicable
A financial instrument refers to any contract that gives rise to a financial asset of one entity and
a financial liability or equity instrument of another entity. A financial asset or financial liability and
equity instrument is recognized when the Company becomes a party to the contract of a
financial instrument.
Haier Smart Home Co., Ltd. Annual Report 2023 185
Section X Financial Report
(1) Classification, recognition and measurement of financial assets
On initial recognition of a financial asset, according to the business model for managing
financial assets and the contractual cash flow characteristics of financial assets, the
Company classifies financial assets into: Financial assets measured at amortized cost;
financial assets measured at fair value through other comprehensive income; financial
assets measured at fair value through profit or loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financial assets
measured at fair value through profit and loss of the current period, related transaction
costs are directly included in profit and loss of the current period; for other types of
financial assets, related transaction costs are included in their initial recognized amounts.
For the accounts receivable or bills receivable arising from the sale of products or the
provision of labor services that do not contain or consider the significant financing
components, etc, the Company shall take the consideration amount entitled to be received
as the initial recognized amount.
1) The debt instruments held by the Company:
① Financial assets measured at amortized cost
The Company’s business model for managing such financial assets is: With the
aim of obtaining contractual cash flow, the contractual cash flow characteristics
of such financial assets shall be consistent with the basic lending arrangements,
that is, the cash flow generated on a specific date is only the payment for the
principal and the interest based on the outstanding principal amount. For such
financial assets, the Company recognizes the interest income in accordance
with the effective interest method. Such financial assets are subsequently
measured at amortised cost. The gains or losses arising from amortisation or
impairment are recognised in profit or loss of the current period. Such financial
assets of the Company mainly include cash and cash equivalents, bills
receivable, accounts receivable, other receivables, creditor’s right investment
and long-term receivables. The Company lists the creditor’s rights investments
and long-term receivables matured within one year (including one year) from the
balance sheet date as non-current assets matured within one year; the
creditor’s rights investments matured within one year (including one year) when
being obtained are listed as other current assets.
186 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
② Financial assets measured at fair value through other comprehensive income
The Company’s business mode for managing such financial assets is: With the
aim of obtaining contractual cash flow and selling the financial assets, the
contractual cash flow characteristics of such financial assets shall be consistent
with the basic lending arrangements. Such financial assets are measured at fair
value through other comprehensive income, but impairment gains and losses,
exchange gains and losses, and interest income calculated by the effective
interest method are included in profit and loss of the current period. Such
financial assets of the Company mainly include financing receivables and other
creditor’s rights investments. The Company lists other creditor’s rights
investments matured within one year (including one year) from the balance
sheet date as non-current assets matured within one year; other creditor’s
rights investments matured within one year (including one year) when being
obtained are listed as other current assets.
③ Financial assets measured at fair value through profit or loss of the current period
The Company classifies financial assets other than those above measured at
amortized cost and those measured at fair value through other comprehensive
income as financial assets measured at fair value through profit or loss of the
current period. In addition, at the time of initial recognition, in order to eliminate
or significantly reduce accounting mismatch, the Company designated some
financial assets as financial assets measured at fair value through profit or loss
of the current period. Such financial assets are subsequently measured at fair
value and changes in fair value are included in profit or loss of the current
period. Such financial assets that are matured more than one year and are
expected to be held for more than one year from the balance sheet date are
listed as other non-current financial assets.
2) Equity instrument investments of the Company:
The Company classifies equity instrument investments that have no control, joint
control and significant influence on itself as financial assets measured at fair value
through profit or loss of the current period; investments that are expected to be held
for more than one year from the balance sheet date are listed as other non-current
financial assets.
In addition, the Company designated some non-trading equity instrument investments
as financial assets measured at fair value through other comprehensive income, which
are listed as other equity instrument investments. Such designation cannot be
revoked once made. The Company includes the relevant dividends and interest
income of such financial assets in profit and loss of the current period, and changes
in fair value are included in other comprehensive income. When the financial asset is
derecognised, the Company transfers the cumulative gain or loss previously included
in other comprehensive income directly to retained earnings and is not included in
profit or loss of the current period.
Haier Smart Home Co., Ltd. Annual Report 2023 187
Section X Financial Report
(2) Classification, recognition and measurement of financial liabilities
On initial recognition, financial instruments or their components issued by the Company are
classified into financial liabilities or equity instruments based on the contractual terms of the
financial instruments and the economic nature, rather than solely on its legal form, together
with the definition of financial liability and equity instruments.
The Company classifies financial liabilities as financial liabilities at fair value through profit
and loss of the current period and other financial liabilities at initial recognition.
Financial liabilities at fair value through profit and loss of the current period are
subsequently measured at fair value. Any gains or losses arising from changes in the fair
value and any interest expenses related to the financial liabilities are recognized in profit or
loss of the current period. The financial liabilities at fair value through profit and loss of the
current period of the Company mainly consist of financial liabilities held for trading.
Other financial liabilities are subsequently measured at amortized costs using effective
interest method. Other financial liabilities of the Company are financial liabilities measured at
amortized cost, including bills payable, accounts payable, other payables, borrowings,
bonds payable, etc. Such financial liabilities are recognized initially at fair value less
transaction costs and subsequently measured using the effective interest method. Financial
liabilities with a maturity of less than one year (including one year) are listed as current
liabilities: those with maturity of more than one year but are mature within one year from
the balance sheet date (including one year) are listed as non-current liabilities due within
one year; the rest are presented as non-current liabilities.
(3) Classification and treatment of financial liabilities and equity instruments
The Company classifies financial liabilities and equity instruments on the following
principles: (1) Where the Company is unable to unconditionally avoid delivering cash or
another financial asset to fulfil a contractual obligation, the contractual obligation meets the
definition of a financial liability. Although some financial instruments do not explicitly include
the terms and conditions imposing the contractual obligation to deliver cash or another
financial asset, they may indirectly give rise to the contractual obligation through other
terms and conditions. (2) Where a financial instrument shall or may be settled in the
Company’s own equity instrument, consideration shall be given to whether the Company’s
own equity instrument as used to settle the instrument is a substitute of cash or another
financial asset or the residual interest in the assets of the Company after deducting all of its
liabilities. In the former case, the instrument shall be the Company’s financial liability; in the
latter case, the instrument shall be the equity instrument of the Company. Under certain
circumstances whereby a financial instrument contract stipulates that the Company shall or
may use its own equity instrument to settle the financial instrument, and the amount of the
contractual right or obligation equal to the number of its own equity instruments to be
received or delivered multiplied by their fair value at the time of settlement, the contract
shall be classified as a financial liability, regardless of whether the amount of the
contractual right or obligation is fixed, or fluctuates in full or in partly in response to
changes in a variable other than the market price of the Company’s own equity instruments
(for example an interest rate, a commodity price or a financial instrument price).
188 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
When classifying a financial instrument (or a component thereof) in consolidated financial
statements, the Company shall consider all terms and conditions agreed between members
of the Group and the holders of the financial instrument. If the Group as a whole has an
obligation in respect of the instrument to settle it by delivering cash or another financial
asset or in such a way that it would be a financial liability, such instrument shall be
classified as a financial liability.
If the financial instrument or its component is attributable to the financial liability, the
relevant interests, dividends, gains or losses, and gains or losses arising from redemption
or refinancing, shall be recorded in the profit or loss of the current period.
If the financial instrument or its component is attributable to equity instrument, the
Company treats it as change in equity when it is issued (including refinanced), repurchased,
sold or cancelled. Changes in fair value of equity instrument is not recognized by the
Company. Transaction costs related to equity transactions are deducted from equity. The
Company recognizes the distribution to holders of the equity instruments as distribution of
profits, and dividends paid do not affect total amount of shareholders’ equity.
(4) Recognition and measurement on transfer of financial assets
A financial asset shall be de-recognized when one of the following conditions is met: ① the
contractual right for receiving cash flows from the financial asset is terminated; ②the
financial asset is transferred, and the risk and rewards of ownership of the financial asset
have been substantially transferred to the transferee; and ③ the financial asset is
transferred; the Company neither transfers nor retains substantially all the risks and rewards
of ownership of the financial asset, but ceases the control over the financial asset. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership of
the financial asset, and the control over the financial asset is not ceased, the financial asset
and the related financial liabilities should be recognized based on the degree of continuing
involvement. The degree of continuing involvement means the level of risks borne by the
Company resulting from the change in value of the financial asset.
On de-recognition of other equity instruments investment, the difference between the
carrying amount and the sum of the consideration received and the cumulative changes in
fair value that had been recognized directly in other comprehensive income is recognized in
the retained earnings. On de-recognition of other financial assets, the difference between
the carrying amount and the sum of the consideration received and the cumulative changes
in fair value that had been recognized directly in other comprehensive income is recognized
in current profit or loss.
Haier Smart Home Co., Ltd. Annual Report 2023 189
Section X Financial Report
For financial assets that are sold with recourse or endorsement, the Company needs to
determine whether the risk and rewards of ownership of the financial asset have been
substantially transferred. If the risk and rewards of ownership of the financial asset have
been substantially transferred, the financial asset shall be derecognized. If the risk and
rewards of ownership of the financial asset have been substantially retained, the financial
asset shall not be de-recognized. If the Company neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset, the Company shall assess
whether the control over the financial asset is retained, and the financial assets shall be
accounted for according to the above paragraphs.
(5) Derecognition of financial liabilities
If the current obligation of a financial liability (or part of it) has been discharged, the
Company derecognizes the financial liability (or part of the financial liability). The Company
(borrower) enters into an agreement with the lender to replace the original financial liability
in the form of a new financial liability, and if the new financial liability is substantially
different from the original financial liability, the original financial liability is derecognized and
the new financial liability is recognized. If the Company makes substantial changes to the
contractual terms of the original financial liability (or a part thereof), the original financial
liability is derecognized and the new financial liability is recognized in accordance with the
revised terms.
If the financial liability (or a part thereof) is derecognized, the difference between the
carrying amount and the consideration paid (including the transferred non-cash assets or
liabilities assumed) is recognized in current profit or loss.
(6) Offsetting financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financial
liabilities, and the legal right can be executed at present, and the Company has a plan to
settle the financial assets and financial liabilities at the same time or at net amount, the
financial assets and financial liabilities can be presented in the balance sheet at net amount
after offsetting. Except for the above circumstances, financial assets and financial liabilities
cannot be offset and shall be presented separately in the balance sheet.
190 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(7) Determination of fair value of financial assets and financial liabilities
Fair value is the amount at which an asset could be sold or a liability could be transferred
between willing parties in an orderly transaction on a measurement date. The fair value of a
financial instrument that is traded in an active market is determined at the quoted price in
the active market. Quoted price in the active market represents quoted price which can be
easily obtained periodically from exchange market, brokers, industry associations or pricing
services agency, etc., which is the transactions amount in arm’s length transactions. The
fair value of a financial instrument that is not traded in an active market is determined by
using a valuation technique. Valuation techniques include using prices of recent market
transactions between knowledgeable and willing parties, reference to the current fair value
of another financial asset that is substantially the same with this instrument, discounted
cash flow analysis and option pricing models, etc. During the valuation, the Company
adopts an applicable valuation technique under current conditions and there are enough
available data and other information to support. Those inputs should be consistent with the
inputs a market participant would use when pricing the asset or liability, and the Company
should maximize the use of relevant observable inputs. When related observable inputs
can’t be acquired or are not feasible to be acquired, then use unobservable inputs.
In summary, the Company categorizes inputs for fair value measurement into three levels
and uses the inputs by the order of Level 1, Level 2 and Level 3. Level 1: quoted prices
(unadjusted) in active markets for identical assets or liabilities at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset or
liability.
(8) Impairment of financial assets
For financial assets measured at amortized cost and debt instrument investments measured
at fair value through other comprehensive income, contract assets and financial guarantee
contracts, the Company recognizes the loss provision based on the expected credit losses.
The Company considers reasonable and reliable information about past events, current
conditions and forecasts of future economic conditions, and takes the risk of default as a
weight, and calculates the probability-weighted amount of the present value of the
difference between the cash flow receivable and the cash flow expected to be received of
the contract to confirm the expected credit losses.
Haier Smart Home Co., Ltd. Annual Report 2023 191
Section X Financial Report
On each balance sheet date, the Company measures the expected credit losses of
financial instruments in different phases. If the credit risk has not increased significantly
since the initial recognition, the financial instruments are in the first phase. The Company
measures the loss provision according to the expected credit losses in the next 12 months;
if credit risk has increased significantly but credit impairment has not yet occurred since the
initial recognition, the financial instruments are in the second phase. The Company
measures the loss provision according to the expected credit losses of the instruments
during the entire duration; if credit impairment has occurred since the initial recognition, the
financial instruments are in the third phase. The Company measures the loss provision
according to the expected credit losses of the instruments during the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the Company
measures the loss provision according to the expected credit losses in the next 12 months,
assuming that its credit risk has not increased significantly since the initial recognition.
For financial instruments in the first phase and second phase and financial instruments with
relatively lower credit risk, the Company calculates interest income based on their book
balance before the deduction of provisions and effective interest rate. For financial
instruments in the third phase, the Company calculates interest income based on their
amortized cost after the impairment provision has been deducted from the book balance
and effective interest rate.
For bills receivable, accounts receivable and contract assets, whether there exist significant
financing components, the Company measures loss provision based on expected credit
loss over the entire duration.
The Company classifies accounts receivable into groups on the basis of shared credit risk
characteristics, and calculates the expected credit losses on groups, the bases of group
determination are as follows:
For each group of bills receivable, the Company applies exposure at default and expected
credit losses rate over the entire duration to calculate the expected credit losses by taking
into account the historical credit losses experience, the existing conditions and forecast of
future economic conditions.
For each group of accounts receivable, the Company makes the comparison of expected
credit losses rates of accounts receivable in overdue days and over the entire duration to
calculate the expected credit losses by taking into account the historical credit losses
experience, the existing conditions and forecast of future economic conditions.
For each group of other accounts receivable, the Company applies exposure at default and
expected credit losses rate within the next 12 months or over the entire duration to
calculate the expected credit losses by taking into account the historical credit losses
experience, the existing conditions and forecast of future economic conditions.
192 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
The Company recognizes the loss impairment provision or reversed in profit or loss of the
current period. For held debt instruments at fair value through other comprehensive
income, the Company recognizes loss/gain on impairment in profit or loss of the current
period, and adjusts other comprehensive income at the same time.
12. Inventory
√ Applicable □ Not Applicable
(1) Classification of inventory
√ Applicable □ Not Applicable
Inventory refers to finished products and commodities held by the Company in daily
activities for sale, products in progress, materials and supplies consumed in the process of
production or provision of labour services, including mainly raw materials, turnover
materials, materials for commissioned processing work, packaging materials, products in
progress, semi-finished products through in-house manufacturing, finished products
(products in stock) and project construction, among others.
(2) Pricing of dispatch of inventory
The actual cost of inventories upon delivery is calculated using the weighted average
method.
(3) Impairment provision for inventory
At the balance sheet date, inventory is measured at the lower of cost and net realisable
value.
The net realisable value of inventories that can be directly put to sale, including finished
products, commodities and materials for sale is determined as the estimated selling price of
such inventory less estimated selling expenses and related tax expenses; the net realisable
value of or inventories held for production, is determined as the estimated selling price of
finished products manufactured less estimated cost incurred upon completion, estimated
selling expenses and related tax expenses; the net realisable value of inventory held for the
execution of sales contract or labour contract is computed on the basis of the contract
price. If the quantity of inventories held by the Company is more than the quantity ordered
under a sales contract, the net realisable value of the inventories in excess is computed on
the basis of the general selling price.
Inventory impairment provision is made on the basis of individual inventory items, provided
that if certain inventories are related to a series of products manufactured and sold in the
same region with identical or similar end uses or purposes and are difficult to measure
separately with other items, their cost and net realisable value may be measured on an
aggregate basis. Inventories The cost and net realizable value of inventories in large
quantity with low unit prices are measured according to inventory types.
Haier Smart Home Co., Ltd. Annual Report 2023 193
Section X Financial Report
At the balance sheet date, if the cost of inventory of the Company is higher than its net
realisable value, impairment provision is made and charged to current profit or loss. If the
factor causing the write-down of inventory value has been removed, the amount of
write-down should be reversed and transferred out of the previous inventory impairment
provision amount. The reversed amount is included in current profit or loss.
(4) Inventory system
The Company adopts the perpetual inventory system as its inventory system.
(5) Amortisation of low-value consumables and packaging materials
The Company adopts one-off amortisation of its low-value consumables and packaging
materials.
13. Contract assets
√ Applicable □ Not Applicable
Recognition method and criteria of contract assets
√ Applicable □ Not Applicable
The Company presents the right of the Company to charge consideration from the customer
unconditionally (i.e. only depends on the passage of time) as a receivable, while the
consideration that the Company has the right (and this right depends on factors other than
passage of time) to receive for goods transferred to customers is presented as a contract
assets. If the Company sells two clearly distinguishable goods to the customer, and it has the
right to receive payment because one of the goods has been delivered, but the receipt of such
payment is conditioned on the delivery of another goods, the Company shall recognise such right
to receive payment as contract asset.
For the determination and accounting treatment methods of the expected credit loss of contract
assets, please see note V.11 “Impairment of financial assets”.
14. Long-term equity investments
√ Applicable □ Not Applicable
Long-term equity investments hereunder refer long-term equity investments in which the
Company exercises control, joint control or significant influence over the investee.
(1) Determination of initial investment cost
① The initial cost of long-term equity investments acquired through business combination
involving parties under common control should be recognised as the share of the
carrying value of the owner’s equity of the acquired party; the initial cost of long-term
equity investments acquired through business combination involving parties not under
common control should be recognised as the combination costs determined at the
date of acquisition;
194 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
② The Company invested in other equity investment other than long-term equity
investments acquired through combination, the initial investment cost of long-term
equity investments acquired with cash payment is the acquisition price actually paid;
the initial investment cost of long-term equity investments acquired with the issuance
of equity- based securities is represented by the fair value of equity-based securities;
the initial investment cost of long-term equity investments acquired through debt
restructuring is determined in accordance with relevant provisions under “Accounting
Standards for Business Enterprises No.12 — Debt Restructuring”; the initial
investment cost acquired in exchange for non-monetary assets shall be determined in
accordance with relevant provisions of the standard.
(2) Subsequent measurement and recognition of profit or loss
Cost method
Long-term equity investments in which the Company is able to exercise control over
the investee is accounted for using the cost method. Under the cost method, the
carrying value of long-term equity investments, other than additional investment or
recouped investment, shall remain constant. The Company declared the distribution of
profit or cash dividend to the investee and calculated the portion of entitlement,
which is recognised as investment income.
Equity method
The equity method is used by the Company to account for long-term equity
investments in associates and joint ventures. Under the equity method, the initial
investment cost is not adjusted for any excess of the initial investment cost over the
share of the net fair value of the investee’s identifiable assets. When the initial
investment cost is less than the share of the fair value of the investment’s identifiable
net assets, the difference is recognised in current profit or loss and the cost of
long-term equity investment is adjusted accordingly.
Under the equity method, share of net profit or losses and other comprehensive
income of the investee are recognised by the Company as investment income and
other comprehensive income, respectively, and the carrying amount of the long-term
equity investment is adjusted accordingly. Share of profit or cash dividend declared
by the investee is charged against the carrying value of the long-term equity
investment; changes in owners’ equity of the investee other than net profit or loss,
other comprehensive income and profit distribution are adjusted against the carrying
value of long-term equity investment and included in capital reserve. Share of net
profit or loss of the investee is recognised by the Company on the basis of the fair
value of the identifiable assets of the investee when the investment is acquired and
adjusted against the net profit of the investee. If the accounting policy and
accounting period of the investee are inconsistent with those of the Company, the
financial statements of the investee is adjusted to align with the accounting policy and
accounting period of the Company, and investment income and other comprehensive
income is recognised accordingly.
Haier Smart Home Co., Ltd. Annual Report 2023 195
Section X Financial Report
Net losses of the investee is recognised by the Company by deducting the carrying
value of the long-term equity investment together with long-term equity that in
substance forms part of the net investment in the investee until it reaches zero.
Moreover, if the Company has incurred obligations to assume additional losses of the
investee, estimated liabilities are recognised according to the obligation expected to
be assumed and charged to current investment loss. If the investee records net profit
in future periods, the Company shall recognise its share of gains after applying such
share of gains to make up for the unrecognised share of loss.
(3) Change of accounting method for long-term equity investment
① Change from fair value measurement to the equity method: If an equity investment in
the investee not previously affording control, joint control or significant influence and
accounted for in accordance with the standard for recognition and measurement of
financial instruments becomes capable of affording joint control or significant influence
over the investee as a result of increased shareholding following additional
investment, the accounting method should be changed to the equity method, and the
fair value of the original equity investment determined according to the standard for
recognition and measurement of financial instruments plus the fair value of
consideration paid for the acquisition of the new investment shall be changed the
initial investment cost under the equity method.
② Change from fair value measurement or equity method to cost method: if an equity
investment previously held in the investee not previously affording control, joint control
or significant influence and accounted for in accordance with the standard for
recognition and measurement of financial instruments, or a long- term equity
investment previously held in associates or joint ventures becomes capable of
affording control over the investee, it is accounted for long-term equity investment
formed through business combination.
③ Change from equity method to fair value measurement: if a long-term equity investment
previously held in the investee affording joint control or significant influence ceases to
afford joint control or significant influence as a result of decrease in shareholding
percentage following partial disposal, the remaining equity investment is recognised in
accordance with the standard for recognition and measurement of financial
instruments, and the difference between the fair value at the date of loss of joint
control or significant influence and the carrying value is included in current profit or
loss.
196 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
④ Change from cost method to equity method or fair value measurement: when preparing
separate financial statements, if the Company losses control over an investee due to
disposal of some equity-based investment and other reasons, the Company accounts
for the remaining equity affording joint control or significant influence over an investee
as a result of disposal based on the equity method, and the remaining equity will be
adjusted as if it is accounted for using the equity method from the date of
acquisition; for the remaining equity not affording joint control or significant influence
over an investee as a result of disposal, it is accounted for in accordance with
relevant requirements of Accounting Standards for Business Enterprises No. 22—
Recognition and measurement of financial assets, and the differences between the fair
value and book value on the date when control is lost are included in profit or loss.
When preparing consolidated financial statements, it shall be accounted for in
accordance with relevant requirements of Accounting Standards for Business
Enterprises No.33— Consolidated financial statements.
(4) Bases for determining joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control over an arrangement, which
relevant activities of such arrangement must be decided by unanimously agreement from
parties who share control. If all the parties or a group of parties must act in concert to
decide on the relevant activities of certain arrangement, it can be considered that all parties
or a group of parties have collective control over the arrangement. When determining if
there is any joint control, it should first be determined if the arrangement is controlled
collectively by all parties or a combination of parties, and then determined whether
decisions about activities related to the arrangement must be made by the unanimous
agreement of those parties who have collective control over the arrangement. If there are
two or more party groups that can collectively control certain arrangement, it does not
constitute joint control. When determining if there is any joint control, the relevant
protection rights will not be taken into account.
Significant influence is the power of the investor to participate in the decision-making of an
investee’s financial and operational policies, but neither control nor jointly control the
formulation of such policies with other parties. When determining if there is any significant
influence on the investee, the influence of the voting shares of the investee held directly or
indirectly and the potential voting rights held by the Company and other parties which are
exercisable in the current period and converted to the equity of the investee, including the
warrants, stock options and convertible bonds that are issued by the investee and can be
converted in the current period, shall be taken into account by the Company.
When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to
50% of the voting shares of the investee, it is generally considered to have significant
influence on the investee, unless there is concrete evidence to prove that it cannot
participate in the production and operational decisions of the investee and cannot pose
significant influence in this situation.
Haier Smart Home Co., Ltd. Annual Report 2023 197
Section X Financial Report
The Company usually determines whether there is significant influence on the investee
through the following one or several circumstances:
① Representation at the board or similar authority of the investee.
② Participation in the decision-making process of the investee’s financial and operational
policies.
③ Having important transactions with the investee.
④ Posting of management personnel at the investee.
⑤ Providing key technical data to the investee.
Having one or several of the above circumstances does not mean that the Company must
have significant influence on the investee. The Company needs to comprehensively
consider all the facts and circumstances to make an appropriate judgment.
(5) Methods for impairment test and impairment provision
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of a long-term equity investment. If there are indications of impairment, an
impairment test should be performed to ascertain its recoverable amount, and an
impairment provision equivalent to the margin by which the recoverable amount is lower
than the carrying value should be made. Once recognised, impairment loss will not be
reversed in subsequent accounting periods. The recoverable amount is determined as the
higher of net fair value of the long-term equity investment on disposal and present value of
estimated future cash flow.
(6) Disposal of long-term equity investments
Upon the Company’s disposal of long-term equity investments, the difference between the
carrying value and consideration actually acquired is included in current profit or loss. Upon
disposal of long-term equity investment, the portion previously included in other
comprehensive income is accounted for according to the relevant percentage on the same
basis adopted in the direct disposal of the relevant assets or liabilities by the investee.
198 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
15. Investment properties
(1) Types and measurement models of investment properties
The Company’s investment properties include the following types: leased land-use rights
and leased buildings.
The Company’s investment properties is initially measured at cost and subsequently on a
cost basis.
(2) Adoption of cost model as accounting policy
Among the Company’s investment properties, leased buildings are subject to depreciation
on a straight-line basis in accordance with accounting policies identical with accounting
policies for fixed assets. Leased land-use rights and land-use rights held for disposal after
appreciation land- use rights in investment properties are amortised using the straight-line
method in accordance with accounting policies identical with fixed asset accounting
policies for intangible assets.
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of an investment property. If there are indications of impairment, an impairment
test should be performed to ascertain its recoverable amount, and an impairment provision
equivalent to the margin by which the recoverable amount is lower than the carrying value
should be made. Once recognised, impairment loss will not be reversed in subsequent
accounting periods.
Where the investment properties are sold, transferred, retired or damaged, the differences
from disposal after deducting the carrying amount and related taxes are recognised in profit
or loss for the current period by the Company. When the Company has evidence indicating
the self-occupied houses and buildings are converted to leasing or leasing out its
properties held for sale under operating leases, the carrying amount of such fixed assets,
intangible assets or inventories before the conversion are transferred to investment
properties. When the Company has evidence indicating the property held to earn rentals or
for capital appreciation are converted to self-occupation or the property intended for
operating lease purpose are open for sale, the carrying amount of such properties before
the conversion are transferred to fixed assets, intangible asset or inventories.
Haier Smart Home Co., Ltd. Annual Report 2023 199
Section X Financial Report
16. Fixed assets
(1) Recognition criteria
√ Applicable □ Not Applicable
Fixed assets of the Company refer to tangible assets held for the production of
commodities, provision of labour services, lease or operational management with a useful
life of more than one accounting year. Fixed assets are recognised if all of the following
conditions are met:
① Economic benefits relating to such fixed assets are likely to flow into the Company;
② The cost of the fixed assets can be reliably measured.
Subsequent expenditure incurred for a fixed asset that meets the recognition criteria shall
be included in the cost of the fixed asset, and the carrying amount of the component of
the fixed asset that is replaced shall be derecognised. Otherwise, such expenditure shall be
recognised in profit or loss for the period in which it is incurred.
Fixed assets of the Company are initially measured at cost. The purchase cost of a fixed
asset comprises its purchase price, related taxes and any directly attributable expenditure
for bringing the asset to its working condition for its intended use, such as transportation
costs and installation expenses. If the payment for a purchased fixed asset is deferred
beyond the normal credit terms, the cost of the fixed asset shall be determined based on
the present value of the instalment payments. The difference between the actual payment
and the present value of the purchase price is recognised in profit or loss over the credit
period, except for such difference that is capitalised according to Accounting Standard for
Business Enterprises No. 17 — Borrowing Costs (ASBE No. 17).
(2) Classification and depreciation of fixed assets
The Company’s fixed assets are mainly classified into: buildings, machinery equipment,
transportation equipment and office and other equipment; depreciation is conducted on a
straight-line basis. The useful life and estimated net residual value of fixed assets are
determined based on the nature and use of the fixed assets. At the end of the year, the
useful life and estimated residual value of and depreciation method for fixed assets are
reviewed, and adjustment is made for any difference with the original estimated amount.
Other than fully depreciated fixed assets which remain in use and the land which is
separately priced and recorded, the Company measures depreciation for all fixed assets.
200 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
The type, depreciation method, estimated useful lives, estimated residual values and yearly
depreciation of the Company’s fixed assets are as follows:
Estimated
Depreciation Estimated useful residual
Type of assets method lives (years) values, net
Buildings Life average method 8–40 0–5%
Machinery equipment Life average method 4–20 0–5%
Transportation equipment Life average method 5–10 0–5%
Office and other equipment Life average method 3–10 0–5%
(3) Methods for impairment test and impairment provision for fixed assets
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of fixed assets. If there are indications of impairment, an impairment test should
be performed to ascertain its recoverable amount, and an impairment provision equivalent
to the margin by which the recoverable amount is lower than the carrying value should be
made. Once recognised, impairment loss will not be reversed in subsequent accounting
periods.
(4) Disposal of fixed assets
Fixed assets are derecognised upon disposal, or when no economic benefits are expected
from use or disposal. The difference between gains on disposal, transfer, retirement or
damage of fixed assets, net of their book value and related taxes, are included in profit and
loss.
17. Construction in progress
√ Applicable □ Not Applicable
(1) Measurement of construction in progress
The cost of the Company’s construction in progress is recognised at actual construction
expenses, including all necessary construction expenses incurred during the construction,
and borrowing costs capitalized before the work reaches the expected conditions for use
and other related costs.
Haier Smart Home Co., Ltd. Annual Report 2023 201
Section X Financial Report
(2) Criteria for and timing of the transfer of construction in progress to fixed assets
The Company’s construction in progress is transferred to fixed assets when the work is
completed and reaches the expected conditions for use. The criteria for judgement of
expected conditions for use should meet one of the following:
① The physical construction (including installation) of fixed assets has been completed in
full or substantially completed in full;
② Trial production or operation has commenced and the result indicates that the asset
can operate normally or can manufacture compliant products in a consistent manner,
or the trial operation indicates that it can operate or conduct business normally;
③ The amount of fixed asset expenditure of the construction is minimal or almost certain
not be further incurred;
④ Fixed assets acquired have reached design or contractual requirements, or are
essentially consistent with design and contractual requirements.
(3) Methods for impairment test and impairment provision for construction in progress
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of construction in progress. If there are indications of impairment, an
impairment test should be performed to ascertain its recoverable amount, and an
impairment provision equivalent to the margin by which the recoverable amount is lower
than the carrying value should be made. Once recognised, impairment loss will not be
reversed in subsequent accounting periods.
The recoverable amount is determined as the higher of net fair value of the asset less
disposal cost and the present value of estimated future cash flow.
18. Borrowing costs
√ Applicable □ Not Applicable
(1) Principle for recognition of capitalisation of borrowing cost
Borrowing costs incurred by the Company that can be directly attributed to the acquisition
or production of assets qualified for capitalisation are capitalised and included in relevant
asset costs; other borrowing costs are recognised as cost at the amount incurred at the
time of incurrence and charged to current profit or loss. Assets qualified for capitalisation
refer to fixed assets, investment properties and inventory that require a considerably long
period of acquisition or production activities to reach the expected conditions for use or
sale.
202 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) Computation of capitalised amounts
Capitalisation period: from the point of time at which the capitalisation of borrowing costs
begins to the point of time at which capitalisation ceases. The period of suspension of
capitalisation of borrowing costs is not included.
Period of suspension of capitalisation: In case of abnormal disruption during the acquisition
or production process for a consecutive period of more than 3 months, the capitalisation
period for borrowing costs should be suspended.
Computation of capitalised amount: ① For specific borrowings, the amount is determined
as interest expense incurred for the period in respect of the specific borrowing less interest
income received through the deposit of unutilised borrowed funds or investment gains
received through provisional investments; ② For general borrowings utilised, the amount is
determined as the weighted average amount of the portion of cumulative asset expenses in
excess of the asset expense of specific borrowings multiplied by the capitalisation rate for
the general borrowings utilised, where the capitalisation rate is the weighted average
interest rate of general borrowings; ③ where there is a discount or premium in the
borrowings, the amortisation of such discount or premium for each accounting period is
determined according to the effective interest rate and the interest amount for each period
is adjusted accordingly.
19. Intangible assets
√ Applicable □ Not Applicable
Intangible assets are the identifiable non-monetary assets which have no physical form and are
possessed or controlled by the Company, and are recognized when the following conditions are
met:
① it is probable that economic benefits attributable to the intangible assets will flow into the
Company;
② the costs of the intangible assets can be measured reliably.
(1) Measurement of intangible assets
Intangible assets of the Company are initially recognized at costs. The actual costs of
purchased intangible assets include the consideration and relevant expenses actually paid.
For intangible assets contributed by investors, relevant actual costs are determined based
on the value agreed in the investment contract or agreement. But if the value agreed in the
investment contract or agreement is not a fair value, the actual costs should be determined
based on the fair value. The cost of a self-developed intangible asset is the total
expenditure incurred in bringing the asset to its intended use. Intangible assets acquired in
a business combination not under common control that are owned by the acquiree but not
recognised in its financial statements are recognised as intangible assets at fair value on
initial recognition of the acquiree’s assets.
Haier Smart Home Co., Ltd. Annual Report 2023 203
Section X Financial Report
Subsequent measurement of intangible assets of the Company: ①Intangible assets with
finite useful lives are amortized on a straight-line basis; their useful lives and amortization
methods are reviewed at the end of each year, and adjusted accordingly if there is any
variance with the previous estimates; ②Intangible assets with indefinite useful lives are not
amortized and their useful lives are reviewed at the end of each year. If there is an
objective evidence that the useful life of an intangible asset is finite, an estimation should
be made on the useful life and the intangible asset should be amortized using the straight-
line method.
(2) Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the asset brings
economic benefits for the Company is unforeseeable, or the useful life could not be
ascertained.
Criterion of determining indefinite useful lives: ① the period is derived from contractual
rights or other legal rights and there are no explicit years of use stipulated in the contract
or laws and regulations; ② the period in which the intangible assets generate benefits for
the Company still could not be estimated after considering the industrial practice or
relevant expert opinions.
At the end of each year, the Company reviews the useful lives of the intangible assets with
indefinite useful lives. The assessment is primarily reviewed by relevant departments that
use the intangible assets, using the down-to-top approach, to determine if there are
changes to the determination basis of indefinite useful lives.
(3) Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether there
is any sign of impairment. If yes, the recoverable amount is recognized through an
impairment test and provision for impairment is made based on the difference between the
carrying value and the recoverable amount.
Impairment loss will not be reversed in subsequent accounting periods once provision is
made for it. The recoverable amount of intangible assets should be based on the higher of
the net fair value of the assets less the disposal expense and the present value of
estimated future cash flow of the assets.
204 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(4) Basis for research and development phases for internal research and development
project and basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred in the research
stage is recognized in the profit or loss as incurred. Expenses incurred in the development
stage are capitalized only if all of the following conditions are met: ①the technical
feasibility of completing the intangible assets so that they will be available for use or for
sale; ②the intention to complete the intangible assets for use or for sale; ③ how the
intangible assets will generate economic benefits, including there is evidence that the
products produced by the intangible assets has a market or the intangible assets
themselves have a market; if the intangible assets are for internal use, there is evidence
that there exists usage for the intangible assets; ④ the availability of adequate technical,
financial and other resources to complete the development and gain the ability to use or
sell the intangible assets; ⑤ the capability to reliably measure the expenditures attributable
to the development stage of the intangible assets.
Specific standards for distinguishing research stage and development stage of an internal
research and development project: the Company refers to the research stage as the stage
of planned investigation and search for obtaining new technology and knowledge, which
features planning and exploration; before commercial production or other uses, the
Company regards the stage of applying the research achievements and other knowledge in
a plan or design to produce new or substantially improved materials, equipment and
products as development stage, which features pertinence and is very likely to form
results.
All the expenditures incurred on research and development which cannot be distinguished
between research stage and development stage are recognized in the profit or loss.
20. Impairment of long-term assets
√ Applicable □ Not Applicable
Long-term equity investment, investment properties measured based on cost model, fixed assets,
construction in progress, intangible assets and other long-term assets are tested for impairment
if there is any sign of impairment at the balance sheet date. If the result of the impairment test
indicates that the recoverable amount of the assets is less than the carrying amount, a provision
for impairment will be made based on the difference and will be recorded in impairment loss. The
recoverable amount is the higher of the net fair value of the assets less the disposal expense
and the present value of estimated future cash flow of the assets. Provision for asset impairment
is calculated and recognized on the individual asset basis. If it is not possible to estimate the
recoverable amount of an individual asset, the recoverable amount of the asset group to which
the asset belongs is determined. An asset group is the smallest asset portfolio that can generate
cash inflows independently.
Haier Smart Home Co., Ltd. Annual Report 2023 205
Section X Financial Report
Goodwill arising from a business combination and an intangible asset with an indefinite useful life
is tested for impairment at least at each year end, irrespective of whether there is any indication
that the asset may be impaired. Intangible assets that have not been ready for intended use are
tested for impairment each year.
When the Company carries out impairment test of the goodwill, the carrying amount of the
goodwill, arising from business combination, shall be allocated to the related asset groups on
reasonable basis since the acquisition date, or to the related asset group portfolios if it is difficult
to be allocated to the related asset groups. When the carrying amount of the goodwill is
allocated to the related asset groups or asset group portfolios, it shall be allocated in the
proportion of the fair value of each asset group or asset group portfolio against the total fair
value of related asset groups or asset group portfolios. If it is difficult to measure the fair value
reliably, it shall be allocated in the proportion of the carrying amount of each asset group or
asset group portfolio against the total carrying amount of related asset groups or asset group
portfolios.
When impairment test is made by the Company to the related asset groups or asset group
portfolios including goodwill, if there is a sign that the related asset groups or asset group
portfolios are prone to impair, the Company shall first conduct impairment test on the asset
groups or asset group portfolios excluding goodwill, calculate the recoverable amount and
recognize the corresponding impairment loss by comparing with its carrying amount. The
Company shall then conduct impairment test on the asset groups or asset group portfolios
including goodwill and compare the carrying amount (including the carrying amount of allocated
goodwill) of related asset groups or asset group portfolios with the recoverable amount thereof.
Impairment loss shall be recognized in accordance with the differences when the recoverable
amount of the related asset groups or asset group portfolios is lower than the carrying amount
thereof. The amount of the impairment loss is first reduced by the carrying amount of the
goodwill allocated to the asset group or set of asset groups, and then the carrying amount of
other assets (other than the goodwill) within the asset group or set of asset groups, pro rata
based on the carrying amount of each asset.
Once the above impairment loss on assets is recognized, it shall not be reversed by the
Company in any subsequent accounting period.
206 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
21. Long-term prepaid expense
√ Applicable □ Not Applicable
Long-term prepaid expenses of the Company are expenditures which have incurred but the
benefit period of which is more than one year (exclusive). They are amortized by installments over
the benefit period based on each item under the expenses. If items under the long-term pre-paid
expenses are no longer beneficial to the subsequent accounting periods, the amortized value of
such unamortized items is then fully transferred to the profit or loss.
22. Contract liabilities
√ Applicable □ Not Applicable
A contract liability represents the Company’s obligation to transfer goods to a customer for
which the Company has received consideration (or an amount of consideration is due) from the
customer. If the customer has already paid the contract consideration before the Company
transfers goods to the customer or the Company has obtained the unconditional collection right,
the Company will recognise such amount received or receivable as contract liabilities at earlier of
the actual payment by the customer or the amount payable becoming due. Contract assets and
contract liabilities under the same contract are presented on a net basis, and contract assets
and contract liabilities under different contracts are not offset.
23. Staff remuneration
Staff remunerations are all forms of compensation and other relevant expenditure given by the
Company in exchange for services rendered by employees, including short-term remunerations,
post-employment benefits, termination benefits and other long-term benefits.
(1) Accounting treatment of short-term remunerations
√ Applicable □ Not Applicable
Short-term remunerations provided by the Company include short-term salaries, bonus,
allowance, subsidies, employee welfare, housing provident fund, labor union fee and
education fee, medical insurance premiums, work-related injury insurance premiums,
maternity insurance premiums, short-term compensated leave, short-term profit-sharing
plans, etc. During the accounting period when employees render services, the Company
shall recognize short-term remunerations that actually incurred as liabilities and credited into
the current profit or loss or the cost of relevant assets on an accrual basis by the benefit
objects.
Haier Smart Home Co., Ltd. Annual Report 2023 207
Section X Financial Report
(2) Accounting treatment of post-employment benefits
√ Applicable □ Not Applicable
Post-employment benefits mainly include the basic pension insurance, enterprise annuity,
etc., In accordance with the risks and obligations undertaken by the Company, the
post-employment benefits are classified as defined contribution plans and defined benefit
plans.
Defined contribution plans: the Company shall recognize the sinking funds paid on the
balance sheet date to individual entities in exchange for services from employees in the
accounting period as liabilities, and shall credit such funds into the profit or loss or the cost
of relevant assets in accordance with the benefit objects.
Defined benefit plans: the Company determines the cost for providing benefits using the
expected cumulative welfare unit method, with actuarial valuations being carried out by
independent actuary at the interim and annual balance sheet date. The costs for staff
remunerations incurred by the defined benefit plans of the Group are categorized as
follows: (1) service cost, including current period service cost, past service cost and
settlement profit or loss. Specifically, current period service cost means the increase of the
present value of defined benefit obligations resulted from the current period services offered
by employees. Past service cost means the increase or decrease of the present value of
defined benefit obligations resulted from the revision of the defined benefit plans related to
the prior period services offered by employees; (2) interest expenses of defined benefit
plans; (3) changes caused by the remeasurement of liabilities for defined benefit plans.
Unless other accounting standards require or permit the credit of the costs for employee
welfare into the cost of assets, the Company will credit (1) and (2) above into the profit or
loss; and recognize (3) above as other comprehensive income and will not transfer it back
to the profit or loss in subsequent accounting periods.
(3) Accounting treatment of termination benefits
√ Applicable □ Not Applicable
Termination benefits are the indemnity proposal provided by the Company for employees
for the purpose of terminating labor relations with employees before expiry of the labor
contracts or encouraging employees to accept downsizing voluntarily. When the Company
could not unilaterally withdraw the termination benefits provided as a result of plan for
termination of labor relations or the redundancy offer, or upon recognition of costs or
expenses related to a restructuring involving the payment of termination benefits, whichever
is earlier, the staff remuneration liabilities arising from such termination benefits are
recognized and included in current profit or loss.
208 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
24. Estimated liability
√ Applicable □ Not Applicable
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting of
commercial acceptance bills, pending litigation or arbitration and product quality assurance
is the present obligation of the Company and the performance of such obligation is likely to
lead to an outflow of economic interests and its amount can be reliably measured, such
obligation shall be recognized as an estimated liability.
(2) Measurement of estimated liability
The estimated liability shall be initially measured according to the best estimate of the
necessary expenses for the performance of the present obligation. If there is a continuous
range for the necessary expenses and if all the outcomes within this range are equally likely
to occur, the best estimate shall be determined according to the middle estimate within the
range.; if there are two or more items involved, the best estimate should be determined
according to all possible outcomes and relevant probabilities.
At the balance sheet date, the carrying value of estimated liabilities should be reviewed. If
there is objective evidence that the carrying value could not reflect in the current best
estimate, the carrying value shall be adjusted to reflect the current best estimate.
If all or part of the expense necessary for settling the provisions is expected to be
compensated by the third party, the amount of compensation is separately recognized as
an asset when it is basically determined to be recoverable, and the recognized amount of
the compensation shall not exceed the carrying amount of the provisions.
25. Share-based payments
√ Applicable □ Not Applicable
Share-based payments of the Company are transactions in which equity instruments are granted
to employees in exchange for services rendered by employees or for the assumption of liabilities
based on equity instruments. Share-based payments of the Company are equity-settled
share-based payments and cash-settled share-based payments.
Haier Smart Home Co., Ltd. Annual Report 2023 209
Section X Financial Report
For equity-settled share-based payment transaction in return for services from employees, it shall
be measured at the fair value of equity instruments granted to the employees at the date of
grant by the Company. On each balance sheet date within the vesting period, the Company
makes the best estimation of the number of vested equity instruments based on subsequent
information such as the updated changes in the number of employees who are granted to vest
and the achievement of specified performance conditions. Based on the above results, the
services received in the current period are included in the relevant cost or expenses based on
the fair value on the date of grant, with the increase in the capital reserve accordingly. The
recognized relevant cost or expenses and the total amount of owners’ interest shall no longer be
adjusted after the vesting date. However, equity instruments vested immediately after the date of
grant shall be included in the relevant cost or expenses based on its fair value on the date of
grant, with the increase in the capital reserve accordingly.
The cash-settled share-based payment shall be measured at the fair value of liability assumed by
the Company, which is determined based on the shares or other equity instruments. For the
cash-settled share-based payment that may be exercised immediately after the grant, the fair
value of the liability assumed by the Company shall, on the date of the grant, be recognized in
relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled
share-based payment that may be exercised if services are fulfilled during the vesting period or
the specified performance condition is achieved, on each balance sheet date within the vesting
period, the services acquired in the current period shall, based on the best estimate of exercise,
be recognized in relevant costs or expenses at the fair value of the liability assumed by the
Company, and the liabilities shall be adjusted correspondingly. At each balanced sheet date and
the settlement date prior to the settlement of liabilities, the fair value of the liability is
re-measured with its change consolidated in profit/loss.
When there is changes to the Company’s share-based payment plans, if the modification
increases the fair value of the equity instruments granted, corresponding recognition of service
increase in accordance with the increase in the fair value of the equity instruments; if the
modification increases the number of equity instruments granted, the increase in fair value of the
equity instruments is recognized as a corresponding increase in service achieved. Increase in the
fair value of equity instruments refer to the difference between the fair values of the equity
instrument on the modified date before or after the modification. If the Company modifies the
vesting conditions in such manner conductive to the employees, including the shortening of the
vesting period, change or cancellation of the performance conditions (rather than market
conditions), the modified vesting conditions are considered upon the disposal of vesting
conditions. If the modification reduces the total fair value of shares paid or the Company uses
other methods not conductive to employees to modify the terms and conditions of share-based
payment plans, the Company will continue to be accounted for the services obtained in the
accounting treatment, as if the change had not occurred, unless the Company cancelled some or
all of the equity instruments granted.
210 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
During the vesting period, if the Company cancel equity instruments granted which will be treated
as accelerating the exercise of rights and any amount to be charged over the remaining vesting
period should be recognized immediately in the profit or loss, while at the same time recognize
the capital reserve. Employees or other parties can choose to meet non-vesting conditions, but
for those that are not met in the vesting period, the Company will treat it as cancellation of
equity instruments granted.
26. Revenue
√ Applicable □ Not Applicable
Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries
during day-to-day operations which might lead to increase of shareholders’ equity and be
irrelevant to capital invested by shareholders.
The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,
recognized revenue when the client obtains the control right of relevant goods or services.
Where the contract includes two or more performance obligations, during the starting date of the
contract, the Company and its subsidiaries allocate transaction price to various single
performance obligation in accordance with the relevant proportion of separate selling price of
goods or services promised by various single performance obligation, and measure revenue in
accordance with transaction price allocated to various single performance obligation.
Transaction price is the amount of consideration that the Company and its subsidiaries are
expected to be entitled to collect due to transfer of goods and services transferred to the client,
excluding the amount collected for any third party. The transaction price recognized by the
Company and its subsidiaries does not exceed the amount of recognized revenue when relevant
uncertainties are eliminated and might not incur material carrying back. The amount that is
expected to be returned to the client is taken as liability of returned goods and is not recorded
in transaction price.
When one of the following conditions is met, the Company and its subsidiaries perform
performance obligations during a certain time horizon, otherwise, it belongs to fulfilling
performance obligations at a certain time point:
① The client simultaneously obtains and consumes economic benefits as the Company and its
subsidiaries perform the contract;
② The client is able to control goods under construction during the process of performance of
the Company and its subsidiaries;
③ Goods produced by the Company and its subsidiaries during the process of performance
have no alternative use, and the Company and its subsidiaries are entitled to collect the
amount for the cumulative completed and performed portion to date during the entire
contractual period.
Haier Smart Home Co., Ltd. Annual Report 2023 211
Section X Financial Report
For the performance obligations performed during a certain time horizon, the Company and its
subsidiaries recognize revenue in accordance with the schedule of performance during such time
horizon. When the schedule of performance can’t be reasonably recognized, where the costs that
have been incurred by the Company and its subsidiaries are estimated to be compensated,
revenue shall be recognized in accordance with the amount of costs that has been incurred until
the schedule of performance can be reasonably confirmed.
For performance obligations performed at a certain time point, the Company and its subsidiaries
recognize revenue at the time point when the client obtains the control right of relevant goods or
services. When judging whether the client has obtained control right over goods or services, the
Company and its subsidiaries will consider the following signs:
① The Company and its subsidiaries enjoy the right of instant collection over such goods and
services;
② The Company and its subsidiaries have transferred the material objects of such goods to
the client;
③ The Company and its subsidiaries have transferred statutory ownership right of the goods
or major risks and rewards of the ownership to the client;
④ The client has accepted such goods or service.
The right that the Company and its subsidiaries are entitled to collect the consideration for
having transferred goods or services to the client (and such right depends on other factors other
than time lapse) is presented as contractual asset, and contractual asset is provisioned
impairment on the basis of expected credit losses. The right owned by and unconditionally
collected from the client by the Company and its subsidiaries (only depend on time lapse) shall
be presented as accounts receivable. Obligations that the Company and its subsidiaries have
collected or shall collect consideration from the client and shall transfer goods or services to the
client are presented as contractual obligations.
Specific accounting policies relating to major activities that the Company and its subsidiaries
obtain revenue are described as follows:
(1) Sale of goods
Generally, contracts for sale of goods between the Company and its clients only include
performance obligation of transferring the whole machine of home appliance. Generally, on
the basis of taking into account the following factors comprehensively, the Company
recognizes the revenue at the time point of transfer of control right of goods: the right of
instant collection for obtaining goods, transfer of major risks and rewards on ownership of
goods, transfer of statutory ownership of goods, transfer of assets of material objects of
goods, the client’s acceptance of such goods.
212 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) Construction contract income
Construction contract between the Company and the client generally includes performance
obligations of construction and installation of commercial air-conditioner and smart home,
because the client is able to control goods under construction during the Company’s
performance process, the Company takes them as performance obligations performed
during a certain time horizon, and recognizes revenue in accordance with the schedule of
performance, and it is an exemption when the schedule of performance can’t be
reasonably confirmed. The Company confirms the schedule of performance of services
provided in accordance with the input method. When the schedule of performance can’t be
reasonably confirmed, where the costs that have been incurred by the Company are
estimated to be compensated, the revenue will be recognized in accordance with the
amount of costs that has been incurred until the schedule of performance can be
reasonably confirmed.
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides quality
assurance for goods sold and project constructed. For guarantee-type quality assurance in
order to ensure the client that goods sold comply with existing standards, the Company
conducts accounting treatment in accordance with estimated liabilities. For service-type
quality assurance in order to ensure the client that we also provide a separate service other
than that the goods sold comply with existing standards, the Company takes it as a
separate performance obligation, and allocates partial transaction price to service-type
quality assurance in accordance with the relevant proportion of separate selling price of
goods and service-type quality assurance, and recognizes revenue when the client obtains
control right over services. When assessing whether quality assurance provides a separate
service other than ensuring the client that the goods sold comply with existing standards,
the Company shall consider factors such as whether such quality assurance is under
statutory requirements or industrial practices, the term of quality assurance and the nature
of the Company’s commitment to perform the tasks.
27. Government grants
√ Applicable □ Not Applicable
(1) Types of government grants
Government grants refer to the gratuitous monetary assets or non-monetary assets
obtained by the Company from the government, excluding the capital invested by the
government as an owner. The government grants are mainly divided into asset-related
government grants and revenue-related government grants.
Haier Smart Home Co., Ltd. Annual Report 2023 213
Section X Financial Report
(2) Accounting treatment of government grants
Asset-related government grants shall be recognized as deferred income in current profit or
loss on an even basis over the useful life of relevant assets; government grants measured
at nominal amount shall be recognized directly in current profit or loss. Revenue-related
government grants shall be treated as follows: ①those used to compensate relevant
expenses or losses to be incurred by the enterprise in subsequent periods are recognized
as deferred income and recorded in current profit or loss when such expenses are
recognized; ②those used to compensate relevant expenses or losses that have been
incurred by the enterprise are recorded directly in current profit or loss.
(3) Basis for determination of asset-related government grant and revenue-related
government grant
If the government grant received by the Company is used for purchase, construction or
other project that forms a long-term asset, it is recognized as asset-related government
grant.
If the government grant received by the Company is not asset-related, it is recognized as
revenue-related government grant.
Government grant received without clear objective shall be classified as asset-related
government grant or revenue-related government grant by:
① Government grant subject to a certain project shall be separated according to the
proportion of expenditure budget and capitalization budget, and the proportion shall
be reviewed and modified if necessary on each balance sheet date;
② Government grant shall be categorized as revenue-related if its usage is described in
general statement and no specific project is specified in the relevant government
document.
(4) Amortization method and determination of amortization period of deferred revenue
related to government grants
Asset-related government grant received by the Company is recognized as deferred
revenue and is evenly amortized to the profit or loss in the current period over the
estimated useful life of the relevant asset starting from the date when the asset is available
for use.
(5) Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of the
period when there is clear evidence that the relevant conditions set out in the financial
subsidy policies and regulations are fulfilled and the receipt of such financial subsidy is
assured.
Other government grants other than those measured at the account receivable is
recognized upon actual receipt of such subsidies.
214 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
28. Deferred tax assets/deferred tax liabilities
√ Applicable □ Not Applicable
Deferred income tax assets and deferred income tax liabilities of the Company are calculated and
recognized based on the differences between the tax bases and the carrying amounts of assets
and liabilities (temporary differences).
(1) Deferred income tax assets are recognized by the Company to the extent that it is probable
that future taxable profits will be available against which the deductible temporary
differences can be utilized. For deductible losses and tax credits that can be carried
forward to future years, deferred income tax assets shall be recognized to the extent that it
is probable that taxable profit will be available in the future to offset the deductible losses
and tax credits. Save as the exceptions, deferred income tax liabilities shall be recognized
for the taxable temporary differences.
(2) Deferred income tax asset of the Company is recognized to the extent that there is enough
taxable income for the deduction of the deductible temporary difference. At the balance
sheet date, if there is sufficient evidence that there will be enough taxable income in the
future for the deduction of the deductible temporary difference, the deferred income tax
asset not recognized in previous accounting period is recognized. If there is no sufficient
evidence that there will be enough taxable income in the future for the deduction of the
deferred income tax asset, the carrying value of the deferred income tax asset is reduced.
(3) The Company recognizes deferred income tax liability for taxable temporary difference arising
from investments in subsidiaries and associated companies, unless the Company could
control the time of reversal of the temporary differences and the temporary differences
would not be probably reversed in the foreseeable future. The Company recognizes
deferred income tax asset for deductible temporary differences arising from investments in
subsidiaries and associated companies, if the temporary difference will be very probably
reversed in the foreseeable future and it is highly probable that taxable income will be
available in the future to deduct the deductible temporary difference.
(4) The Company does not recognize deferred income tax liability for a temporary difference
arising from the initial recognition of goodwill. No deferred income tax asset or deferred
income tax liability is recognized for the temporary differences resulting from the initial
recognition of assets or liabilities due to a transaction other than a business combination,
which affects neither accounting profit nor taxable income (or deductible loss). At the
balance sheet date, deferred income tax assets and deferred income tax liabilities of the
Company are measured at the tax rates that apply to the period when the asset is
expected to be recovered or the liability is expected to be settled.
Haier Smart Home Co., Ltd. Annual Report 2023 215
Section X Financial Report
(5) Deferred income tax assets and deferred income tax liabilities are offset when:
1) deferred tax assets and deferred tax liabilities relate to income taxes levied by the same
taxation authority on the same taxable entity within the Company; and
2) such taxable entity within the Company has a legally enforceable right to settle current
income tax assets and current income tax liabilities on a net basis.
29. Leases
√ Applicable □ Not Applicable
Lease is a contract in which the Company transfers or obtains the right of use of an identified
asset or several identified assets under control for the exchange or payment of consideration
within a certain period of time. At inception of a contract, the Company assesses whether a
contract is, or contains, a lease.
(1) The Company as the lessee
√ Applicable □ Not Applicable
1) Initial measurement
On the commencement date of the lease term, the Company recognizes its right to
use leased assets over the lease term as right-of-use assets and recognizes the
present value of the lease payments that have not been paid as lease liabilities,
except for short-term leases and low-value leases. The lease payments are
discounted using the implicit interest rate in the lease when calculating the present
value of the lease payments. If that rate cannot be readily determined, the Company
uses its incremental borrowing rate as the discount rate.
Right-of-use assets shall be initially measured at costs. The costs include:
a. initial measurement amount of the lease liabilities;
b. a lease payment paid on or before the date of commencement of the lease term,
where there were lease incentives, such incentives received shall be deducted;
c. initial direct costs incurred by the lessee;
d. costs expected to be incurred by the Company for demolition and removal of
leased assets, restoration of the premises where the leased assets are located,
or restoration of the leased assets to the conditions of the lease terms.
216 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
2) Subsequent measurement
If the Company accrues depreciation for right-of-use assets by reference to the
depreciation policy for fixed assets (see this Note V.16 “Fixed assets” for details), and
can reasonably determine that the ownership of the leased asset can be acquired at
the expiration of the lease term, the Company shall depreciate the leased asset within
its remaining useful life. If the Company cannot reasonably determine that the
ownership of the leased asset can be acquired at the expiration of the lease term, the
Company shall depreciate the leased asset within the lease term or its remaining
useful life, whichever is shorter. For lease liabilities, the Company shall calculate the
interest expenses for each period over the lease term at the fixed periodic interest
rate, and recognize it in current profit or loss or the cost of relevant assets. Variable
lease payments that are not included in the measurement of lease liabilities are
recognized in current profit or loss or the cost of relevant assets when they are
actually incurred. After the commencement date of the lease term, in the event that
there is a change in the substantive fixed payments, a change in expected payment
under a guaranteed residual value, a change in an index or rate used in determining
the lease payments, or a change in the evaluation result or actual exercise of
purchase option, extension option or termination option, the Company remeasures the
lease liabilities based on the present value of the lease payments after the change
and adjusts the carrying value of the right-of-use asset accordingly. If the carrying
amount of the right-of-use asset has been reduced to zero, but a further reduction in
the measurement of the lease liabilities is still warranted, the Company recognizes the
remaining amount of the remeasurement in current profit or loss.
3) Short-term leases and leases of low-value assets
For short-term leases (leases with a term of less than 12 months as of the lease
commencement date) and leases of low-value assets, the Company adopts a
simplified approach by not recognizing the right-of-use assets and lease liabilities, and
instead recognizes the cost of relevant assets or current profit or loss on a
straight-line basis for each period over the lease term.
(2) The Company as the lessor
√ Applicable □ Not Applicable
The Company classifies leases into finance leases and operating leases based on the
substance of the transaction at the inception date of the lease. A finance lease is a lease
that transfers substantially all the risks and rewards incidental to ownership of the leased
asset. An operating lease is a lease other than a finance lease.
1) Operating leases
The Company uses the straight-line method to recognize lease receipts under
operating leases as rental income for each period during the lease term. Variable
lease payments relating to operating leases that are not recognized as lease receipts
are recognized in current profit or loss when they are actually incurred.
Haier Smart Home Co., Ltd. Annual Report 2023 217
Section X Financial Report
2) Finance leases
On the commencement date of the lease term, the Company recognizes finance lease
receivables and derecognizes finance lease assets. Finance lease receivables are
initially measured at the net investment in the lease (the sum of the unguaranteed
residual value and the present value of the lease receipts not yet received on the
commencement date of the lease term discounted at the interest rate embedded in
the lease), and interest income is recognized over the lease term calculated at a fixed
periodic interest rate. Variable lease payments acquired by the Company that are not
included in the measurement of the net investment in the lease are recognized in
current profit or loss when they are actually incurred.
30. Other significant accounting policies and accounting estimates
√ Applicable □ Not Applicable
(1) Asset securitisation
The Company has securitised certain receivables to entrust the assets to specific-purpose
entities which would issue such securities to investors. As asset service provider, the
Company is responsible for the provision of maintenance and daily management of the
assets, formulation of annual asset disposal plans, formulation and implementation of asset
disposal plan, signing of relevant asset disposal agreements and preparation asset service
reports on a regular basis.
In applying the accounting policy for the securitisation of financial assets, the Company has
considered the extent to which the risk and reward of the assets have been transferred to
other entities, and the extent to which the Company exercises control over the entity:
① When the Company has transferred substantially all risk and reward relating to the
ownership of a financial asset, such financial asset is derecognised;
② When the Company retains substantially all risk and reward relating to the ownership
of a financial asset, the Company continues to recognise such financial asset;
③ If the Company neither transfers nor retains substantially all risk and reward relating to
the ownership of a financial asset, the Company considers whether it has control over
the financial asset. If the Company does not retain control, the financial asset is
derecognised, and the rights and obligations arising from or retained the transfer are
recognised as assets and liabilities, respectively. If the Company retains control, the
financial asset is recognised according to the extent of continued involvement in the
financial assets.
218 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) Hedge accounting
Hedge refers, in respect of the risk exposure arising from the company’s management of
specific risks such as foreign exchange risks, interest rate risks, price risks and credit risks,
to risk management activity of designating financial instruments as hedging instruments
such that the change in the fair value or cash flow of the hedging instruments can be
expected to set off the change in the fair value or cash flow of the hedged item.
The hedged item refers to an item designated for hedge against the risk of change in fair
value or cash flow that can be reliably measured.
Hedging instruments are financial instruments designated for hedge, the change in fair value
or cash flow of which is expected to set off the change in the fair value or cash flow of the
hedged item.
The Company assesses whether the hedge relationship fulfills the requirement for hedge
effectiveness at the inception date of the hedge and continuously in subsequent periods.
The effectiveness of hedge refers to the extent to which the change in the fair value or
cash flow of the hedging instruments can offset the change in the fair value or cash flow of
the hedged item caused by the risk against which the hedge is made. The change in the
fair value or cash flow of a hedging instrument in excess or shortfall of the change in the
fair value or cash flow of the hedging instruments can offset the change in the fair value or
cash flow of the hedged item represents the ineffective portion of the hedge.
(3) Significant accounting estimates
In the course of applying accounting policies, the Company is required to make
judgements, estimations and assumptions on the carrying values of statement items that
cannot be accurately measured owing to uncertainties to which operating activities are
subject. Such judgements, estimations and assumptions are made based on the past
experience of the management and taking into consideration of other relevant factors. Such
judgements, estimations and assumptions affect the reported amounts of income,
expenses, assets and liabilities and the disclosure of contingent liabilities as at the balance
sheet date. However, the actual outcome resulting from the uncertainty of such estimates
could be different from the current estimates of the management, thereby resulting in
significant adjustments to the carrying value of the future assets or liabilities affected. The
Company regularly reviews such judgements, estimations and assumptions on a going
concern basis. If the change in accounting estimates affects only the current period in
which the change occurs, the affected amount is recognized for the period in which the
change occurs; if both the current period and future periods are affected, the affected
amount is recognised for the current period and the future periods.
Haier Smart Home Co., Ltd. Annual Report 2023 219
Section X Financial Report
At the balance sheet date, important aspects in which the Company is required to make
judgements, estimations and assumptions on the amount of items on the financial
statements are as follows:
Estimated liabilities
The Company estimates and makes provision for product warranty and estimated
contract loss according to contract terms, existing knowledge and historical
experience. When such contingencies have given rise to a present obligation, and the
performance of such present obligation is likely to result in the outflow of economic
benefit from the Company, the Company recognises estimated liabilities for the
contingencies based on the best estimates of expenses required for the performance
of relevant present obligations. The recognition and measurement of estimated
liabilities is dependent to a large extent on management judgement. In the course of
judgement, the Company is required to assess factors such as risks, uncertainties
and the time value of currency relating to such contingencies. In particular, the
Company recognises estimated liabilities in respect of after-sales undertaking to
customers for return and replacement, maintenance and installation of goods sold.
The recognition of estimated liabilities has taken into account the maintenance
experience and data of the Company for recent years, although past experience in
maintenance may not reflect maintenance in the future. Any increase or decrease in
this provision might affect the profit or loss of future years.
Provision for ECL
The Company measures ECL through default risk exposure and the ECL rate, which
is determined based on the default probability rate and default loss rate. In
determining the ECL rate, the Company uses data such as internal historic credit loss
experience and adjusts the historic data taking into consideration current conditions
and prospective information. When considering prospective information, indicators
adopted by the Company include the risk of economic downside, expected growth in
unemployment rate, and changes in external market conditions, technical conditions
and customer conditions. The Company monitors and reviews the assumptions
relating to ECL computation on a regular basis. There was no significant change to
aforesaid estimation technique and key assumptions during the year.
220 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Impairment provisions for inventory
The Company makes impairment provisions for inventory of which cost is higher than
net realisable value and obsolete and slow-moving inventory based on the lower of
cost and net realisable value according to its inventory accounting policy. The
impairment of inventory to its net realisable value is based on assessment of the
sellability of inventory and its net realisable value. The authentication of inventory
impairment requires the management to obtain conclusive evidence and make
judgment and estimates taking into consideration factors such as the purpose of
inventory and post-balance sheet date events. Any difference between the actual
outcome and the previous estimate will affect the carrying value of inventory and the
charge or reversal of impairment provisions for inventory during the period in which
the estimates are modified.
Fair value of financial instruments
For financial instruments without an active trading market, the Company determines
its fair value using valuation techniques. Such valuation techniques include discounted
cash flow model analysis and others. During the assessment, the Company is
required to make estimates on future cashflow, credit risk, market volatility rate and
relevance and select an appropriate discount rate. Such relevant assumptions are
subject to uncertainty, and any change will affect the fair value of financial
instruments.
Impairment of other equity instrument investments
The Company’s determination of impairment for other equity instrument investments is
largely dependent on the management’s judgment and assumptions to determine
whether impairment should be recognised. In the course of making judgments and
assumptions, the Company is required to assess the extent and duration of the fair
value of the investment being lower than cost, as well as the financial conditions and
short-term business prospects of the investee, including industry conditions,
technological revolution, credit rating, default rate and counterparty risks.
Haier Smart Home Co., Ltd. Annual Report 2023 221
Section X Financial Report
Impairment provision for long-term assets
At the balance sheet date, the Company assesses whether there are indications of
possible impairment of non-current assets other than financial assets. In addition to
the annual impairment test, intangible assets with indefinite useful life are also tested
for impairment when there are indications of the same. Impairment tests on non-
current assets other than financial assets are conducted when there are indications
that its carrying value may not be recoverable. An impairment has occurred when the
carrying value of an asset or asset group is higher than the recoverable amount (the
higher of net fair value less disposal cost and the present value of estimated future
cash flow). The net fair value less disposal cost is determined with reference to the
agreed selling price of similar assets in a fair transaction or observable market prices
less incremental costs attributable directly to the disposal of such asset. In estimating
the present value of future cashflow, significant judgement is required to be made in
respect of the production volume and selling price of the asset or (asset group),
relevant operating cost and discount rate for the computation of present value. The
Company takes into consideration all available relevant information when making
estimates on the recoverable amount, including forecasts on production volume,
selling price and relevant operating costs based on reasonable and justifiable
assumptions. The Company conducts goodwill impairment tests at least annually. This
requires estimates on the present value of future cashflow of asset group or portfolio
of asset groups to which goodwill has been allocated. When making estimates on the
present value of future cashflow, the Company is required to make estimates on
cashflow generated from future asset group or portfolio of asset groups, and at the
same time select an appropriate discount rate to determine the present value of
future cashflow.
Depreciation and amortisation
Depreciation and amortisation of investment properties, fixed assets and intangible
assets is charged on a straight-line basis over their useful life after taking their
residual values into account. The Company reviews the useful life on a regular basis
to determine the amount of depreciation and amortisation charge to be allocated to
each reporting period. The useful life is determined based on past experience relating
to similar assets taking into consideration expected technological upgrades. If there
are significant changes in previous estimates, the depreciation and amortisation
charge for future periods will be adjusted.
Deferred income tax assets
The Company recognises deferred income tax assets in respect of all unutilised tax
losses, to the extent that it is probable that sufficient taxable profit will be available to
offset the loss. This requires the exercise of significant judgement by the Company’s
management to estimate the timing and amount of future taxable profit, taking into
account its tax planning strategy, to determine the amount of deferred income tax
assets to be recognised.
222 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Income tax
In the Company’s usual operating activities, the final tax treatment and computation
of certain transactions are subject to uncertainty. Whether certain items can be
presented on a pretax basis is subject to approval of the competent taxation
authority. If the final confirmed outcome of such taxation matters is different from the
amount of the initial estimates, such difference will affect the current income tax and
deferred income tax for the period of final confirmation.
Provision for sales rebate
The Company and its subsidiaries adopt a sales rebate policy for sales agent
customers. Based on relevant provisions of the sales agreements, vetting of specific
transactions, market conditions, channel inventory level and past experience with
reference to the status of completion of agreed appraisal indicators by sales agent
customers, the Company and its subsidiaries makes estimates on and provision for
sales rebate on a regular basis. The provision of sales rebate involves judgment and
estimation by the management. In the event of any material change in previous
estimates, the aforesaid difference will affect the sales rebate for the period for which
the estimates are changed.
31. Changes in significant accounting policies
√ Applicable □ Not Applicable
Particulars of and reasons for changes in
accounting policies Date of issue Date of adoption
Accounting Standards for Business November 2022 1 January 2023
Enterprises Interpretation No. 16
(“Interpretation No. 16”)
Haier Smart Home Co., Ltd. Annual Report 2023 223
Section X Financial Report
The Company and its subsidiaries have adopted the standard of the Interpretation No. 16 on
1 January 2023. For deferred tax assets and liabilities recognised in respect of the lease liabilities
and right-of-use assets related to a single transaction at the beginning of the earliest period
when the Interpretation No. 16 was adopted for the presentation of the financial statements, the
net amount of the deferred tax assets and liabilities after offsetting was equal to the amounts
originally recognised on a net basis, with no impact on the consolidated balance sheet items
presented at the net amount after offsetting. The impact of the changes in accounting policies on
deferred tax assets and deferred tax liabilities before offsetting as at 1 January 2023 was as
follows:
Before policy After policy
Item changes Impact of changes changes
Deferred tax assets before offsetting 4,038,915,158.86 868,657,062.49 4,907,572,221.35
Deferred tax liabilities before offsetting 4,673,734,789.63 868,657,062.49 5,542,391,852.12
Offset amount –2,314,874,230.44 –868,657,062.49 –3,183,531,292.93
Deferred tax assets after offsetting 1,724,040,928.42 1,724,040,928.42
Deferred tax liabilities after offsetting 2,358,860,559.19 2,358,860,559.19
VI. TAXATION
1. Main tax categories and rates
√ Applicable □ Not Applicable
Tax types Basis of taxation Tax rate
Value-added tax Taxable revenue from sales of 6%, 9%, 13%
goods and rendering services
City maintenance and construction tax Circulation tax payable 7%
EIT Taxable income Statutory tax rate
or preferential
rates as follows
(Local) education surcharge Circulation tax payable 1%, 2%, 3%
224 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
2. Preferential tax
√ Applicable □ Not Applicable
Companies subjected to preferential tax and preferential tax rate:
Company Tax rate Preferential tax
Qingdao Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Qingdao Haier Special Refrigerator 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Dishwasher Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Qingdao Haier Special Freezer Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Intelligent Home 15.00% entitled to the preferential
Appliance Technology Co., Ltd. taxation policies as a hi-tech
enterprise
Wuhan Haier Electronics Holding Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Wuhan Haier Freezer Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Hefei Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Hefei Haier Air-conditioning Co., 15.00% entitled to the preferential
Limited taxation policies as a hi-tech
enterprise
Zhengzhou Haier Air-conditioning Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Shenyang Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Qingdao Haier Air-Conditioner 15.00% entitled to the preferential
Electronics Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Meier Plastic Powder Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Haier Smart Home Co., Ltd. Annual Report 2023 225
Section X Financial Report
Company Tax rate Preferential tax
Qingdao Hai Gao Design and 15.00% entitled to the preferential
Manufacture Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Hairi High Technology Co., 15.00% entitled to the preferential
Ltd taxation policies as a hi-tech
enterprise
Qingdao Haier (Jiaozhou) Air- 15.00% entitled to the preferential
conditioning Co., Limited taxation policies as a hi-tech
enterprise
Qingdao Haier Intelligent Technology 15.00% entitled to the preferential
Development Co., Ltd. taxation policies as a hi-tech
enterprise
Foshan Haier Freezer Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Qingdao Haier Central Air Conditioning 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Haier U+smart Intelligent Technology 15.00% entitled to the preferential
(Beijing) Co., Ltd. taxation policies as a hi-tech
enterprise
Shanghai Zhi Han Technology Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Electronic Plastic Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Qingdao Wei Xi Intelligent Technology 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Special Refrigerating 15.00% entitled to the preferential
Appliance Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Smart Kitchen 15.00% entitled to the preferential
Appliance Co., Ltd. taxation policies as a hi-tech
enterprise
Hefei Haier Air Conditioning 15.00% entitled to the preferential
Electronics Co., Ltd. taxation policies as a hi-tech
enterprise
Shanghai Haier Medical Technology 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
226 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Company Tax rate Preferential tax
Shanghai Haier Smart Technology Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Qingdao Yunshang Yuyi IOT 15.00% entitled to the preferential
Technology Co., Ltd. taxation policies as a hi-tech
enterprise
Haier (Shanghai) Home Appliance 15.00% entitled to the preferential
Research and Development Center taxation policies as a hi-tech
Co., Ltd. enterprise
Haier (Shenzhen) R&D Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Laiyang Haier Smart Kitchen Appliance 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Guangdong Haier Intelligent 15.00% entitled to the preferential
Technology Co. Ltd] taxation policies as a hi-tech
enterprise
Dalian Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Qingdao Jijia Cloud Intelligent 15.00% entitled to the preferential
Technology Co., Ltd. taxation policies as a hi-tech
enterprise
Hefei Haier Washing Machine Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Qingdao Haier Washing Machine Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Qingdao Jiaonan Haier Washing 15.00% entitled to the preferential
Machine Co., Ltd. taxation policies as a hi-tech
enterprise
Foshan Shunde Haier Electric Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Tianjin Haier Cleaning Electrical 15.00% entitled to the preferential
Appliances Co., Ltd. (天 津 海 尔 洗 涤 taxation policies as a hi-tech
电 器 有 限 公 司) enterprise
Qingdao Economic and Technological 15.00% entitled to the preferential
Development Zone Haier Water taxation policies as a hi-tech
Heater Co., Ltd. enterprise
Haier Smart Home Co., Ltd. Annual Report 2023 227
Section X Financial Report
Company Tax rate Preferential tax
Wuhan Haier Water Heater Co., Ltd. 15.00% entitled to the preferential
taxation policies as a hi-tech
enterprise
Foshan Haier Drum Washing Machine 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Strauss Water 15.00% entitled to the preferential
Equipment Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Strauss Technology 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier New Energy Electric 15.00% entitled to the preferential
Appliance Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Washing Appliance Co., 15.00% entitled to the preferential
Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Lexin Cloud Technology 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Hefei Haier Drum Washing Machine 15.00% entitled to the preferential
Co., Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Smart Electrics 15.00% entitled to the preferential
Equipment Co. Ltd. taxation policies as a hi-tech
enterprise
Qingdao Haier Lejia Electrical 15.00% entitled to the preferential
Appliance Co. Ltd. taxation policies as a hi-tech
(青 島 樂 家 電 器 有 限 公 司) enterprise
Jiangxi Haier Medical Technology Co., 15.00% entitled to the preferential
Ltd. taxation policies under the
Western Development initiative
of the PRC
Chongqing Haier Electrical Appliance 15.00% entitled to the preferential
Sales Co., Ltd. and some Western taxation policies under the
companies Western Development initiative
of the PRC
Chongqing Haier Air-conditioning Co., 15.00% entitled to the preferential
Ltd. taxation policies under the
Western Development initiative
of the PRC
228 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Company Tax rate Preferential tax
Chongqing Haier Refrigeration 15.00% entitled to the preferential
Appliance Co., Ltd. taxation policies under the
Western Development initiative
of the PRC
Chongqing Haier Washing Machine 15.00% entitled to the preferential
Co., Ltd. taxation policies under the
Western Development initiative
of the PRC
Guizhou Haier Electronics Co., Ltd. 15.00% entitled to the preferential
taxation policies under the
Western Development initiative
of the PRC
Chongqing Hairishun Home Appliance 15.00% entitled to the preferential
Sales Co., Ltd. and some Western taxation policies under the
companies Western Development initiative
of the PRC
Chongqing Haier Washing Machine 15.00% entitled to the preferential
Co., Ltd taxation policies under the
Western Development initiative
of the PRC
Chongqing Haier Water Heater Co., 15.00% entitled to the preferential
Ltd taxation policies under the
Western Development initiative
of the PRC
Chongqing Haier Drum Washing 15.00% entitled to the preferential
Machine Co., Ltd taxation policies under the
Western Development initiative
of the PRC
Qingdao Haier Technology Co., Ltd. 10.00% entitled to the preferential
taxation policies as a key
software enterprise
Haier Smart Home Co., Ltd. Annual Report 2023 229
Section X Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS
1. Monetary funds
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Cash on hand 541,712.70 5,312,391.11
Cash in bank 53,524,177,266.50 52,978,813,851.96
Other cash balances 961,733,861.94 1,178,085,912.24
Total 54,486,452,841.14 54,162,212,155.31
Include: total amount of overseas deposits 15,909,397,682.46 11,963,648,575.80
Deposit in Finance Company 26,276,742,534.50 31,433,124,152.44
Other explanations
Other monetary funds mainly included investment fund, deposit on third party payment platforms,
guarantees and other restricted fund, etc.
2. Financial assets held for trading
Items Closing balance Opening balance
Short-term wealth management products 487,936,101.81 14,638,968.26
Investments in other equity instruments 243,224,439.64 336,843,065.02
Investment funds 222,803,002.38 168,430,847.63
Total 953,963,543.83 519,912,880.91
230 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
3. Derivative financial assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Forward foreign exchange contracts 67,565,829.44 178,992,877.32
Forward commodity contracts 4,192,283.19
Total 67,565,829.44 183,185,160.51
4. Bills receivable
(1) Bills receivable presented by types
Items Closing balance Opening balance
Bank acceptance notes 8,466,159,415.18 9,390,227,149.92
Commercially acceptance notes 160,607,051.53 237,902,374.08
Balance of bills receivable 8,626,766,466.71 9,628,129,524.00
Allowance for bad debts 5,331,635.32 3,937,685.85
Bills receivable, net 8,621,434,831.39 9,624,191,838.15
(2) Changes in allowance for bad debts of bills receivable in the current period:
Increase for the Decrease for the
Items current period current period
Provision for Write-off/
Opening the current Other other Closing
balance period movement Reversal movement balance
Allowance for bad
debts 3,937,685.85 2,442,094.38 1,048,144.91 5,331,635.32
Total 3,937,685.85 2,442,094.38 1,048,144.91 5,331,635.32
The Company’s bills receivables were mainly generated from daily operation activities such
as sales of commodity, provision of labor, etc., and the allowance for bad debts was
measured based on expected credit loss over the entire duration whether there exist
significant financing components.
The bills receivable pledged by the Company at the end of the period was
RMB4,389,991,243.14 (amount at the beginning of the period RMB8,716,194,311.64).
Haier Smart Home Co., Ltd. Annual Report 2023 231
Section X Financial Report
5. Accounts receivable
Accounts receivable are disclosed by aging as follow:
Aging Closing balance Opening balance
Within one year 20,004,004,007.43 15,941,416,673.44
1–2 years 873,509,449.30 744,911,486.13
2–3 years 510,375,731.48 277,269,661.37
Over 3 years 288,610,175.85 129,303,240.96
Balance of accounts receivable 21,676,499,364.06 17,092,901,061.90
Allowance for bad debts 1,408,399,927.63 1,206,152,250.09
Accounts receivable, net 20,268,099,436.43 15,886,748,811.81
By method of provision of allowance for bad debts
Categories Closing balance
Book balance Allowance for bad debts
Percentage
Percentage of provision
Amount (%) Amount (%) Carrying value
Account receivables
subject to provision
for bad debts on a
separate basis 866,424,078.12 4.00 864,112,221.06 99.73 2,311,857.06
Account receivables
subject to provision
for bad debts on a
collective basis 20,810,075,285.94 96.00 544,287,706.57 2.62 20,265,787,579.37
Total 21,676,499,364.06 100.00 1,408,399,927.63 6.50 20,268,099,436.43
232 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(continued)
Categories Opening balance
Book balance Allowance for bad debts
Percentage
Percentage of provision
Amount (%) Amount (%) Carrying value
Account receivables
subject to provision
for bad debts on a
separate basis 669,106,556.78 3.91 658,051,988.70 98.35 11,054,568.08
Account receivables
subject to provision
for bad debts on a
collective basis 16,423,794,505.12 96.09 548,100,261.39 3.34 15,875,694,243.73
Total 17,092,901,061.90 100.00 1,206,152,250.09 7.06 15,886,748,811.81
Account receivables subject to provision for bad debts on a separate basis at the
end of the period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Name Closing balance
Allowance for Percentage of
Book balance bad debts provision (%) Reason for provision
25 customers in 866,424,078.12 864,112,221.06 99.73 The obligors were in
total significant financial
difficulty
Total 866,424,078.12 864,112,221.06 99.73
The account receivables of significant individual amount and subject to provision for bad
debts on a separate basis at the end of the period was RMB726,379,640.82 (amount at the
beginning of the period RMB536,690,595.28).
Haier Smart Home Co., Ltd. Annual Report 2023 233
Section X Financial Report
Account receivables subject to provision for bad debts on a collective basis
√ Applicable □ Not Applicable
Aging Closing balance
Allowance for Percentage of
Book balance bad debts provision (%)
Within 1 year 19,975,992,567.68 288,934,773.72 1.45
1–2 years 463,149,665.27 61,273,338.92 13.23
2–3 years 193,271,661.47 72,699,318.58 37.62
Over 3 years 177,661,391.52 121,380,275.35 68.32
Total 20,810,075,285.94 544,287,706.57 2.62
(continued)
Aging Opening balance
Allowance for Percentage of
Book balance bad debts provision (%)
Within 1 year 15,628,451,183.11 341,360,523.71 2.18
1–2 years 445,226,708.15 33,709,717.14 7.57
2–3 years 231,744,330.03 90,123,931.89 38.89
Over 3 years 118,372,283.83 82,906,088.65 70.04
Total 16,423,794,505.12 548,100,261.39 3.34
Changes in allowance for bad debts of accounts receivable in the current period:
Increase for the Decrease for the
Items current period current period
Provision for Write-off/
Opening the current Other other Closing
balance period movement Reversal movement balance
Allowance for
bad debts 1,206,152,250.09 432,154,043.65 4,453,844.82 145,010,380.92 89,349,830.01 1,408,399,927.63
The aggregate amount of the top 5 account receivables and contract assets as at the end
of the period was RMB5,525,018,986.65 (amount at the beginning of the period:
RMB4,030,275,384.24), accounting for 25.11% (at the beginning of the period: 23.07%) of
the book balance of account receivables and contract assets, and the amount of provision
for bad debts was RMB604,983,462.26 (amount at the beginning of the period
RMB604,758,501.08).
234 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Actual write-off of accounts receivable in the current period
The amount of accounts receivable actually written off in the current period was
RMB82,305,106.67 (amount for the corresponding period: RMB35,724,496.02) and there
was no significant bad debt write-off of accounts receivable.
The Company’s accounts receivable that were terminated due to the transfer of
financial assets in the current period
The amount of accounts receivable that the company terminated at the end of the period
due to the transfer of financial assets was RMB6,411,839,897.28 (amount at the beginning
of the period: RMB7,752,646,133.49) and the transfer method was outright sale factoring/
asset securitization.
Restricted accounts receivable in the current period
The amount of accounts receivable restricted at the end of the period is RMB1,255,120.80
(amount at the beginning of the period: RMB1,944,980,392.98).
6. Prepayments
(1) Prepayments are presented by aging:
√ Applicable □ Not Applicable
Unit and Currency: RMB
Aging Closing balance Opening balance
Amount Percentage (%) Amount Percentage (%)
Within one year 1,163,325,306.16 93.95 1,087,347,492.36 97.92
1–2 years 56,449,865.29 4.56 9,481,169.76 0.85
2–3 years 7,104,895.06 0.57 7,826,299.09 0.70
Over 3 years 11,414,864.00 0.92 5,852,909.40 0.53
Total 1,238,294,930.51 100.00 1,110,507,870.61 100.00
(2) The total amount of the top 5 in the prepayments at the end of the period was
RMB214,815,987.16, accounting for 17.35% of the book balance of prepayment (amount at
the beginning of the period: RMB285,279,364.51, accounting for 25.69%).
(3) There was no significant prepayment aged over 1 year at the end of the period.
Haier Smart Home Co., Ltd. Annual Report 2023 235
Section X Financial Report
7. Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Interest receivable 748,496,020.24 513,320,376.79
Other receivables 1,901,062,964.81 1,887,793,525.76
Total 2,649,558,985.05 2,401,113,902.55
(1) Interest receivable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Within one year 473,678,991.02 365,716,532.95
1–2 years 199,801,995.25 117,786,419.18
2–3 years 70,063,170.96 19,790,000.00
Over 3 years 4,951,863.01 10,027,424.66
Total 748,496,020.24 513,320,376.79
(2) Other receivables
Other receivables are disclosed by aging as follows:
Aging Closing balance Opening balance
Within one year 1,413,423,130.38 1,415,479,963.79
1–2 years 94,189,862.20 217,023,682.62
2–3 years 204,379,944.75 23,617,332.57
Over 3 years 277,554,421.44 387,192,496.32
Balance of other receivables 1,989,547,358.77 2,043,313,475.30
Allowance for bad debts 88,484,393.96 155,519,949.54
Other receivables, net 1,901,062,964.81 1,887,793,525.76
236 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Provision of allowance for bad debts based on the general model of expected
credit losses
Allowance for
bad debts Stage 1 Stage 2 Stage 3
Expected credit Lifetime Lifetime
losses for the expected credit expected credit
coming 12 losses (not losses (credit-
months credit-impaired) impaired) Total
Opening balance 133,616,436.54 21,903,513.00 155,519,949.54
Provision for the
current period 7,073,055.91 7,073,055.91
Reversal for the
current period 51,584,453.85 1,384,084.95 52,968,538.80
Write-off and
others for the
current period 2,274,157.64 18,865,915.05 21,140,072.69
Closing balance 86,830,880.96 1,653,513.00 88,484,393.96
Changes in allowance for bad debt provision of other receivables in the current
period
Increase for the Decrease for the
Items current period current period
Provision for Write-off/
Opening the current Other other Closing
balance period movement Reversal movement balance
Allowance for
bad debts 155,519,949.54 7,073,055.91 52,968,538.80 21,140,072.69 88,484,393.96
Haier Smart Home Co., Ltd. Annual Report 2023 237
Section X Financial Report
The total amount of the top 5 other receivables at the end of the period was
RMB671,641,747.67 (amount at the beginning of the period: RMB913,820,290.12),
accounting for 33.76% of the book balance of other receivables (at the beginning of
the period: 44.72%), and the amount of provision for bad debts was
RMB3,359,976.38 (amount at the beginning of the period: RMB0.00).
Other receivables written off during the period
The amount of other receivables actually written off in the current period was
RMB22,283,049.47 (amount for the corresponding period: RMB56,385,567.52) and no
significant other receivables were written off for bad debts.
Other receivables mainly included deposits, quality guarantees, employee loans, tax
refunds, and advance payments, etc.
8. Inventories
(1) Category of inventories
Items Closing Balance
Impairment
Provision of
Book balance inventories Carrying value
Raw materials 5,873,703,173.53 208,533,811.42 5,665,169,362.11
Work in progress 47,535,985.86 47,535,985.86
Finished goods 35,084,012,597.82 1,272,711,329.46 33,811,301,268.36
Total 41,005,251,757.21 1,481,245,140.88 39,524,006,616.33
(continued)
Items Opening Balance
Impairment
Provision of
Book balance inventories Carrying value
Raw materials 6,220,344,034.47 171,673,251.23 6,048,670,783.24
Work in progress 74,028,876.21 74,028,876.21
Finished goods 36,903,949,735.10 1,438,863,087.02 35,465,086,648.08
Total 43,198,322,645.78 1,610,536,338.25 41,587,786,307.53
238 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) Impairment provision of inventories
Increase for the Decrease for the
Items current period current period
Provision for Write-off/
Opening the current Other other Closing
balance period movement Reversal movement balance
Raw materials 171,673,251.23 108,912,061.72 33,829,562.06 38,221,939.47 208,533,811.42
Work in progress
Finished goods 1,438,863,087.02 1,102,723,733.93 86,400,310.46 1,182,475,181.03 1,272,711,329.46
Total 1,610,536,338.25 1,211,635,795.65 120,229,872.52 1,220,697,120.50 1,481,245,140.88
(3) Details of impairment provision of inventories are as follows
Specific basis for Reason for reversing or
determining net writing off the impairment
Items realizable value provision of inventories
Raw materials Measurement at the lower of Production, use or sales
cost and net realizable value
Finished goods Measurement at the lower of sales
cost and net realizable value
9. Contractual assets
(1) Details of contract assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing Balance Opening Balance
Provision for Provision for
Book balance bad debts Carrying Value Book balance bad debts Carrying Value
Relating to construction
service contract 327,870,850.30 66,931,441.57 260,939,408.73 379,905,624.96 69,975,265.71 309,930,359.25
Total 327,870,850.30 66,931,441.57 260,939,408.73 379,905,624.96 69,975,265.71 309,930,359.25
Haier Smart Home Co., Ltd. Annual Report 2023 239
Section X Financial Report
(2) Classification by method of provision for bad debts
Categories Closing balance
Book balance Allowance for bad debts
Percentage
Percentage of provision
Amount (%) Amount (%) Carrying value
Contract assets
subject to provision
for bad debts on a
separate basis 58,419,039.53 17.82 58,419,039.53 100.00
Contract assets
subject to provision
for bad debts on a
collective basis 269,451,810.77 82.18 8,512,402.04 3.16 260,939,408.73
Total 327,870,850.30 100.00 66,931,441.57 20.41 260,939,408.73
(continued)
Categories Opening balance
Book balance Allowance for bad debts
Percentage
Percentage of provision
Amount (%) Amount (%) Carrying value
Contract assets
subject to provision
for bad debts on a
separate basis 57,105,478.30 15.03 57,048,337.23 99.90 57,141.07
Contract assets
subject to
provision for bad
debts on a
collective basis 322,800,146.66 84.97 12,926,928.48 4.00 309,873,218.18
Total 379,905,624.96 100.00 69,975,265.71 18.42 309,930,359.25
240 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(3) Contract assets subject to provision for bad debts on a separate basis at the end
of the period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Name Closing balance
Allowance for Percentage of
Book balance bad debts provision (%) Reason for provision
21 customers in 58,419,039.53 58,419,039.53 100.00 The obligors were in
total significant financial
difficulty
Total 58,419,039.53 58,419,039.53 100.00
(4) Contract assets subject to provision for bad debts on a collective basis at the end
of the period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Name Closing balance
Allowance for Percentage of
Contract assets bad debts provision (%)
Relating to construction
service contract 269,451,810.77 8,512,402.04 3.16
Total 269,451,810.77 8,512,402.04 3.16
(5) Provision for bad debts on contract assets during the current period
Increase for the Decrease for the
Items current period current period
Provision for Write-off/
Opening the current Other other Closing
balance period movement Reversal movement balance
Relating to
construction
service
contract 69,975,265.71 3,043,824.14 66,931,441.57
Total 69,975,265.71 3,043,824.14 66,931,441.57
Haier Smart Home Co., Ltd. Annual Report 2023 241
Section X Financial Report
10. Other current assets
(1) Details
Items Closing Balance Opening Balance
Impairment Impairment
Book balance Provision Book balance Provision
Bank deposit for wealth
management products 1,530,274,566.66 1,642,421,944.45
Deductible taxes 2,610,660,645.55 2,710,929,690.28
Returns cost receivables 670,702,791.81 325,055,055.98 563,233,565.88 280,818,239.06
Others 63,584,720.64 57,543,006.31
Total 4,875,222,724.66 325,055,055.98 4,974,128,206.92 280,818,239.06
(2) Impairment Provision
Increase for the Decrease for the
Items current period current period
Provision for Write-off/
Opening the current Other other Closing
balance period movement Reversal movement balance
Returns cost
receivables 280,818,239.06 325,055,055.98 280,818,239.06 325,055,055.98
Total 280,818,239.06 325,055,055.98 280,818,239.06 325,055,055.98
11. Debt investments
Items Closing balance Opening balance
Principal Interest Principal Interest
Time deposit -long term 8,677,500,000.00 163,733,078.66 1,000,000,000.00 34,222,222.22
Total 8,677,500,000.00 163,733,078.66 1,000,000,000.00 34,222,222.22
Include: time deposit in Finance
Company 7,377,500,000.00 86,374,745.33
242 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
12. Long-term equity investments
Investees Increase/decrease for the current period
Adjustment in
Investment profit other Other Declaration of
Opening Investment recognized under comprehensive changes in cash dividends
balance increase equity method income equity or profits
Associate：
Haier Group Finance Co., Ltd. 7,560,187,324.04 595,448,540.64 –9,490,166.96 –235,200,000.00
Bank of Qingdao Co., Ltd. 2,934,085,854.00 271,598,742.67 70,737,018.48 –76,288,906.40
Wolong Electric (Jinan) Motor
Co., Ltd. 174,697,807.74 25,270,339.30 –22,305,600.00
Qingdao Hegang New Material
Technology Co., Ltd. 314,802,331.45 14,911,234.91
Qingdao Haier SAIF Smart Home
Industry Investment Center
(Limited Partnership) 319,245,649.36 –83,255,532.55 –29,225,674.05
Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners
Co., Ltd. 715,461,260.26 131,493,706.05 –183,150,000.00
Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd. 413,367,540.80 16,250,623.48 –17,510,692.75
Qingdao Haier Multimedia Co., Ltd. 153,550,234.50 –65,250,234.50
Baoshihua Tong Fang Energy
Technology Co., Ltd. (寶石花同
方能源科技有限公司) 30,267,952.94 59,013.84
Zhengzhou Highly Electric Appliance
Co., Ltd. (鄭州海立電器有限
公司) 98,000,000.00
Anhui Kunhe Smart Technology
Co., Ltd. 1,997,782.61
Zhejiang Futeng Fluid Technology
Co., Ltd. 77,807,408.84 –223,246.85
Beijing Mr. Hi Network Technology
Company Limited 7,507,759.75
Hongtong Environmental Technology
(Guangzhou) Co., Ltd. (宏通環境
技術（廣州）有限公司) 4,500,000.00 –234,034.27
Beijing ASU Tech Co., Ltd. 12,829,433.78 –17,761,329.99 12,850,905.72
Shenzhen Genyuan Environmental
Protection Technology Co., Ltd. 6,914,487.73
Qingdao Haimu Investment
Management Co., Ltd. 2,521,766.42 87,690.15
Qingdao Haimu Smart Home
Investment Partnership (Limited
Partnership) 58,905,912.88 –916,905.70
Haineng Wanjia (Shanghai)
Technology Development
Co., Ltd. 772,938.88 –166,909.17
Qingdao Guochuang Intelligent Home
Appliance Research Institute
Co., Ltd. 45,016,334.20 –6,442,106.67
Guangzhou Heying Investment
Partnership (Limited Partnership) 285,793,577.87 –20,816,696.55
Haier Smart Home Co., Ltd. Annual Report 2023 243
Section X Financial Report
Investees Increase/decrease for the current period
Adjustment in
Investment profit other Other Declaration of
Opening Investment recognized under comprehensive changes in cash dividends
balance increase equity method income equity or profits
Qingdao Home Wow Cloud Network
Technology Co., Ltd. 2,547,217.00 –354,547.51
Bingji (Shanghai) Corporate
Management Co., Ltd. 1,014,425,293.04 41,819,769.83
Youjin (Shanghai) Corporate
Management Co., Ltd. 1,843,591,441.88 76,035,945.14
RRS (Shanghai) Investment Co., Ltd. 3,351,166,257.98 138,247,172.98
Haier Best Water Technology
Co., Ltd. 148,369,638.40
Huizhixiangshun Equity Investment
Fund (Qingdao) Partnership
(Limited Partnership) 238,806,947.64
Qingdao Ririshun Huizhi Investment
Co., Ltd. 4,083,482.78
Qingdao Xinshenghui Technology
Co., Ltd. 8,598,002.89 1,407,912.26
EuropaltersItaliaS.r.l. 15,760,505.28
OryginLLC 13,918,442.26 8,378,488.78
Konan Electronic Co., Ltd. 67,770,092.99 –374,388.94 –2,789,951.98 –226,800.00
HNR (Private) Company Limited 74,366,909.55 42,066,344.71 –5,207,447.75
HPZ LIMITED 88,751,047.98 –76,639,344.33 –8,628,127.15
CONTROLADORAMABES.A.deC.V. 4,685,927,386.53 673,201,637.87 –133,208,775.03 –20,684,123.49 –126,817,804.35
Middle East Airconditioning
Company,Limited 8,820,101.55 –1,701,195.07 180,260.12
Total 24,652,368,172.86 141,146,441.72 1,774,578,898.28 –109,223,886.82 –7,833,217.77 –690,725,477.55
244 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(continued)
Increase/decrease for the
Investees current period
Impairment
Provision
Other The disposal of Closing Closing
movement the investment balance Balance
Associate：
Haier Group Finance Co., Ltd. 7,910,945,697.72
Bank of Qingdao Co., Ltd. 3,200,132,708.75
Wolong Electric (Jinan) Motor Co., Ltd. 177,662,547.04
Qingdao Hegang New Material
Technology Co., Ltd. 329,713,566.36
Qingdao Haier SAIF Smart Home
Industry Investment Center (Limited
Partnership) 206,764,442.76
Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners Co., Ltd. 663,804,966.31
Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd. 412,107,471.53 –21,000,000.00
Qingdao Haier Multimedia Co., Ltd. 88,300,000.00 –88,300,000.00
Baoshihua Tong Fang Energy
Technology Co., Ltd. (寶石花同方能
源科技有限公司) 30,326,966.78
Zhengzhou Highly Electric Appliance
Co., Ltd. (鄭州海立電器有限公司) 98,000,000.00
Anhui Kunhe Smart Technology
Co., Ltd. –1,997,782.61
Zhejiang Futeng Fluid Technology
Co., Ltd. 77,584,161.99
Beijing Mr. Hi Network Technology
Company Limited –7,507,759.75
Hongtong Environmental Technology
(Guangzhou) Co., Ltd. (宏通環境
技術（廣州）有限公司) 4,265,965.73
Beijing ASU Tech Co., Ltd. 7,919,009.51
Shenzhen Genyuan Environmental
Protection Technology Co., Ltd. –6,914,487.73
Qingdao Haimu Investment
Management Co., Ltd. 2,609,456.57
Qingdao Haimu Smart Home
Investment Partnership (Limited
Partnership) 57,989,007.18
Haineng Wanjia (Shanghai) Technology
Development Co., Ltd. 606,029.71
Haier Smart Home Co., Ltd. Annual Report 2023 245
Section X Financial Report
Increase/decrease for the
Investees current period
Impairment
Provision
Other The disposal of Closing Closing
movement the investment balance Balance
Qingdao Guochuang Intelligent Home
Appliance Research Institute
Co., Ltd. 38,574,227.53
Guangzhou Heying Investment
Partnership (Limited Partnership) –70,560,000.00 194,416,881.32
Qingdao Home Wow Cloud Network
Technology Co., Ltd. 2,192,669.49
Bingji (Shanghai) Corporate
Management Co., Ltd. 1,056,245,062.87
Youjin (Shanghai) Corporate
Management Co., Ltd. 1,919,627,387.02
RRS (Shanghai) Investment Co., Ltd. 3,489,413,430.96
Haier Best Water Technology Co., Ltd. 148,369,638.40
Huizhixiangshun Equity Investment Fund
(Qingdao) Partnership (Limited
Partnership) –631,310.61 238,175,637.03
Qingdao Ririshun Huizhi Investment
Co., Ltd. 4,083,482.78
Qingdao Xinshenghui Technology
Co., Ltd. 10,005,915.15
EuropaltersItaliaS.r.l. –15,760,505.28
OryginLLC 22,296,931.04
Konan Electronic Co., Ltd. 64,378,952.07
HNR (Private) Company Limited 111,225,806.51
HPZ LIMITED 3,483,576.50
CONTROLADORAMABES.A.deC.V. 5,078,418,321.53
Middle East Airconditioning Company,
Limited 7,299,166.60 –845,634.54
Total –103,371,845.98 25,656,939,084.74 –110,145,634.54
246 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
13. Investments in other equity instruments
(1) Details of investments in other equity instruments at the end of the period:
Items Closing balance Opening balance
SINOPEC Fuel Oil Sales Corporation Limited 1,986,156,165.17 1,234,500,000.00
Haier COSMO IOT Ecosystem Technology
Co., Ltd. 2,817,408,000.00 2,817,408,000.00
Other 1,600,130,789.60 1,799,974,930.20
Total 6,403,694,954.77 5,851,882,930.20
(2) Dividends from investment in other equity instruments during the current period:
Amount for the
Items current period
SINOPEC Fuel Oil Sales Corporation Limited 54,539,047.11
Other 4,132,177.14
Total 58,671,224.25
Haier Smart Home Co., Ltd. Annual Report 2023 247
Section X Financial Report
14. Investment properties
Measurement model of investment properties
(1) The changes in investment properties measured at cost this year are as follows:
Houses and Land use
Items buildings rights Total
I. Original book value
1. Opening balance 93,351,061.91 29,370,397.68 122,721,459.59
2. Increase for the period
(1) External acquisition
(2) Inventories/fixed assets/
construction in progress
transferred in
(3) Increase in business
combinations
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Change in foreign exchange
rate and others 350,209.20 350,209.20
5. Closing balance 93,701,271.11 29,370,397.68 123,071,668.79
II. Accumulated depreciation and
accumulated amortization
1. Opening balance 16,919,838.97 2,759,869.10 19,679,708.07
2. Increase for the period
(1) Provision or amortization 4,069,106.08 585,182.14 4,654,288.22
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Change in foreign exchange
rate and others 106,591.73 106,591.73
5. Closing balance 21,095,536.78 3,345,051.24 24,440,588.02
III. Provision for impairment
1. Opening balance
2. Increase for the period
(1) Provision
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Change in foreign exchange
rate and others
5. Closing balance
IV. Book value
1. Closing book value 72,605,734.33 26,025,346.44 98,631,080.77
2. Opening book value 76,431,222.94 26,610,528.58 103,041,751.52
248 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) The depreciation and amortization amount charge for the period is RMB4,654,288.22 (amount
for the corresponding period: RMB6,405,466.73).
(3) The recoverable amount of the investment real estate of the Company at the end of the
period is not less than its book value, so no provision for impairment is made.
15. Fixed assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Fixed assets 29,603,936,822.78 27,158,348,424.28
Disposals of fixed assets
Total 29,603,936,822.78 27,158,348,424.28
Haier Smart Home Co., Ltd. Annual Report 2023 249
Section X Financial Report
(1) Fixed assets:
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value:
1. Opening balance 14,637,131,005.80 31,324,534,257.57 193,143,213.57
2. Increase for the period
(1) Purchase 125,540,500.36 1,483,457,737.48 5,148,439.21
(2) Construction in progress
transferred in 1,061,862,119.98 3,012,269,067.33 25,503,782.62
(3) Increase in business
combinations 27,878,074.50 342,940.57
3. Decrease for the period
(1) Disposal or write-off 114,596,964.43 890,692,350.65 12,587,327.05
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others 72,114,894.71 447,424,538.25 –3,938,734.72
5. Closing balance 15,782,051,556.42 35,404,871,324.48 207,612,314.20
II. Accumulated depreciation
1. Opening balance 4,538,423,308.23 16,035,153,335.30 119,070,640.87
2. Increase for the period
(1) Provision 681,106,714.50 2,777,493,396.94 22,753,739.13
(2) Increase in business
combinations 1,772,785.10 99,726.34
3. Decrease for the period
(1) Disposal or write-off 36,751,072.95 745,642,011.92 7,716,624.95
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others 42,604,655.32 142,336,523.97 –375,585.11
5. Closing balance 5,225,383,605.10 18,211,114,029.39 133,831,896.28
III. Provision for impairment
1. Opening balance 28,586,023.90 16,202,770.28 110,029.00
2. Increase for the period
(1) Provision 2,831,832.73
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or write-off 122,114.80 178,128.17
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others –863,932.68 –1,570,790.59 –1,701.60
5. Closing balance 27,599,976.42 17,285,684.25 108,327.40
IV. Book value
1. Closing book value 10,529,067,974.90 17,176,471,610.84 73,672,090.52
2. Opening book value 10,070,121,673.67 15,273,178,151.99 73,962,543.70
250 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(continued)
Items Office furniture Other Total
I. Original book value:
1. Opening balance 1,324,636,809.03 2,916,743,458.84 50,396,188,744.81
2. Increase for the period
(1) Purchase 60,278,297.65 54,491,762.99 1,728,916,737.69
(2) Construction in progress
transferred in 188,218,311.67 290,911,105.87 4,578,764,387.47
(3) Increase in business
combinations 835,810.80 29,056,825.87
3. Decrease for the period
(1) Disposal or write-off 49,629,215.86 121,896,813.79 1,189,402,671.78
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others 5,911,932.09 53,936,031.07 575,448,661.40
5. Closing balance 1,530,251,945.38 3,194,185,544.98 56,118,972,685.46
II. Accumulated depreciation
1. Opening Balance 788,864,149.17 1,708,674,462.66 23,190,185,896.23
2. Increase for the period
(1) Provision 199,336,047.71 294,040,822.30 3,974,730,720.58
(2) Increase in business
combinations 556,277.03 2,428,788.47
3. Decrease for the period
(1) Disposal or write-off 44,127,920.31 113,346,603.90 947,584,234.03
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others 8,041,429.36 55,165,632.03 247,772,655.57
5. Closing Balance 952,669,982.96 1,944,534,313.09 26,467,533,826.82
III. Provision for impairment
1. Opening balance 243,387.38 2,512,213.74 47,654,424.30
2. Increase for the period
(1) Provision 8,256.79 2,840,089.52
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or write-off 4,957.13 305,200.10
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others –8,729.91 –242,123.08 –2,687,277.86
5. Closing balance 237,957.13 2,270,090.66 47,502,035.86
IV. Book value
1. Closing book value 577,344,005.29 1,247,381,141.23 29,603,936,822.78
2. Opening book value 535,529,272.48 1,205,556,782.44 27,158,348,424.28
Haier Smart Home Co., Ltd. Annual Report 2023 251
Section X Financial Report
(2) In the current period, the balance of the construction in progress transferred to the original
value of the fixed assets in a total of RMB4,578,764,387.47 (amount for the corresponding
period: RMB6,244,222,182.09).
(3) As at 31 December 2023, the net book value of the buildings for which the Company has
not yet obtained certificates of title was RMB408 million (amount at the beginning of the
period RMB2.037 billion), and the relevant certificates of title were being processed. The
Company can legally and effectively occupy and operate the above-mentioned buildings for
which no certificates of title have been obtained.
(4) There was no mortgage secured by the fixed assets mortgage at the end of the period, and
there was no mortgage secured by the fixed assets mortgage at the beginning of the
period.
16. Construction in progress
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing Balance Opening Balance
Construction in progress 5,403,469,596.76 4,094,712,417.61
Construction materials
Total 5,403,469,596.76 4,094,712,417.61
252 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Construction in progress
(1) Details of construction in progress
√ Applicable □ Not Applicable
Unit and Currency: RMB
Projects Closing Balance Opening Balance
Book Impairment Book Book Impairment Book
balance Provision Value balance provision Value
Europe Candy Project 1,092,171,521.23 1,092,171,521.23 467,370,049.46 467,370,049.46
Qingdao Refrigeration
Appliance Project 914,078,742.21 914,078,742.21
Qingdao HVAC Project 530,979,038.43 530,979,038.43 365,555.56 365,555.56
Qingdao Water Ecology
Technology Project 529,949,339.20 529,949,339.20 92,905,882.13 92,905,882.13
America GE APPLIANCES
Project 343,482,203.73 22,622,250.04 320,859,953.69 338,096,215.95 338,096,215.95
New Zealand FPA Project 200,943,871.90 200,943,871.90 176,619,361.43 176,619,361.43
Eastern European Project 148,106,777.44 148,106,777.44 392,579,594.60 392,579,594.60
Qingdao Air Conditioning
Electronics Project 135,966,703.60 135,966,703.60 313,855,913.14 313,855,913.14
Zhengzhou New Energy
Project 104,122,098.62 104,122,098.62 197,524,472.64 197,524,472.64
Qingdao Smart Appliances
Project 78,218,772.30 78,218,772.30 67,092,916.99 67,092,916.99
Qingdao Jiaozhou Washing
Appliances Project 77,224,500.10 77,224,500.10 93,825,106.07 93,825,106.07
Chongqing Water Heater
Project 75,225,516.54 75,225,516.54 61,350,349.63 61,350,349.63
Qingdao Air Conditioner
Project 73,270,568.99 73,270,568.99 51,569,425.40 51,569,425.40
Foshan Freezer Project 67,104,763.68 67,104,763.68 97,616,741.69 97,616,741.69
Zhengzhou Air Conditioner
Project 66,251,489.90 66,251,489.90 546,460.15 546,460.15
Others 990,093,027.53 1,097,088.60 988,995,938.93 1,744,604,991.69 1,210,618.92 1,743,394,372.77
Total 5,427,188,935.40 23,719,338.64 5,403,469,596.76 4,095,923,036.53 1,210,618.92 4,094,712,417.61
Haier Smart Home Co., Ltd. Annual Report 2023 253
Section X Financial Report
(2) Details of significant changes of construction in progress for the period
Change in
foreign
Opening Increase for the Transfer Other exchange rate Closing Source of
Project name balance current period to fixed assets decrease and others balance fund
Europe Candy Project 467,370,049.46 1,047,297,746.68 380,869,588.00 –41,626,686.91 1,092,171,521.23 Self-funding
Qingdao Refrigeration
Appliance Project 980,507,961.42 66,429,219.21 914,078,742.21 Self-funding
Qingdao HVAC Project 365,555.56 530,613,482.87 530,979,038.43 Self-funding
Qingdao Water Ecology
Technology Project 92,905,882.13 439,490,359.70 2,446,902.63 529,949,339.20 Self-funding
America GE
APPLIANCES Project 338,096,215.95 516,280,314.17 516,625,823.89 5,731,497.50 343,482,203.73 Self-funding
New Zealand FPA
Project 176,619,361.43 219,275,901.70 199,857,537.82 4,906,146.59 200,943,871.90 Self-funding
Eastern European
Project 392,579,594.60 270,000,233.49 466,229,610.14 –48,243,440.51 148,106,777.44 Self-funding
Qingdao Air Conditioning
Electronics Project 313,855,913.14 228,411,035.68 406,300,245.22 135,966,703.60 Self-funding
Zhengzhou New Energy
Project 197,524,472.64 134,384,592.62 227,786,966.64 104,122,098.62 Self-funding
Qingdao Smart
Appliances Project 67,092,916.99 57,800,691.09 46,674,835.78 78,218,772.30 Self-funding
Qingdao Jiaozhou
Washing Appliances
Project 93,825,106.07 55,037,560.09 71,638,166.06 77,224,500.10 Self-funding
Chongqing Water Heater
Project 61,350,349.63 115,293,593.01 101,418,426.10 75,225,516.54 Self-funding
Qingdao Air Conditioner
Project 51,569,425.40 55,890,979.13 34,189,835.54 73,270,568.99 Self-funding
Foshan Freezer Project 97,616,741.69 13,640,021.17 44,151,999.18 67,104,763.68 Self-funding
Zhengzhou Air
Conditioner Project 546,460.15 124,183,371.66 58,478,341.91 66,251,489.90 Self-funding
Others 1,744,604,991.69 1,194,610,304.73 1,955,774,413.25 6,652,144.36 990,093,027.53 Self-funding
Total 4,095,923,036.53 5,982,718,149.21 4,578,871,911.37 –72,580,338.97 5,427,188,935.40
254 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(3) Impairment provision of construction in progress
Change in
foreign
Opening Increase for the Transfer to Other exchange rate Closing
Project name balance current period fixed assets decrease and others balance
America GE APPLIANCES
Project 22,513,947.38 108,302.66 22,622,250.04
Lejia IOT Project 837,735.85 837,735.85
Others 372,883.07 107,523.90 –6,006.42 259,352.75
Total 1,210,618.92 22,513,947.38 107,523.90 102,296.24 23,719,338.64
17. Right-of-use assets
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value:
1. Opening balance 4,673,699,908.83 37,374,188.44 213,211,277.75
2. Increase for the current period
(1) Purchase 884,227,772.60 283,273,168.36 114,591,080.22
(2) Increase in business
combination 7,822,613.44
3. Decrease for the current period
(1) Disposal 635,248,838.80 12,340,308.82 55,477,784.64
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others 38,405,669.63 –9,208,243.26 –2,442,714.57
5. Closing balance 4,968,907,125.70 299,098,804.72 269,881,858.76
II. Accumulated depreciation
1. Opening balance 1,284,083,200.17 18,972,328.56 125,499,329.46
2. Increase for the current period
(1) Provision 820,949,004.29 31,286,558.32 72,638,871.28
(2) Increase in business
combination 1,212,092.84
3. Decrease for the current period
(1) Disposal 426,062,786.57 12,340,308.82 54,692,106.80
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others 25,092,378.52 –750,560.01 –12,603,646.66
5. Closing balance 1,705,273,889.25 37,168,018.05 130,842,447.28
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
IV. Book Value
1. Closing book balance 3,263,633,236.45 261,930,786.67 139,039,411.48
2. Opening book balance 3,389,616,708.66 18,401,859.88 87,711,948.29
Haier Smart Home Co., Ltd. Annual Report 2023 255
Section X Financial Report
(continued)
Items Office furniture Other Total
I. Original book value:
1. Opening balance 53,135,501.06 364,530,322.79 5,341,951,198.87
2. Increase for the current period
(1) Purchase 356,817,460.82 167,574,757.56 1,806,484,239.56
(2) Increase in business
combination 7,822,613.44
3. Decrease for the current period
(1) Disposal 6,515,638.43 709,582,570.69
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others 11,694,388.08 6,946,752.05 45,395,851.93
5. Closing balance 415,131,711.53 539,051,832.40 6,492,071,333.11
II. Accumulated depreciation
1. Opening balance 22,851,405.90 95,319,580.89 1,546,725,844.98
2. Increase for the current period
(1) Provision 35,008,477.81 103,759,866.70 1,063,642,778.40
(2) Increase in business
combination 1,212,092.84
3. Decrease for the current period
(1) Disposal 6,515,638.43 499,610,840.62
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others –817,318.76 2,098,924.68 13,019,777.77
5. Closing balance 50,526,926.52 201,178,372.27 2,124,989,653.37
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
IV. Book Value
1. Closing book balance 364,604,785.01 337,873,460.13 4,367,081,679.74
2. Opening book balance 30,284,095.16 269,210,741.90 3,795,225,353.89
256 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
18. Intangible assets
Proprietary Licenses and
Items technology franchises Land use rights
I. Original book value
1. Opening balance 2,045,745,341.24 4,641,652,220.77 1,617,778,038.37
2. Increase for the current period
(1) Purchase 10,398,578.49 564,726,076.81
(2) Internal research and
development 126,500,869.01
(3) Increase in business
combination 105,591,559.06 507,048.50
3. Decrease for the current period
(1) Disposal 28,683,786.27 174,537.22
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 40,334,928.40 224,908,217.38 9,185,131.60
5. Closing balance 2,212,581,138.65 4,953,866,789.43 2,192,021,758.06
II. Accumulated amortization
1. Opening balance 1,177,726,697.55 1,012,993,222.17 246,593,605.24
2. Increase for the current period
(1) Provision 197,197,149.16 157,683,854.05 39,359,224.37
(2) Increase in business
combination 1,841,292.00 232,981.38
3. Decrease for the current period
(1) Disposal 681,317.29
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 24,874,826.41 29,806,244.67 296,975.36
5. Closing balance 1,399,798,673.12 1,201,643,295.60 286,482,786.35
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision 66,323,073.48
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 307,280.65
5. Closing balance 66,630,354.13
IV. Book Value
1. Closing book balance 812,782,465.53 3,685,593,139.70 1,905,538,971.71
2. Opening book balance 868,018,643.69 3,628,658,998.60 1,371,184,433.13
Haier Smart Home Co., Ltd. Annual Report 2023 257
Section X Financial Report
(continued)
Application
management
Trademark software and
Items rights others Total
I. Original book value
1. Opening balance 2,582,976,744.57 5,344,358,234.62 16,232,510,579.57
2. Increase for the current period
(1) Purchase 501,216,025.11 1,076,340,680.41
(2) Internal research and
development 341,880,210.31 468,381,079.32
(3) Increase in business
combination 14,383,024.24 120,481,631.80
3. Decrease for the current period
(1) Disposal 156,648,068.04 185,506,391.53
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 105,214,311.63 –24,979,266.69 354,663,322.32
5. Closing balance 2,688,191,056.20 6,020,210,159.55 18,066,870,901.89
II. Accumulated amortization
1. Opening balance 3,265,730,771.74 5,703,044,296.70
2. Increase for the current period
(1) Provision 853,486,338.15 1,247,726,565.73
(2) Increase in business
combination 5,131,434.27 7,205,707.65
3. Decrease for the current period
(1) Disposal 92,934,304.15 93,615,621.44
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 51,027,185.42 106,005,231.86
5. Closing balance 4,082,441,425.43 6,970,366,180.50
III. Impairment provision
1. Opening balance 23,584,905.66 23,584,905.66
2. Increase for the current period
(1) Provision 58,760.67 66,381,834.15
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 307280.65
5. Closing balance 23,643,666.33 90,274,020.46
IV. Book Value
1. Closing book balance 2,688,191,056.20 1,914,125,067.79 11,006,230,700.93
2. Opening book balance 2,582,976,744.57 2,055,042,557.22 10,505,881,377.21
258 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
At the end of the period, the intangible assets developed through the Company accounted for
the 20.52% of the original value at the end of the period (accounting for 20.47% at the
beginning of the period).
19. Goodwill
Change in foreign
Opening Increase for the Decrease for the exchange rate Closing
Items balance current period current period and others balance
GE APPLIANCES 20,695,534,392.80 350,855,867.30 21,046,390,260.10
Candy 1,929,953,985.15 113,437,999.14 2,043,391,984.29
Others 1,018,107,265.92 172,866,669.21 8,970,515.28 1,199,944,450.41
Total 23,643,595,643.87 172,866,669.21 473,264,381.72 24,289,726,694.80
In the case of a goodwill impairment test, the Company compares the carrying amount of the
relevant asset group or asset group combination (including goodwill) with its recoverable amount.
If the recoverable amount is less than the book value, corresponding difference will be
recognized in profit or loss.
The recoverable amount of the asset group (including goodwill) is calculated with discounted
estimated future cash flow method based on a management-approved 5–15 years budget. Future
cash flows beyond the budget period are estimated using the estimated perpetual annual growth
rate. The perpetual annual growth rate (mainly 1%–2%) adopted by the management is
consistent with industry forecast data and does not exceed the long-term average growth rate of
each product. The management determines the compound income growth rate (mainly 2.33%-
5.32%) and the EBITDA profit margin (mainly 0.23%–12.95%) based on historical experience and
market development forecasts, and adopts the pre-tax interest rate that can reflect the specific
risks of the relevant asset group as the discount rate (mainly 10.64% –16.25%). The management
analyzes the recoverable amount of each asset group based on these assumptions and believes
that there is no need to make provision for goodwill.
Haier Smart Home Co., Ltd. Annual Report 2023 259
Section X Financial Report
20. Long-term amortized expenses
Amortization for Change in foreign
Opening Increase for the the current exchange rate Closing
Items balance current period period Other decrease and others balance
Renovation 457,806,490.36 315,677,767.30 416,685,868.20 11,652.37 356,810,041.83
Improvement on leased
property 146,458,109.22 15,067,837.05 31,195,631.10 779,965.96 131,110,281.13
Others 155,618,574.62 162,493,891.86 61,017,923.88 –3,269,347.92 253,825,194.68
Total 759,883,174.20 493,239,496.21 508,899,423.18 –2,477,729.59 741,745,517.64
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before elimination
Items Closing balance Opening balance
Provision for assets impairment 472,765,698.56 486,504,423.79
Liabilities 2,647,034,061.96 2,392,703,222.82
Internal unrealized earnings eliminated due to
combination 707,589,929.59 848,773,608.23
Uncovered losses 230,766,537.22 217,344,490.61
R&D expenses 1,171,434,607.38 615,110,766.72
Others 293,113,791.04 347,135,709.18
Total 5,522,704,625.75 4,907,572,221.35
(2) Deferred income tax liabilities before elimination
Items Closing balance Opening balance
Asset amortisation 4,067,663,051.78 3,875,255,150.79
Remeasurement of fair value of the reaming
equity on the day when the control right
was lost 878,623,804.46 878,623,804.46
Changes in fair value of investments in other
equity instruments 306,253,762.39 293,662,487.81
Others 492,608,929.16 494,850,409.06
Total 5,745,149,547.79 5,542,391,852.12
(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end
of the period was RMB3,716,758,993.59 (amount at the beginning of the period
RMB3,183,531,292.93).
260 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
22. Other non-current assets
Items Closing balance Opening balance
Prepayments for equipment and land 1,747,355,221.82 1,671,590,606.02
Others 286,631,723.46 209,146,285.61
Total 2,033,986,945.28 1,880,736,891.63
23. Short-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Borrowings — secured by pledge 34,094,566.22 82,727,127.97
Borrowings — secured by guarantee 101,506,733.93
Borrowings — secured by credit 10,284,257,275.66 9,487,989,660.46
Total 10,318,351,841.88 9,672,223,522.36
24. Derivative financial liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Forward foreign exchange contracts 166,573,028.22 92,580,419.48
Forward commodity contracts 2,051,976.75 12,013,621.18
Total 168,625,004.97 104,594,040.66
Haier Smart Home Co., Ltd. Annual Report 2023 261
Section X Financial Report
25. Bills payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Types Closing balance Opening balance
Commercial acceptance notes 5,234,670,724.72 2,212,721,304.36
Bank acceptance notes 16,981,055,996.90 22,885,836,425.70
Total 22,215,726,721.62 25,098,557,730.06
26. Accounts payables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Accounts payables 47,061,789,173.62 41,885,313,890.79
Total 47,061,789,173.62 41,885,313,890.79
The book balance at the end of the period was mainly the unpaid expenditures on material and
labour. There were no significant accounts payables aged over 1 year at the end of the period.
27. Contractual liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Contractual liabilities 7,731,916,491.54 9,353,173,914.03
Total 7,731,916,491.54 9,353,173,914.03
The book balance at the end of the period was mainly due to the advance payment that has
been collected and has not yet performed the contractual obligations. There were no significant
contractual liabilities aged over 1 year at the end of the period.
262 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
28. Payables for staff remuneration
(1) Payables for staff remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
I. Short-term
remuneration 3,815,730,531.14 29,177,490,664.54 28,078,532,451.90 4,914,688,743.78
II. Post-employment
benefits defined
contribution plan 65,446,167.35 1,459,000,677.67 1,499,877,690.46 24,569,154.56
III. Termination benefits 35,166,874.40 154,856,542.69 184,771,315.82 5,252,101.27
IV. Other benefits due
within one year 134,121,181.48 26,808,850.23 27,922,202.82 133,007,828.89
Total 4,050,464,754.37 30,818,156,735.13 29,791,103,661.00 5,077,517,828.50
(2) Short-term remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
I. Salaries, bonus,
allowances and
benefit 2,659,565,504.91 21,751,333,710.78 20,891,492,659.98 3,519,406,555.71
II. Employee welfare 333,049,384.20 1,095,608,519.73 1,079,703,411.93 348,954,492.00
III. Social benefit 224,360,701.36 1,893,493,834.74 1,887,573,713.85 230,280,822.25
IV. Housing fund 5,036,607.14 629,659,364.31 626,382,976.89 8,312,994.56
V. Labor union fee and
education fund 9,025,442.26 138,962,198.70 142,481,368.12 5,506,272.84
VI. Short-term
compensated leave 260,622,518.13 488,987,097.53 482,691,485.59 266,918,130.07
VII. Others 324,070,373.14 3,179,445,938.75 2,968,206,835.54 535,309,476.35
Total 3,815,730,531.14 29,177,490,664.54 28,078,532,451.90 4,914,688,743.78
Haier Smart Home Co., Ltd. Annual Report 2023 263
Section X Financial Report
(3) Defined contribution plan
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
1. Basic pension
insurance 64,162,379.08 1,355,288,133.10 1,396,245,970.97 23,204,541.21
2. Unemployment
insurance 346,829.94 38,818,540.03 38,920,398.48 244,971.49
3. Enterprise annuity
payment 936,958.33 64,894,004.54 64,711,321.01 1,119,641.86
Total 65,446,167.35 1,459,000,677.67 1,499,877,690.46 24,569,154.56
(4) Termination benefits
√ Applicable □ Not Applicable
Items Closing balance Opening balance
Termination compensation 5,252,101.27 35,166,874.40
Total 5,252,101.27 35,166,874.40
29. Taxes payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Value-added tax 915,234,725.86 860,587,585.73
Corporate income tax 1,555,728,849.24 1,704,621,792.80
Individual income tax 185,154,739.72 100,208,772.52
City maintenance and construction tax 26,230,124.20 28,891,872.00
Education surcharge 9,117,000.14 14,945,658.71
The electrical and electronic products waste
treatment fund 89,138,721.00 97,068,373.00
Other taxes 60,611,364.57 70,172,036.08
Total 2,841,215,524.73 2,876,496,090.84
264 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
30. Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Dividends payable 1,880,719.69 1,246,573.35
Other payables 19,179,688,465.14 17,583,952,055.78
Total 19,181,569,184.83 17,585,198,629.13
(1) Dividends payable
Name of unit Closing balance Opening balance
Other public shareholders 1,880,719.69 1,246,573.35
Total 1,880,719.69 1,246,573.35
(2) Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Other payables 19,179,688,465.14 17,583,952,055.78
Total 19,179,688,465.14 17,583,952,055.78
The closing balance mainly included the incurred but unpaid costs. There were no
significant other payables aged over 1 year at the end of the period.
Haier Smart Home Co., Ltd. Annual Report 2023 265
Section X Financial Report
31. Non-current liabilities due within one year
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Long-term borrowings due within one year 146,867,809.53 2,854,446,929.32
Long term payables due within one year 14,105,028.65
Lease liabilities due within one year 1,039,704,621.43 903,249,632.59
Estimated liabilities due within one year 2,531,873,089.62 2,537,054,105.17
Total 3,732,550,549.23 6,294,750,667.08
32. Other current liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Payable refund 639,149,848.05 624,887,787.38
Tax amount to be transferred to output tax 990,618,406.97 1,198,555,732.48
Others 21,470,896.50 26,982,922.63
Total 1,651,239,151.52 1,850,426,442.49
33. Long-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Borrowings — secured by guarantee 23,550,000.00
Borrowings — unsecured by credit 17,936,302,925.77 13,567,316,873.43
Total 17,936,302,925.77 13,590,866,873.43
The interest rates of the Company’s long-term borrowings: 2.00%–7.00%.
266 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
34. Lease liabilities
Items Closing balance Opening balance
Lease liabilities 4,326,506,047.60 3,727,727,303.20
Less: lease liabilities due within one year 1,039,704,621.43 903,249,632.59
Total 3,286,801,426.17 2,824,477,670.61
35. Long-term payables
Items Closing balance Opening balance
Investment from CDB development fund 36,500,000.00 36,500,000.00
Others 34,718,451.43 7,740,087.94
Less: long-term payables due within one year 14,105,028.65
Total 57,113,422.78 44,240,087.94
Under the Investment Contract of China Development Fund executed by the Company and its
subsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)
Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,
China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou)
Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual return of
1.2% by means of dividends or buyback premium for the above investments. As of the end of
the period, the subsidiaries of the Company made buyback in amount of RMB36.5 million.
36. Long-term employee benefits payable
√ Applicable □ Not Applicable
(1) Statement of long-term employee benefits payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
I. Post-employment benefits: net liability of
defined benefit plan 364,213,564.08 417,072,669.76
II. Termination benefits 575,644,959.29 386,522,704.17
III. Provision for work-related injury
compensation 145,596,315.81 206,951,828.41
Total 1,085,454,839.18 1,010,547,202.34
Haier Smart Home Co., Ltd. Annual Report 2023 267
Section X Financial Report
(2) Defined benefits plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified
staff. Under these plans, the employees are entitled to the retirement benefits agreed in
such defined benefit plans.
These plans are exposed to interest rate risks, changes in life expectancy of the beneficiary
and other risks.
The recent actuarial evaluation of the assets and the present value of defined benefit
obligations under such plans are determined by using the projected unit credit method.
The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company
Actuarial assumptions used to defined benefit plans
Items Rate
Discount rate 1.00%
Expected rate of return 2.00%
Present value of defined benefit obligations
Items Amount
I. Opening balance 253,301,981.31
II. Defined benefit cost recognized in current profit or loss 8,432,769.33
1. Current service cost 7,213,186.90
2. Past service cost
3. Settlement gains (loss indicated in ‘–’)
4. Interest cost 1,219,582.43
III. Defined benefit cost recognized in other comprehensive
income –14,452,614.65
1. Actuarial loss (gain indicated in ‘–’) –14,452,614.65
IV. Other changes –29,240,068.09
1. The consideration paid at the time of settlement
2. Benefit paid –18,964,390.93
3. Exchange differences –10,275,677.16
V. Closing balance 218,042,067.90
268 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Fair value of plan assets
Items Amount
I. Opening balance 293,745,142.73
II. Defined benefit cost recognized in current profit and loss 5,517,808.69
1. Interest income 5,517,808.69
III. Defined benefit cost recognized in other comprehensive
income 14,587,336.63
1. Return on plan assets (except those included in net
interests) 14,587,336.63
2. Changes in impact of asset cap (except those included in
net interests)
IV. Other changes –20,252,385.83
1. Employer contributions 2,146,545.90
2. Benefit paid –10,316,265.46
3. Exchange differences –12,082,666.27
V. Closing balance 293,597,902.22
Neither the Company’s ordinary shares or bonds, nor the properties occupied by the
Company are included in the plan assets.
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance –40,443,161.42
II. Defined benefit cost recognized in current profit or loss 2,914,960.64
III. Defined benefit cost recognized in other comprehensive
income –29,039,951.28
IV. Other changes –8,987,682.26
V. Closing balance –75,555,834.32
The average term for the defined benefit obligation is 11.67 years at the balance
sheet date.
Haier Smart Home Co., Ltd. Annual Report 2023 269
Section X Financial Report
The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has provided post-employment
defined benefit plan of health care benefits to eligible employees.
Actuarial assumptions used in defined benefit plans
Items Rate
Discount rate 5.18%
Present value of defined benefit obligations
Items Amount
I. Opening balance 123,777,420.24
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 6,972,517.02
1. Current service cost 2,334,947.59
2. Past service cost
3. Settlement gains (loss indicated in ‘–’)
4. Interest cost 4,637,569.43
IV. Defined benefit cost recognized in other comprehensive
incomes 1,838,733.78
1. Actuarial loss (gain indicated in ‘–’) 1,838,733.78
V. Other changes –52,677,626.67
1. The consideration paid at the time of settlement
2. Benefit paid –9,546,425.71
3. Plan amendments –47,023,076.48
4. Others 2,013,015.17
5. Exchange differences 1,878,860.35
VI. Closing balance 79,911,044.37
270 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 123,777,420.24
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 6,972,517.02
IV. Defined benefit cost recognized in other comprehensive
incomes 1,838,733.78
V. Other changes –52,677,626.67
VI. Closing balance 79,911,044.37
The average term for the defined benefit obligation is 1.83 years at the balance sheet
date.
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary
of the Company
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
post-retirement defined benefit plan of health care benefits for the eligible employees.
Actuarial assumptions used in defined benefit plans
Items Rate
Discount rate 5.19%
Haier Smart Home Co., Ltd. Annual Report 2023 271
Section X Financial Report
Present value of defined benefit obligations
Items Amount
I. Opening balance 195,104,194.13
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 9,080,514.66
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘–’)
4. Interest cost 9,080,514.66
IV. Defined benefit cost recognized in other comprehensive
incomes –22,406,869.18
1. Actuarial loss (gain indicated in ‘–’) –22,406,869.18
V. Other changes –15,875,897.44
1. The consideration paid at the time of settlement
2. Benefit paid –19,028,672.18
3. Exchange differences 3,152,774.74
VI. Closing balance 165,901,942.17
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 195,104,194.13
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 9,080,514.66
IV. Defined benefit cost recognized in other comprehensive
incomes –22,406,869.18
V. Other changes –15,875,897.44
VI. Closing balance 165,901,942.17
272 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary
of the Company
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
defined benefit plan of pension for the eligible employees.
Actuarial assumptions used in defined benefit plans
Items Rate
Discount rate 5.21%
Present value of defined benefit obligations
Items Amount
I. Opening balance 126,866,875.02
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 8,650,933.08
1. Current service cost 2,427,611.01
2. Past service cost
3. Settlement gains (loss indicated in ‘–’)
4. Interest cost 6,223,322.07
IV. Defined benefit cost recognized in other comprehensive
incomes 1,406,600.54
1. Actuarial loss (gain indicated in ‘–’) 1,406,600.54
V. Other changes –28,487,202.15
1. The consideration paid at the time of settlement
2. Benefit paid –30,539,976.85
3. Exchange differences 2,052,774.70
VI. Closing balance 108,437,206.49
Haier Smart Home Co., Ltd. Annual Report 2023 273
Section X Financial Report
Fair value of plan assets
Items Amount
I. Opening balance 92,039,772.87
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
incomes 4,523,787.83
1. Return on plan assets (except those included in net
interests) 4,523,787.83
2. Changes in impact of asset cap (except those included in
net interests)
IV. Other changes –18,785,464.35
1. Employer contributions 10,269,526.04
2. Benefits paid out –30,539,976.85
3. Exchange differences 1,484,986.46
V. Closing balance 77,778,096.35
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 34,827,102.15
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 8,650,933.08
IV. Defined benefit cost recognized in other comprehensive
income –3,117,187.29
V. Other changes –9,701,737.80
VI. Closing balance 30,659,110.14
274 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(3) Provision for work-related injury compensation
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, made a provision for
work-related injury claims for the staff injured during the production accidents from
1 January 1991, which was used to pay for the claim made by the injured staff. The
provision was calculated by Beechercarlson Insurance Services, LLC., based on actuarial
method and a discount rate of 3.72%.
Items Amount
I. Opening balance 206,951,828.41
II. Business combination not under common control
III. Compensation recognized in current profit and loss 81,910,931.51
IV. Actual compensation paid –146,465,227.75
V. Other changes 3,198,783.64
VI. Closing balance 145,596,315.81
Classification of the balance of defined benefit plan
Items Closing balance Opening balance
Short-term Benefit 33,170,713.47 36,444,790.69
Long-term Benefit 364,213,564.08 417,072,669.76
Total 397,384,277.55 453,517,460.45
37. Estimated liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Opening balance Closing balance
Active litigation 18,469,174.18 32,259,609.59
Others 262,077,808.56 315,280,800.19
Projection of warranty expenses and
installation fees 1,330,482,237.43 1,587,473,632.46
Total 1,611,029,220.17 1,935,014,042.24
Significant assumption and estimation relating to estimation of warranty expenses and installation
fees: the Company reasonably estimated the warranty expenses and installation fees rate based
on its actual expenses on the warranty expenses and installation fees as well as sales data in the
past. The Company estimated the warranty expenses and installation fees that are likely to be
incurred in the future according to its policies on the warranty expenses and installation fees, as
well as the actual sales data.
Haier Smart Home Co., Ltd. Annual Report 2023 275
Section X Financial Report
38. Deferred income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Government grants 948,935,134.05 244,851,624.29 143,467,151.90 1,050,319,606.44
Total 948,935,134.05 244,851,624.29 143,467,151.90 1,050,319,606.44
39. Share capital
Opening Increase for the Decrease for the Closing
Share category balance current period current period balance
I. Restricted shares
1. State-owned shares
2. Shares held by domestic non-
state-owned legal entities
3. Shares held by domestic
individuals
4. Shares held by offshore
non-state-owned legal entities
II. Non-restricted shares 9,446,598,493 8,483,600 9,438,114,893
1. Ordinary shares in RMB 6,308,552,654 6,308,552,654
2. Domestic listed foreign Shares
3. Offshore listed foreign Shares 3,138,045,839 8,483,600 3,129,562,239
4. Others
III. Total shares 9,446,598,493 8,483,600 9,438,114,893
276 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
40. Capital reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Capital premium (Share premium) 22,280,237,959.89 754,716.99 351,841,150.60 21,929,151,526.28
Others capital reserve 1,601,799,364.87 610,606,646.81 379,202,853.91 1,833,203,157.77
Total 23,882,037,324.76 611,361,363.80 731,044,004.51 23,762,354,684.05
The main reasons for the change in capital premium: the cancellation of treasury stock for the
current period resulted in the decrease in capital premium of RMB173,997,008.66; a business
combination under the same control occurred for the current period resulted in the decrease in
capital premium of RMB94,561,200.00, and share premium was offset by share-based payment
exercise of RMB52,165,259.20.
The main reasons for the change in other capital reserves: the amortized share-based payment
for the current period included in other capital reserves of RMB610,606,646.81 and other capital
reserves were offset by share-based payment exercise of RMB379,202,853.91.
41. Treasury stock
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Treasury stock 3,857,807,196.38 1,801,808,513.60 625,550,602.56 5,034,065,107.42
Total 3,857,807,196.38 1,801,808,513.60 625,550,602.56 5,034,065,107.42
Haier Smart Home Co., Ltd. Annual Report 2023 277
Section X Financial Report
42. Other comprehensive income
Amounts for the current period
Attributable to Attributable to
Amount before Deduction of the parent minority
Opening current income impact on company after shareholders Closing
Items balance tax income tax tax after tax Others balance
a –241,549,088.46 –109,223,886.82 5,204,174.14 –104,019,712.68 –345,568,801.14
b 3,926,810.45 –120,129,623.59 20,839,490.61 –98,556,869.01 –733,263.97 –94,630,058.56
c 1,251,780,016.89 –335,901,648.31 –321,845,843.59 –14,055,804.72 929,934,173.30
d 869,623,580.17 550,686,416.89 –87,343,624.50 463,145,900.61 196,891.78 1,332,769,480.78
e 106,902,179.40 57,335,709.85 –17,018,618.58 40,317,053.23 38.04 147,219,232.63
Total 1,990,683,498.45 42,766,968.02 –78,318,578.33 –20,959,471.44 –14,592,138.87 1,969,724,027.01
Notes:
(1) Item a, b, and c are other comprehensive income that will be reclassified to profit or loss, the details are as follows:
Item a represents other comprehensive income classified to profit and loss under the equity method.
Item b represents cash flow hedge reserves (the effective part of the cash flow hedge profit and loss).
Item c represents exchange differences on translation of financial statements denominated in foreign currencies.
(2) Item d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.
Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.
43. Surplus reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Statutory surplus reserve 3,966,533,821.65 828,147,920.56 4,794,681,742.21
Discretionary surplus reserve 26,042,290.48 26,042,290.48
Reserve fund 11,322,880.64 11,322,880.64
Enterprise expansion fund 10,291,630.47 10,291,630.47
Total 4,014,190,623.24 828,147,920.56 4,842,338,543.80
278 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
44. Undistributed profits
√ Applicable □ Not Applicable
Items Amounts
Undistributed profits at the end of previous year 57,976,944,921.36
Change in accounting policy
Combination under common control 6,789,938.01
Undistributed profits at the beginning of the year 57,983,734,859.37
Add: net profit attributable to owners of the parent company 16,596,615,045.87
Other transfer in 37,920,637.14
Adjustment due to implementation of enterprise accounting standard
Profit available for appropriation for the year 74,618,270,542.38
Less: appropriation of statutory surplus reserve 828,147,920.56
Dividend payable for ordinary shares 5,254,436,127.22
Undistributed profits at the end of period 68,535,686,494.60
45. Operating income and operating cost
(1) Operating income
Amount for the Amount for the
Items current period previous period
Primary business 260,292,715,110.96 242,496,674,518.97
Other Business 1,135,067,939.14 1,082,250,439.50
Total 261,427,783,050.10 243,578,924,958.47
Haier Smart Home Co., Ltd. Annual Report 2023 279
Section X Financial Report
(2) Primary business income and primary business cost by product category
Categories Amount for the current period Amount for the previous period
Primary Primary Primary Primary
business income business cost business income business cost
Air conditioner 45,659,954,167.67 32,250,291,838.55 40,059,458,698.75 28,599,397,831.67
Refrigerator 81,640,696,197.18 55,335,233,549.67 77,637,761,907.85 52,883,745,098.80
Kitchen appliance 41,588,961,234.83 28,293,408,033.92 38,716,316,796.64 26,189,345,356.34
Water appliance 15,010,842,426.77 8,089,006,857.41 13,786,852,209.99 7,443,373,512.28
Washing machine 61,272,315,753.28 40,872,967,073.73 57,721,991,613.33 38,583,555,563.97
Equipment product
and integrated
channel services 15,119,945,331.23 13,816,209,393.14 14,574,293,292.41 13,130,186,928.01
Total 260,292,715,110.96 178,657,116,746.42 242,496,674,518.97 166,829,604,291.07
46. Taxes and surcharge
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
City maintenance and construction tax 370,194,426.87 290,370,564.78
Education surcharge 193,928,992.50 191,064,238.17
Property tax 83,854,370.16 61,839,604.81
Land use tax 24,248,077.46 21,637,047.83
Stamp duty 289,581,777.39 206,756,202.56
Others 54,390,611.42 42,213,230.03
Total 1,016,198,255.80 813,880,888.18
280 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
47. Selling expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Selling expenses 40,978,039,605.37 38,600,298,275.47
Total 40,978,039,605.37 38,600,298,275.47
The Company’s selling expenses are mainly salary expenses, transportation and storage fees,
advertising and promotion fees, and after-sales expenses.
48. Administrative expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Administrative expenses 11,489,640,885.88 10,846,346,796.51
Total 11,489,640,885.88 10,846,346,796.51
The Company’s administrative expenses are mainly salary expenses, office fees, depreciation and
amortization of assets fees, etc.
49. R&D expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
R&D expenses 10,221,013,589.28 9,507,384,787.81
Total 10,221,013,589.28 9,507,384,787.81
The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, inspection
and testing fees.
Haier Smart Home Co., Ltd. Annual Report 2023 281
Section X Financial Report
50. Financial expenses
Amount for the Amount for the
Items current period previous period
Interest expense 2,109,996,018.29 988,036,369.52
Less: interest income 1,486,196,698.91 855,213,183.91
Less: cash discount 123,733,614.83 142,905,868.01
Exchange gains and losses (gains are represented
by ‘–’) –135,177,135.61 –371,894,224.02
Others 149,267,211.03 140,224,686.95
Total 514,155,779.97 –241,752,219.47
Interest expenditure in lease liabilities for the current period was RMB138,474,152.20 (amount for
the corresponding period: RMB96,997,943.85).
51. Other income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Classification by nature current period previous period
Government grants related to revenue 1,447,141,973.36 966,729,425.62
Government grants related to assets 111,722,681.00 103,374,416.98
Total 1,558,864,654.36 1,070,103,842.60
282 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
52. Investment income (losses are represented by ‘–’)
Amount for the Amount for the
Items current period previous period
Long-term equity investments income calculated
by the equity method 1,786,573,842.34 1,582,178,829.86
Investment income from disposal of long-term
equity investments 13,984,506.23 27,123,485.74
Investment income from other equity instrument
investments during holding period 58,671,224.25 31,607,357.22
Income from wealth management products 49,612,602.11 92,625,406.55
Investment income from disposal of financial
assets measured at fair value with changes
included in current profit and loss 1,075,642.32 99,121,873.23
Total 1,909,917,817.25 1,832,656,952.60
53. Gains on changes in fair value (losses are represented by ‘–’)
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Source of gains on change in fair value current period previous period
Change in fair value of forward foreign exchange
contracts –134,151,416.10
Change in fair value of equity investments –21,952,224.65 59,522,888.36
Change in fair value of fund investments 38,833,850.27 –37,211,579.82
Others 2,872,037.43 –10,602,826.09
Total 19,753,663.05 –122,442,933.65
54. Credit impairment loss (losses are represented by ‘–’)
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Bad debts losses on bills receivable –1,393,949.47 1,901,562.15
Bad debts losses on accounts receivable –287,143,662.73 –420,692,343.10
Bad debts losses on other receivable 45,895,482.89 –12,586,699.87
Total –242,642,129.31 –431,377,480.82
Haier Smart Home Co., Ltd. Annual Report 2023 283
Section X Financial Report
55. Impairment loss on assets (losses are represented by ‘–’)
Amount for the Amount for the
Items current period previous period
Impairment losses on inventory –1,091,405,923.13 –1,144,921,827.01
Impairment losses on other current assets –325,055,055.98 –280,818,239.06
Impairment losses on fixed assets –2,840,089.52 –3,191,271.04
Impairment losses on construction in progress –22,513,947.38 –107,523.90
Impairment losses on intangible assets –66,381,834.15
Impairment losses on long-term equity investment –845,634.54
Impairment losses on contract assets 3,043,824.14 –69,975,265.71
Total –1,505,153,026.02 –1,499,859,761.26
56. Gains on disposal of assets (losses are represented by ‘–’)
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Gains on disposal of non-current assets 23,609,524.65 257,217,030.01
Losses on disposal of non-current assets –38,952,222.32 –50,474,214.22
Total –15,342,697.67 206,742,815.79
57. Non-operating income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Total gains on disposal of non-current assets 2,269,765.94 2,647,656.16
Quality claims and fines 34,631,544.06 46,905,155.24
Others 90,985,651.44 87,042,486.70
Total 127,886,961.44 136,595,298.10
284 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
58. Non-operating expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Total losses on disposal of non-current assets 98,784,851.16 27,077,182.74
Others 197,017,715.27 163,629,787.05
Total 295,802,566.43 190,706,969.79
59. Income tax expenses
(1) Statement of income tax expenses
Amount for the Amount for the
Items current period previous period
Current income tax expense 3,552,063,937.01 2,752,011,782.12
Deferred income tax expense –571,875,681.60 305,811,089.59
Total 2,980,188,255.41 3,057,822,871.71
(2) Reconciliation between accounting profit and income tax expenses for the current
period
Items Amounts
Total accounting profit 19,712,258,030.16
Income tax expense calculated pursuant to statutory tax rate 4,928,064,507.54
Impact from different tax rates applicable to subsidiaries –1,086,884,505.65
Impact from adjustment to income tax in prior periods –170,674,750.88
Impact from non-taxable income –456,115,238.02
Impact from non-deductible cost, expense and loss 305,664,892.51
Impact from deductible provisional differences or deductible losses
of unrecognized deferred tax –215,234,847.67
Others –324,631,802.42
Total income tax expense 2,980,188,255.41
60. Other comprehensive income
√ Applicable □ Not Applicable
Please refer to notes V.42 for details.
Haier Smart Home Co., Ltd. Annual Report 2023 285
Section X Financial Report
61. Cash flow statement items
(1) Cash related to operating activities
Other cash received from operating activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Deposits and securities 207,823,520.16
Government grants 1,049,491,519.04
Non-operating income excluding government grants 42,639,694.45
Interest income 1,086,296,196.12
Others 116,009,935.69
Total 2,502,260,865.46
Other cash paid to operating activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Cash paid on selling expenses 18,524,157,608.35
Cash paid on administrative and R&D expenses 7,052,345,804.22
Cash paid on financial expenses 126,570,147.13
Non-operating expenses 6,217,009.16
Others 201,220,123.60
Total 25,910,510,692.46
286 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) Cash related to investing activities
Other cash received from significant investing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Redemption of wealth management products 8,068,457,513.41
Total 8,068,457,513.41
Other cash paid to significant investing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Purchase of wealth management products 16,050,909,175.06
Total 16,050,909,175.06
Haier Smart Home Co., Ltd. Annual Report 2023 287
Section X Financial Report
(3) Cash related to financing activities
Other cash paid to financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Repurchase of shares 1,801,808,513.60
Cash paid to lease 1,137,968,353.78
Cash paid for acquisition of subsidiaries through business
combination under common control 94,561,200.00
Purchase of minority interests in subsidiaries 26,677,200.00
Others 35,312,400.26
Total 3,096,327,667.64
Changes of various liabilities arising from financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items current period current period
Opening Cash Non-cash Cash Non-cash Closing
balance change change change change balance
Short-term
borrowings 9,672,223,522.36 14,894,631,688.36 282,566,010.97 14,531,069,379.81 10,318,351,841.88
Long-term
borrowings
(including
long-term
borrowings due
within one year) 16,445,313,802.75 5,063,235,695.18 467,532,644.52 3,892,911,407.15 18,083,170,735.30
Lease liabilities
(including lease
liabilities due
within one year) 3,727,727,303.20 1,985,283,683.51 1,137,968,353.78 248,536,585.33 4,326,506,047.60
Total 29,845,264,628.31 19,957,867,383.54 2,735,382,339.00 19,561,949,140.74 248,536,585.33 32,728,028,624.78
288 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
62. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Supplementary information current period previous period
1. Net profit adjusted to cash flow of operating activities:
Net profit 16,732,069,774.75 14,733,312,889.78
Add: impairment provision for assets 1,505,153,026.02 1,499,859,761.26
Loss from credit impairment 242,642,129.31 431,377,480.82
Depreciation of fixed assets, depletion of oil
and gas assets, depreciation of biological
assets for production 3,979,360,664.97 3,668,992,233.20
Amortization of right-of-use assets 1,063,642,778.40 896,109,386.87
Amortization of intangible assets 1,247,725,926.68 1,074,941,740.28
Amortization of long-term prepaid expenses 508,899,423.18 411,338,249.38
Loss from disposal of fixed assets, intangible
assets and other long-term assets (gain
represented by “ — ”) 111,857,782.89 –182,313,289.21
Loss from retirement of fixed assets (gain
represented by “ — ”)
Loss from change of fair value (gain
represented by “ — ”) –19,753,663.05 122,442,933.65
Financial expenses (gain represented by “ — ”) 1,810,094,023.35 616,142,145.50
Loss from investments (gain represented by
“ — ”) –1,909,917,817.25 –1,832,656,952.60
Decrease in deferred income tax assets
(increase represented by “ — ”) –679,303,548.89 –452,670,928.44
Increase of deferred income tax liabilities
(decrease represented by “ — ”) 107,427,867.30 758,482,018.03
Decrease in inventories (increase represented
by “ — ”) 982,047,266.87 –2,783,200,168.10
Decrease of operational account receivables
(increase represented by “ — ”) –4,117,149,099.81 1,795,073,188.15
Increase of operational account payables
(decrease represented by “ — ”) 2,985,588,574.38 –1,509,097,715.87
Others 711,991,119.20 1,008,424,173.16
Net cash flow generated from operational
activities 25,262,376,228.30 20,256,557,145.86
2. Significant investment and financing activities not involving cash inflows and
outflows:
Capital transferred from debts 361,395,824.17
Convertible corporate bonds due within
one year
Fixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period 53,977,310,651.03 53,392,209,857.41
Less: cash balance at the beginning of the
period 53,392,209,857.41 45,201,743,280.53
Add: cash equivalents balance at the end of
the period
Less: cash equivalents balance at the
beginning of the period
Net increase of cash and cash equivalents 585,100,793.62 8,190,466,576.88
Haier Smart Home Co., Ltd. Annual Report 2023 289
Section X Financial Report
(2) Net cash paid on acquisition of subsidiaries for the current period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount
Cash or cash equivalents paid for business combination occurred
for the current period 162,489,967.94
Including: Europaltners Italia Srl 17,537,247.94
Tongfang Energy Technology Development Co., Ltd. (同 方 能 源 科
技 發 展 有 限 公 司) 144,952,720.00
Less: Cash or cash equivalents held by subsidiaries on the
acquisition date 6,177,856.07
Including: Europaltners Italia Srl 743,814.14
Tongfang Energy Technology Development Co., Ltd. (同 方 能 源 科
技 發 展 有 限 公 司) 5,434,041.93
Net cash paid on acquisition of subsidiaries 156,312,111.87
(3) Composition of cash and cash equivalents
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
I. Cash 53,977,310,651.03 53,392,209,857.41
Including: Cash on hand 541,712.70 5,312,391.11
Bank deposits always available for payment 53,524,177,266.50 52,978,813,851.96
Other monetary funds always available for
payment 452,591,671.83 408,083,614.34
II. Cash equivalents
Including: bond investments due within three
months
III. Closing balance of cash and cash
equivalents 53,977,310,651.03 53,392,209,857.41
Including: restricted cash and cash
equivalents used by the parent company
or subsidiaries of the Group
290 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(4) Monetary funds that are not cash and cash equivalents
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period Reasons
Deposit 448,374,520.06 664,825,001.43 Poor marketability, not
Restricted special 54,996,888.29 94,737,979.02 readily realizable, or
account deposit available for payment
Others 5,770,781.76 10,439,317.45
Total 509,142,190.11 770,002,297.90 /
Haier Smart Home Co., Ltd. Annual Report 2023 291
Section X Financial Report
63. Monetary items in foreign currency
Items Closing balance Opening balance
Balance in Exchange Balance in Exchange
foreign currency rate Balance in RMB foreign currency rate Balance in RMB
Monetary funds
USD 1,706,547,575.50 7.0827 12,086,964,513.02 1,290,843,958.56 6.9646 8,990,211,833.81
EUR 175,320,608.19 7.8592 1,377,879,723.86 47,915,506.82 7.4229 355,672,015.56
JPY 4,478,977,012.53 0.050213 224,902,872.73 2,642,036,348.79 0.052358 138,331,739.15
HKD 353,808,079.17 0.9062 320,620,881.34 647,479,463.24 0.8933 578,393,404.51
Others 2,377,241,597.06 2,630,279,781.27
Subtotal 16,387,609,588.01 12,692,888,774.30
Accounts receivables
USD 1,139,193,238.37 7.0827 8,068,563,949.37 770,735,456.70 6.9649 5,368,095,382.34
EUR 480,196,918.94 7.8592 3,773,963,625.34 480,679,854.02 7.4229 3,568,038,488.40
JPY 4,914,686,701.05 0.050213 246,781,163.32 4,448,523,930.25 0.052358 232,915,815.94
Others 4,873,677,549.96 3,648,407,445.01
Subtotal 16,962,986,287.99 12,817,457,131.69
Short-term borrowings
USD 486,876,813.46 7.0827 3,448,402,406.69 337,460,553.02 6.9646 2,350,277,767.57
EUR 250,039,963.32 7.8592 1,965,114,079.70 551,092,544.77 7.4229 4,090,704,850.58
JPY 2,017,059,526.42 0.050213 101,282,610.00 0.052358
HKD 2,600,000,000.00 0.9062 2,356,120,000.00 2,600,000,000.00 0.8933 2,322,580,000.00
Others 1,323,813,159.10 518,039,984.83
Subtotal 9,194,732,255.49 9,281,602,602.98
Accounts payables
USD 1,909,489,893.66 7.0827 13,524,344,069.80 1,941,535,383.62 6.9646 13,522,017,332.77
EUR 621,708,354.09 7.8592 4,886,130,296.44 626,564,863.63 7.4229 4,650,928,326.21
JPY 6,641,786,186.84 0.050213 333,504,009.80 7,649,104,013.52 0.052358 400,491,787.94
NZD 146,250,125.13 4.4991 657,993,937.97 150,709,317.71 4.4162 665,562,488.87
Others 3,451,938,860.63 3,276,292,812.40
Subtotal 22,853,911,174.64 22,515,292,748.19
Non-current liabilities due within one year
USD 138,292,003.54 7.0827 979,480,773.48 501,395,115.52 6.9646 3,492,016,421.53
EUR 97,148,817.20 7.8592 763,511,984.14 82,207,419.42 7.4229 610,217,453.64
JPY 1,027,109,699.08 0.050213 51,574,259.32 2,057,044,588.79 0.052358 107,702,740.58
RUB 685,662,519.93 0.0803 55,058,700.35 471,424,350.00 0.0942 44,408,173.77
Others 361,870,186.58 86,526,344.63
Subtotal 2,211,495,903.87 4,340,871,134.15
Long-term borrowings
USD 1,160,000,000.00 7.0827 8,215,932,000.00 742,230,000.00 6.9646 5,169,335,058.00
EUR 597,689,081.07 7.8592 4,697,358,025.92 698,254,017.68 7.4229 5,183,069,747.86
RUB 250,000,000.00 0.0942 23,550,000.00
Others 1,034,286,451.77 1,014,924,067.59
Subtotal 13,947,576,477.69 11,390,878,873.45
292 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
64. Leases
(1) As lessee
√ Applicable □ Not Applicable
Variable lease payments not included in the measurement of lease liabilities
√ Applicable □ Not Applicable
RMB176,724,465.05
Lease expenses of short-term leases or leases of low-value assets which are subject to
simplified treatment
√ Applicable □ Not Applicable
RMB262,176,314.90
Total cash outflow for leases 1,576,869,133.73 (Unit and Currency: RMB)
The leased assets leased by the Company include housing and buildings, production
equipment, transportation equipment, office equipment and others used in the course of
operations. Some of the leases contain renewal options and termination options.
(2) As lessor
a. Lease incomes from operating leases as lessor
√ Applicable □ Not Applicable
Unit and Currency: RMB
Including:
incomes related
to variable lease
payments not
included in
Items Lease incomes lease receipts
Operating leases as lessor 6,138,424.49 0
Total 6,138,424.49 0
Haier Smart Home Co., Ltd. Annual Report 2023 293
Section X Financial Report
b. Undiscounted lease receipts for the next five years:
Lease receipts Undiscounted lease receipts per year
Closing amount Opening amount
Within 1 year 4,582,971.43 3,901,805.87
2 to 5 years 2,933,400.00 11,255,903.92
Over 5 years
Total 7,516,371.43 15,157,709.79
The leased assets leased out by the Company are mainly housing, buildings and land
use rights. For details of changes of the leased assets, please refer to Note VII.14.
VIII. RESEARCH AND DEVELOPMENT EXPENDITURE
(1). By the nature of expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Remuneration for the employees 4,561,708,115.06 4,280,729,363.52
Design and development expenses 3,553,157,344.57 3,401,479,754.38
Material input 1,801,538,991.20 1,718,071,325.56
Depreciation and amortization 235,373,827.86 182,885,401.52
Organizational operation and others 669,467,061.28 657,089,397.12
Total 10,821,245,339.97 10,240,255,242.10
Including: expensed research and
development expenditure 10,219,284,795.74 9,499,191,097.85
Capitalized research and development expenditure 601,960,544.23 741,064,144.25
294 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2). Development expenditure on research and development projects eligible for
capitalization
Decrease for the current period
Change in
Included in foreign
Increase for the Recognized as current profit exchange rate
Items Opening balance current period intangible asset and loss and others Closing balance
Home Appliance
Intelligent
Interaction Project 97,519,232.72 97,519,232.72
OWNERSHIP
EXPERIENCE
PROGRAM 16,439,526.97 31,908,445.55 432,262.68 48,780,235.20
91ABD.ERP IT
PROGRAM 7,539,118.42 38,395,897.76 42,701,301.82 107,131.20 3,340,845.56
AI Multimodal
Interaction Project 53,602,467.67 100,045,772.56 153,648,240.23
Home Appliances
Intelligent Low
Carbon Energy
Saving Project 131,513,213.52 131,513,213.52
Others 76,899,402.61 202,577,982.12 140,518,323.75 1,728,793.54 –20,380,345.82 116,849,921.62
Total 154,480,515.67 601,960,544.23 468,381,079.32 1,728,793.54 –19,840,951.94 266,490,235.10
Haier Smart Home Co., Ltd. Annual Report 2023 295
Section X Financial Report
IX. CHANGES OF CONSOLIDATION SCOPE
1. Business combination not under common control
√ Applicable □ Not Applicable
(1). Business combination transactions not under common control occurring in the
current period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Revenue of Net profit of
The the acquiree the acquiree
proportion from from
of equity Acquisition combination combination
Acquisition interest method of Basis for date to the date to the
date of equity Acquisition cost acquired equity Combination determining the end of the end of the
Name of the acquiree interest of equity interest (%) interest date combination period period
Europalters Italia S.r.l. April 2023 EUR2,292,460 100 Acquisition April 2023 Equity delivery EUR20,682,401EUR–710,404
Tongfang Energy
Technology
Development Co., Ltd.
( September September
) 2023 144,952,720.00 80 Acquisition 2023 Equity delivery 59,323,066.93 3,016,132.97
(2). Combination cost and goodwill
Tongfang
Energy
Technology
Development
Co., Ltd.
Europalters (
Items Italia S.r.l. )
— Cash EUR2,292,460 144,952,720.00
— Contingent consideration
Total combination cost EUR2,292,460 144,952,720.00
Less: acquired identifiable
Share of fair value of net assets EUR–16,032,934 116,374,008.26
Amount of goodwill EUR18,325,394 28,578,711.74
296 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(3). Identifiable assets and liabilities of the acquiree on the combination date
Items Europalters Italia S.r.l.
Fair value (EUR) Book value (EUR)
Monetary funds 97,231.00 97,231.00
Accounts receivables 3,319,509.00 4,470,509.00
Inventories 387,481.00 516,481.00
Other current assets 3,065,716.00 2,153,680.00
Goodwill 6,727,210.00
Long-term assets 686,897.00 339,897.00
Short-term borrowings –3,026,876.00 –3,026,876.00
Accounts payables –173,081.00 –173,081.00
Taxes payable –33,253.00 –33,253.00
Payables for staff remuneration –418,771.00 –418,771.00
Other payables –10,189,660.00 –10,189,660.00
Non-current liabilities due within one year –9,303,819.00 –2,784,819.00
Long-term liabilities –444,308.00 –444,308.00
Net assets –16,032,934.00 –2,765,760.00
Less: minority interests
Net assets acquired –16,032,934.00 –2,765,760.00
Haier Smart Home Co., Ltd. Annual Report 2023 297
Section X Financial Report
Tongfang Energy Technology
Development Co., Ltd.
Items ( )
Fair value Book value
Monetary funds 5,434,041.93 5,434,041.93
Accounts receivables 118,584,316.42 118,584,316.42
Inventories 8,447,305.23 8,447,305.23
Other current assets 4,232,144.78 4,232,144.78
Fixed assets 26,628,037.40 26,628,037.40
Construction in progress 32,508,205.12 32,508,205.12
Right-of-use assets 6,610,520.60 6,610,520.60
Intangible assets 113,275,924.15 79,811,057.21
Other long-term asset 35,792,288.95 35,792,288.95
Short-term borrowings –18,000,000.00 –18,000,000.00
Accounts payables –111,720,139.96 –111,720,139.96
Payables for staff remuneration –1,491,773.91 –1,491,773.91
Taxes payable –2,547,376.92 –2,547,376.92
Non-current liabilities due within one year –14,230,526.76 –14,230,526.76
Other current liabilities –7,947,388.63 –7,947,388.63
Lease liabilities –3,712,527.64 –3,712,527.64
Long-term payables –21,950,650.01 –21,950,650.01
Other non-current liabilities –21,712,054.34 –13,345,837.60
Net assets 148,200,346.41 123,101,696.21
Less: minority interests 31,826,338.15 26,806,608.11
Net assets acquired 116,374,008.26 96,295,088.10
298 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
2. Business combination under common control
√ Applicable □ Not Applicable
(1). Business combination under common control occurring in the current period
The basis for the
The proportion of transaction of
equity acquired in constituting business
the business combination under Recognition basis of
Name of the acquiree combination common control Combination date combination date
Shanghai Haier Smart Technology 100.00% Controlled by Haier Group 2023.1 Subject equity-related right and
Co., Limited (上海海爾智能科技 Corporation before and obligation transferred to the
有限公司) after combination Company
Zhengzhou Haiyong New Corporate 100.00% Controlled by Haier Group 2023.12 Subject equity-related right and
Management Co., Ltd (鄭州海永 Corporation before and obligation transferred to the
新企業管理有限公司) after combination Company
(Continued)
The income Net profit of
of the the acquiree
acquiree from from the The income
the beginning beginning of of the Net profit of
of the current the current acquiree the acquiree
period to period to during the during the
Name of the combination combination comparison comparison
acquiree date date period period
Shanghai Haier
Smart Technology
Co., Limited (上 海
海爾智能科技有限
公 司) N/A N/A 154,209,888.77 551,638.23
Zhengzhou Haiyong
New Corporate
Management Co.,
Ltd (鄭州海永新企
業 管 理 有 限 公 司) 3,330,320.71 –2,581,701.76 6,992,260.56 579,633.02
Haier Smart Home Co., Ltd. Annual Report 2023 299
Section X Financial Report
(2). Combination cost
Combination cost Cash Equity
Shanghai Haier Smart
Technology Co., Limited
(上 海 海 爾 智 能 科 技 有 限
公 司) 70,000,000.00 N/A
Zhengzhou Haiyong New
Corporate Management Co.,
Ltd (鄭 州 海 永 新 企 業 管 理
有 限 公 司) 24,561,200.00 N/A
(3). Carrying amount of assets and liabilities of the acquiree at the combination date
Shanghai Haier Smart Technology
Co., Limited
Items ( )
End of the
Combination date previous period
Monetary funds 22,886,544.88 22,886,544.88
Accounts receivables 183,024,484.05 183,024,484.05
Inventory 45,073,195.71 45,073,195.71
Other current assets 530,506.71 530,506.71
Deferred income tax assets 1,817,890.71 1,817,890.71
Less: Accounts payables 189,302,217.18 189,302,217.18
Short-term borrowings 28,848,789.90 28,848,789.90
Taxes payable 3,375,065.74 3,375,065.74
Net assets 31,806,549.24 31,806,549.24
Zhengzhou Haiyong New Corporate
Management Co., Ltd
Items ( )
End of the
Combination date previous period
Monetary funds 1,187,696.86 509,927.92
Accounts receivables 744,929.25 1,959,675.75
Other current assets 113,018.42 363,883.92
Investment properties 74,125,324.15 77,363,258.95
Construction in progress 27,917.12 27,917.12
Less: Accounts payables 73,557,964.67 74,967,076.96
Taxes payable 239,234.12 274,197.93
Net assets 2,401,687.01 4,983,388.77
300 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
3. Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:
Qingdao Haishuzhi
Enterprise
Consulting Service
Co., Ltd.
(
Items )
Equity disposal price
Proportion of equity disposal 100%
Method of equity disposal Cancellation
Time of loss-of-control 2023.1
Basis for determination the time of loss-of- control Cancellation
Difference between consideration and its share of net assets of the
subsidiary as respect to the disposal in the consolidated level –733.51
4. Changes of consolidation scope due to other reasons
√ Applicable □ Not Applicable
(1) During the period, Qingdao Haier Home AI Industry Innovation Center Co., Ltd., a subsidiary
of the Company, established a wholly-owned subsidiary, Qingdao Haier Yikang Technology
Co., Ltd. (青 島 海 爾 益 康 科 技 有 限 公 司).
(2) During the period, Qingdao Haier Home AI Industry Innovation Center Co., Ltd., a subsidiary
of the Company, established a subsidiary, Qingdao Haier Youyang Technology Co., Ltd. (青
島 海 爾 有 養 科 技 有 限 公 司).
Haier Smart Home Co., Ltd. Annual Report 2023 301
Section X Financial Report
X. INTERESTS IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Flourishing Reach Mainland of China Bermuda Group company, which 100.00% 100.00% Establishment
Limited mainly engage in
investment holding, the
production and sale of
washing machines and
water heaters,
distribution service
Haier Electronics Mainland of China Bermuda Group company, which 100.00% 100.00% Establishment
Group Co., Ltd. and Hong Kong mainly engage in
investment holding, the
production and sale of
water equipment,
distribution service
Haier U.S. Appliance the United States the United Group company, which 100.00% 100.00% Establishment
Solutions, Inc. States mainly engage in home
appliances production
and distribution
business
Haier Singapore Singapore and Singapore Group company, which 100.00% 100.00% Business
Investment Holding other overseas mainly engage in home combination
Co., Ltd. areas appliances production under common
and distribution control
business
Haier New Zealand New Zealand New Zealand Group company, which 100.00% 100.00% Business
Investment Holding mainly engage in home combination
Company Limited appliances production under common
and distribution control
business
Candy S.p.A Europe Italy Group company, which 100.00% 100.00% Business
mainly engage in home combination not
appliances production under common
and distribution control
business
Qingdao Haier Air Qingdao High-tech Qingdao Manufacture and sale of 92.37% 92.37% Business
Conditioner Gen Zone High-tech household air- combination
Corp., Ltd. Zone conditioners under common
control
Guizhou Haier Huichuan District, Huichuan Manufacture and sale of 59.00% 59.00% Business
Electronics Co., Ltd. Zunyi City, District, Zunyi refrigerator combination
Guizhou Province City, Guizhou under common
Province control
Hefei Haier Air- Hefei Haier Hefei Haier Manufacture and sale of 100.00% 100.00% Business
conditioning Co., Industrial Park Industrial Park air-conditioners combination
Limited under common
control
302 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Wuhan Haier Wuhan Haier Wuhan Haier Manufacture and sale of 59.86% 59.86% Business
Electronics Holding Industrial Park Industrial Park air-conditioners combination
Co., Ltd. under common
control
Qingdao Haier Qingdao Qingdao Manufacture and sale of 97.43% 97.43% Business
Air- Conditioner Development Development air-conditioners combination
Electronics Co., Ltd. Zone Zone under common
control
Qingdao Haier Qingdao High-tech Qingdao Manufacturing of plastic 100.00% 100.00% Business
Information Plastic Zone High-tech products combination
Development Co., Zone under common
Ltd. control
Dalian Haier Precision Dalian Export Dalian Export Manufacture and sale of 90.00% 90.00% Business
Products Co., Ltd. Expressing Zone Expressing precise plastics combination
Zone under common
control
Hefei Haier Plastic Hefei Economic & Hefei Economic Manufacture and sale of 95.17% 4.83% 100.00% Business
Co., Ltd. Technological & plastic parts combination
Development Technological under common
Area Development control
Area
Qingdao Meier Plastic Qingdao Qingdao Manufacture of plastic 40.00% 60.00% 100.00% Business
Powder Co., Ltd. Development Development powder, plastic sheet combination
Zone Zone and high-performance under common
coatings control
Chongqing Haier Jiangbei District, Jiangbei District, Plastic products, sheet 90.00% 10.00% 100.00% Business
Precision Plastic Chongqing City Chongqing metal work, electronics combination
Co., Ltd. City and hardware under common
control
Qingdao Haier Qingdao High-tech Qingdao Manufacture and 97.91% 97.91% Establishment
Refrigerator Co., Zone High-tech production of
Ltd. Zone fluorine-free
refrigerators
Qingdao Haier Pingdu Pingdu Manufacture of 100.00% 100.00% Establishment
Refrigerator Development Development refrigerators
(International) Co., Zone, Qingdao Zone, Qingdao
Ltd.
Qingdao Household Qingdao High-tech Qingdao Research and 100.00% 100.00% Establishment
Appliance Zone High-tech development of home
Technology and Zone appliances mold and
Equipment Research technological equipment
Institute
Qingdao Haier Whole Qingdao High-tech Qingdao Research, development 98.33% 98.33% Establishment
Set Home Appliance Zone High-tech and sales of
Service Co., Ltd. Zone health- related small
home appliance
Qingdao Haier Special Qingdao Qingdao Manufacture and sales of 100.00% 100.00% Establishment
Refrigerator Co., Development Development fluorine-free
Ltd. Zone Zone refrigerators
Qingdao Haier Qingdao Qingdao Manufacture of dish 99.59% 99.59% Establishment
Dishwasher Co., Development Development washing machine and
Ltd. Zone Zone gas stove
Haier Smart Home Co., Ltd. Annual Report 2023 303
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Qingdao Haier Special Qingdao Qingdao Research, manufacture 96.78% 96.78% Establishment
Freezer Co., Ltd. Development Development and sales of freezer and
Zone Zone other refrigeration
products
Dalian Haier Dalian Export Dalian Export Air conditioner processing 90.00% 90.00% Establishment
Air- conditioning Expressing Zone Expressing and manufacturing
Co., Ltd. Zone
Dalian Haier Dalian Export Dalian Export Refrigerator processing 100.00% 100.00% Establishment
Refrigerator Co., Expressing Zone Expressing and manufacturing
Ltd. Zone
Qingdao Haier Qingdao Qingdao Development, assembling 100.00% 100.00% Establishment
Electronic Plastic Development Development and sales of plastics,
Co., Ltd. Zone Zone electronics and
products
Wuhan Haier Freezer Wuhan Economic & Wuhan Economic Research, manufacture 82.93% 4.36% 87.29% Establishment
Co., Ltd Technological & and sales of freezer and
Development Technological other refrigeration
Zone High-tech Development products
Industrial Park Zone High-tech
Industrial Park
Qingdao Haidarui Qingdao High-tech Qingdao Develop, purchase and 98.00% 2.00% 100.00% Establishment
Procurement Service Zone High-tech sell electrical products
Co., Ltd. Zone and components
Qingdao Haier Qingdao High-tech Qingdao Development and 91.46% 1.01% 92.47% Establishment
Intelligent Home Zone High-tech application of home
Appliance Zone appliances,
Technology Co., communication,
Ltd. electronics and network
engineering technology
Chongqing Haier Jiangbei District, Jiangbei District, Manufacture and sales of 76.92% 23.08% 100.00% Establishment
Air-conditioning Co., Chongqing City Chongqing air conditioners
Ltd. City
Qingdao Haier Qianwang ang Qianwang ang Development and 70.00% 70.00% Establishment
Precision Products Road, Jiaonan Road, Jiaonan manufacture of precise
Co., Ltd. City City plastic, metal plate,
mold and electronic
products for home
appliances
Qingdao Haier Air Jiaonan City, Jiaonan City, Manufacture of home 100.00% 100.00% Establishment
Conditioning Qingdao Qingdao appliances and
Equipment Co., Ltd. electronics
Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00% 100.00% Establishment
Zone Haier Expressing Zone Expressing
Air-conditioning Zone
Trading Co., Ltd.
Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00% 100.00% Establishment
Zone Haier Expressing Zone Expressing
Refrigerator Trading Zone
Co., Ltd.
Chongqing Haier Jiangbei District, Jiangbei District, Sales of home appliances 95.00% 5.00% 100.00% Establishment
Electronics Sales Chongqing City Chongqing
Co., Ltd. City
Chongqing Haier Jiangbei District, Jiangbei District, Processing and 84.95% 15.05% 100.00% Establishment
Refrigeration Chongqing City Chongqing manufacturing of
Appliance Co., Ltd. City refrigerator
304 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Hetei Haier Hefei Haier Hefei Haier Processing and 100.00% 100.00% Establishment
Refrigerator Co., Industrial Park Industrial Park manufacturing of
Ltd. refrigerator
Qingdao Haier Qingdao Qingdao Air-conditioning engineer 100.00% 100.00% Establishment
Intelligent Building Development Development
Technology Co., Zone Zone
Ltd.
Chongqing Lianmai Jiangbei District, Jiangbei District, Sales of home appliances 51.00% 51.00% Establishment
Electric Appliance Chongqing City Chongqing and electronics
Sales Co., Ltd. City
(重慶聯邁電器銷售
有限公司)
Qingdao Haier Jiaozhou City, Jiaozhou City, Manufacture and sale of 100.00% 100.00% Establishment
(Jiaozhou) Qingdao Qingdao air-conditioners
Air-conditioning Co.,
Limited
Qingdao Haier Jiaozhou City, Jiaozhou City, Manufacture and sales of 100.00% 100.00% Establishment
Component Co., Qingdao Qingdao plastic and precise
Ltd. sheet metal products
Haier Shareholdings Hong Kong Hong Kong Investment 100.00% 100.00% Establishment
(Hong Kong) Limited
Harvest International Cayman Islands Cayman Islands Investment 100.00% 100.00% Establishment
Company
Shenyang Haier Shenbei New Area, Shenbei New Manufacture and sales of 100.00% 100.00% Establishment
Refrigerator Co., Shenyang City Area, refrigerator
Ltd. Shenyang City
S
Foshan Haier Freezer Sanshui District, Sanshui District, Manufacture and sales of 100.00% 100.00% Establishment
Co., Ltd. Foshan City Foshan City refrigerator
Zhengzhou Haier Zhengzhou Zhengzhou Manufacture and sales of 100.00% 100.00% Establishment
Air-conditioning Co., Economic and Economic and freezer
Ltd. Technological Technological
Development Development
Zone Zone
Qingdao Haidayuan Qingdao Qingdao Develop, purchase and 100.00% 100.00% Establishment
Procurement Service Development Development sell electrical products
Co., Ltd. Zone Zone and components
Qingdao Haier Qingdao High-tech Qingdao Development and 100.00% 100.00% Establishment
Intelligent Zone High-tech research of home
Technology Zone appliance products
Development Co.,
Ltd.
Qingdao Hairi High Qingdao High-tech Qingdao Design, manufacture and 100.00% 100.00% Business
Technology Co., Zone High-tech sales of product model combination
Ltd. Zone and mould under common
control
Qingdao Hai Gao Qingdao High-tech Qingdao Industrial design and 75.00% 75.00% Business
Design and Zone High-tech prototype production combination
Manufacture Co., Zone under common
Ltd. control
Beijing Haier Guangke Beijing Beijing Development, promotion 55.00% 55.00% Business
Digital Technology and transfer of combination
Co., Ltd. technology under common
control
Haier Smart Home Co., Ltd. Annual Report 2023 305
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Shanghai Haier Shanghai Shanghai Wholesale and retail of 66.87% 66.87% Establishment
Medical Technology medical facility
Co., Ltd.
Qingdao Haier Qingdao Qingdao Development and sales of 100.00% 100.00% Business
Technology Co., software and information combination
Ltd. product under common
control
Qingdao Haier Qingdao Qingdao Entrepreneurship 100.00% 100.00% Establishment
Technology investment and
Investment Co., Ltd. consulting
Qingdao Casarte Qingdao Qingdao Development, production 100.00% 100.00% Establishment
Smart Living and sales of appliances
Appliances Co., Ltd.
Qingdao Qingdao Qingdao Sales of home appliances 100.00% 100.00% Establishment
Haichuangyuan and digital products
Appliances Sales
Co., Ltd.
Haier Overseas Qingdao Qingdao Sales of home appliances, 100.00% 100.00% Establishment
Electric Appliance international freight
Co., Ltd. forwarding
Haier Group (Dalian) Dalian Dalian Sales of home appliances, 100.00% 100.00% Business
Electrical Appliances international freight combination
Industry Co., Ltd. forwarding under common
control
Qingdao Haier Central Qingdao Qingdao Production and sales of 100.00% 100.00% Establishment
Air Conditioning Co., air and refrigeration
Ltd. equipment
Chongqing Haier Hefei Hefei Sales of home appliances 100.00% 100.00% Establishment
Home Appliance
Sale Hefei Co., Ltd.
Qingdao Weixi Smart Qingdao Qingdao Intelligent sanitary ware 85.00% 85.00% Establishment
Technology Co.,
Ltd.
Haier U+smart Beijing Beijing Software development 100.00% 100.00% Establishment
Intelligent
Technology (Beijing)
Co., Ltd.
Haier (Shanghai) Shanghai Shanghai Sales, research and 100.00% 100.00% Establishment
Electronics Co., Ltd. development of home
appliances
Shanghai Haier Shanghai Shanghai Business management 100.00% 100.00% Establishment
Zhongzhi Fang consulting, chuangke
Chuang Ke management
Management Co.,
Ltd.
Qingdao Haier Smart Qingdao Qingdao Production and sales of 85.82% 85.82% Establishment
Kitchen Appliance kitchen smart home
Co., Ltd. appliances
GE Appliance Shanghai Shanghai Sales of home appliances 100.00% 100.00% Establishment
(Shanghai) Co., Ltd.
Qingdao Haier Special Qingdao Qingdao Production and sales of 100.00% 100.00% Establishment
Refrigerating home appliances
Appliance Co., Ltd.
306 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Shanghai Zhihan Beijing Beijing Promotion of 100.00% 100.00% Establishment
Technology Co., technological
Ltd. (上海摯瀚科技 development
有限公司)
Laiyang Haier Smart Laiyang Laiyang Production and sales of 100.00% 100.00% Establishment
Kitchen Appliance home appliances
Co., Ltd.
Hefei Haier Air Hefei Hefei Production and sales of 100.00% 100.00% Establishment
Conditioning home appliances
Electronics Co., Ltd.
Haier (Shanghai) Shanghai Shanghai Research and 100.00% 100.00% Establishment
Home Appliance development of home
Research and appliances
Development Center
Co., Ltd.
Haier (Shenzhen) R&D Shenzhen Shenzhen Development, research 100.00% 100.00% Establishment
Co., Ltd. and technical services of
household and
commercial electrical
Guangzhou Haier Air Guangdong Guangdong Manufacturing of 100.00% 100.00% Establishment
Conditioner Co., refrigeration and air
Ltd. conditioning equipment
Qingdao Yunshang Qingdao Qingdao IoT technology research 60.00% 60.00% Establishment
Yuyi IOT Technology and development
Co., Ltd.
Qingdao Jijia Cloud Qingdao Qingdao R&D and sales of lighting 80.00% 80.00% Establishment
Intelligent appliances
Technology Co.,
Ltd.
Qingdao Haimeihui Qingdao Qingdao Leasing and business 100.00% 100.00% Establishment
Management services
Consulting Co., Ltd.
(青島海美匯管理諮
詢有限公司)
Wuxi Yunshang Wuxi Wuxi Internet of Things 100.00% 100.00% Establishment
Internet of Clothing technology R & D
Technology Co.,
Ltd. (無錫雲裳衣聯
網科技有限公司)
Qingdao Haidacheng Qingdao Qingdao Develop, purchase and 100.00% 100.00% Establishment
Procurement Service sell electrical products
Co., Ltd. and components
Guangdong Haier Guangzhou Guangzhou Scientific research and 76.72% 76.72% Business
Intelligent technology service combination not
Technology Co. Ltd. sector under common
(廣東海爾智能科技 control
有限公司)
Beijing Haixianghui Beijing Beijing Scientific research and 100.00% 100.00% Establishment
Technology Co., technology service
Ltd. (北京海享匯科 sector
技有限公司)
Haier Smart Home Co., Ltd. Annual Report 2023 307
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Haier Smart Home Qingdao Qingdao Technology development 100.00% 100.00% Establishment
Experience Cloud of smart home
Ecological products, whole
Technology Co., furniture customization,
Ltd. (海爾智家體驗 etc.
雲生態科技有限
公司)
Haier Smart Home Qingdao Qingdao Technical services, 100.00% 100.00% Establishment
(Qingdao) Network development,
Co., Ltd. (海爾智家 consulting, transfer, etc.
（青島）網絡有限
公司)
Haier Smart Home Qingdao Qingdao Residential interior 100.00% 100.00% Establishment
(Qingdao) Network decoration, professional
Operation Co., Ltd. construction operation,
(海爾智家（青島）網 special equipment
絡運營有限公司) installation, upgrading
and repair, etc.
Qingdao Internet of Qingdao Qingdao Urban distribution and 100.00% 100.00% Establishment
Wine Technology transportation services,
Co., Ltd. (青島酒聯 import and export of
網物聯科技有限 goods, technology
公司) import and export and
food business, etc.
Qingdao Linghai Air Qingdao Qingdao Manufacture and 100.00% 100.00% Establishment
Conditioning production of air
Equipment Co., Ltd. conditioner and
(青島菱海空調設備 refrigeration equipment
有限公司)
Shenzhen Yunshang Shenzhen Shenzhen Import and export 100.00% 100.00% Establishment
Yilian Technology business, Internet,
Co., Ltd. (深圳雲裳 Internet of things, big
衣聯科技有限公司) data, AI, AR and
technical services
operation
Qingdao Haixiangxue Qingdao Qingdao Professional intermediary 100.00% 100.00% Establishment
Human Resources activities
Co., Ltd. (青島海享
學人力資源有限
公司)
Jiangxi Haier Medical Jiangxi Jiangxi Wholesale and retail of 100.00% 100.00% Establishment
Technology medical equipment
Co., Ltd.
Qingdao Haizhi Qingdao Qingdao Technical service 100.00% 100.00% Establishment
Shenlan Technology development
Co., Ltd.
Qingdao Haishengze Qingdao Qingdao Air conditioning 100.00% 100.00% Establishment
Technology equipment technical
Co., Ltd. services
Qingdao Hailvyuan Qingdao Qingdao Electrical and electronic 100.00% 100.00% Establishment
Recycling products waste
Technology treatment
Co., Ltd.
308 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Qingdao Haier HVAC Qingdao Qingdao Manufacture and sale of 75.00% 25.00% 100.00% Establishment
Equipment Co., Ltd. air-conditioners
(青島海爾暖通空調
設備有限公司)
Qingdao Haier Home Qingdao Qingdao Integrated service of AI 100.00% 100.00% Establishment
AI Industry industry application
Innovation Center system
Co., Ltd. (青島海爾
家庭人工智能產業
創新中心有限公司)
Zhejiang Weixi IoT Zhejiang Zhejiang IoT application service 100.00% 100.00% Establishment
Technology Co.,
Ltd. (浙江衛璽物聯
科技有限公司)
Qingdao Haier Quality Qingdao Qingdao Inspection and testing of 100.00% 100.00% Business
Inspection Co., Ltd. home appliance combination
(青島海爾質量檢測 under common
有限公司) control
Qingdao Qingdao Qingdao Product certification 100.00% 100.00% Business
Haiyongcheng service combination
Certification Service under common
Co., Ltd.(青島海永 control
成認證服務有限
公司)
Qingdao Zhonghai Qingdao Qingdao Home appliance testing 100.00% 100.00% Business
Borui Testing and technology combination
Technology Service consulting under common
Co., Ltd.(青島中海 controls
博睿檢測技術服務
有限公司)
Qingdao Haier Special Qingdao Qingdao Manufacture and sale of 100.00% 100.00% Business
Plastic Development refrigerator doors combination
Co., Ltd. under common
controls
Qingdao Haizhiling Air Qingdao Qingdao Software development 100.00% 100.00% Establishment
Conditioning and sale of daily
Engineering Co., necessities
Ltd. (青島海智菱空
調工程有限公司)
Haier Smart Home Qingdao Qingdao Promotion of energy- 100.00% 100.00% Establishment
(Xiongan, Hebei) saving technology
Technology Co.,
Ltd. (海爾智家科技
（河北雄安）有限
公司)
Qingdao Ruibo Qingdao Qingdao Environmental and AI 89.13% 89.13% Establishment
Ecological technology consulting
Environmental
Technology Co.,
Ltd. (青島瑞博生態
環保科技有限公司)
Qingdao Sanyiniao Qingdao Qingdao Technology service and 100.00% 100.00% Establishment
Technology Co., advertisement design
Ltd. (青島三翼鳥科
技有限公司)
Haier Smart Home Co., Ltd. Annual Report 2023 309
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Qingdao Jingzhi Qingdao Qingdao Operation of dangerous 100.00% 100.00% Establishment
Recycle waste
Environmental
Technology Co.,
Ltd. (青島鯨智再生
環保科技有限公司)
Qingdao Yunshang Qingdao Qingdao Professional cleaning and 51.00% 51.00% Establishment
Jieshen Yilian sale of daily necessities
Technology Co.,
Ltd. (青島雲裳潔神
衣聯科技有限公司)
Shanghai Yunshang Shanghai Shanghai Professional cleaning and 100.00% 100.00% Establishment
Yuyi IoT Technology sale of daily necessities
Co., Ltd. (上海雲裳
羽衣物聯科技有限
公司)
Shijiazhuang Shijiazhuang Shijiazhuang Professional cleaning and 51.00% 51.00% Establishment
Yunshang Yilian sale of daily necessities
Technology Co.,
Ltd. (石家莊雲裳衣
聯科技有限公司)
Nanjing Yunshang Nanjing Nanjing Professional cleaning and 80.00% 80.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd. (南京雲裳
衣聯科技有限公司)
Shanxi Yunshang Shanxi Shanxi Professional cleaning and 51.00% 51.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd. (山西雲裳
衣聯科技有限公司)
Tianjin Yunshang Tianjin Tianjin Professional cleaning and 51.00% 51.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd. (天津雲裳
衣聯網科技有限
公司)
Chongqing Yunshang Chongqing Chongqing Professional cleaning and 51.00% 51.00% Establishment
Haihong Yilian sale of daily necessities
Technology Co.,
Ltd. (重慶雲裳海宏
衣聯科技有限公司)
Chengdu Yunshang Chengdu Chengdu Professional cleaning and 80.00% 80.00% Establishment
Meier Yilian sale of daily necessities
Technology Co.,
Ltd. (成都雲裳美爾
衣聯科技有限公司)
Beijing Yunshang Beijing Beijing Professional cleaning and 51.00% 51.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd. (北京雲裳
衣聯科技有限公司)
Chengdu Yunshang Chengdu Chengdu Professional cleaning and 100.00% 100.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd. (成都雲裳
衣聯科技有限公司)
310 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
% of
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding right Method
Direct Indirect
Qingdao Haixiangmian Qingdao Qingdao Sale of food and daily 100.00% 100.00% Establishment
Technology Co., necessities
Ltd. (青島海享眠科
技有限公司)
Qingdao Haier Kitchen Qingdao Qingdao Technology service and 100.00% 100.00% Establishment
IoT Technology Co., sale of daily necessities
Ltd. (青島海爾廚聯
網物聯科技有限公
司)
Tibet Haifeng Tibet Tibet Development of software 100.00% 100.00% Establishment
Intelligent Innovation and medical equipment
Technology Co.,
Ltd. (西藏海峰智能
創新科技有限公司)
Qingdao Haixiangzhi Qingdao Qingdao Manufacturing of home 100.00% 100.00% Establishment
Technology Co., appliances
Ltd. (青島海享智科
技有限公司)
Qingdao Haier Qingdao Qingdao Manufacturing of home 100.00% 100.00% Establishment
Refrigeration appliances
Appliance Co., Ltd.
(青島海爾製冷電器
有限公司)
Chongqing Haier Chongqing Chongqing Manufacturing of home 100.00% 100.00% Establishment
Washing Appliance appliances
Co., Ltd. (重慶海爾
洗滌電器有限公司)
Tongfang Energy Beijing Beijing Technology development 84.32% 84.32% Business
Technology service combination not
Development Co., under common
Ltd. (同方能源科技 control
發展有限公司)
Qingdao Haier Qingdao Qingdao Technology development 51.00% 51.00% Establishment
Youyang Technology service
Co., Ltd. (青島海爾
有養科技有限公司)
Qingdao Haier Yikang Qingdao Qingdao Technology development 100.00% 100.00% Establishment
Technology Co., service
Ltd. (青島海爾益康
科技有限公司)
Microenterprises such All over the All over the Sales of home appliances Establishment
as Qingdao Hai country country
Heng Feng Electrical
Appliances Sale &
Service Co., Ltd.
(2) The Company has no material non-wholly owned subsidiaries.
Haier Smart Home Co., Ltd. Annual Report 2023 311
Section X Financial Report
2. Transactions leading to the changes in the share of owners’ equity in subsidiaries
but not losing the control
√ Applicable □ Not Applicable
(1). Description of changes in the share of owners’ equity in subsidiaries:
√ Applicable □ Not Applicable
Capital contribution by minority shareholders of the subsidiary of the Company leads to
changes in the Company’s shareholding ratio.
(2). Impact of the transactions on minority interest and the equity attributable to
shareholders of the Company:
Items Others
Total Consideration for acquisition/disposal 61,354,600.26
Less: share of net assets of subsidiaries in respect to the
shareholding proportion acquired/disposed 30,236,917.52
Difference 31,117,682.74
Including: adjustment to decrease capital reserve 31,117,682.74
3. Interests in joint ventures and associates
√ Applicable □ Not Applicable
(1). Joint ventures and associates
Principal place of Place of Nature of Accounting treatment
Name of joint venture and associates business registration Nature of business business of investment
Haier Group Finance Co., Ltd Qingdao Qingdao Financial services 42.00% Equity method
Bank of Qingdao Co., Ltd Qingdao Qingdao Commercial Bank 8.19% Equity method
Wolong Electric (Jinan) Motor Co., Ltd. Jinan Jinan Motor Manufacturing 30.00% Equity method
Qingdao Hegang New Material Technology Qingdao Qingdao Steel plate manufacturing 23.94% Equity method
Co., Ltd. (青島河鋼新材料科技股份有限
公司)
Qingdao Haier SAIF Smart Home Industry Qingdao Qingdao Venture Capital 63.13% Equity method
Investment Center (Limited Partnership)
Mitsubishi Heavy Industries Haier (Qingdao) Qingdao Qingdao Manufacturing of home 45.00% Equity method
Air-conditioners Co., Ltd. appliances
Qingdao Haier Carrier Refrigeration Qingdao Qingdao Manufacturing of home 49.00% Equity method
Equipment Co., Ltd. appliances
Qingdao Haier Multimedia Co., Ltd. Qingdao Qingdao R&D and sales of 20.20% Equity method
television
Zhengzhou Highly Electric Appliance Co., Zhengzhou Zhengzhou Manufacture and sale of 49.00% Equity method
Ltd. (鄭州海立電器有限公司) press
Baoshihua Tong Fang Energy Technology Beijing Beijing Technology service 20.00% Equity method
Co., Ltd. (寶石花同方能源科技有限公司) development
312 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Principal place of Place of Nature of Accounting treatment
Name of joint venture and associates business registration Nature of business business of investment
Zhejiang Futeng Fluid Technology Co., Ltd. Huzhou Huzhou Gas compression 48.00% Equity method
machinery
development and
manufacturing
Hongtong Environmental Technology Guangzhou Guangzhou Machinery and equipment 15.00% Equity method
(Guangzhou) Co., Ltd. (宏通環境技術 development and
（廣州）有限公司) manufacturing
Beijing ASU Tech Co., Ltd. Beijing Beijing Technical service import 34.15% Equity method
and export business
Qingdao Haimu Investment Management Qingdao Qingdao Investment management 49.00% Equity method
Co., Ltd.
Qingdao Haimu Smart Home Investment Qingdao Qingdao Investment management 24.00% Equity method
Partnership (Limited Partnership)
Haineng Wanjia (Shanghai) Technology Shanghai Shanghai Construction 20.00% Equity method
Development Co., Ltd.
Qingdao Guochuang Intelligent Household Qingdao Qingdao Development of home 35.51% Equity method
Appliance Research Institute Co., Ltd. appliances
(青島國創智能家電研究院有限公司)
Guangzhou Heying Investment Partnership Guangzhou Guangzhou Investment 49.00% Equity method
(Limited Partnership)
Qingdao Home Wow Cloud Network Qingdao Qingdao Home online service 22.10% Equity method
Technology Co., Ltd
Bingji (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method
Co., Ltd.
Youjin (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method
Co., Ltd
RRS (Shanghai) Investment Co., Ltd. (日日 Shanghai Shanghai Investment management 45.00% Equity method
順（上海）投資有限公司)
Haier Best Water Technology Co., Ltd. (倍世 Qingdao Qingdao Water equipment 49.00% Equity method
海爾飲水科技有限公司) technology
development service
HuizhiXiangshun Equity Investment Fund Qingdao Qingdao Investment management 30.00% Equity method
(Qingdao) Partnership (Limited
Partnership)
Qingdao RRS Huizhi Investment Co., Ltd. Qingdao Qingdao Investment management 50.00% Equity method
Qingdao Xinshenghui Technology Co., Ltd. Qingdao Qingdao Technology service 20.00% Equity method
(青島鑫晟匯科技有限公司) development
Konan Electronic Co., Ltd Japan Japan Motor Manufacturing 50.00% Equity method
HPZ LIMITED Nigeria Nigeria Manufacturing of home 25.01% Equity method
appliance
HNR (Private) Company Limited Pakistan Pakistan Manufacturing of home 31.72% Equity method
appliance
ControladoraMabeS.A.deC.V. Mexico Mexico Manufacturing of home 48.41% Equity method
appliance
Middle East Air conditioning Saudi Arabia Saudi Arabia Sales of home appliances 49.00% Equity method
Company,Limited
Haier Smart Home Co., Ltd. Annual Report 2023 313
Section X Financial Report
(2) Key financial information of important associates
Items Finance company
Closing balance/ Opening balance/
Amount for the Amount for the
current period previous period
Current assets 58,471,449,425.14 62,367,859,305.44
Non-current assets 17,215,510,844.97 12,622,422,390.73
Total assets 75,686,960,270.11 74,990,281,696.17
Current liabilities 56,268,320,103.08 56,509,751,262.74
Non-current liabilities 583,055,172.64 480,084,424.03
Total liabilities 56,851,375,275.72 56,989,835,686.77
Minority interests
Equity attributable to shareholders of the parent
company 18,835,584,994.39 18,000,446,009.40
Including: share of net assets calculated per
shareholding percentage 7,910,945,697.64 7,560,187,323.95
Operating income 1,699,389,982.11 2,037,253,129.20
Net profit 1,417,734,620.57 1,585,017,777.56
Other comprehensive income –22,595,635.58 9,929,719.24
Total comprehensive income 1,395,138,984.99 1,594,947,496.80
Dividend received from associates for the year 235,200,000.00 218,400,000.00
314 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(3). Summarized financial information of insignificant joint ventures and associates
Closing balance/ Opening balance/
Amount for the Amount for the
Investment in associates current period previous period
Bank of Qingdao Co., Ltd. 3,200,132,708.75 2,934,085,854.00
Wolong Electric (Jinan) Motor Co., Ltd. 177,662,547.04 174,697,807.74
Qingdao Hegang New Material Technology Co.,
Ltd. (青 島 河 鋼 新 材 料 科 技 股 份 有 限 公 司) 329,713,566.36 314,802,331.45
Qingdao Haier SAIF Smart Home Industry
Investment Center (Limited Partnership) 206,764,442.76 319,245,649.36
Mitsubishi Heavy Industries Haier (Qingdao)
Airconditioners Co., Ltd. 663,804,966.31 715,461,260.26
Qingdao Haier Carrier Refrigeration Equipment
Co., Ltd. 412,107,471.53 413,367,540.80
Qingdao Haier Multimedia Co., Ltd. 88,300,000.00 153,550,234.50
Baoshihua Tong Fang Energy Technology Co.,
Ltd. (寶 石 花 同 方 能 源 科 技 有 限 公 司) 30,326,966.78
Zhengzhou Highly Electric Appliance Co., Ltd.
(鄭 州 海 立 電 器 有 限 公 司) 98,000,000.00
Anhui Kunhe Intelligent Technology Co., Ltd. 1,997,782.61
Zhejiang Futeng Fluid Technology Co., Ltd. 77,584,161.99 77,807,408.84
Beijing Mr. Hi Network Technology Company
Limited 7,507,759.75
Hongtong Environmental Technology (Guangzhou)
Co., Ltd. (宏 通 環 境 技 術（廣 州）有 限 公 司) 4,265,965.73
Beijing ASU Tech Co., Ltd. 7,919,009.51 12,829,433.78
Shenzhen Genyuan Environmental Protection
Technology Co., Ltd. 6,914,487.73
Qingdao Haimu Investment Management Co., Ltd. 2,609,456.57 2,521,766.42
Qingdao Haimu Smart Home Investment
Partnership (Limited Partnership) 57,989,007.18 58,905,912.88
Yunshang Zhonglian Technology (Shanghai) Co.,
Ltd. (雲 裳 眾 聯 科 技（上 海）有 限 公 司) 606,029.71 772,938.88
Qingdao Guochuang Intelligent Household
Appliance Research Institute Co., Ltd.
(青 島 國 創 智 能 家 電 研 究 院 有 限 公 司) 38,574,227.53 45,016,334.20
Guangzhou Heying Investment Partnership
(Limited Partnership) 194,416,881.32 285,793,577.87
Qingdao Home Wow Cloud Network Technology
Co., Ltd 2,192,669.49 2,547,217.00
Bingji (Shanghai) Corporate Management
Co., Ltd. 1,056,245,062.87 1,014,425,293.04
Youjin (Shanghai) Corporate Management
Co., Ltd 1,919,627,387.02 1,843,591,441.88
Haier Smart Home Co., Ltd. Annual Report 2023 315
Section X Financial Report
Closing balance/ Opening balance/
Amount for the Amount for the
Investment in associates current period previous period
RRS (Shanghai) Investment Co., Ltd.
(日 日 順（上 海）Investment有 限 公 司) 3,489,413,430.96 3,351,166,257.98
Haier Best Water Technology Co., Ltd.
(倍 世 海 爾 飲 水 科 技 有 限 公 司) 148,369,638.40 148,369,638.40
HuizhiXiangshun Equity Investment Fund
(Qingdao) Partnership (Limited Partnership) 238,175,637.03 238,806,947.64
Qingdao RRS Huizhi Investment Co., Ltd. 4,083,482.78 4,083,482.78
Qingdao Xinshenghui Technology Co., Ltd.
(青 島 鑫 晟 匯 科 技 有 限 公 司) 10,005,915.15 8,598,002.89
Europalters Italia S.r.l. 15,760,505.28
Orygin LLC 22,296,931.04 13,918,442.26
Konan Electronic Co., Ltd 64,378,952.07 67,770,092.99
HNR (Private) Company Limited 111,225,806.51 74,366,909.55
HPZ LIMITED 3,483,576.50 88,751,047.98
Controladora Mabe S.A.deC.V. 5,078,418,321.53 4,685,927,386.53
Middle East Airconditioning Company, Limited 7,299,166.60 8,820,101.55
Total book value of investment 17,745,993,387.02 17,092,180,848.82
Total amount of the following financial data of
associates calculated based on shareholding
percentage
Net profit 1,179,130,357.63 917,792,070.74
Other comprehensive income –99,733,719.86 95,751,117.93
Total comprehensive income 1,079,396,637.77 1,013,543,188.67
316 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
XI. SEGMENT INFORMATION
√ Applicable □ Not Applicable
The Company is principally engaged in manufacture and sales of home appliances and relevant
services business, manufacture of upstream home appliances parts, distribution of products of third
party, logistics and after-sale business.
As of 31 December 2023, the Company’s segment reports have been updated to integrate domestic
and overseas industries to reflect the Company’s management goals of globalization as a global home
appliance enterprise. The management of the Company began to review business information under
the new structure, and segment reports were updated based on this change and how the Company
manages and monitors segment performance. The amount of the comparable period has restated
based on the changes.
The Company has five business segments: (1) Household Food Storage and Cooking Solutions: mainly
manufacturing and selling refrigerator/freezers and kitchen appliances; (2) Air Solutions: mainly
manufacturing and selling air conditioners; (3) Household Laundry Management Solutions:
mainlymanufacturing and selling washing machines and dryers; (4) Household Water Solutions: mainly
manufacturing and selling water home appliances such as water heaters and water purifiers; (5) Other
business: mainly include channel, equipment components, small home appliance business and others.
The management of the Company assesses operating performance of each segment and allocates
resources according to the division. Sales between segments were mainly based on market price.
Due to centralized management under the headquarters or exclusion from the assessment scope of
segment management, the total assets of segments exclude monetary funds, financial assets held for
trading, derivative financial assets, dividends receivable, held-for-sale financial assets, other current
assets, debt investment, long-term accounts receivable, long-term equity investment, other equity
instruments investment, other non-current financial assets, goodwill and deferred income tax assets;
the total liabilities of segments exclude long-term and short-term borrowings, financial liabilities held for
trading, derivative financial liabilities, taxes payable, interests payable, dividends payable, held-for-sale
liabilities, bonds payable, deferred income tax liabilities and other non-current liabilities; profits of
segments exclude financial expenses, profit or loss in fair value changes, income from investment, and
income on disposal of assets, Non-value-added tax refundable upon imposition component of other
income, non-operating incomes and expenses and income tax.
Haier Smart Home Co., Ltd. Annual Report 2023 317
Section X Financial Report
(1) Information of reportable segments
Segment information for the period
Segment information Household Food Storage and Cooking Solutions Household Laundry
Management
Refrigerator/freezers Kitchen appliances Air Solutions Solutions
Segment revenue 81,910,667,160.82 41,654,343,658.36 46,104,262,503.63 61,491,493,913.78
Including: external revenue 81,731,369,432.17 41,594,458,746.73 45,810,371,440.47 61,311,742,096.32
Inter-segment revenue 179,297,728.65 59,884,911.63 293,891,063.16 179,751,817.46
Total segment operating cost 76,884,871,643.42 38,711,598,234.63 44,241,479,650.50 55,891,172,557.71
Segment operating profit 5,025,795,517.40 2,942,745,423.73 1,862,782,853.13 5,600,321,356.07
Total segment assets 46,386,636,541.89 21,182,487,836.50 23,095,120,351.59 31,083,146,812.59
Total segment liabilities 61,738,020,657.75 12,928,214,554.98 22,560,023,701.22 18,456,071,567.13
(continued)
Household Water Inter-segment
Segment information Solutions Other business eliminations Total
Segment revenue 15,335,988,639.36 96,723,505,175.74 –81,792,478,001.59 261,427,783,050.10
Including: external revenue 15,169,679,363.06 15,810,161,971.35 261,427,783,050.10
Inter-segment revenue 166,309,276.30 80,913,343,204.39 –81,792,478,001.59
Total segment operating cost 13,518,468,362.44 96,666,241,331.19 –81,872,464,956.21 244,041,366,823.68
Segment operating profit 1,817,520,276.92 57,263,844.55 79,986,954.62 17,386,416,226.42
Total segment assets 6,974,086,027.37 72,345,944,832.66 –74,983,515,615.16 126,083,906,787.44
Total segment liabilities 5,952,269,383.29 67,056,680,238.32 –74,838,436,273.16 113,852,843,829.53
318 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Segment information for the corresponding period of last year
Segment information Household Food Storage and Cooking Solutions Household Laundry
Management
Refrigerator/freezers Kitchen appliances Air Solutions Solutions
Segment revenue 77,859,503,523.00 38,953,051,777.02 40,760,615,973.95 57,909,239,383.61
Including: external revenue 77,677,799,236.48 38,899,564,816.89 40,457,857,437.51 57,820,114,253.41
Inter-segment revenue 181,704,286.52 53,486,960.13 302,758,536.44 89,125,130.20
Total segment operating cost 73,597,983,358.76 36,245,984,416.06 39,671,596,085.75 52,735,218,516.89
Segment operating profit 4,261,520,164.24 2,707,067,360.96 1,089,019,888.20 5,174,020,866.72
Total segment assets 32,212,596,722.21 18,635,173,441.43 21,054,805,558.76 28,587,194,295.50
Total segment liabilities 44,000,212,968.96 11,068,288,033.81 13,915,821,835.30 16,655,474,631.12
(continued)
Household Water Inter-segment
Segment information Solutions Other business eliminations Total
Segment revenue 14,133,741,848.26 91,174,434,408.87 –77,211,661,956.24 243,578,924,958.47
Including: external revenue 14,009,751,227.10 14,713,837,987.08 243,578,924,958.47
Inter-segment revenue 123,990,621.16 76,460,596,421.79 –77,211,661,956.24
Total segment operating cost 12,543,842,686.45 91,121,188,739.68 –77,256,660,522.88 228,659,153,280.71
Segment operating profit 1,589,899,161.81 53,245,669.19 44,998,566.64 14,919,771,677.76
Total segment assets 6,706,376,868.37 52,027,298,467.81 –39,850,856,358.17 119,372,588,995.91
Total segment liabilities 5,417,671,439.39 58,218,057,761.30 –39,617,922,327.86 109,657,604,342.02
Haier Smart Home Co., Ltd. Annual Report 2023 319
Section X Financial Report
(2) Geographical information
‘Other countries/regions’ in this report refers to all other countries/regions (including Hong Kong
and Macau Special Administration Region and Taiwan) other than the mainland China for the
purpose of information disclosure
a. External transaction revenue
Amount for the Amount for the
Items current period previous period
Mainland China 125,015,887,048.63 116,820,021,832.58
Other countries/regions 136,411,896,001.47 126,758,903,125.89
Among which:
America 79,751,236,167.61 76,629,831,084.82
Australia 6,142,491,032.57 6,962,360,306.70
South Asia 9,520,761,970.29 8,283,959,988.29
Europe 28,543,893,610.21 23,031,521,394.12
Southeast Asia 5,779,907,984.73 5,179,557,555.83
Middle East and Africa 1,934,336,705.54 1,970,513,900.11
Japan 3,662,478,664.81 3,568,558,534.13
Others 1,076,789,865.71 1,132,600,361.89
Total 261,427,783,050.10 243,578,924,958.47
b. Total non-current assets
Items Closing balance Opening balance
Mainland China 22,369,511,589.93 19,433,006,951.77
Other countries/regions 31,152,060,989.07 29,019,302,954.24
Total 53,521,572,579.00 48,452,309,906.01
Total non-current assets exclude: debt investments, long-term receivable, long-term equity
investments, other equity instrument investments, other non-current financial assets,
goodwill and deferred income tax assets.
320 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
XII. DISCLOSURE OF FAIR VALUE
1. Fair value of assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the lowest level to
which the input value is significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market.
Level 2: Inputs that are directly or indirectly observable for related assets or liabilities, except for
Level 1 inputs.
Level 3: Unobservable inputs of related assets or liabilities.
At the end of the period
Items Input used for fair value measurement
Important Important
Quotes in an observable unobservable
active market input input
(Level 1) (Level 2) (Level 3) Total
Continuously measured at fair
value
Financial assets held for trading 369,591,046.58 487,936,101.81 96,436,395.44 953,963,543.83
Including: Bank wealth management
products 487,936,101.81 487,936,101.81
Investment fund 222,803,002.38 222,803,002.38
Investment in equity
instruments 146,788,044.20 96,436,395.44 243,224,439.64
Derivative financial assets 67,565,829.44 67,565,829.44
Including: Forward foreign exchange
contract 67,565,829.44 67,565,829.44
Other equity instruments 19,988,760.34 6,383,706,194.43 6,403,694,954.77
Including: Equity instruments measured
at fair value through other
comprehensive income 19,988,760.34 6,383,706,194.43 6,403,694,954.77
Derivative financial liabilities 168,625,004.97 168,625,004.97
Including: Forward foreign exchange
contract 166,573,028.22 166,573,028.22
Forward commodity contracts 2,051,976.75 2,051,976.75
Haier Smart Home Co., Ltd. Annual Report 2023 321
Section X Financial Report
At the beginning of the period
Items Input used for fair value measurement
Important Important
Quotes in an observable unobservable
active market input input
(Level 1) (Level 2) (Level 3) Total
Continuously measured at fair
value
Financial assets held for trading 395,687,084.83 14,638,968.26 109,586,827.82 519,912,880.91
Including: Bank wealth management
products 14,638,968.26 14,638,968.26
Investment fund 168,430,847.63 168,430,847.63
Investment in equity
instruments 227,256,237.20 109,586,827.82 336,843,065.02
Derivative financial assets 183,185,160.51 183,185,160.51
Including: Forward foreign exchange
contract 178,992,877.32 178,992,877.32
Forward commodity contracts 4,192,283.19 4,192,283.19
Other equity instruments 16,353,773.34 1,027,550,923.67 4,807,978,233.19 5,851,882,930.20
Including: Equity instruments measured
at fair value through other
comprehensive income 16,353,773.34 1,027,550,923.67 4,807,978,233.19 5,851,882,930.20
Derivative financial liabilities 104,594,040.66 104,594,040.66
Including: Forward foreign exchange
contract 92,580,419.48 92,580,419.48
Forward commodity contract 12,013,621.18 12,013,621.18
Other non-current liabilities 16,916,789.10 16,916,789.10
Including: Put option liability 16,916,789.10 16,916,789.10
For financial instruments traded in an active market, the Company determines its fair value based
on its quotes in an active market; for financial instruments not traded in an active market, the
Company uses valuation techniques to determine its fair value.
322 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
2. The basis for determining the fair value of the continual Level 2 fair value
measurement items
Fair value at the
Items end of the period Valuation techniques
Financial assets held for trading
Including: Bank wealth management 487,936,101.81 Discounted cash flow
products
Derivative financial assets
Including: Forward foreign exchange 67,565,829.44 Discounted cash flow
contract
Derivative financial liabilities
Including: Forward foreign exchange 166,573,028.22 Discounted cash flow
contract
Forward commodity contracts 2,051,976.75 Discounted cash flow
Haier Smart Home Co., Ltd. Annual Report 2023 323
Section X Financial Report
3. Continual Level 3 fair value measurement major items, the valuation techniques adopted
and information of important parameters
Fair value at the Valuation Significant Sensitivity of fair value
Items end of the period technique unobservable input Range to the input
Other equity instruments
Including:
1. COSMO IoT 2,817,408,000.00 Market approach 1. Average P/S 1. 2.93 to 1. 1% increase
Technology multiple of 2.99 (decrease) in average
Co., LTD. (卡奧 peers 2. 27.46% to P/S multiple of the
斯物聯科技股 2. Discount for 29.46% Comparable
份有限公司) lack of Companies would
marketability result in increase
(decrease) in fair
value by RMB21.27
million.
2. 1% increase
(decrease) in the
lack of marketability
would result in
decrease (increase)
in fair value by
RMB29.35 million.
2. SINOPEC Fuel 1,986,156,165.17 Market approach 1. Average P/E 1. 37.38 to 1. 1% increase
Oil Sales multiple of 38.14 (decrease) in average
Corporation peers 2. 25.23% to P/E multiple of the
Limited (中國石 2. Discount for 27.23% Comparable
化銷售股份有 lack of Companies would
限公司) marketability result in increase
(decrease) in fair
value by RMB19.86
million.
2. 1% increase
(decrease) in the
lack of marketability
would result in
decrease (increase)
in fair value by
RMB26.92 million.
4. Financial instruments not measured at fair value
Financial assets and financial liabilities not measured at fair value include: monetary funds, bills
receivable, accounts receivable, other receivables, other current assets, long-term and short-term
borrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,
etc. The difference between the book value and the fair value of financial assets and financial
liabilities not measured at fair value at the end of the period is small.
324 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
XIII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
(I) Explanation for basis of identifying related party
According to Accounting Standards for Business Enterprises No. 36 — Related Party
Disclosures, parties are considered to be related if one party has the ability to control or jointly
control the other party or exercise significant influence over the other party. Parties (two or more
than two) are also considered to be related if they are subject to common control, joint control
or significant influence from another party.
According to Management Practices for Information Disclosure of Listed Company (China
Securities Regulatory Commission Order No. 182), related legal entity or individual will be
identified as related parties in certain occasions.
(II) Relationships between related parties
1. Information about the parent company and other companies holding shares of the
Company
Interest Voting rights
Type of Registered Legal Relationships with in the to the
Name enterprise Registered place capital representative the Company Company Company
Haier Group Collective Qingdao High-tech 311,180,000 Zhou Yunjie Parent Company 11.36% 11.36%
Corporation ownership Zone Haier Park
company
Haier COSMO Co., Joint-stock Qingdao High-tech 631,930,000 Zhou Yunjie Subsidiary of 13.34% 13.34%
Ltd. (海爾卡奧斯 company Zone Haier Park Parent
股份有限公司) Company
HCH (HK) Investment Private Hong Kong HKD 10,000 / Parties acting in 5.71% 5.71%
Management Co., company concert of
Limited Parent
Company
Qingdao Haier Venture Company with Qingdao Free Trade 923,000,000 Zhou Yunjie Parties acting in 1.83% 1.83%
& Investment limited Zone concert of
Information Co., liability Parent
Ltd. Company
Qingdao Haichuangzhi Limited Qingdao High-tech 118,924,416 / Parties acting in 1.42% 1.42%
Management partnership Zone Haier Park concert of
Consulting company Parent
Enterprise (Limited Company
Partnership)
Haier International Private Hong Kong HKD 2 / Parties acting in 0.62% 0.62%
Co., Limited company concert of
Parent
Company
2. Subsidiaries of the Company
The details of the subsidiaries of the Company are detailed in Note X.1. Interests in
subsidiaries.
3. Joint ventures and associates of the Company
The information of material joint ventures or associates of the Company are detailed in Note
VII.12 and X.3.
Haier Smart Home Co., Ltd. Annual Report 2023 325
Section X Financial Report
4. Connected companies with no relationship of control
Name Relationship with the Company
Chongqing Zhonglian Energy Technology Subsidiary of Haier Group
Co., Ltd.
Chongqing Haier Electrical Appliances Sales Subsidiary of Haier Group
Co., Ltd.
Hongkong Gooday Supply Chain Subsidiary of Haier Group
Management Limited
Shanghai Cotai Supply Chain Management Subsidiary of Haier Group
Co., Ltd.
Gooday Supply Chain Technologies Co., Ltd. Subsidiary of Haier Group
Gooday (Qingdao) International Supply Chain Subsidiary of Haier Group
Service Co., Ltd.
Qingdao Goodaymart Supply Chains Subsidiary of Haier Group
Co., Ltd.
Qingdao Maidirui Ecological Environment Subsidiary of Haier Group
Technology Co., Ltd. (青 島 邁 帝 瑞 生 態
環 境 科 技 有 限 公 司)
Qingdao Oasis Technology Co., Ltd. Subsidiary of Haier Group
Qingdao Haina Cloud Intelligent System Subsidiary of Haier Group
Co., Ltd.
Qingdao Haier Parts Procurement Co., Ltd. Subsidiary of Haier Group
Qingdao Haier International Trading Co., Ltd. Subsidiary of Haier Group
Qingdao Haier International Travel Agency Subsidiary of Haier Group
Co., Ltd.
Feiketeng Intelligent Technology (Qingdao) Subsidiary of Haier Group
Co., Ltd. (斐 科 騰 智 能 科 技（青 島）有 限
公 司)
Dalian Haier International Trade Co., Ltd. Subsidiary of Haier Group
Qingdao Haironghui Commercial Factoring Subsidiary of Haier Group
Co., Ltd. (青 島 海 融 匯 商 業 保 理 有 限 公 司)
COSMOPlat Digital Technology (Qingdao) Subsidiary of Haier Group
Co., Ltd. (卡 奧 斯 數 字 科 技（青 島）有 限
公 司)
Haier Cloud City Digital Technology Subsidiary of Haier Group
(Qingdao) Co., Ltd. (海 爾 雲 城 數 字 科 技
（青 島）有 限 公 司)
Qingdao Blue Whale Technology Co., Ltd. Subsidiary of Haier Group
Qingdao Dingxin Electronic Technology Subsidiary of Haier Group
Co., Ltd.
Cosmoplat Chuangzhi IOT Technology Subsidiary of Haier Group
Co., Ltd.
Haier International Co., Ltd. Subsidiary of Haier Group
Shenyang Ririxin Corporate Management Subsidiary of Haier Group
Co., Ltd. (瀋 陽 日 日 新 企 業 管 理 有 限 公 司)
Qingdao Xiaoshuai Intelligent Technology Subsidiary of Haier Group
Co., Ltd.
326 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Name Relationship with the Company
Qingdao Manniq Intelligent Technology Subsidiary of Haier Group
Co., Ltd.
Cosmoplat Chuangzhi IOT Technology Subsidiary of Haier Group
(Chongqing) Co., Ltd.
Qingdao Haier New Materials R & D Subsidiary and associate of Haier
Co., Ltd. Group
Qingdao Haier Multi-media Co., Ltd. Associate
Controladora Mabe S.A.de C.V. Associate
HNR (Private) Company Limited Associate
HPZ Limited Associate
Mitsubishi Heavy Industry Haier (Qingdao) Air Associate
Conditioner Co., Ltd.
Wolong Electric (Jinan) Motor Co., Ltd. Associate
Qingdao HBIS Composite New Material Subsidiary of associate
Co., Ltd.
Hefei Hegang New Material Technology Subsidiary of associate
Co., Ltd.
(III) Related party transactions
1. Details of the Company’s procurement of goods and services from related parties are as
follows:
Amount for the Amount for the
Name of related parties current period previous period
Controladora Mabe S.A.de C.V. 15,526,699,638.30 13,123,708,450.38
Qingdao Haier Parts Procurement Co., Ltd. 6,413,180,580.72 7,059,896,523.58
Gooday Supply Chain Technologies Co., Ltd. 3,558,500,838.94 4,444,169,934.17
HNR (Private) Company Limited 2,514,374,986.36 3,073,674,460.32
Chongqing Haier Electrical Appliances Sales
Co., Ltd. 2,114,941,629.47 3,054,825,152.17
Shanghai Cotai Supply Chain Management
Co., Ltd. 1,358,496,545.27 1,471,945,927.42
Qingdao Haier International Trading Co., Ltd. 547,788,113.32 397,359,401.03
Gooday (Qingdao) International Supply Chain
Service Co., Ltd. 685,581,695.96 266,844,283.32
Mitsubishi Heavy Industry Haier (Qingdao) Air
Conditioner Co., Ltd. 607,144,743.77 352,035.40
Dalian Haier International Trade Co., Ltd. 527,629,376.86 529,797,174.58
Qingdao Goodaymart Supply Chains
Co., Ltd. 389,108,907.34 421,203,765.86
Other related parties 3,296,053,790.33 4,057,047,170.88
Total 37,539,500,846.64 37,900,824,279.11
Haier Smart Home Co., Ltd. Annual Report 2023 327
Section X Financial Report
2. Details of the Company’s sales of goods to related parties are as follows:
Amount for the Amount for the
Name of related parties current period previous period
HNR (Private) Company Limited 1,245,177,362.70 602,998,664.66
Controladora Mabe S.A.de C.V. 1,202,388,632.22 1,023,743,811.97
Qingdao Haier International Trading Co., Ltd. 557,630,937.13 672,339,983.04
Qingdao Oasis Technology Co., Ltd. 143,051,045.42 67,904,127.81
Qingdao Haier Multi-media Co., Ltd. 122,202,322.75 136,786,578.47
HPZ Limited 101,907,938.50 118,748,741.50
Qingdao Haier International Travel Agency
Co., Ltd. 53,656,646.75 119,166,052.08
Other related parties 304,883,890.25 670,938,693.97
Total 3,730,898,775.72 3,412,626,653.50
3. Amount of unsettled items of related parties
Closing Opening
Items and name of customers Balance Balance
Bills receivable:
Qingdao Haier International Trading Co., Ltd. 178,000,000.00
Qingdao Haina Cloud Intelligent System Co., Ltd. 4,820,740.99 9,196,905.30
COSMOPlat Digital Technology (Qingdao)
Co., Ltd. (卡 奧 斯 數 字 科 技（青 島）有 限 公 司) 1,080,198.77 2,338,177.61
Qingdao Ding Xin Electronics Technology
Co., Ltd. 45,947,984.43
Cosmoplat Chuangzhi IOT Technology
(Chongqing) Co., Ltd. 28,764,679.42
Cosmoplat Chuangzhi IOT Technology Co., Ltd. 23,908,824.49
Other related parties 14,739,591.90 11,525,466.12
Accounts receivable:
HNR (Private) Company Limited 1,191,001,767.66 887,316,060.44
Qingdao Oasis Technology Co., Ltd. 116,266,117.23 46,664,529.91
Qingdao Haier International Travel Agency
Co., Ltd. 66,704,908.59 13,660,669.79
HPZ Limited 37,410,646.01 117,899,486.73
Qingdao Maidirui Ecological Environment
Technology Co., Ltd. (青 島 邁 帝 瑞 生 態 環 境 科
技 有 限 公 司) 37,264,581.99 12,210,497.95
Chongqing Zhonglian Energy Technology
Co., Ltd. 20,861,198.77 48,870,443.21
Qingdao Haina Cloud Intelligent System Co., Ltd. 20,810,291.74 24,917,701.10
Other related parties 238,487,927.26 559,054,609.85
328 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Closing Opening
Items and name of customers Balance Balance
Prepayments:
Qingdao Haier International Trade Co., Ltd. 8,594,602.74 4,248,008.35
Haier Cloud City Digital Technology (Qingdao)
Co., Ltd. (海 爾 雲 城 數 字 科 技（青 島）有 限 公 司) 8,393,601.61
Hefei Hegang New Material Technology Co., Ltd. 6,241,957.96
Qingdao Haier International Travel Agency
Co., Ltd. 3,115,793.21 6,253,573.56
HNR (Private) Company Limited 110,370,091.99
Other related parties 14,806,610.06 35,104,367.42
Other receivables:
Controladora Mabe S.A.de C.V. 14,824,407.91 12,158,833.50
Qingdao Haier International Trade Co., Ltd. 7,951,101.19 3,055,976.92
Haier International Co., Ltd. 3,685,669.87 4,272,144.02
Shenyang Ririxin Corporate Management Co., Ltd.
(瀋 陽 日 日 新 企 業 管 理 有 限 公 司) 3,000,000.00
Qingdao Blue Whale Technology Co., Ltd. 12,392,334.21
Qingdao Xiaoshuai Intelligent Technology
Co., Ltd. 10,500,000.00
Dalian Haier International Trade Co., Ltd. 9,440,616.07
Other related parties 12,066,688.19 18,628,538.25
Bills payable:
Qingdao Haier New Materials R & D Co., Ltd. 390,891,579.36 386,075,771.04
Hefei Hegang New Material Technology Co., Ltd. 21,795,818.85 24,471,564.49
Qingdao HBIS Composite New Material Co., Ltd. 27,781,266.64 12,149,382.48
Wolong Electric (Jinan) Motor Co., Ltd. 30,416,664.00 37,773,640.00
Qingdao Haier Parts Procurement Co., Ltd. 180,719,158.83
Other related parties 606,400.00
Accounts payable:
Controladora Mabe S.A.de C.V. 1,017,676,511.30 1,299,452,149.83
Qingdao Haironghui Commercial Factoring Co.,
Ltd. (青 島 海 融 匯 商 業 保 理 有 限 公 司) 367,964,948.49
Qingdao Haier Parts Procurement Co., Ltd. 247,164,539.11 1,860,747,884.39
HNR (Private) Company Limited 225,492,094.68
Qingdao Haier International Trading Co., Ltd. 197,267,091.22 257,531,848.99
Qingdao Haier New Materials R&D Co., Ltd. 96,592,224.43 101,958,410.60
Dalian Haier International Trade Co., Ltd. 82,860,333.64 150,178,673.56
Hong Kong Gooday Supply Chain Technologies
Co., Ltd. 74,153,281.02 250,478,107.49
Other related parties 524,214,760.71 501,220,733.45
Haier Smart Home Co., Ltd. Annual Report 2023 329
Section X Financial Report
Closing Opening
Items and name of customers Balance Balance
Contract liabilities:
Wolong Electric (Jinan) Motor Co., Ltd. 50,686,531.85 51,422,207.69
Chongqing Zhonglian Energy Technology
Co., Ltd. 17,217,306.92 17,215,206.92
Other related parties 10,101,182.89 13,569,890.19
Other payables:
Gooday Supply Chain Technologies Co., Ltd. 897,015,102.10 485,473,357.04
Shanghai Cotai Supply Chain Management
Co., Ltd. 129,653,209.93 113,720,815.14
Qingdao Oasis Technology Co., Ltd. 102,395,000.82 83,842.78
Gooday (Qingdao) International Supply Chain
Service Co., Ltd. 64,467,694.39 140,136,176.89
Feiketeng Intelligent Technology (Qingdao) Co.,
Ltd. (斐 科 騰 智 能 科 技（青 島）有 限 公 司) 51,986,700.46 759,000.00
Qingdao Goodaymart Supply Chains Co., Ltd. 45,292,270.93 30,669,122.96
Qingdao Manniq Intelligent Technology Co., Lt 14,038,277.93 67,521,909.37
Other related parties 193,110,957.17 308,322,551.23
4. Other related party transactions
√ Applicable □ Not Applicable
(1) On 30 March 2023, Haier Group Corporation and Haier Group Finance Co., Ltd.
(hereafter, the “Finance Company”) renewed the Financial Services Framework
Agreement, and the “resolution on the renewal of the Financial Services Framework
Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation and
the estimated amount of connected transaction” was considered and passed at the
4th meeting of the 11th session of the Board of Directors. The Financial Services
Framework Agreement became effective from the passing of the resolution.
Various current balances of the Company and the Finance Company are as follows:
Items Closing Balance Opening Balance
Monetary funds deposited at the
Finance Company 33,654,242,534.50 31,433,124,152.44
Interest receivable from the Finance Company 688,144,130.70 468,636,097.70
Loans of the Finance Company 60,000,000.00
Interest payable to the Finance Company 46,158.00
Bills issued 8,909,470,662.88 21,621,825,652.96
Foreign exchange derivatives of the
Finance Company –10,143,691.03 –2,293,511.73
330 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
Various balances of the Company and the Finance Company are as follows:
Amount for the Amount for the
Items current period previous period
Interest income of the Finance Company 765,875,670.14 570,162,437.71
Interest expense of the Finance Company 435,000.00 4,933,548.81
Service fee of the Finance Company 23,618,778.66 29,446,933.09
Spot foreign exchange business (foreign
exchange settlement and sale) 9,015,944,003.06 6,337,945,933.79
(2) The lease expense of the Company and its subsidiaries for production and
operation leased from related parties for the current period was RMB99 million
(amount for the corresponding period: RMB97 million).
(3) Haier Group Corporation provided joint liability guarantee for certain bills payable
of the subsidiaries of the Company with the guaranteed amount of RMB2,639
million at the end of the period (amount at the beginning of the period:
RMB2,311 million).
(IV) Pricing Policy
1. Related-party Sales
Some related parties purchase components through the independent procurement platform
of the Company, purchase electrical appliances for sales from the Company, and receive
after-sales services, R&D service, housing rental and other business provided by the
company due to their business needs. In April 2022, according to the implementation of
connected transactions in the early stage and the relevant listing requirements in Hong
Kong, the Company and Haier Group Corporation revised and signed the Product and
Materials Sales Framework Agreement, the Service Provision Framework Agreement and the
Property Leasing Framework Agreement on the basis of the original execution contract,
which agreed on the financial connected transactions. The pricing principle included that
both parties should agree on the price which is not less favourable than those provided by
the Company to the Independent Third Parties on arm’s length to ensure the fairness and
reasonableness of connected transactions. The valid term of the agreement commenced
from 1 January 2023 to 31 December 2025, which can be renewed for another three years
upon expire.
Haier Smart Home Co., Ltd. Annual Report 2023 331
Section X Financial Report
2. Related-party Procurement
In addition to independent procurement platform, the Company entrusted Haier Group
Corporation and its subsidiaries for procurements of part of raw materials. Moreover, the
Company entrusted Haier Group Corporation and its subsidiaries to provide the Company
with logistics and distribution, energy and power, basic research and testing, equipment
leasing, house leasing and maintenance, greening and cleaning, gift procurement, design,
consulting, various ticket booking and other services. In April 2022, according to the
implementation of connected transactions in the early stage and the relevant listing
requirements in Hong Kong, the Company and Haier Group Corporation revised and signed
the Product and Materials Sales Framework Agreement, the Service Provision Framework
Agreement and the Property Leasing Framework Agreement on the basis of the original
execution contract, which agreed on the financial connected transactions. The pricing
principle included that both parties should agree on the price which is not less favourable
than those provided by the Company to the Independent Third Parties on arm’s length to
ensure the fairness and reasonableness of connected transactions. The valid term of the
agreement commenced from 1 January 2023 to 31 December 2025, which can be
renewed for another three years upon expire.
3. Financial aspect
Some of the financial services such as deposit and loan service, discounting service and
foreign exchange derivatives needed by the Company are provided by Haier Group
Corporation, its subsidiaries and other companies. According to the Financial Service
Agreement entered among the Company, Haier Group Corporation and other parties, the
price of financial services is determined by the principle of not less favourable than market
value fair. The Company is entitled to decide whether to keep cooperation relationship with
them with the knowledge of the price prevailing in the market and in combination with its
own interests. While performing the agreement, the Company could also require other
financial service institutions to provide related financial services basing on actual situation.
In order to meet the Company’s demands such as the avoidance of foreign exchange
fluctuation risk, the Company may choose Haier Group Finance Co., Ltd. to provide some
foreign exchange derivative business after comparing with comparable companies. The
Company will uphold the safe and sound, appropriate and reasonable principle, under
which all foreign exchange capital business shall have a normal and reasonable business
background to eliminate speculative operation. At the same time, the Company has
specified the examination and permission rights, management positions and responsibilities
at all levels for its foreign exchange capital business to eradicate the risks of operation by
persons and improved its response speed to risks on the premise that the risks are
effectively controlled. In June 2021, the Company and Haier Group Corporation renewed
the Financial Services Framework Agreement, which agreed on the financial connected
transactions. The pricing principle included the deposit interest rate not lower than the
maximum interest rate of major banks listed and the loan interest rate not less favourable
than the market price to ensure the fairness and reasonableness of connected transactions.
The valid term of the agreement lasts until 31 December 2023, which can be renewed for
another three years upon expire.
332 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
4. Others
The Company signed the Intellectual Property Licensing Framework Agreement with Haier
Group Corporation in November 2020. According to the agreement, Haier Group has
agreed to grant or procure its subsidiaries and contact persons to grant the license to the
Company at nil consideration to use all its intellectual property rights, including but not
limited to trademarks, patents, copyrights and logos for the products, packaging, services
and business introduction documents of the Company. The date of the Intellectual Property
Licensing Framework Agreement shall be permanently effective from the listing date. When
such specific intellectual property rights expire and are not renewed by Haier Group, our
right to use certain intellectual property rights under the Intellectual Property Licensing
Framework Agreement will terminate.
XIV. SHARE-BASED PAYMENTS
1. Various equity instruments
√ Applicable □ Not Applicable
Unit of Number: shares
Unit and Currency of Amount: RMB
Categories of
participants Granted during the period Exercised during the period Vested during the period Lapsed during the period
Number Amount Number Amount Number Amount Number Amount
Directors and senior
management 2,915,816 64,748,022.30 1,076,882 24,943,679.53 2,564,586 17,492,337.27
Staff 31,590,543 705,507,909.31 15,783,328 373,654,712.16 57,729,704 529,194,750.02
Total 34,506,359 770,255,931.61 16,860,210 398,598,391.69 60,294,290 546,687,087.29
Outstanding share options or other equity instruments at the end of the period
√ Applicable □ Not Applicable
Categories of participants Outstanding share options at the end of the period Outstanding other equity instruments at the end of the period
The remaining The remaining
Exercise price contractual term Exercise price contractual term
2021 First Option RMB25.63 per share September 2021 —
September 2026
2021 Second Option RMB25.63 per share December 2021 —
December 2026
2022 Option RMB23.86 per share June 2022 — June 2026
2022 Stock Ownership Plan A N/A August 2022-August 2024
2022 Stock Ownership Plan H N/A August 2022-August 2024
2023 Stock Ownership Plan A N/A July 2023 — July 2025
2023 Stock Ownership Plan H N/A July 2023 — July 2025
2021 Restricted Shares N/A August 2021 — July 2024
2022 Restricted Shares N/A July 2022 — June 2025
2023 Restricted Shares N/A July 2023- June 2026
Haier Smart Home Co., Ltd. Annual Report 2023 333
Section X Financial Report
2. Equity-settled share-based payments
√ Applicable □ Not Applicable
Unit and Currency: RMB billion
Method of determining the fair value of equity Closing price of share on the date of
instrument on the date of grant grant, Black-Scholes Model
Key parameters of determining the fair value of Historical volatility rate, risk-free rate,
equity instrument on the date of grant yield rate
Basis for determining the number of exercisable The best estimate of the management
equity instruments
Reason for significant differences between current Nil
and prior period estimates
Accumulated amount of equity-settled share-based 1.135
payment included in the capital reserve
3. Cash-settled share-based payments
□ Applicable √ Not Applicable
4. Share-based payments for the current period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Equity-settled Cash-settled
share-based share-based
Categories of participants payment payment
Director, Senior management 50,198,564.36
Staff 560,408,082.45
Total 610,606,646.81
5. Modification and termination of share-based payments
□ Applicable √ Not Applicable
XV. CONTINGENCIES
As of 27 March 2024, the Company has no significant contingencies that need to be disclosed.
XVI. EVENTS AFTER THE BALANCE SHEET DATE
According to the resolution of the 9th meeting of the 11th session of the Board of Directors of the
Company held on 27 March 2024, the profit for the year is proposed to be distributed on the basis of
the total number of shares on the record date after deducting the repurchased shares from the
repurchased account when the plan is implemented in the future, the Company will declare cash
dividend of RMB8.04 (including taxes) for every 10 shares to all shareholders.
334 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
XVII. RISKS RELATED TO FINANCIAL INSTRUMENTS
√ Applicable □ Not Applicable
The book value of various financial instruments on the balance sheet date is as follows:
Financial assets
Items Closing Balance
Financial assets Financial assets
measured at fair measured at fair
value and value and
changes of which changes of which
included in included in other
current profit and Measured at comprehensive
loss amortized cost income Total
Monetary funds 54,486,452,841.14 54,486,452,841.14
Financial assets held for trading 953,963,543.83 953,963,543.83
Derivative financial assets 67,565,829.44 67,565,829.44
Receivable 8,621,434,831.39 8,621,434,831.39
Accounts receivable 20,268,099,436.43 20,268,099,436.43
Other receivables 2,649,558,985.05 2,649,558,985.05
Other current assets 1,530,274,566.66 1,530,274,566.66
Debt investments 8,841,233,078.66 8,841,233,078.66
Long-term receivables 350,409,496.85 350,409,496.85
Other equity instruments 6,403,694,954.77 6,403,694,954.77
Financial assets (continued)
Items Opening Balance
Financial assets Financial assets
measured at fair measured at fair
value and value and
changes of which changes of which
included in included in other
current profit and Measured at comprehensive
loss amortized cost income Total
Monetary funds 54,162,212,155.31 54,162,212,155.31
Financial assets held for trading 519,912,880.91 519,912,880.91
Derivative financial assets 183,185,160.51 183,185,160.51
Receivable 9,624,191,838.15 9,624,191,838.15
Accounts receivable 15,886,748,811.81 15,886,748,811.81
Other receivables 2,401,113,902.55 2,401,113,902.55
Other current assets 1,642,421,944.45 1,642,421,944.45
Debt investments 1,034,222,222.22 1,034,222,222.22
Long-term receivables 305,070,001.45 305,070,001.45
Other equity instruments 5,851,882,930.20 5,851,882,930.20
Haier Smart Home Co., Ltd. Annual Report 2023 335
Section X Financial Report
Financial liabilities
Items Closing Balance
Financial Financial
liabilities liabilities
measured at measured at
fair value amortised cost Total
Short-term borrowings 10,318,351,841.88 10,318,351,841.88
Derivative financial liabilities 168,625,004.97 168,625,004.97
Bills payable 22,215,726,721.62 22,215,726,721.62
Accounts payable 47,061,789,173.62 47,061,789,173.62
Other payables 19,181,569,184.83 19,181,569,184.83
Non-current liabilities due in one year 146,867,809.53 146,867,809.53
Long-term borrowings 17,936,302,925.77 17,936,302,925.77
Long-term payables 57,113,422.78 57,113,422.78
Financial liabilities (continued)
Items Opening Balance
Financial Financial
liabilities liabilities
measured at measured at
fair value amortised cost Total
Short-term borrowings 9,672,223,522.36 9,672,223,522.36
Derivative financial liabilities 104,594,040.66 104,594,040.66
Bills payable 25,098,557,730.06 25,098,557,730.06
Accounts payable 41,885,313,890.79 41,885,313,890.79
Other payables 17,585,198,629.13 17,585,198,629.13
Non-current liabilities due in one year 2,854,446,929.32 2,854,446,929.32
Long-term borrowings 13,590,866,873.43 13,590,866,873.43
Long-term payables 44,240,087.94 44,240,087.94
Other non-current liabilities 16,916,789.10 16,916,789.10
Please refer to related items in Note VII for details on each of the financial instruments of the
Company. Risks related to these financial instruments and the risk management policies taken by the
Company to mitigate these risks are summarized below. The management of the Company manages
and monitors these risk exposures to ensure the above risks are well under control.
336 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
1. Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accounts
receivable, interest receivable, other receivables and wealth management products.
(1) The Company’s bank deposits and wealth management products are mainly deposited in
Haier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks.
The interest receivables are mainly the accrued interests from fixed deposits which are
deposited in the above banks. The Group does not believe there is any significant credit
risk due to defaults of its counterparties which would cause any significant loss. (2)
Accounts receivable and bills receivable: The Company only trades with approved and
reputable third parties. All customers who are traded by credit are subject to credit
assessment according to the policies of the Company, and the payment terms shall be
determined on a reasonable basis. The Company monitors the balances of accounts
receivable on an ongoing basis and purchases credit insurance for receivables of
large-amount credit customers in order to ensure the Company is free from material bad
debts risks. (3) Other receivables of the Company mainly include export tax refund,
borrowings and contingency provision. The Company strengthened its management and
continuous monitoring in respect of these receivables and relevant economic business
based on historical data, so as to ensure that the Company’s significant risk of bad debts
is controllable and will be further reduced.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling
obligations associated with financial liabilities. To control such risk, the Company utilizes various
financing methods such as notes settlement and bank loans to strive for a balance between
sustainable and flexible financing. It also has obtained bank credit facilities from several
commercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, South
Asia, central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and other
currencies.
The Company’s overseas assets and liabilities denominated in foreign currencies as well as
transactions to be settled in foreign currencies expose the Company to fluctuations in exchange
rates. The Company’s finance department is responsible for monitoring the size of transactions in
foreign currencies and assets and liabilities denominated in foreign currencies to minimize the risk
of exposure to fluctuation in exchange rate; the Company resorts the way of signing forward
foreign exchange contracts to avoid the risk of exchange fluctuation.
Haier Smart Home Co., Ltd. Annual Report 2023 337
Section X Financial Report
4. Interest rate risk
The Company’s interest rate risk arises primarily from its long- and short- term bank loans and
bonds payables which are interest-bearing debts. Financial liabilities with floating interest rates
expose the Company to cash flow interest rate risk, while financial liabilities with fixed interest
rates expose the Company to fair value interest rate risk. The Group determines the relative
proportion of fixed-interest rate and floating interest rate contracts in light of the prevailing market
conditions.
XVIII. OTHER SIGNIFICANT EVENTS
√ Applicable □ Not Applicable
The Company intends to acquire, through its wholly-owned subsidiary, the commercial refrigeration
business of Carrier Global Corporation, a company listed on the New York Stock Exchange of the
United States of America at a cash consideration of approximately US$640 million (equivalent to
approximately RMB4,559 million, with the final consideration amount subject to adjustments at
Completion). The transaction has been considered and approved by the President’s Office meeting of
the Company. While it involves an overseas acquisition, it remains conditional to the filing or approval
procedures with relevant domestic and overseas government authorities.
The Company has no other significant events that need to be disclosed.
XIX. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY
1. Accounts receivable
Closing Opening
Aging Balance Balance
Within one year 715,238,098.86 379,679,227.77
1–2 years 378,071,982.79 533,963,843.29
2–3 years 532,467,268.93
Over 3 years
Accounts receivable balance 1,625,777,350.58 913,643,071.06
Allowance for bad debts 251.55
Net receivables 1,625,777,099.03 913,643,071.06
Changes in bad debt provision for accounts receivable in the current period:
Opening Increase for the current Decrease for the current Closing
Items Balance period period Balance
Provision for Write-off and
the current Other other
period increase Reversal movement
Allowance for bad
debts 251.55 251.55
338 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
2. Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing Balance Opening Balance
Interest receivable 117,439,655.79 29,783,516.95
Dividend receivable 570,000,000.00 1,015,840,000.00
Other receivables 22,962,538,160.78 13,341,408,140.62
Total 23,649,977,816.57 14,387,031,657.57
Interest receivable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing Balance Opening Balance
Within 1 year 117,439,655.79 29,783,516.95
More than 1 year
Total 117,439,655.79 29,783,516.95
Dividend receivable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items (or investees) Closing Balance Opening Balance
Within 1 year 570,000,000.00 1,000,000,000.00
More than 1 year 15,840,000.00
Total 570,000,000.00 1,015,840,000.00
Haier Smart Home Co., Ltd. Annual Report 2023 339
Section X Financial Report
Other receivables
① The disclosure of other receivables by aging is as follows:
Aging Closing Balance Opening Balance
Within one year 13,256,949,623.31 6,278,019,144.67
More than one year 9,708,953,420.36 7,066,828,954.97
Other receivables balance 22,965,903,043.67 13,344,848,099.64
Allowance for bad debts 3,364,882.89 3,439,959.02
Net other receivables 22,962,538,160.78 13,341,408,140.62
② Changes in bad debt provision for other receivables in the current period:
Increase for Decrease for
the current period the current period
Provision for Write-off and
Opening the current Other other Closing
Items Balance period increase Reversal movement Balance
Allowance for bad debts 3,439,959.02 75,076.13 3,364,882.89
3. Long-term equity investment
√ Applicable □ Not Applicable
(1) Details of long-term equity investments:
Closing Balance Opening Balance
Provision for Provision for
Items Book balance impairment Book balance impairment
Long-term equity investment
Including: Long-term equity investments in
subsidiaries 52,823,723,686.31 7,100,000.00 49,632,299,728.31 7,100,000.00
Long-term equity investments in
associates 3,121,372,319.75 109,300,000.00 3,228,239,799.56 109,300,000.00
Total 55,945,096,006.06 116,400,000.00 52,860,539,527.87 116,400,000.00
340 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(2) Long-term equity investments to subsidiaries
Increase/ Impairment
Decrease for the provisions at the
Name of investee Opening Balance period Closing Balance end of the period
I. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd. 9,500,000.00 9,500,000.00
Haier Group (Dalian) Electrical Appliances
Industry Co., Ltd 34,735,489.79 34,735,489.79
Qingdao Haier Refrigerator Co., Ltd. 402,667,504.64 402,667,504.64
Qingdao Haier Special Refrigerator Co., Ltd. 426,736,418.99 426,736,418.99
Qingdao Haier Information Plastic
Development Co., Ltd. 102,888,407.30 102,888,407.30
Dalian Haier Precision Products Co., Ltd. 41,836,159.33 41,836,159.33
Hefei Haier Plastic Co., Ltd. 72,350,283.21 72,350,283.21
Qingdao Haier Technology Co., Ltd. 16,817,162.03 16,817,162.03
Qingdao Household Appliance Technology
and Equipment Research Institute 66,778,810.80 66,778,810.80
Qingdao Meier Plastic Powder Co., Ltd. 24,327,257.77 24,327,257.77
Chongqing Haier Precision Plastic Co., Ltd. 47,811,283.24 47,811,283.24
Qingdao Haier Electronic Plastic Co., Ltd. 69,200,000.00 69,200,000.00
Dalian Haier Refrigerator Co., Ltd. 138,600,000.00 138,600,000.00
Dalian Haier Air-conditioning Co., Ltd. 99,000,000.00 99,000,000.00
Hefei Haier Air-conditioning Co., Limited 79,403,123.85 79,403,123.85
Qingdao Haier Refrigerator (International)
Co., Ltd. 238,758,240.85 238,758,240.85
Qingdao Haier Air-Conditioner Electronics
Co., Ltd. 1,131,107,944.51 1,131,107,944.51
Qingdao Haier Air Conditioner
Gen Corp., Ltd. 220,636,306.02 220,636,306.02
Qingdao Haier Special Freezer Co., Ltd. 471,530,562.76 471,530,562.76
Qingdao Haier Dishwasher Co., Ltd. 206,594,292.82 206,594,292.82
Wuhan Haier Freezer Co., Ltd. 47,310,000.00 47,310,000.00
Wuhan Haier Electronics Holding Co., Ltd. 100,715,445.04 100,715,445.04
Chongqing Haier Air-conditioning Co., Ltd 100,000,000.00 100,000,000.00
Hefei Haier Refrigerator Co., Ltd. 49,000,000.00 49,000,000.00
Qingdao Haier Whole Set Home Appliance
Service Co., Ltd. 118,000,000.00 118,000,000.00
Chongqing Haier Refrigeration Appliance
Co., Ltd. 91,750,000.00 91,750,000.00
Haier Shanghai Zhongzhi Fang Chuang Ke
Management Co., Ltd. 2,000,000.00 2,000,000.00
Qingdao Haier Special Refrigerating Appliance
Co., Ltd. 100,000,000.00 100,000,000.00
Haier Shareholdings (Hong Kong) Limited 26,180,674,326.24 3,068,553,958.00 29,249,228,284.24
Shenyang Haier Refrigerator Co., Ltd. 100,000,000.00 100,000,000.00
Foshan Haier Freezer Co., Ltd. 100,000,000.00 100,000,000.00
Zhengzhou Haier Air-conditioning Co., Ltd. 100,000,000.00 100,000,000.00
Qingdao Haidayuan Procurement Service
Co., Ltd. 20,000,000.00 20,000,000.00
Qingdao Haier Intelligent Technology
Development Co., Ltd. 130,000,000.00 130,000,000.00
Haier Smart Home Co., Ltd. Annual Report 2023 341
Section X Financial Report
Increase/ Impairment
Decrease for the provisions at the
Name of investee Opening Balance period Closing Balance end of the period
Qingdao Haier Technology Investment
Co., Ltd. 367,505,635.00 42,870,000.00 410,375,635.00
Qingdao Casarte Smart Living Appliances
Co., Ltd. 10,000,000.00 10,000,000.00
Haier Overseas Electric Appliance Co., Ltd. 500,000,000.00 500,000,000.00
Haier (Shanghai) Electronics Co., Ltd. 12,500,000.00 12,500,000.00
Haier U+smart Intelligent Technology (Beijing)
Co., Ltd. 143,000,000.00 143,000,000.00
Haier Electronics Group Co., Ltd. 3,979,407,602.61 3,979,407,602.61 7,100,000.00
Flourishing Reach Limited (SPVX) 12,751,300,336.02 12,751,300,336.02
Qingdao Haidarui Procurement Service
Co., Ltd. 107,800,000.00 107,800,000.00
Qingdao Haier Intelligent Household
Appliances Co., Ltd. 326,400,000.00 326,400,000.00
Qingdao Haidacheng Procurement Service
Co., Ltd. 100,000,000.00 100,000,000.00
Qingdao Haier Quality Inspection Co., Ltd. 18,657,135.49 18,657,135.49
Qingdao Haier Home AI Industry Innovation
Center Co., Ltd. 20,000,000.00 80,000,000.00 100,000,000.00
Haier Zhjia Experience Cloud Ecological
Technology Co., Ltd. 100,000,000.00 100,000,000.00
Qingdao Ruibo Ecological Environmental
Technology Co., Ltd. 55,000,000.00 55,000,000.00
Total 49,632,299,728.31 3,191,423,958.00 52,823,723,686.31 7,100,000.00
342 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
(3) Long-term equity investments to associates
Increase/Decrease for the current period
Increased/ Investment
decreased income Impairment
amount for the recognized under provisions at the
Name of investee Opening Balance current period equity method Others Closing Balance end of the period
Wolong Electric (Jinan)
Motor Co., Ltd. 168,579,556.35 25,780,193.59 –22,305,600.00 172,054,149.94
Qingdao Haier SAIF Smart
Home Industry
Investment Center
(Limited Partnership) 319,245,649.36 –83,255,532.55 –29,225,674.05 206,764,442.76
Bank of Qingdao Co., Ltd. 1,162,338,491.42 107,593,877.12 –2,199,381.12 1,267,732,987.42
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners
Co., Ltd. 715,461,260.26 131,493,706.05 –183,150,000.00 663,804,966.31
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd. 413,367,540.80 16,250,623.48 –17,510,692.75 412,107,471.53 21,000,000.00
Qingdao Haier Multimedia
Co., Ltd 153,550,234.49 –65,250,234.49 88,300,000.00 88,300,000.00
Qingdao HBIS New Material
Technology Co., Ltd. 295,697,066.88 14,911,234.91 310,608,301.79
Total 3,228,239,799.56 147,523,868.11 –254,391,347.92 3,121,372,319.75 109,300,000.00
4. Operating revenue and operating cost
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for Amount for
the current period the previous period
Items Revenue Cost Revenue Cost
Primary Business 633,158,770.00 546,305,360.36 335,344,865.65 292,889,261.14
Other Business 87,833,714.07 79,980,358.06 89,317,060.67 77,735,951.48
Total 720,992,484.07 626,285,718.42 424,661,926.32 370,625,212.62
Haier Smart Home Co., Ltd. Annual Report 2023 343
Section X Financial Report
5. Investment income
Amount for the Amount for the
Items current period previous period
Long-term equity investments income calculated by the
equity method 147,523,868.11 71,408,243.76
Investment income from long-term equity investment
accounted for using cost method 8,458,124,538.41 6,328,139,259.26
Income from wealth management products 45,058,372.14 31,888,263.12
Investment income from investment in other equity
instrument during the holding period 317,575.18 302,249.84
Total 8,651,024,353.84 6,431,738,015.98
XX. APPROVAL OF FINANCIAL REPORT
This financial report was approved for publication by the Board of Directors of the Company on
27 March 2024.
XXI. SUPPLEMENTARY INFORMATION
1. Basic earnings per share and diluted earnings per share
Amount for the current period Amount for the previous period
Earnings per share Earnings per share
(RMB) (RMB)
Weighted Weighted
average Basic Diluted average Basic Diluted
return on earnings earnings return on earnings earnings
Items net assets per share per share net assets per share per share
Net profit attributable to ordinary
shareholders of the Company 16.85% 1.79 1.78 16.80% 1.58 1.57
Net profit attributable to ordinary
shareholders of the Company
after deduction of non-recurring
profit or loss 16.06% 1.71 1.69 15.95% 1.50 1.49
344 Haier Smart Home Co., Ltd. Annual Report 2023
Section X Financial Report
2. Non-recurring profit or loss
Amount for the Amount for the
Items current period previous period
Net profit attributable to ordinary shareholders of the Parent
Company 16,596,615,045.87 14,712,054,763.24
Less: non-recurring profit or loss 772,450,884.44 749,122,909.46
Net profit attributable to ordinary shareholders of the Parent
Company after deduction of non-recurring profit or loss 15,824,164,161.43 13,962,931,853.78
Breakdown of non-recurring profit and loss for the current period
Non-recurring profit and loss items Amounts for the current period
Profit and loss from disposal of non-current assets –97,873,276.66
Government subsidies included in current profit or loss,
except for government subsidies that are closely related
to the Company’s normal business operations, to be
enjoyed in a fixed amount or fixed quantity based on
the national unified standards 1,093,584,406.07
Profit from the excess of the fair value of the identifiable
net assets of investee companies on acquisition of the
investment over the cost of investment in the
Company’s subsidiaries, associates and joint ventures
Profit and loss from fair value changes of financial assets
held for trading, financial liabilities held for trading, as
well as investment gains arising from disposal of
financial assets held for trading, financial liabilities held
for trading and financial assets held for sale, except the
effective hedging related to the normal operations of the
Company 20,829,305.37
Other non-operating income and expenses except the
aforementioned items –71,400,519.77
Effect of minority equity interest –19,881,554.58
Effect of income tax –150,225,774.23
Effect of profit from business combination under common
control –2,581,701.76
Total 772,450,884.44
Haier Smart Home Co., Ltd. Annual Report 2023 345
Section X Financial Report
For the Company’s recognition of items that are not listed in the “Explanatory Announcement on
Information Disclosure for Companies Offering Their Securities to the Public No.1 — Non-
recurring Profit or Loss” as non-recurring profit or loss items and the amount of which is
significant, and for non-recurring profit or loss items as illustrated in the “Explanatory
Announcement on Information Disclosure for Companies Offering Their Securities to the Public
No.1 — Non-recurring Profit or Loss” designated as recurring profit or loss items, reasons shall
be specified.
□ Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
Chairman of the Board: LI Huagang
Date of approval for publication by the Board: 27 March 2024
Information of amendment
□ Applicable √ Not Applicable
346 Haier Smart Home Co., Ltd. Annual Report 2023
