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禾丰股份:禾丰股份2021年年度报告(英文版)2022-09-14  

                                                                   Wellhope Foods Co., Ltd. 2021 Annual Report



Stock Code: 603609                   Stock Abbreviation (English): Wellhope




                     Wellhope Foods Co., Ltd.
                       2021 Annual Report




                            April 2022




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                                                               Wellhope Foods Co., Ltd. 2021 Annual Report


                                         Important Statements
I.    The Board of Directors, Supervisory Board, Directors, Supervisors and Senior Management of
Wellhope hereby warrant that there are no false representations, misleading statements or material
omissions in this annual report, jointly and severally accept full responsibility for the truthfulness,
accuracy and completeness of the contents of this report.

II.   All Directors attended the Board Meeting.

III. SuyaJincheng CPA LLP has issued a standard audit report for Wellhope.

IV.   Wellhope's Chairman Jin Weidong and the Director of internal audit Zhang Wenliang warrant the
truthfulness, accuracy and completeness of the information presented in the financial statements in
this annual report.

V.    The dividend plan for the reporting period has been deliberated by the Board of Directors.
The plan for 2021 dividend distribution will be: In 2021, Wellhope will not pay dividends, issue bonus
stock, and convert capital reserve into share capital, the undistributed profit will be carried forward to
the next year. According to Rules on Share Repurchase of Public Companies issued by the CSRC,
Wellhope paid RMB 200,003,612.37 to repurchase its shares in 2021, which was regarded as cash
dividend, accounting for 168.74% of RMB 118,530,518.15, the Company's net profit attributable to
shareholders in 2021.

VI. Risk Statement of Forward-looking Statements

The forward-looking descriptions in this report such as plans, development strategies and other
information cannot be deemed the Company's commitment to investors. Please beware of the
investment risks.

VII. There has been no occurrence of the Company's non-business capital being occupied by
controlling shareholder and his related parties.

VIII. There has been no occurrence of the Company violating its decision-making procedure while
providing external guarantees.

IX. There has been no occurrence that more than half of the directors can’t guarantee the authenticity,
accuracy and completeness of the annual report disclosed by the Company.

X. Material Risk Warning

Wellhope describes possible risks in detail, please refer to "Possible Risks" in Section III "Business
Operations Analysis".

XI. This annual report has been issued in both Chinese and English versions. In case there is any
discrepancy or inconsistency between the two versions, the Chinese version shall prevail. The disclosed
Chinese version of 2021 Annual Report can be obtained at: www.sse.com.cn.




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                                                                                        Wellhope Foods Co., Ltd. 2021 Annual Report



                                                                 Contents

Section I      Glossary ............................................................................................................................... 4
Section II     Company Profile and Key Financial Information ................................................................. 5
Section III    Business Operation Analysis ................................................................................................ 9
Section IV     Corporate Governance ......................................................................................................56
Section V      Environment and Social Responsibility ............................................................................. 72
Section VI     Important Disclosures .......................................................................................................85
Section VII    Changes in Common Shares and Shareholder Information .............................................. 92
Section VIII   Preference Share ............................................................................................................... 97
Section IX     Corporate Bond .................................................................................................................98
Section X      Financial Statements .........................................................................................................99


                Financial statements with the signature and seal of the legal representative, the
 Reference file
                person taking charge of accounting and the person taking charge of the accounting
   directory
                department.
 Reference file The original audit report with the seal of the accounting firm and the signature and
   directory    seal of the CPA.
                During the reporting period, all the original documents and original announcements of
 Reference file
                the Company that have been publicly disclosed on the websites designated by the
   directory
                CSRC.




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                                                               Wellhope Foods Co., Ltd. 2021 Annual Report


                                          Section I Glossary

I.          Glossary


     CSRC                    refers to   China Securities Regulatory Commission


     SSE                     refers to   Shanghai Stock Exchange


     Wellhope,               refers to   Wellhope Foods Co., Ltd.
     the Company


     Reporting Period        refers to   January 1, 2021-December 31, 2021


     The end of the          refers to
     reporting period                    December 31, 2021

                                         Koninklijke De Heus B.V., the parent company of De Heus
     Royal De Heus           refers to   Mauritius Ltd., the biggest privately-owned feed company in
                                         the Netherlands

     Company Constitution    refers to   The Constitution of Wellhope Foods Co., Ltd.


     Shareholders' Meeting   refers to   The Shareholders' Meeting of Wellhope Foods Co., Ltd.


     Board of Directors      refers to   The Board of Directors of Wellhope Foods Co., Ltd.


     Supervisory Board       refers to   The Supervisory Board of Wellhope Foods Co., Ltd.


     Corporate Law           refers to   The Corporate Law of the People's Republic of China


     Securities Law          refers to   The Securities Law of the People's Republic of China




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                                                                       Wellhope Foods Co., Ltd. 2021 Annual Report


                              Section II   Company Profile and Key Financial Information

 I.        Company Information
       Company name (English)                         Wellhope Foods Co., Ltd.
       Abbreviation (English)                         Wellhope
       Company name (Chinese)                         禾丰食品股份有限公司
       Abbreviation (Chinese)                         禾丰股份
       Legal Representative                           Jin Weidong

II.        Contact Person
                                       Secretary of the Board             Representative of Securities Affairs
       Name                                   Zhao Xin                                Zhao Changqing
                              No. 169, Huishan Street, Shenbei New       No. 169, Huishan Street, Shenbei New
       Address                District, Shenyang, Liaoning Province,     District, Shenyang, Liaoning Province,
                                               China                                       China
       Tel                                 024-88081409                                024-88081409
       Fax                                 024-88082333                                024-88082333
       Email                             hfmy@wellhope.co                           hfmy@wellhope.co

III.       Basic Information of the Company
                                                      No. 169, Huishan Street, Shenbei New District, Shenyang,
       Registered address
                                                      Liaoning Province, China
                                                      On December 6, 2016, the registered address of the
                                                      Company was changed from "No. 67, Hunnan
                                                      Development Zone, Shenyang " to "No. 169, Huishan
       Change of the Company's registered
                                                      Street, Shenbei New District, Shenyang, Liaoning
       address
                                                      Province". Please refer to the announcement No.
                                                      2016-045 disclosed by the Company on the website of
                                                      Shanghai Stock Exchange
                                                      No. 169, Huishan Street, Shenbei New District, Shenyang,
       Office address
                                                      Liaoning Province, China
       Postal code                                    110164
       Company website                                www.wellhope-ag.com
       Email                                          hfmy@wellhope.co

IV.        Place where the Annual Report is Prepared
       Media designated by the Company for disclosing      China Securities Journal, Shanghai Securities News,
       information                                         Securities Times
       Website designated by the CSRC for publishing
                                                           www.sse.com.cn
       the annual report
       Place where the Company prepares its
                                                           Securities Department
       annual report

V.         Stock Information
                                                  Stock information
               Stock type          Stock exchange for IPO      Stock abbreviation               Stock code
                                       Shanghai Stock
                 A share                                      Wellhope(禾丰股份)                 603609
                                          Exchange
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VI.         Other Information
                                           Name              SuyaJincheng CPA LLP
                                                             14th-16th F, Central International Plaza, No. 159
   Accounting firm (local)             Office address
                                                             Taishan Road, Nanjing, Jiangsu Province, China
                                  Name of signatory CPA      Zhou Jiawen, Wang Lei
                                          Name               China Galaxy Securities Co., Ltd.
    The sponsor performs
                                      Office address         Qinghai financial building, Fengtai district, Beijing
     the responsibility of
                                    Name of signatory
   continuous supervision                                    Zhang Peng, Qiao Na
                                      representative
     during the reporting
                                   Period of conducting
            period                                           2021
                                  continuous supervision

VII.        Key Accounting Data and Financial Performance Indicators in the Latest Three Years
       1.   Key accounting data
                                                                                      Unit: yuan Currency: RMB
                                                                                Year-on-Year
               Item                     2021                    2020                               2019
                                                                                 change %
 Operating revenue                29,468,925,899.60     23,817,600,766.26              23.73   17,792,091,973.58
 Net profit attributable to
 the shareholders of the            118,530,518.15       1,235,162,151.48             -90.40    1,199,347,355.96
 Company
 Net profit attributable to
 the shareholders of the
                                    134,826,072.01       1,230,677,435.86             -89.04     1,190,975,760.51
 Company deducting
 extraordinary items
 Net cash flow from
                                    299,160,222.36         765,945,453.03             -60.94    1,111,605,966.58
 operating activities
                                     As at the              As at the           Year-on-Year        As at the
                                    end of 2021            end of 2020           change %          end of 2019
 Net assets attributable
 to the shareholders of            6,464,358,869.77      6,752,397,489.35              -4.27    5,698,139,557.54
 the Company
 Total assets                     12,971,506,159.72     11,646,508,203.99              11.38    9,149,772,043.85

       2.   Key financial performance indicators
                                                                                      Year-on-Year
                         Item                            2021          2020                                   2019
                                                                                       change %
 Basic earnings per share (yuan per share)                 0.13          1.34                        -90.30   1.34
 Diluted earnings per share (yuan per share)               0.13          1.34                        -90.30   1.34
 Basic earnings per share deducting
                                                           0.15          1.33                        -88.72   1.33
 extraordinary items (yuan per share)
                                                                                Decreased 18.13
 Weighted average return on equity (%)                     1.80         19.93                         24.57
                                                                                 percentage points
 Weighted average return on equity deducting                                       Decreased 17.81
                                                      2.05       19.86                                24.40
 extraordinary items (%)                                                         percentage points
   Explanation: The main reasons for the sharp decline in the Company's performance in 2021 are as
   follows. A. Unexpected decline in domestic pig prices, combined with the increase in feed costs and
   other factors, led to a heavy loss in the Company's swine raising business. B. The costs of day old chick
   and feed increased year-on-year, and the consumption in the market was not profitable. The profit of
   the Company’s broiler integration business turned from profit to loss.

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VIII.    Key Financial Figures by Quarters in 2021
                                                                                 Unit: yuan Currency: RMB
              Item                        Q1                   Q2                Q3               Q4
  Operating revenue               6,323,388,582.64   7,320,046,599.29     8,119,870,556.88     7,705,620,160.79
  Net profit attributable to
  the shareholders of the           290,928,241.18     -39,573,337.37      -203,165,870.99        70,341,485.33
  Company
  Net profit attributable to
  the shareholders of the
                                    299,181,338.60     -38,921,639.80      -199,562,495.31        74,128,868.52
  Company deducting
  extraordinary items
  Net cash flow from
                                   -556,311,101.38    303,643,883.85         30,142,460.87       521,684,979.02
  operating activities

 IX.     Extraordinary Items
                                                                                 Unit: yuan Currency: RMB
                          Item                           2021                  2020             2019
  Gains or losses on disposal of non-current
                                                     -13,978,382.83          3,169,342.06       -3,146,106.63
  assets
  Government grants charged to current gains
  or losses (excl. the government grants that
  are closely related to the Company's ordinary
                                                      40,412,773.97         33,102,019.89       22,363,695.79
  course of business and gained constantly at
  fixed quotas or amounts as per certain
  standards based on the state polices)
  Income generated from the investment costs
  for acquiring subsidiaries, associated
  companies and joint ventures being lower                                                           1,844.71
  than the fair value of the investee’s net
  identifiable assets acquired by the Company
  Gains or losses on fair-value changes in
  trading financial assets and liabilities,
  derivative financial assets and liabilities, and
  the income from disposal of trading financial
  assets and liabilities, derivative financial         2,552,441.74           -148,741.92        4,418,219.50
  assets and liabilities as well as other debt
  investment (excl. the effective portion of
  hedges that arise in the Company's ordinary
  course of business)
  Non-operating income and expense other
                                                     -42,725,463.13        -24,964,468.42      -15,858,496.27
  than those described above
  Other items that meet the definition of
                                                         184,353.40                                820,378.27
  deducting extraordinary items
  deduct: Income tax effects                           2,557,348.61          3,223,835.48        4,200,204.18

  Non-controlling interests’ effects(after-tax)         183,928.40          3,449,600.51       -3,972,264.26

                        Total                        -16,295,553.86          4,484,715.62        8,371,595.45




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X.     Item Measured at Fair Value
                                                                         Unit: yuan Currency: RMB
                                                                                 Effects on current
         Item          Opening balance    Closing balance         Change
                                                                                       profit
Derivative financial
                           4,725,552.30      9,667,725.25        4,942,172.95            1,555,420.50
assets
         Total             4,725,552.30      9,667,725.25        4,942,172.95            1,555,420.50




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                                   Section III    Business Operation Analysis

I.        Business Operation Analysis
     1.   Overview of the performance in 2021
     In 2021, the agriculture and animal husbandry industries faced severe challenges. In terms of feed, the
     feed raw materials fluctuated with high prices, the consumption demands for feed in the second half of
     the year were slowed down as a result of the downward animal raising industry. Pig prices slumped
     continuously despite the higher-than-expected recovery of production capacity. In terms of broiler
     industry, the entire market was deteriorated caused by the high price of day old chick, soaring feed
     cost and sluggish customer consumption. Against such a backdrop, all employees of Wellhope joined
     hands to forge ahead and overcome difficulties by vigorously expanding new markets, optimizing
     marketing strategies, reducing internal costs and heightening working efficiency, as well as improving
     operational capability. Besides, measures have also been taken to enhance the management of
     accounts receivable, reasonably arrange capital expenditures, accelerate inventory turnover to ensure
     sufficient cash flow. Under the concerted efforts made by all employees, Wellhope remained one of
     the few enterprises that made profits despite the first big drop in the Company's performance.
     Wellhope’s operating revenue reached RMB 29.47 billion with a year-on-year increase of 23.73%, the
     net profit attributable to shareholders of the Company recorded RMB 119 million, decreased by
     90.40%, the net profit attributable to shareholders deducting extraordinary items recorded RMB 135
     million, declined 89.04%. At the end of the reporting period, the total assets reached RMB 12.97 billion,
     rising 11.38% compared with the end of the prior year, whilst the equity attributable to the owners of
     parent company recorded RMB 6.46 billion, declining 4.27% compared with the end of the prior year.
     2.   Review of the Company’s business progress
     A.   Feed business
     In 2021, the feed raw materials witnessed remarkably fluctuations with high prices, the market of
     animal raising industry changed complexly, making the transformation and upgrading of the feed
     industry accelerated, the polarization in feed industry has become increasingly remarkably. At a time
     when opportunities and risks coexisted, the Company, as an industrial leader, leveraged its advantages
     of corporate brand and technology to speed up the reform of feed business, bravely explored new
     markets and refined internal operation to constantly develop and optimize its system capabilities. In
     2021, the total output of feed produced by the Company's holding and associated companies reached
     8.03 million tons, up 15.04% year on year, and the feed sold to the markets recorded 4.33 million tons,
     up 12.54% year on year.




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Feed sales volume of companies included in the consolidated scope in 2021
                                                                     Sales volume          YOY change of
                           Sales volume 2021         % of total
         Item                                                            2020              national feed
                               (10k tons)          sales volume
                                                                      (10k tons)            production
Swine feed                                197.24        45.54%               155.99                  26.44%
Poultry feed                              142.83        32.98%               144.69                  -1.29%
Ruminant feed                              71.69        16.55%                 63.10                 13.61%
Other feed                                 21.34         4.93%                 21.05                  1.38%
         Total                            433.10       100.00%               384.83                  12.54%

a. Upgrading strategic positioning and strengthening internal collaboration
Feed business has been always identified as the primary business of the Company. In 2021, when
revising strategies, the Company further enhanced the strategic position of feed business, proposing
higher requirements for the core capabilities of feed business while granting more resources to feed
business. Within the reporting period, to develop feed business, the Company promoted the
collaboration and interconnection among technology department, purchasing department and
marketing department, making the marketing and sales departments as well as the function
departments could be strategically connected to share pressure and performance. With science-based
procedure design and targeted appraisal mechanism, the collaboration capabilities among these
departments have been enhanced continuously. Besides, the Company launched the "Xiaohe Smart
Customer Sevice" project to promote online management of feed business, which has further
intensified the management of the process of marketing activities, optimized the customer service
system, and powered the sales personnel with an information platform. Under the efforts made by all
these departments jointly, the Company successfully maintained an industry-leading net profit per ton
in a market environment where the price of feed raw materials remained high, significantly improving
its core capabilities of feed business.
b. Promoting organizational structure and talents team to vigorously support the sales team
In 2021, the head office of the Company, based on the original structure of the technology department,
purchasing department and marketing department, established three research institutes, including
Technology R&D Institute, Market Trend Research Institute, and Market Research Institute. The
Technology R&D Institute was established to develop the formulas of various types of feed products and
research animal raising technologies, the Market Trend Research Institute was designed to study the
industry trend as well as the status quo of the upstream and downstream industries, especially the
changes in the price of feed raw materials, the Market Research Institute was set up to analyze and
study the market structure, competitors and customer demands. Meanwhile, based on regional
management, the Company set up marketing business lines for different feed varieties to provide
professional service with specialized personnel and specialized business lines. With the cooperation
between regional management and business line management, the Company’s differentiated market
insight and development strategy complemented each other with professional marketing and service
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system, which improved the quality and speed of customer development significantly. Besides, these
three institutes and various business lines have taken measures to attract key professional talents and
optimize resource allocation constantly, with the purpose of providing more support for front-line
marketing personnel.
c.   Improving technical service to seize resources in the new market
In 2021, the Company further expanded its input in market expansion and upgraded the technical
service system, witnessing a rapid increase in the proportion of large-scale farms and a steady-state
growth of feed sales volume. In northeastern China, the Company, by taking its relative advantages in
raw material purchasing, has vigorously developed large-scale farm customers while enriching its sales
strategies by making using of the new media and diversified platforms, which has strengthened the
brand advantages of the Company’s products in medium-sized farms and back-yard farms. In other
areas, the Company divided its market into five regions in terms of North China, Shandong region,
Central China, West China and East China. By promoting the decentralized management mode and
formulating specific market expansion solutions according to the characteristics of different regions, the
Company has increased its sales units steadily to fill the gap in the market gradually. Besides, the
Company launched Wellhope 6M management service solution for large-scale farms, which contained 6
strategies aimed at reducing costs and increasing efficiency (e.g., system evaluation strategy, problem
analysis strategy, cost structure strategy, pig herd management strategy, precise nutrition strategy,
customized solution strategy) to sort out, analyze and rank complex problems related to farms.
Designed with 73 operation appraisal indicators, the solution covered 1,123 key inspection points of the
farms, and could rapidly identify the key problems for farms with the 22 precision management tools
designed for the solution, which could help customers make feasible and effective solutions. By
constantly attracting technical service experts and expanding the scale of the service team, the
Company has improved its overall service capability and increased the proportion of large-scale farms
significantly.
B. Broiler integration business
In 2021, the cost of the upstream business of broiler industry increased, whilst the downstream
consumption decreased. In such a context, the profits dropped precipitously, which marked an
unprecedented downward trend in this industry. Under such adverse conditions, the Company, taking
ensuring safety, improving efficiency, enhancing ecosystem and increasing profits as the development
policy, slowed down the expansion pace of broiler integration business. Instead, the Company took
measures to improve its operational capability and reduce costs, improve the layout of the industrial
chain while ensuring safety to expand its market share steadily. In 2021, the holding and associated
companies slaughtered 693 million broilers with a year-on-year increase of 8.5%, totally produced and
sold 1.8 million tons of broiler parts products, increased by 7.0%, produced 28,000 tons of prepared
food and cooked food with a year-on-year increase of 7.3%, among which, the export volume of cooked
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food recorded 3,488 tons, increased by 15.9% compared with the same period of last year.
a. Slowing down the expansion pace and improving the layout of the industrial chain
In 2021, the projects newly invested in the past two years in the broiler industry were put into
production densely, leading to a periodical surplus of supply. In this regard, the Company slowed down
the development pace of the broiler business in 2021, and moderately increased the production
capacity of broiler breeding and raising, heightened the proportion of self-supplied day old chicks and
live broilers to match the industrial chain as planned. In additions, the Company constantly enhanced
production management, improved operation indicators. Meanwhile, in response to the changes in the
market, the Company dynamically adjusted the policies on feeding fees for contract farm owners
according to the production time and stage of farms, so as to ensure proper allocation of profits
between the Company and farm owners. As for the slaughtering business, in the second half of 2021,
the Company reduced the target yield in the previous plan according to the estimations on the market
trend, actively slowed down the pace of expansion, and maintained stable development with existing
production capacity. Attaching equal importance to short-term profits and long-term development, the
Company increased the production and sales scale of new projects not producing at full capacity by
centralizing resources, with the purpose of crossing the break-even point as soon as possible.
b. Squeezing costs and expenses, heightening cost and efficiency management
In 2021, despite the downturn broiler industry, the Company insisted on lean management of its broiler
integration business by continuously optimizing production indicators, improving operation efficiency,
strictly controlling product quality and rationally squeezing the cost and expenses, which has further
enhanced its operational capability. As for broiler raising business, the Company boosted the
informatization in this sector to improve the data analysis ability and decision-making efficiency.
Meanwhile, the Company made efforts to ensure the quality of self-produced day old chicks, diversified
options of outsourcing chicks, constantly modified and improved Breeding Site Management Manual,
achieving growth of production performance steadily. As for slaughtering business, the Company
continued to improve its production efficiency, reduce operation costs, and strengthen quality
management. At the same time, the Company continuously explored the operation modes of automatic
production lines, also designed automatic configuration of production lines according to the reality of
plants by considering multiple elements in terms of production scale, product positioning, product mix,
customer structure, which has laid a solid foundation for future transformation and upgrading of
businesses.
c.   Expanding the market vigorously and optimizing marketing strategy
In 2021, as COVID-19 lingered and market consumption stayed at a low level, the delivery of frozen
broiler products faced various challenges. Meanwhile, with the higher-than-expectation recovery of the
production capacity of live pigs, demands for chicken have been further squeezed reduced and pork
with cheap price was taking a big bite out of chicken. To cope with this unfavorable situation, the
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Company’s slaughtering entities, with the multi-brand strategy, accelerated the expansion of the sales
channel of broiler parts products, and occupied market shares rapidly on the condition of reaching a
balance between production and sales. Meanwhile, the Company further improved the quality of
broiler products and increased the proportion of fresh products to realize the highest comprehensive
value with the best product portfolio. The Company also explored high-quality customers, and
improved the ecological niche sustainably. As for prepared food and cooked food businesses, the
Company has improved its core capabilities and brand influence by accelerating the construction
progress of new projects to expand the scale of basic production and sales rapidly, improving its ability
to undertake large orders, and strengthening R&D of products to create knock-out products.
C. Pig raising business
In 2021, pig prices in China witnessed a higher-than-expected reduction. The era of gaining high profits
from raising pig ended, while the industry getting stuck in periodical in-depth deficit, imposing huge
capital pressure on those companies who were seeking radical expansion of production previously. At
such a critical turning point, the Company faced all the challenges and made rational decisions,
including phasing out inefficient sows, reducing production scale, constantly enhancing pig farm
management to improve production performance, reducing costs and expenses, controlling the weight
of pig, and improving the turnover speed to ensure capital safety. In 2021, the Company’s holding and
associated companies marketed 639,000 heads of finishers, 588,000 piglets (215,000 heads sold to
market, 373,000 sold to internal companies), 66,000 heads of pig breeders, totaling 1.293 million heads
of pig (920,000 heads sold to market, and 373,000 sold to internal companies).
a. Insisting on stable operation and phasing out inefficient sows
From 2019 to the first quarter of 2021, despite the extremely high profit of pig raising industry, the
Company insisted on stable operation with a calm mind, most farms were expanded production by
asset-light mode. Meanwhile, the Company strictly controlled the quality of pig breeders. By the end of
June 2021, the holding and associated companies had 79,000 sows in stock, with ternary hybrid
breeding sows accounting for only 5.5% (the average level in the industry was 45%). With the inflection
point of the market arriving, the Company phased out inefficient sows without hesitation, 20,000 heads
of sows with low production performance in the third quarter were cut, and 9,000 sows were
eliminated in the fourth quarter. By the end of 2021, the number of sows of the Company reduced to
50,000, including 30,000 heads of reproducible sows and 20,000 gilts. The entire production
performance of sows has been further enhanced. Meanwhile, the Company also heightened the
performance appraisal criterion for contact farms, terminated its cooperation with some fattening
farms and outsourcing farms to slow down the development pace and reduce business pressure, which
reduced the costs and expenses significantly and ensured capital safety.




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b.   Continuously reducing costs and increasing efficiency, improving production performance
significantly
In 2021, the Company started to apply process-based performance management systems in its pig
raising business sector, including three-level meeting, benchmark analysis and task list. Every month,
the head office, regional branches, and pig farms held operation analysis meetings to identify key
problems of each farm by applying the benchmark analysis management mode, formulated task lists to
effectively implement the improvement plan. In addition, in 2021, the Company reviewed the structure
of pig business again to optimize personnel configuration. By offering trainings for staff and introducing
key technical talents, the Company has successfully improved the competence of technical and service
personnel. The cost for piglet weaning and fattening have been reduced sharply supported by phasing
out inefficient sows, improving asset quality, heightening technical skill of resident staff and enhancing
farm operation. In the future, the Company will further improve its pig production performance,
constantly increase the operation of pig farms and develop into a Company with industry-leading cost
management and control.
c.   Enhancing African Swine Fever management, reducing epidemic prevention cost
African Swine Fever prevention has been normalized for biosecurity and has become a key element
affecting costs. In 2021, the Company, still taking biosecurity as a priority, reviewed the biosecurity
control of feed mills, pig farms, and cooperative farms, and built a multi-level management and control
system to prevent external cases and internal infection. Meanwhile, to ensure that every team member
had a strong sense of responsibility and awareness, the Company took measures to improve the
technical proficiency of teams and further improved the reward and punishment mechanisms. Through
three years’ practice, the Company has accumulated rich experience in ASF prevention, reserved
sufficient professional talents, and developed a mature prevention system. In 2022, the Company will
combine ASF prevention with lean management gradually. On the condition of ensuring biosecurity, the
Company will constantly verify the economic efficiency and effectiveness of prevention costs, improve
the prevention procedure, and reduce the prevention cost of biosecurity.
D. Raw material trade business
In 2021, companies active in animal raising industry generally suffered losses, and the cost of feed and
animal health products came under pressure, which brought certain challenges to the Company's
trading business. However, the Company accurately studied on the market situation, seized the
opportunity and obtained a better profit in fish meal, amino acid, calcium hydrogen and other raw
material varieties with a large potential for growth. In addition, the Company actively took multiple
measures to hedge the adverse impact of the industry, on the one hand, broadened the product
category based on the original product line, expanded sales areas and promoted product sales. On the
other hand, gave full play to the advantages of the professional team, improved the service to the farms
to enhance market competitiveness. Furthermore, the Company developed the import business of
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foreign feed raw materials, which brought new opportunities for business expansion. At the same time,
with the help of information platform, the Company further improved the internal management of its
trading companies, also reduced operating costs, improved operating efficiency, which would lay a solid
foundation for the great development of future trade.
E. Progress in other aspects
a.   Increasing talent configuration and improving purchasing capability
During the reporting period, the Company has taken a large number of measures to improve team
construction, purchasing mode, and business management specification of the purchasing system as
well as enhance the interconnection between the technology department and the purchasing
department. In 2021, young and highly-educated employees with abundant experiences joined in the
purchasing team, which improved the study on raw materials and the market trend research capability.
As for the purchasing mode, the Company improved the concentration ratio of purchasing, with certain
areas having completed the transformation from three-level procurement to two-level procurement to
enhance centralized decision-making and improve the efficiency of procurement management. As for
business management, measures have been taken to improve the raw material supply chain
management, making the supply channel could be selected flexibly according to market change,
expanding the scope of the supplies to ensure the supply security. Meanwhile, the Company has also
taken measures to deepen the collaboration between the technology department and the purchasing
department. At a time of high raw material prices, the Company gained obvious advantages regarding
alternative costs of raw materials through the interconnection between technology and raw material
purchasing.
b.   Actively responding to changes, research and development making contributions
In 2021, with the changing background of external unpredictable environment, sharp fluctuation of raw
material prices, the COVID-19 cases, the impact of African Swine Fever, and the increasing market
competition pressure, the Company insisted on R&D and innovation, pursued the production of feed
products with higher quality and cost-effective, and looked for better alternative combinations, and
upgraded on-site farming technology solutions. For feed business, the Company launched a new
generation of creep feed, with better palatability, diarrhea-resistance. In the application of raw material
alternative technology, the Company shared technical information with its partner Royal De Heus,
continuously optimized the dynamic database and reserves a variety of efficient technologies for feed
formulations. In terms of the iterative upgrading of feeding programs, the Company has achieved
remarkable results in pig feeding management technology, beef cattle and sheep feeding program and
poultry feeding technology. Over the years, the Company has unswervingly focused on the input in
R&D. Now it has a technical team composed of hundreds of doctoral, master and senior experts. It also
continued to introduce doctors with development potential as R&D or regional technology leaders, and
the R&D expenses increased year by year. For more details about research and development, please
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refer to Section III.
c. Enhancing benchmark management and building a process-based performance management
system
During the reporting period, the Company mainly focused on building a process-based performance
management system, it accumulated experience through the mature management mode of broiler
integration business and then applied such experiences in other business sectors. By implementing
monthly three-level operation analysis meeting involving the head office, regional center, and
subsidiaries, supporting by management methods and tools including inspection team, specialized
project team and task list, the Company has formed a full set of PDCA circulation of process-based
performance management. In 2021, the Company strengthened benchmark management and plan
tracking, developed in-depth market insight, and reviewed management, which has achieved the
implementation of the strategic goals and key tactical plans. For employees, the performance of the
Company and individuals was tracked and managed effectively. Such a mode will be further improved
and promoted in 2022, to constantly improve the performance of the Company and its employees.
d. Strengthening capital operation, powering business development
During the reporting period, in order to improve the long-term investment value of stocks and
safeguard the interests of shareholders, the Company repurchased its shares by means of centralized
bidding. In 2021, the Company has repurchased 20.96 million shares with a cumulative payment of
RMB 200 million, the repurchased shares will be used to carry out employee stock ownership plans or
equity incentive plans. As of the disclosure date of this report, the issuance of convertible bonds of the
Company was being promoted as planned. The convertible bonds were expected to raise RMB 1.5
billion, and all the funds raised will be used for the development of the primary businesses and the
realization of the strategic goals.
F. Awards and recognitions in 2021
 Being listed in the Fortune China 500 for the fifth time, ranking 409, up 91 places.
 Being selected as the first batch of national supply chain innovation and application demonstration
enterprises
 Ranking 9th in China's top 100 enterprises of light industry technology
 Ranking 11th among the Top 50 enterprises in China's light industry and food industry
 Ranking 28th in China's top 200 light industry enterprises
 Being awarded the Dedication Medal of the Red Cross Society of China
 Obtaining the A-level Evaluation of information disclosure of Shanghai Stock Exchange in 2020-2021,
wining this honor for four consecutive years
 Wining the 9th season of China Good Feed, Technology innovation Leader, Ruminant Technology
Innovation Star Brand
 Being named the 2021 National Agricultural and Rural Informatization Demonstration Base
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       Being rated as the demonstration base of excellent quality management promotion in Liaoning
      Province
II.        Review of the Circumstances of the industries that the Company involved
      1.   Feed industry
      China's feed industry started up in the mid to late 1970s, and in just a dozen years, China’s feed industry
      has achieved what developed countries have accomplished in decades. In 2011, China's feed production
      exceeded the United States for the first time, becoming the world's largest feed producer. Comparing
      with the rapid development of the early stage, China’s feed industry has witnessed a slowdown in the
      growth of production output in the past 10 years, but it still has a huge market size. In 2021, China's
      total feed production grew steadily, with a booming supply and demand in the market.
      In terms of supply, the production of national commercial feed in 2021 reached 293.443 million tons
      with a year-on-year increase of 16.1%. By varieties, swine feed recorded 130.765 million tons, increased
      by 46.6%. The production of layer feed and broiler feed recorded 32.314 million tons and 89.096 million
      tons, decreased by 3.6% and 2.9% respectively, whilst the ruminant feed output reached 14.803 million
      tons, rose by 12.2%. From the perspective of industry consolidation, there were 957 feed mills with an
      annual capacity over 100,000 tons, newly increased 208 producers compared with the prior year. These
      feed mills totally produced 177.077 million tons of feed with a year-on-year increase of 24.4%,
      contributing towards 60.3% of the total national feed production, which rose by 7.5 percentage points
      over the previous year. Among these large-scale feed mills, there were 39 feed enterprise groups with
      annual output of more than 1 million tons, an increase of 6 over the previous year, and the total feed
      output accounted for 59.7% of the total national feed production, an increase of 5.1 percentage points
      over the previous year.
      In terms of demand, in 2021, the demand for swine feed and ruminant feed was favorable, while the
      demand for poultry feed decreased. Specifically, regarding swine feed, the pig stock in the northern
      region has reached a high level in the first half of the year, and the demand for swine feed in the
      southern region has grown rapidly due to the accelerated recovery of production capacity, in the
      second half of the year, with the sharp decline in pig prices, the growth rate of swine raising scale has
      been controlled, and the growth rate of swine feed demand has slowed down. Regarding poultry feed,
      egg prices have continued to be weak, old chickens have been eliminated centrally, the stock of layer
      has dropped significantly, and the demand for layer feed has shrunk. Although there was an increase in
      the number of slaughtered broilers, the body weight was significantly declined, and the feed to meat
      ratio was also reduced, resulting in a slight decrease in broiler feed demand. For ruminant feed, farmers
      were positive to replenish the stock as raising cattle and sheep was profitable, thus the stock was
      gradually growing, making the demand for feed increase.
      Overall, the growth rate of China's feed production in the first half of 2021 was higher than that in the
      second half year, and the annual growth rate far exceeded the average growth rate in the past 10 years,
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however, the growth rate reflected obvious unevenness among various regions, categories and
companies with different scales. In terms of geography, the process of resuming pig production in the
North was basically ended, and the pig stock in the South had been rapidly increasing, so the growth of
pig feed sales in the South was much larger than that in the North. In terms of category, benefiting from
the unexpected recovery of pig production, the increase of pig feed output was much larger than that
of other varieties of feed. In terms of industry consolidation, the entry barrier of feed industry has been
continuously increasing, and the polarization among feed enterprises has been becoming remarkable.
Large enterprises have been rabidly grabbing market shares supported by their technologies, costing,
branding, management, capital, logistics, and other advantages, whilst small and medium-sized
companies have been gradually squeezed out the market, the consolidation of feed industry has been
unceasingly enhanced.
Note: The above data is obtained from the China Feed Industry Association Statistical Report and Boyar Industry
Analysis Report.
2.   Broiler industry
In 2021, pig production recovered beyond expectations and the excess supply of pork significantly
suppressed the demand for chicken. In the meantime, the production capacity of large-scale
enterprises after rapid expansion in 2019-2020 was released intensively, thus leading to increasingly
fierce market competition.
On the supply side, the overcapacity of broiler breeders was cut in the fourth quarter of last year, which
resulted the inventories of forced-moulting breeders falling to a new low in the first quarter of 2021. In
the meantime, factors such as the suspension of day old chick hatching at the Spring Festival and
COVID-19 cases, caused the supply of commercial day old chicks was tight in the first quarter, the price
rose rapidly from RMB 1 yuan per chick at the beginning of the year to RMB 5-6 yuan, and the delivery
of chick was less than expected. In the second and third quarters, with the recovery of chicken supply,
the delivery of live broiler gradually increased to the high level, hitting a historical high in July, above
470 million for five consecutive months. In the fourth quarter, the winter climate increased the
difficulty of breeding, and the delivery of chickens dropped from high level. For the whole year, China's
broiler production in 2021 recorded 5.39 billion with a year-on-year increase of 7.76%, and the
production of broiler parts products reached 10.2 million tons with an increase of 5.86%, the supply of
chicken exceeded 2014, reaching a record high.
On the demand side, the influences of COVID-19 continued to linger. Against the backdrop of weak
economic conditions, consumer demand has slightly rebounded, but it was still far from the level of
market consumption before the COVID-19 pandemic. In 2021, the outbreak of COVID-19 cases in many
places continued to impact outdoor catering, group consumption, wholesale market, supermarket retail,
food processing and other links, and the demand for chicken remained weak. Moreover, the continuous
sharp decline in pork prices influenced the alternative of chicken for pork, further squeezing domestic

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demand for chicken. In terms of chicken price, the comprehensive price of broiler parts products had
been falling all the way from RMB 11,000 yuan per ton at the beginning of the year, approaching RMB
10,000 yuan in June, and almost falling below RMB 9,000 yuan per ton at the end of September, which
was the lowest price in nearly a year. At the end of the year, chicken prices rebounded a bit, but they
were still below the cost line of most integrated enterprises.
Overall, in 2021, the price of day old chick was higher, feed costs rose sharply, and the consumption was
not preferable. Looking through all the year round, the grandparent breeder enterprises gained higher
profit, whilst the parent breeder enterprises obtained modest profit, and commercial broiler breeding
enterprises suffered a small loss, slaughtering enterprises faced heavy loss. For integrated companies,
each broiler lost RMB 0.25 yuan this year, earnings were down sharply.
Note: The above data is obtained from the China Feed Industry Association Statistical Report and Boyar Industry
Analysis Report.
3.   Swine raising industry
In 2021, a key turnaround occurred in the pig breeding industry, with capacity recovering beyond
expectation, pig prices dropping sharply since the high level at the beginning of the year, the industry
transforming from high profitability to significant losses, and policy guidance changing from expanding
production to stabilizing production.
On the supply side, China's pig production capacity recovered beyond expectation in 2021, with the
slaughtered hog nationwide increasing by 59.17% year-on-year and pork production increasing by
49.17% year-on-year. In the second and third quarters, a number of factors such as raising large-weight
pig, holding finisher to wait price going up and cutting sows, resulted in a continuously sharp drop in
domestic pig prices, whereafter farmers and companies stampeded into selling pigs, making the
national average pig price fall to a low point in October. With the continuous downward movement of
pig prices, the industry gradually changed from scale expansion to cost control, a few players decisively
drop out the market, while most players still held a wait-and-see attitude, eliminating low-efficiency
breeding sows while retaining a large number of gilts, leading market gaming intensify. At the end of
2021, the domestic breeding sow stock decreased by 9.72% year-on-year, but the quality of sows was
significantly optimized compared to the end of 2020, and the proportion of three way cross breeding
sow stock decreased from 50% to less than 10%, so the enhancement of sow efficiency was enough to
make up for the impact of reduced production capacity.
In terms of demand, with the recovery of pork supply and the decline of pork price, pork consumption
gradually recovered, but the recovery of consumption was slower than the growth of supply. In the past
two years, the production of pork alternatives, mainly chicken, has increased significantly. The
long-standing high prices of pork have changed residents' consumption habits, and the consumption of
alternatives has increased significantly. Although the price of pork declined, it is difficult to return to the
consumption level before 2018. In addition, the long-term harassment of the COVID-19 pandemic has

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       always suppressed terminal consumption, and the recovery of consumption has shown a gradual, while
       the supply of pork was concentrated in a short period of time, resulting in a serious imbalance between
       pork supply and demand. In 2021, the national average price of pig hit the bottom in early October,
       approaching RMB 10 yuan per kg, and consumption recovered slightly in the fourth quarter, the price
       rebounded to near RMB 16 yuan per kg at the end of the year, but still decreased 56% compared with
       the high price at the beginning of the year.
       In general, the domestic live pig production capacity recovered beyond expectations, and the quality of
       sows and the number of live pigs slaughtered both increased remarkably. Although the demand for
       pork slightly increased, the recovery of consumption was significantly slower than the increase of
       production capacity, coupled with the large inventory pressure of slaughterhouses and the periodic
       imbalance of supply and demand, all these intensively weed out incompetent players in this industry.
       Note: The above data is obtained from the China Feed Industry Association Statistical Report and Boyar Industry
       Analysis Report.
III.        Circumstance of Primary Businesses in the Reporting Period
       Wellhope is one of the renowned large-scale enterprises across domestic agriculture and animal
       husbandry industries, primary businesses cover animal feed, feed raw materials trade, broiler
       integration and swine raising, it is also involved in veterinary drug, farming equipment manufacturing,
       pet clinic, etc. In 2018, Wellhope identified food business as its strategic business, which is now in full
       swing implementation. Since establishment, Wellhope has always adhered to its corporate mission, i.e.,
       “Through advanced technology, professional service, and high-quality products, Wellhope is devoted to
       the development of China’s animal husbandry industry, resources conservation, environment
       protection, as well as food security for the benefit of people", and all Wellhope people hold together to
       set sights on becoming one of the world's leading enterprise across agriculture, animal husbandry, and
       food industries.
       During the reporting period, the primary businesses of Wellhope have not changed significantly.
  Primary
                               Feed                       Broiler integration                    Swine raising
  business
  Primary           Swine, poultry, ruminant,
                                                  Live broiler, broiler parts products    Finisher, piglet, pig breeders
  products                aquatic feed
                                                  Industrial chain-covering broiler
                                                                                         Industrial chain-covering a
                                                  breeder raising, day old chick
                                                                                         complete swine breeding
                                                  hatching, feed processing,
                    Sales model-dealer, direct                                           system, including great
                                                  commercial broiler rearing,
                    sales                                                                grandparent, grandparent
 Operation                                        slaughtering and processing,
                    Operation model-R&D,                                                 and parent stock, piglet, and
  model                                           further processing of prepared
                    purchasing, production,                                              commercial swine
                                                  food and cooked food
                    marketing, service                                                   Raising model of finisher-
                                                  Raising model of commercial
                                                                                         own farms together with
                                                  broiler-own farms together with
                                                                                         contract farms(outsourcing)
                                                  contract farms(outsourcing)
                                                     Liaoning, Jilin, Heilongjiang,       Liaoning, Jilin, Heilongjiang,
 Business               29 provincial-level
                                                     Henan, Hebei, and Shandong             Anhui, Hebei, and Henan
distribution          administrative regions
                                                               provinces                           provinces

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1. Animal feed, feed raw materials trade businesses
Wellhope produces and sells animal feed for swine, poultry, ruminant, aquatic and fur-farmed animals,
which are marketed in 29 provinces and regions across China. It has also built feed mills in Nepal,
Indonesia and the Philippines, etc. Driven by the concept of “constantly working on new products,
never following the beaten path”, Wellhope always designs tailored products for animals in different
phases, and it is committed to offering farmers integrated services such as animal raising, disease
prevention and operation management, while helping farmers achieve desirable economic returns.
The subsidiary trade companies mainly trade in feed raw materials such as fish meal, soybean meal and
co-products of corn, also engage in feed additives including amino acid, antioxidant, mold inhibitors and
vitamin. In addition, these trade companies are the sales agents of animal health products such as
vaccines and veterinary drugs produced by global strategic suppliers. Now the trade business is active in
the regions of Northeast, North, East, South, and Southwest regions across China, some products have
been exported to Nepal, Mongolia and other countries.
2. Broiler integration business
Wellhope has invested more than 50 holding and associated entities in the value chain of broiler
integration, which are mainly located in the provinces of Liaoning, Jilin, Heilongjiang, Hebei, Henan and
Shandong, etc. Wellhope's broiler integration business, with three business sectors in terms of broiler
raising, meat processing and further processing, contains all parts in the industrial chain, including
broiler breeders raising, day-old chick hatching, feed production, commercial broiler rearing,
slaughtering and processing of raw meat, further processing of prepared and cooked food. Through
standardized management and streamline operation, Wellhope, cooperating with its partners,
consolidates the controls of bio-safety, drug residue and in-process hygiene to achieve traceable food
safety. Based on the number of broilers slaughtered by holding and associated factories, Wellhope has
stepped into the first echelon of the broiler industry and become one of the leading suppliers of broiler
products nationwide.

                                                                 Wellhope




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 Broiler raising: This sector covers broiler breeder raising, day-old chick hatching, commercial broiler
rearing and feed processing. By formulating scientific and rational feeding programs, light programs and
comprehensive disease prevention systems, Wellhope provides high-quality eggs for its hatching farms.
Meanwhile, it has established thorough management systems in the hatching process and purchased
intelligent facilities that are available for hatching in batches, also equipped with high-efficient and
energy-saving hatcher and micro-environment control system for producing healthy day-old chicks.
Entering commercial broiler sector, Wellhope mainly raises broiler by self-invested farms and
contract(out-sourcing) farms under the pattern of standardized management by unifying nine aspects.
All these farms apply three-tier cages and automate all the processes from feed intake, water supply,
temperature to moisture control, etc. The average weight of Wellhope’s commercial broiler has reached
3.0 kg with the livability of over 96%, and the European production index exceeded 390, which have
received wide recognitions from the cooperative farms.
Raw meat processing: Wellhope has set up 16 holding and associated slaughtering and processing
factories, which are equipped with domestically state-of-the-art production lines that are available to
slaughter 900 million broilers per year. Driven by strict all-in and all-out inspection and quarantine as
well as drug residue detection, every single factory has established a total quality guarantee system and
traceability system to monitor all the processes. Meanwhile, Wellhope constantly strengthens
slaughtering and processing techniques by ways of systematic pre-job training and skill promotion
training as well as conducting "6S" management (i.e., Seiri, Seiton, Seiketsu, Shitsuke, Seiso, Safety),
making the killing out percentage and per capita slaughtering efficiency stand out among companies
with similar scale. Now Wellhope’s broiler parts products have entered the supply chain of Shineway
Group, Jinluo Group, Yurun Group, China’s McDonalds and KFC, Yoshinoya, Wallace, Dili Fresh Food,
Yonghui Superstores, RT-MART, other regional large food distributors, fresh markets and food
processing plants, etc. In the meantime, broiler products have also been sold to the regions of Hong
Kong and Macao, and exported to some countries such as Mongolia and Bahrain, etc.
Further processing: Relying on the advantage of integration, Wellhope uses high-quality chicken
supplied by own slaughterhouses as raw materials and installs efficient and energy-saving equipment to
process raw meat into prepared products. At present it supplies over 100 kinds of further-processed
chicken products to central kitchens of restaurant chains, corporate and school canteens, supermarkets
and convenience stores. In terms of online marketing, Wellhope’s flagship store of food products have
been launched on Taobao and JDcom, whilst some of its independent-brand products produced by
Wellhope's subordinated companies have also been marketed via community e-commerce platforms. In
addition, due to ever-growing demand from consumers, Wellhope has been vigorously expanding its
export business of cooked products, and such products have successfully penetrated the Japanese and
Korean markets with good response.


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3. Swine raising business
By carefully considering industry trends and own strengthens, Wellhope has tried swine raising business
in 2016. Through solely-invested, co-invested operations and leasing, it has built farms and expanded
businesses in some predominant regions suitable for raising swine, such as Liaoning, Jilin, Heilongjiang,
Henan, Hebei, and Anhui provinces. At present, Wellhope's swine raising business mainly adopts the
operation model that composes of pig breeders raising and sales, commercial piglet selling plus
fattening via own farms and contract farms (such as leasing, agent construction, cooperative farming
base). Through establishing comprehensive and strict bio-safety systems, advanced breeding systems
and scientific feeding management systems, Wellhope is devoted to crafting an integrated chain that
contains breeding, swine raising, slaughtering and processing.




A. Building farms with high standard
Wellhope insists on constructing farms in compliance with the principle of moderate scale for every
single farm, whilst it strictly designs bio-safety systems driven by the philosophy of beginning with the
end in mind. All newly-built and under-construction projects adopt advanced production process and
farming equipment, while using intelligent feeding system, environmental control equipment, and
production management software to improve productivity and create a comfortable environment for
swine.
B. Holistic operation
a.   In terms of genetic selection and breeding. Wellhope introduces high-quality pig breeders with
French, American and Danish genes to match different business areas to provide parent stock with pure
blood and clear pedigree. At the same time, by establishing scientific breeding programs, Wellhope
continuously optimizes the structures of breeding stock to ensure the source of excellent breeders, so
as to enhance its competence in swine raising industry.
b.   In terms of feeding management. Wellhope has established a dynamic management system for
feeding swine. It covers feed nutrition and raw material database, feed processing and product quality
database as well as production performance database, in combination with dynamic formulation
technology, large-scale pig farm feeding management technology and bio-safety prevention technology
to provide systematic nutrition solutions for farms. Meanwhile, through continuous measures such as
data collection and analysis, result tracking, Wellhope is capable to accurately optimize nutrition

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  programs, refine internal management and risk warning to improve feeding performance.
  c.   In terms of bio-safety prevention. After more than two years of exploration and experimentation,
  Wellhope has established the bio-safety management system that consists of small group feeding,
  four-zone control, three-level disinfection, precise detection and monitoring with alarm system. For
  instance, various levels of security systems, such as service centers and disinfection areas have been set
  up outside the farms. Professional staff disinfect people, vehicles and materials thoroughly step by step.
  Regarding inside farms, all these farms have been divided into zones with different safety levels
  corresponding to quarantine and isolation remedy, with installation of AI identification and surveillance
  cameras at key links and spots of bio-safety. The visualization management helps ensure enforcement
  of bio-safety measures. Moreover, each business unit has set up laboratories specialized in testing
  African swine fever, which apply techniques like fluorescence quantitative PCR to achieve precise
  detection, discovery and elimination to safeguard pig farms.
  4. The Company's position in the involved industries
  Wellhope has obtained the honorary titles of National Leading Enterprise in Agricultural Integration
  Industry, National-recognized Enterprise Technology Center, National High-Tech Enterprise. Since
  completing IPO in 2014, Wellhope has been elected as Top 100 Most Valuable Corporation of Chinese
  Public Companies for four times and ranked on China’s Top 500 Private Enterprise for five times.
  Meanwhile, it holds a leading position in the Northeast regions of China, whilst has also become a
  highly influential brand in North, East, Central and Northwest regions across China. Regarding feed
  business, Wellhope is the Vice Chairman of China Feed Industry Association, and has been awarded as
  National Top 10 Leading Feed Enterprise, it was rated as Top 10 Leading feed enterprises in China in
  2020, with a higher sales volume of commercial feed in China. Regarding broiler business, Wellhope’s
  broiler integration business has been developing rapidly in recent years. Based on the number of
  broilers slaughtered and processed by holding and associated companies, Wellhope is now among the
  top rank of China’s white feather broiler industry.
IV.    Core Competence Analysis within the Reporting Period
  The core competencies of Wellhope are embodied in a highly educated, loyal and enterprising
  management team, integrated with rationally planned and stably developed business strategies, a
  sophisticated and advanced industrial chain, widespread adoption of a systematic and scientific-based
  innovative R&D system, constantly enhanced and increasingly matured brand influence, coupled with
  highly energized and dynamic corporate culture that powers the development of Wellhope.
  1.   A highly educated, loyal and enterprising management team
  Talented people are the primary resources and the core competence of Wellhope. The highly-educated
  management team, led by seven cofounders, all with professional backgrounds, abundance of
  experiences and practices in management and animal husbandry industries, are highly capable of
  grasping the business environment accurately, formulating the development strategy scientifically, and
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have deep insights and high recognitions of Wellhope’s core values and business philosophy. Almost all
the middle and senior managers are internally selected and cultivated by Wellhope, these core
members have been rewarded with various incentives, and they have a strong sense of ownership. Over
the past 27 years, the middle and senior management team has been highly stable, and the directors
and general managers have rarely left the Company on their own initiative, except for those who were
reassigned to other positions due to substandard performance. Meanwhile, newly promoted members
of the management team born in the 1980s and 1990s are selected from key talents’ cultivation
programs, such as “Seedling Plan” and “Sunflower Program”. They love the Company, they are
aggressive to forge ahead, having become the backbone force of the management team. Wellhope also
attaches great importance to the continuous learning and ability improvement of these managers, by
setting up various senior training programs such as the EDP (Executive Development Program),
leadership training camp, etc. At the same time, it also organizes managers to study in domestic and
overseas outstanding enterprises to expand their horizons and reflect on improvement. The main cause
of failure of some domestic companies is due to unstable and disunited management team. In contrast,
the highly educated, loyal and enterprising management team is one of Wellhope’s core competence
advantages at present and in the future, and it is also the main reason why the Company is so confident
about the future.
2.   Rationally planned and stably developed business strategies
Based on in-depth understanding of both domestic and global politics, economies and industrial trends,
Wellhope has always attached great importance to its sustainable development and risk control, with
focus on operation capability and emphasis on profitable investment return from new projects. Driven
by the investment concepts of steady growth, healthy and sustainable development, Wellhope,
rationalizes its business layout step by step, instead of pushing through rash and impulsive investment,
to maintain the rationality and safety of its industrial chain and to mitigate all calculated risks faced by
enterprise operations, taking the “Built to Last” philosophy as a significant objective.
Rationally planned and stably developed business strategies reflect in the following aspects.
A.   Prudent expansion of business areas
Starting off with the premix business, Wellhope has been dedicated to expanding feed business over
the years, at present it has become one of the top 10 commercial feed producers nationwide. In 2008,
Wellhope entered broiler integration business after careful thinking. After 14 years of efforts, the
number of broilers processed by Wellhope’s holding and associated entities have been standing at the
forefront of the broiler industry, with its management and key technical indicators ranking top position
both at home and abroad. In 2018, in order to seize market opportunities and control operating risks,
Wellhope decided to formally launch swine raising business through cooperation and sole
proprietorship. Since then, it has been mastering the core competitive advantage of this business
through talents cultivation, practice accumulation, etc. Meanwhile, in the year 2018, Wellhope further
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recognized its development strategy in the next ten years, i.e., while unceasingly expand feed business,
Wellhope would vigorously boost broiler integration and swine raising businesses, explore and promote
food business, to ultimately become a leading enterprise with leading-edge product quality and
operation efficiency across agriculture, animal husbandry and food industries.
B.   Business model confirming to the future trends
Wellhope has gradually formed a value chain with high competence and capability of withstanding risk
in the fields of animal feed, raising, slaughtering and further processing, which enables all business
divisions to closely connect and support each other, reduce the cost of intermediate processes, lower
trading risks, improve profit margin, and ensure food safety. Such set up has become a future direction
for agricultural companies under an increasingly complex and changing economic and industrial
environment.
C.   Steady market expansion
Instead of expanding rapidly in the nationwide markets supported by the success of feed business in
Northeast regions and broiler integration business, Wellhope, with rich experiences in market
expansion, insists on exploring new markets based on overall analysis and investigations, carefully
penetrating the markets step by step in the Northeast, Northwest, Northern China, Henan, Shandong
provinces and other areas, while continuing to pursue asset-light operation, taking into account
operational efficiency and returns on investment.
D.   Complete and balanced product mix
Wellhope offers a full range of feed products. The sales volume and development of swine, poultry,
ruminant and aquatic feed products have reached great height of achievements respectively, which in
turn could mitigate operational risks caused by sporadic animal diseases or other cases beyond the
Company’s control.
E.   Strict control of financial risks
Wellhope always attaches great importance to financial risk control. Since going public, it has gradually
improved internal control system, regulated corporate governance structure and enhanced the
awareness on risk control. It uses vertical management methods in coping with finances, such as
centralized financing and credit management, centralized funds and cash management and centralized
management of decision-making for providing guarantees. Taking into account the socio-economic
environment, the development of the industry and operating conditions, the Company effectively
controlled the scale of indebtedness and financial costs, with a gearing ratio of 42.08% at the end of the
reporting period.
3.   A sophisticated and advantaged industrial chain
The advantages of Wellhope’s industrial chain are mainly reflected in geographical locations and
business portfolios.


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A.   Preferable geographical location
The head office of Wellhope is located at Shenyang in Liaoning province, with its primary businesses
mainly involved distribution in Northern China, especially in the Northeast regions. Northeast China is a
potential growth area for animal husbandry specially designated by the government, and is thus
suitable for agricultural companies to expand their businesses with the availability of ample high-quality
raw materials, mild climates, small stocking density and a relatively lower human resource cost. The
Northeast is located in the largest grain-producing region in China, especially producing corn and rice
characterized by high quality and large output. Relying on well-developed further processing industry,
Northeast has abundant grain and its by-products that can be used as feed raw materials, which have
the advantages of high performance cost ratio and convenient logistics. After implementing the
national policy of pre-assigned auction of rice, the Northeast can enjoy a unique advantage supported
by large rice supply and comprehensive costs. The application of brown rice in formula has been
maximumly dampened the pressure of the high price of corn for feed costs. Meanwhile, broiler
production mainly centralizes in Liaoning, Jilin, Henan, Hebei and Shandong provinces, where
Wellhope’s broiler integration businesses are mainly located in, account for over 75% of national
production, and these areas are the most important regions for developing white feather broiler
industry in China, with a strong foundation for broiler raising and more mature marketing system.
Moreover, Wellhope is actively exploring overseas markets by building feed mills in the Philippines,
Indonesia and Nepal, where animal husbandry is developing well with high potential.
B.   Constantly optimized business portfolio
Centered on agriculture and animal husbandry industries, Wellhope adopts the expansion strategies of
"diversification and integration" to constantly optimize its business portfolio, which has increasingly
heightened its capacity on risk resistance and sustained profitability. In terms of diversification, while
strengthening and expanding feed business, Wellhope has been vigorously promoting broiler
integration and swine raising businesses to strive to build an operation model powered by these two
businesses. In terms of integration, the integrated model is an inevitable trend for domestic companies
that are active in agriculture and animal husbandry industries. After years of development in raw
materials trading, feed production, animal raising, slaughtering and further processing businesses,
Wellhope has formed a complete industrial chain with high competitive advantage and risk prevention
capability, and it is gradually perfecting its support structure to each business sector in the chain, boldly
exploring food further processing to fast complete the industrial chain, while constantly standardizing
and optimizing the division and cooperation system to further enhance the synergies among all
business sectors.
4.   A systematic and scientific-based innovative R&D system
By holding fast to the corporate mission, i.e. “Through advanced technology, professional services, and
high-quality products, Wellhope is devoted to the development of China’s animal husbandry industry,
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resources conservation, environmental protection, as well as food security for the benefit of the
people”, Wellhope’s R&D system always adheres to market-oriented and customer-oriented principles
as well as upholding the objective of producing “safe products, with stable quality, tailored nutrition
and being customer-centric”, constantly exploring innovative technology and working on new products.
The Company has a unique and competitive R&D cooperation model, an excellent and leading R&D
team, and it has formed a three-level R&D system and high-efficient achievement transformation
system supported by the large platform of Wellhope Research Institute. Meanwhile, the Company also
has first-class testing capability nationwide and an efficient and accurate dynamic raw material
database, a distinct product portfolio and a constantly optimized service capability.
A.   Excellent R&D team
Relying on a relatively complete industrial chain, Wellhope has built a R&D team specializing in animal
raising, product formulation, manufacturing and related technologies to focus on feed, broiler
integration, swine raising, biological feed additives, etc. Wellhope’s R&D team is composed of hundreds
of masters and doctorate degree holders, professors and senior experts. These experts, with profound
knowledge, have transformed many cutting-edge technologies into actual applications. In the
meantime, those experienced technicians focus on conducting trials and demonstrations projects to
validate, choose and apply the most suitable technologies. Relying on technical strengths, Wellhope has
received many national and local-level accreditations and honors, including the Nationally-recognized
Enterprise Technology Center, National and Local Joint Engineering Research Center for the
Development and Application of New Biological Feed, National R&D Branch Center of Feed Processing,
Comprehensive Trial Farm for National Swine Raising Industry Technology System, R&D Center of
Agricultural Products Further Processing and Bio-pharmaceutical Industry Cluster of Liaoning Province,
Innovation Team for Feed Technology and Safety of Liaoning Province.
B.   Competitive R&D cooperation
In 2006, Wellhope partnered with Royal De Heus, a century-old company from the Netherlands. By
drawing on its globally advanced technological resources, leading know-how and a century of excellent
management practices, Wellhope has made successful breakthroughs and progresses in producing safe
and high-quality feed, with precise and efficient nutritional contents, and most importantly using
antibiotic-free technologies. Meanwhile, the R&D teams from both sides have maintained frequent
exchanges, which enable Wellhope to keep abreast with the world's latest technologies in R&D
achievements. By combining own 27-year’s technologies and experiences, Wellhope is committed to
providing customers with high quality products and technical service. Adding to these, the Company
cooperates deeply with research institutes and universities, such as China Agricultural University,
Nanjing Agricultural University, Shenyang Agricultural University, Northeast Agricultural University, Hefei
University of Technology, Anhui Agricultural University, to develop new technologies for feed products
and meat products and joint training of professional talents.
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C.   Top-class testing ability and database
The Company's central laboratory is one of the few CNAS-accredited laboratories among domestic feed
companies, and the test results can be recognized by 60 countries or regions worldwide. The lab has
been equipped with advanced testing equipment and divided into three functional rooms to cater for
physics and chemistry testing, microbiology testing and precision instruments testing. From micro to
macro levels, the central laboratory is able to maintain consistency in quality and plays a vital role in
implementing the concept of safety first in every step of the production processes. Meanwhile, it has
also established an internal raw material database and shares data resources with the Dutch partner.
With precise net energy database of sow and growing pig, amino acid database, crude fiber database,
fatty acid database, etc., animal rations can be precisely formulated according to production
performance and feed intake to obtain the lowest cost formula and achieve the best cost performance
ratio.
D.   Fruitful research and development results
Research and development power the sustainable development of an enterprise. Wellhope has made
many fruitful achievements on the road of research and development. By the end of the reporting
period, Wellhope has received 196 authorized patents, including 59 invention patents, and won 2
National Science and Technology Progress Awards, 1 National Technology Invention Award and nearly
20 provincial and ministerial-level sci-tech awards.
In the face of market changes during the reporting period, the Company continued to consolidate its
R&D achievements, accumulate practices and made breakthroughs in certain technologies, such as raw
material alternative technology, optimization of antibiotic-free pig feed, intestinal health control
technology for creep and nursery feed, and participated in revising Feed Ingredients Catalog led by the
Ministry of Agriculture, undertook special project named Feed Quality Safety Control and Low-protein
Feed of Liaoning Province, participated in the development of national group standards for low-protein
diets for pigs and poultry, became an demonstrated enterprise driven by the reduction of corn and
soybean meal, joined in the development of group standards related to bio-fermented feed, and
became a demonstration base for bio-fermentation. At the same time, the Company has set up
scientific research and innovation platforms, such as Wellhope Research Institute, provincial key
laboratory, provincial enterprise technology center, provincial enterprise engineering technology
research center and other scientific research innovation platform and postdoctoral innovation practice
talents training base, to comprehensively improve the competitiveness of research and development.
5.   Constantly enhanced and increasingly matured brand influence
Wellhope has successfully established its product and corporate brand in domestic agriculture and
animal husbandry industries for the past 27 years. With the constant transformation and upgrading of
the animal husbandry industry, its branding will be further strengthened.


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A.   Product brand
Relying on leading-edge technology, high quality products and continuous improvement in customer
service over the years, Wellhope’s brands have been widely accepted and trusted by customers in the
market, especially in the Northern regions of China. The brand “Wellhope” has been recognized and
honored as Liaoning Province Famous-brand Product, Liaoning Province Famous Trademark, China
Famous Brand, China’s Top 500 Most Valuable Brands, Most Influential Brand in National Animal
Husbandry Industry, Trustworthy Product in China's Feed Industry, Governor's Quality Award of
Liaoning Province.
B.   Corporate brand
Driven by the core values of "Integrity, Responsibility, Double-Win", some of Wellhope’s businesses are
joint ventures with partners, it has been working closely together with many partners for more than 10
or even 20 years, including a 16-year’s good relationship with Royal De Heus. These successful ventures
have proven that “Wellhope”, as a corporate brand, has been well recognized and trusted by its
partners. Meanwhile, the strength of Wellhope's brand has also been proved by long-term strategic
partnerships with various multinational and domestic suppliers, and all loans provided by financial
institutions over the years have been credit loans due to the good reputation of Wellhope. As a strong
employer brand, “Wellhope” has been recognized and favored by employees, and potential job seekers.
Wellhope has twice won the "Best Employer" based on rating by a third party Zhaopin.com.
6.   Highly energized and dynamic corporate culture that powers the development of Wellhope
After 27 years of development, Wellhope has established energized and dynamic corporate culture that
has been acknowledged by all staff and powers its development. The core value of "Integrity,
Responsibility, Double-Win" and the management philosophy of "Innovation, Efficiency, Self-Discipline",
have been deeply entrenched in the thinking and behaviors of employees, and has been applied
without fail in day-to-day management, strategic planning and business decision. Common values play a
crucial role in improving organization efficiency, enhancing organizational cohesion and organizational
empowerment. A good corporate culture is the fundamental principle for corporate operation, which
powers the long-term development of Wellhope.
The publicity campaign presented by Wellhope's managers once a year, with their good practices in
daily work and leading by example, have been freely shared as part of the corporate culture
dissemination efforts. In the first half of 2021, the Company held President's Strategy Presentation and
Wellhope Products Purchasing Festival via live streaming on the occasion of Wellhope Day, the
anniversary of the Company's founding, to strengthen the implementation of the Company's goals and
improvement measures, and to stimulate the sense of responsibility and enthusiasm for all employees.
More than 160 subsidiaries held different kinds of staff activities to celebrate Wellhope Day, which
enriched the cultural life of staff and further promoted the corporate culture. Moreover, the Company
further improved the self-media matrix, adopted diverse and fresh forms to publicize the culture of
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  Wellhope by head office, regional center and subsidiary, so that the culture could be further penetrated
  into the hearts of employees. In the second half of the year, the first 32 stars with high sense of values
  were selected from the Stars with high Sense of Values campaign, and their deeds were spread in the
  Company, becoming one of the important ways to promote Wellhope's culture. The season III Voice of
  Wellhope brought encouragement and motivation to all employees under the backdrop of downward
  industry. Furthermore, in order to make the core values and management philosophy can better guide
  the behavior of employees, the Company has launched the Code of Conduct on Core Values and
  Management Philosophy, and planned to make all staff achieve full familiarity and understanding of the
  Code this year and try to apply it in the annual performance appraisal of employees. In addition, the
  Company promoted the culture of Benchmarking throughout 2021 to boost the benchmarking
  management, which may lead all employees to set internal and external benchmarks, find gaps, and
  catch up with the benchmarks.
  It has been proved that corporate culture is the moat of Wellhope’s development, and constantly
  strengthening culture construction shall be a lasting and significant work for Wellhope.
V.     Operations during the reporting period
  As at December 31, 2021, Wellhope's total assets recorded RMB 12.97 billion, increased by 11.38%
  compared with the end of prior year, the equity attributable to the owners of parent company recorded
  RMB 6.46 billion, decreased by 4.27% compared with the end of prior year. Meanwhile, the operating
  revenue realized RMB 29.47 billion with a year-on-year increase of 23.73%, and the net profit
  attributable to the shareholders of the Company recorded RMB 118.53 million, declined 11.38% on a
  year-on-year basis.

  1. Analysis of primary business
  A. Analysis of changes of income and cash flow
                                                                              Unit: yuan Currency: RMB
                Item                           2021                     2020              Change %
Operating revenue                         29,468,925,899.60         23,817,600,766.26             23.73
Operating costs                           27,900,298,516.35         21,683,591,011.74             28.67
Sales expenses                               570,137,322.67            465,307,995.89             22.53
Administrative expenses                      418,116,582.79            310,275,697.03             34.76
Financial expenses                           100,665,726.06             64,680,213.72             55.64
R&D expenses                                  97,360,753.44             83,587,106.40             16.48
Net cash flow from operating
                                             299,160,222.36            765,945,453.03                -60.94
activities
Net cash flow from investing
                                           -1,051,027,476.87        -1,506,349,447.57        Not applicable
activities
Net cash flow from financing
                                              764,760,161.07           419,432,876.57                 82.33
activities
  Explanation of above changes.

  Operating revenue-the operating revenue of feed business, broiler integration business, raw material
  trade business and swine raising business increased.

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Operating costs- the sales volume of primary businesses increased, the cost of raw materials grew.
Sales expenses- the volume of business grew in the current period, resulting in an increase in sales and
operating expenses.
Administrative expenses- manager’s compensation and expenses increased.
Financial expenses- the interest on bank borrowings increased.
R&D expenses-R&D input increased.
Net cash flow from operating activities- the year-over-year increase in cash outflow from operating
activities was greater than the year-over-year increase in cash inflow from operating activities.
Net cash flow from investing activities- cash paid for investments decreased compared to the same
period of the previous year.
Net cash flow from financing activities- cash received from loans increased compared to the same
period of the previous year.




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B.      Analysis of revenue and cost
During the reporting period, Wellhope achieved an operating revenue of RMB 29.47 billion with a
year-on-year growth of 23.73%, which was mainly contributed by the increased sales revenue of feed
business, broiler integration business, trade business and pig raising business. The operating cost
recorded RMB 27.90 billion with a growth rate of 28.67%, mainly due to the growth of feed sales
volume and the rising costs of raw materials.
a.        Primary business analyzed by industries, product classification and regions
                                                                                         Unit: yuan   Currency: RMB
                                              Analyzed by Industries
                                                                              YoY          YoY        YoY change of
                                                           Gross profit
 Industry        Operating revenue      Operating cost                     change of    change of       gross profit
                                                            margin %
                                                                           revenue %      cost %         margin %
                                                                                                      Decreased 0.86
     Feed         15,357,358,385.77    13,910,119,144.70          9.42          26.81       28.03          percentage
                                                                                                                points
                                                                                                      Decreased 4.48
  Broiler
                   8,254,927,757.75     8,202,644,655.33          0.63          15.14       20.57          percentage
integration
                                                                                                                points
   Raw                                                                                                Decreased 0.38
 materials         3,676,535,189.41     3,492,547,504.09          5.00          16.68       17.15          percentage
  trade                                                                                                         points
                                                                                                            Decreased
     Swine                                                                                                       46.79
                   1,487,908,610.43     1,725,822,225.36        -15.99          96.60      229.52
     raising                                                                                               percentage
                                                                                                                points
                                                                                                             Increased
 Related
                     676,260,828.90      561,257,982.90          17.01          11.17       13.13     1.44percentage
businesses
                                                                                                                points
                                          Analyzed by Product Categories
                                                                              YoY          YoY        YoY change of
                                                           Gross profit
 Product         Operating revenue      Operating cost                     change of    change of       gross profit
                                                            margin %
                                                                           revenue %      cost %         margin %
                                                                                                      Decreased 0.86
     Feed         15,357,358,385.77    13,910,119,144.70          9.42          26.81       28.03          percentage
                                                                                                                points
                                                                                                      Decreased 4.48
  Broiler
                   8,254,927,757.75     8,202,644,655.33          0.63          15.14       20.57          percentage
integration
                                                                                                                points
   Raw                                                                                                Decreased 0.38
 materials         3,676,535,189.41     3,492,547,504.09          5.00          16.68       17.15          percentage
  trade                                                                                                         points
                                                                                                            Decreased
     Swine                                                                                                       46.79
                   1,487,908,610.43     1,725,822,225.36        -15.99          96.60      229.52
     raising                                                                                               percentage
                                                                                                                points
                                                                                                             Increased
 Related
                     676,260,828.90      561,257,982.90          17.01          11.17       13.13     1.44percentage
businesses
                                                                                                                points
                                               Analyzed by Regions
                                                                              YoY          YoY        YoY change of
                                                           Gross profit
     Region      Operating revenue      Operating cost                     change of    change of      gross profit
                                                            margin %
                                                                           revenue %      cost %        margin %
                                                                                                      Decreased 4.09
East China         2,944,928,663.54     2,795,772,871.18          5.06           4.94        9.66         percentage
                                                                                                               points

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                                                                                                                   Decreased 5.87
  North China         3,662,109,835.92       3,516,433,267.03                3.98          20.10        27.92          percentage
                                                                                                                            points
                                                                                                                   Decreased 2.36
   Northeast
                     15,001,518,812.65     14,012,804,503.58                 6.59          32.69        36.13          percentage
    China
                                                                                                                            points
                                                                                                                   Decreased 7.29
  Central and
                      5,036,917,573.95       4,977,009,073.07                1.19          29.23        39.52          percentage
  South China
                                                                                                                            points
   Southwest                                                                                                       Decreased 2.42
                        693,852,777.01        668,911,808.59                 3.59         -18.17        -16.05
     China                                                                                                                  points
                                                                                                                    Increased 1.27
   Northwest
                      1,716,466,841.56       1,545,880,286.41                9.94           9.09          7.57         percentage
     China
                                                                                                                            points
                                                                                                                   Decreased 7.18
    Overseas
                        397,196,267.63        375,579,702.51                 5.44          25.85        36.20          percentage
     market
                                                                                                                            points
                                                  Analyzed by Sales Model
                                                                                         YoY           YoY         YoY change of
                                                                  Gross profit
  Sales model      Operating revenue         Operating cost                           change of     change of       gross profit
                                                                   margin %
                                                                                      revenue %       cost %         margin %
                                                                                                                   Decreased 2.85
       Direct
                     20,987,808,392.87      19,803,378,424.98                5.64          17.39        21.05          percentage
       selling
                                                                                                                            points
                                                                                                                   Decreased 5.83
   Selling on
                      8,465,182,379.39       8,089,013,087.40                4.44          43.06        52.35          percentage
  commission
                                                                                                                            points

  Explanation
  During the reporting period, the sales of live pig increased significantly, whilst feed raw materials price
  remained high, the operating income and operating costs of the Company’s swine raising business
  increased substantially year-on-year, and the gross profit margin decreased significantly.
  The Company's operating revenue and operating cost in Northeast China increased remarkably, mainly
  due to the significant growth of the sales of live pig in these regions in 2021 and the stable growth of
  feed sales volume.
  b.        Analysis of sales volume
                                                                             YoY change
                   Production              Sales                                                   YoY change       YoY change
                                                        Inventory                 of
 Product             volume               volume                                                     of sales            of
                                                        (10k tons)           production
                   (10k tons)            (10k tons)                                                 volume %        inventory %
                                                                              volume %
  Feed                       516.20          433.10               7.27                  8.30             12.54             15.40

  c.        Analysis of cost
                                                                                                      Unit: yuan   Currency: RMB
                                                                % of total                               % of total        YoY
By Industry             Item                  2021                                       2020
                                                                  costs                                    costs        change %
   Feed            Raw material          12,784,888,622.21           96.10          10,104,260,157.10           96.27       26.53
   Feed              Labor cost             150,722,363.44            1.13             108,916,427.66            1.04       38.38
   Feed            Depreciation             106,103,495.18            0.80              88,079,837.94            0.84       20.46
                 Energy (electricity,
   Feed                                     146,590,774.25            1.10            103,360,428.22             0.98       41.82
                    coal, steam)
   Feed                Other                115,466,115.61            0.87             91,210,812.76             0.87       26.59

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                  manufacturing
                expenses (energy
                 and depreciation
                    excluded)
                 Total production
  Feed                                 13,303,771,370.69      100.00        10,495,827,663.68      100.00        26.75
                        cost
 Broiler           Raw material         7,256,411,038.64          83.02      5,926,656,581.31       82.36        22.44
 Broiler            Labor cost            458,522,106.14           5.25        333,817,293.68        4.64        37.36
 Broiler           Depreciation            67,106,803.95           0.77         49,577,201.22        0.69        35.36
                Energy (electricity,
 Broiler                                  95,115,811.60            1.09         79,688,980.83        1.11        19.36
                   coal, steam)
                       Other
                  manufacturing
 Broiler        expenses (energy         863,170,280.18            9.88        806,179,181.09       11.20         7.07
                 and depreciation
                    excluded)
                 Total production
 Broiler                                8,740,326,040.51      100.00         7,195,919,238.13      100.00        21.46
                        cost
                                                           % of total                           % of total      YoY
By Product             Item                 2021                                 2020
                                                             costs                                costs      change %
  Feed             Raw material        12,784,888,622.21       96.10        10,104,260,157.10       96.27        26.53
  Feed              Labor cost            150,722,363.44         1.13          108,916,427.66         1.04       38.38
  Feed             Depreciation           106,103,495.18         0.80           88,079,837.94         0.84       20.46
                Energy (electricity,
  Feed                                   146,590,774.25            1.10        103,360,428.22        0.98        41.82
                   coal, steam)
                       Other
                  manufacturing
  Feed          expenses (energy         115,466,115.61            0.87         91,210,812.76        0.87        26.59
                 and depreciation
                    excluded)
                 Total production
  Feed                                 13,303,771,370.69      100.00        10,495,827,663.68      100.00        26.75
                        cost
 Broiler           Raw material         7,256,411,038.64          83.02      5,926,656,581.31       82.36        22.44
 Broiler            Labor cost            458,522,106.14           5.25        333,817,293.68        4.64        37.36
 Broiler           Depreciation            67,106,803.95           0.77         49,577,201.22        0.69        35.36
                Energy (electricity,
 Broiler                                  95,115,811.60            1.09         79,688,980.83        1.11        19.36
                   coal, steam)
                       Other
                  manufacturing
 Broiler        expenses (energy         863,170,280.18            9.88        806,179,181.09       11.20         7.07
                 and depreciation
                    excluded)
                 Total production
 Broiler                                8,740,326,040.51      100.00         7,195,919,238.13      100.00        21.46
                        cost

  d.       Top 5 customers and suppliers
  The sales revenue of top 5 customers reached RMB 1.10 billion, contributing towards 3.73% of the
  Company’s total operating revenue, the sales revenue of which, arising from selling products to the
  related parties reached RMB 432.46 million, accounting for 1.47% of the total annual sales.
  The purchase orders of top 5 suppliers reached RMB 2.57 billion, accounting for 14.45% of the
  Company’s purchase orders during the reporting period, of which, it did not occur the orders of
  purchasing products from the related parties.




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C.    Expense
                                                                             Unit: yuan Currency: RMB
           Item                      2021                       2020                   Change %

      Sales expense                570,137,322.67              465,307,995.89                       22.53

Administrative expense             418,116,582.79              310,275,697.03                       34.76

       R&D expense                   97,360,753.44              83,587,106.40                       16.48

     Financial expense             100,665,726.06               64,680,213.72                       55.64
D.    R&D Input
a. R&D input
                                                                             Unit: yuan Currency: RMB
Expensing R&D input                                                                      97,360,753.44
Capitalizing R&D expenditure                                                                         0
Total R&D expenditure                                                                    97,360,753.44
% of total operating revenue                                                                      0.33
Percentage of capitalizing R&D expenditure                                                           0
b. Headcount
Headcount of R&D                                                                                      249
Percentage of total staff %                                                                           3.18
                                            Educational structure
                              Item                                                Headcount
Doctoral candidate                                                                                      20
Masters                                                                                                108
Bachelors                                                                                               75
Junior college                                                                                          41
High school and below                                                                                    5
                                               Age structure
                              Item                                                Headcount
30 years old (30 excluded)                                                                              94
30-40 (30 included, 40 excluded)                                                                       108
40-50 (40 included, 50 excluded)                                                                        30
50-60 (50 included, 60 excluded)                                                                        17
60 and above                                                                                             0

c.    Circumstances of R&D
During the reporting period, the Company was under increasing market competition pressure and
facing the ever-changing market environment where ASF was becoming normal, raw material prices
sharply fluctuated. The Company was committed to the R&D of new feed products, searching for raw
material alternatives, optimizing antibiotic-free feed solutions, and the transformation and upgrading of
animal raising technologies, to constantly improve market adaptability, exploit cost advantages, and
enhance product competitiveness.

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a) Updating feed product, effectively solving breeding problems
Pig Feed: Wellhope continually optimized the antibiotic-free program, upgraded the creep feed and sow
feed products, etc. After one-year’s successful test in the feed market, Wellhope has further optimized
the antibiotic-free solution in the regional market and focused more on piglet intestinal health
management. The performance of antibiotic-free feed has been further enhanced, and the cost of
antibiotic-free solutions became more competitive in the industry. During the reporting period,
Wellhope launched a new generation of creep feed, which comprehensively improved the palatability
and piglet diarrhea-resistance. Meanwhile, the existing sow feed products and 6M supporting solution
had been upgraded in all aspects to effectively solve the problems such as the hyper prolific sows with
larger litter size, insufficient milk secretion and an increase in the number of weak piglets.
Broiler feed: The Company focused on reducing the cost of commercial broiler feed and solving the
problems of pulverization and grading in bulk feed transportation. During the reporting period, the
Company continuously adjusted the feed formula to reduce cost, and promoted the use of brown rice,
wheat and other grains to replace corn. Now the factories in the north area have used brown rice in
high inclusion levels, and some factories in other areas have successfully promoted wheat diet. In view
of the problems that the traditional feed forms can be easy to be pulverized and graded during bulk
transportation, the Company improved the processing technology and upgraded the original feed forms
to control the material losses.
Layer feed:To satisfy the market requirement, the Company constantly made efforts in layer feed R&D,
put into a new experimental base, improved processing technology and upgraded products. The new
R&D experimental base can carry out the verifying test of chick, pullet and layer feed products
simultaneously. It also researched on the effect of the particle size of raw materials on bulk
transportation, obtained the optimum grinding parameters, which reduced mixing and grading during
transportation. Meanwhile, to meet the market demand for more cost-effective wheat diet, the
Company launched a wheat premix product and upgraded the premix products of laying period, which
showed good effect on enhancing egg weight, eggshell quality and color.
Ruminant feed: The Company has been deep in ruminant feed industry for decades. The dairy cattle
product line focused on the aspects of nutritional immune and anti-oxidative stress, which could help to
manage the dry cows in proper body condition (Body Condition Score between 3.25 and 3.5).
Meanwhile, the research of anti-oxidative stress research helped to reduce the incidence of metabolic
diseases after calving and to relieve the heat and cold stress in dairy cattle. The beef cattle and
meat-type sheep and goat product line focused on building the regional research and development
base. Based on the different feeding strategies around China, the product line pertinently developed
new products and new feeding patterns to improve the profit for customers.
Aquatic feed: The Company developed and launched puffed compound feeds for carp, grass carp and
crucian carp, and also developed a sinking and floating feeding mode suitable for different breeding
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modes, replacing pellet compound feeds and shortening the marketing cycle of marketable fish. In
order to solve the key pain points of body color, health problems and low survival rate in shrimp culture,
while enhancing the competitiveness of the factory shrimp feed, the Company has developed shrimp
fermented feed called “Yisheng KangTai”, established feeding patterns and standards to solve customer
problems.
b) Widely using raw material alternatives to highlight competitive cost advantage
In 2021, in the face of sharp increase in raw materials price, supported by more than 20 years R&D
practices and drawing on the experiences of partner Royal De Heus about raw material alternatives,
the Company continuously updated raw material dynamic database to reserve multiple formula
technology. For swine feed, the Company was committed to developing and promoting corn
substitutes such as wheat and brown rice, which continuously enhanced animals’ performance and
product competitiveness. For layer feed, it also researched and reserved the application technology of
wheat, brown rice and sorghum diets on production performance on laying hens. For broiler feed, the
Company applied all-wheat or all-brown rice blended diets, and the technology of replacing soybean
meal and fish meal in chick feed with self-produced chicken intestinal meal, etc. Meanwhile, under the
premise of ensuring feed quality, it explored more possibilities of raw material alternatives.
c) Upgrading animal raising programs to improve benefits
Technology of pig breeding management: Wellhope constantly exerted efforts in pig breeding
management, and has made great progress in pig breeding and selection, biosecurity, antibiotic-free
programs, and feeding management technology. During the reporting period, Wellhope regionally
distributed breeding pigs, carried out genetic cooperation with the top international pig breeding
companies, and established a pig breeding system mainly based on French and Danbred pig breeds.
After more than three years of exploration and experience accumulation in biosecurity prevention and
control technology, plenty of achievements have been made in the field of ASF prevention and control.
The prevention methods such as gridding feeding in pig farms, and the combination with conventional
and unconventional prevention measures, have significantly reduced the occurrence of ASF. In terms of
the antibiotic-free solutions in the regional market, the Company emphasized more on the
management of piglet intestinal health, and therefore the effects of antibiotic-free products have been
further strengthened. Furthermore, it clarified cost control indicators, and recommended personalized
feeding program according to market conditions and pig breeds, which make breeding costs under
control. At the same time, an intelligent feeding system for sows was built to achieve precise feeding
with good effect.
Feeding pattern of beef cattle and meat-type sheep and goat: Beef cattle and meat-type sheep and goat
product line focused on building the regional research and development base. The nutritionist guided
the regional product managers to pertinently design and optimize the products based on the features
of local animal feeding. It also encouraged to actively try and innovate the feeding patterns. The re-new
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of feeding patterns could significantly increase the labor efficiency and the customer’s profit.
Broiler feeding and slaughter capacity: In 2021, the Company constantly improved the feeding patterns
and feeding programs. According to the different physiological stages of broilers and corresponding to
the feed forms, the Company formulated systematic feeding procedures and programs, clearly
stipulated the feeding consumption for each stage, and improved FCR. In terms of reducing the use of
antibiotics in feed, the Company has evaluated a large number of feed additives to replace antibiotics,
which has improved intestinal health of broiler and reduced the mortality rate during feeding. At the
same time, the Company has made strict selection of substitution for coccidiostat, and some feed
products have completely use antibiotic-free technology. And the Company continued to improve
broiler slaughter technology and was committed to improving meat yield and quality.
d) Adhering to R & D and innovation work
The Company has been attaching great importance to scientific research and innovation, and has been
rated as the national enterprise technology center, national feed processing professional sub-center,
national agricultural product processing enterprise technology innovation institution, provincial key
laboratory, provincial enterprise technology center, provincial enterprise engineering technology
research center and scientific research innovation platform and post-doctoral innovation practice talent
training base, etc. At the same time, to carry out the research and development of new products and
meat products, as well as joint training of professional talents, Wellhope has carried out in-depth
cooperation with scientific research institutes and major universities such as China Agricultural
University, Nanjing Agricultural University, Shenyang Agricultural University, Northeast Agricultural
University, Hefei University of Technology, Anhui Agricultural University, etc.
Honors and Patents
                                               Patents granted in 2021

                                                                 Patents for invention                59
        Number of
                                         196
    authorized patents                                         Patents for utility models
                                                                                                      137
                                                                      and designs
   Circumstances of Wellhope participating in the formulation of national or community standards and undertaking
                                               sci-tech projects in 2021
                              Participated in the revision of the Catalogue of Feed Materials led by the Ministry of
    National standards        Agriculture, and was responsible for the addition and revision of the categories of
                              Legume Seeds and their Processed Products, Tubers, Roots and their Processed
                              Products and Other Seeds and their Processed Products
                              Participated in the Technical Regulations for Safe and High Quality Pork Production and
   Community standards        Technical Regulations for Safe and High Quality Egg Production led by Beijing Biofeed
                              Industry Technology Innovation Strategic Alliance

                                Liaoning Province Major Project Feed Quality Safety Control and Low-Protein Feed
   Sci-tech projects that
                                Shenyang Science and Technology Program Research on Sow Precise Nutrition and
  Wellhope undertook and
                                Supporting Feeding Mode
          presided
                                Liaoning Province Selection of Livestock and Poultry Breeding and Key Technologies of
                                Production in the Whole Industry Chain
                            Honors regarding technology research and development in 2021


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                             Obtained the CNAS laboratory accreditation certificate again in April 2021
          Honors               Authentication Certificate of Information Security Management System in October
                                                                      2021
                             The 3rd Sannong Science and Technology Service Golden Bridge Award--Research and
                             Promotion of Integrated Nutrition of Sows and Piglets



E.   Cash flow
                                                                                    Unit: yuan Currency: RMB
                  Item                                 2021                          2020          Change %
Cash inflow of operating activities               30,162,759,715.04            24,607,049,169.74        22.58
Cash outflow of operating activities              29,863,599,492.68            23,841,103,716.71        25.26
Net cash flow from operating activities              299,160,222.36                765,945,453.03      -60.94
Cash inflow of investing activities                  198,241,674.35                504,590,930.16      -60.71
Cash outflow of investing activities               1,249,269,151.22              2,010,940,377.73      -37.88
                                                                                                         Not
Net cash flow from investing activities           -1,051,027,476.87             -1,506,349,447.57
                                                                                                   applicable
Cash inflow of financing activities                3,325,721,138.44              2,555,443,020.39       30.14
Cash outflow of financing activities               2,560,960,977.37              2,136,010,143.82       19.89
Net cash flow from financing activities              764,760,161.07                419,432,876.57       82.33
                                                                                                         Not
Net cash flow                                          12,075,918.87              -322,192,838.64
                                                                                                   applicable




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2. Assets and liabilities
A. Circumstance of assets and liabilities
                                                                                                                                       Unit: yuan Currency: RMB
                                                % of total    Closing balance of    % of total
      Item          Closing balance of 2021                                                       YoY change %                     Explanation
                                                 assets              2020            assets
 Trading
                                                                    50,000,000.00          0.43         -100.00   Maturity of structured deposits decreased
 financial assets
 Derivative
                                 9,667,725.25          0.07          4,725,552.30          0.04          104.58   New derivative financial assets
 financial assets
 Accounts                                                                                                         Newly increased accounts receivable in thes
                               681,517,885.70          5.25        450,170,744.45          3.87           51.39
 receivable                                                                                                       ettlement period
                                                                                                                  Prepayments for procurement increased during
 Prepayments                   479,830,550.25          3.70        364,401,520.23          3.13           31.68
                                                                                                                  the year
 Contract assets                 2,505,447.69          0.02          4,301,418.29          0.04          -41.75   The contract warranty reduced
 Other current
                               156,089,468.63          1.20        109,698,865.94          0.94           42.29   Deductible VATincreased in this period
 assets
 Construction in
                               602,237,560.51          4.64        322,895,206.90          2.77           86.51   Projects such as pig farms and slaughterhouses
 progress
 Right-of-use
                               199,981,121.45          1.54                                                       Due to implement new lease guidelines
 assets
 Goodwill                        2,135,421.24          0.02           290,425.67           0.00          635.27   Merger of enterprises under different control
 Long-term
                                53,309,950.44          0.41        143,945,562.29          1.24          -62.97   Due to implement new lease guidelines
 amortized costs
 Short-term
                             1,546,199,813.26         11.92      1,110,672,869.40          9.54           39.21   Short-term borrowing increased
 borrowing
 Advance
                                10,500,434.76          0.08         15,522,362.13          0.13          -32.35   Proceeds from sale decreased
 receipt
                                                                                                                  Funds transfer with external companies
 Other payables                408,226,372.67          3.15        280,673,085.07          2.41           45.45
                                                                                                                  increased
 Non-current
                                                                                                                  Long-term borrowings and long-term payables
 liabilities due               191,145,065.59          1.47        121,896,906.66          1.05           56.81
                                                                                                                  due within one year increased
 within one year
 Other current
                                 9,681,957.60          0.07          3,386,523.00          0.03          185.90   The amount of tax to be transferred increased
 liabilities
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Long-term
                    1,245,618,946.13   9.60   574,880,271.67        4.94   116.67   Long-term bank borrowing increased
borrowings
Lease liabilities    123,468,375.46    0.95                                         Due to implement new lease guidelines
Long-term
                      47,702,610.06    0.37    15,458,230.92        0.13   208.59   Financial leasing increased
payables
Deferred                                                                            Government grants related to assets that
                      60,335,083.33    0.47    42,238,872.75        0.36    42.84
income                                                                              received in the reporting period increased
Deferred
                                                                                    Deferred income liabilities recognized as
income tax              2,792,995.02   0.02     1,936,853.23        0.02    44.20
                                                                                    taxable temporary differences increased
liabilities




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B.   Overseas assets
Overseas assets recorded RMB 20,867,005.31, accounting for 0.16% of the total assets.
3.   Investment analysis
As at December 31, 2021, the balance of the Company’s long-term equity investment recorded RMB
2.33 billion, decreased by 3.80% compared with the end of prior year. For details, please refer to notes
to the items of Consolidated Financial Statements--long-term equity investment.




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4.   Main holding and associated companies
                                                                                                                                             Unit: RMB 10k
                                                                        Registered                                                     Operating     Operating
             Company                         Primary business                         Total assets   Net assets        Net profit
                                                                          capital                                                       revenue        profit
Beijing Sanyuan Wellhope Agri-Tech
                                     Feed production and selling           1,000.00      24,868.20     20,352.08          3,680.83      73,873.13         4,161.40
Company
Shenyang Wellhope Agri-Tech
                                     Feed production and selling           8,210.00      26,585.04     20,141.33          3,430.07     188,128.25         4,542.10
Company
Xi'an Wellhope Feed Sci-Tech
                                     Feed production and selling             500.00      27,867.96     21,890.12          5,063.49     106,972.13         5,882.23
Company
                                     Broiler slaughtering, processing
Anshan Jiuguhe Food Company                                                4,320.00      88,117.81     49,415.47          5,986.94     198,085.15         5,993.85
                                     and selling
                                     Feed processing, broiler
                                     breeder raising, day old chick
Beipiao Hongfa Food Company                                                3,000.00    224,332.96     140,899.74           -655.66     307,158.34        -1,631.52
                                     hatching, broiler raising and
                                     slaughtering
                                     Feed processing, broiler
Dalian Heyuan Agri-Tech Company      breeder raising, day old chick       10,000.00    152,661.19      83,193.85         -3,466.93     303,262.94        -3,201.48
                                     hatching, broiler raising
Dalian Chengsan Animal Husbandry     Broiler raising and feed
                                                                           1,008.61    256,348.12     141,897.31        -12,780.97     444,982.62       -16,403.94
Company                              processing
Liaoning Wellhope Agriculture and
                                     Swine raising                         5,000.00    117,746.16      21,046.55         -3,930.96      72,826.41        -4,078.44
Animal Husbandry Development
                                     Feed production and selling,
Anhui Wellhope Agri-Tech Company                                          16,000.00      71,066.65     14,784.71        -11,106.25       74,670.92      -10,259.17
                                     swine raising
Tai’an Jiuguhe Agriculture          Broiler raising and feed
                                                                           1,060.00      59,458.40     13,660.59         -8,918.08     229,582.19        -9,172.50
Development Company                  processing
Shenyang Wellhope Ruminant Feed
                                     Feed production and selling             550.00      22,901.74     17,031.91          3,069.24      70,306.91         4,098.17
Mill
                                     Broiler raising and feed
Linghai Jiuguhe Feed Mill                                                  1,755.00      16,888.86     11,217.02         -3,471.47     166,779.97        -3,579.68
                                     processing


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VI.    Outlook on the Company's Future Development
  1.   Industry outlook
  China is a large agricultural producer with a population of 1.4 billion. In China, agriculture has always
  been regarded as a strategic industry that provides security and stability to residents and lays a
  foundation for national economy. This is not only because agriculture is the source of food and clothing
  for people and the basis of survival, but also because it is the pillar of the independence and
  development of other industries. China has always paid great attention to the development of
  agriculture. Along with latest changes in international trade, resources and environment, technological
  circumstance, industrial structure, policies and regulations and other factors, the development of
  agriculture has also ushered in a new phase.
  Under the backdrop of deepening reform on the supply-side and industrial transformation and
  upgrading, the animal husbandry industry in which Wellhope is active has also ushered in a new
  development opportunity despite numerous challenges.
  A. Edging out less qualified players, the consolidation of feed industry is increasingly heightened
  Along with fierce competitions taking place in the feed industry, extra-large companies are constantly
  expanding their businesses, medium-sized producers are seeking business opportunities, whilst small
  producers are gradually squeezed out of the market. For large companies, they enjoy their strengths
  and advantages in technology, cost, brand, management, capital and logistics to continuously improve
  their total factor productivity, rapidly expand production scale and seize market shares through mergers
  and acquisitions as well as embarking on new projects. Those small and medium-sized feed producers
  have been gradually edged out in the increasingly fierce competitions due to their lower technical level,
  higher comprehensive costs, weaker brand reputation, lack of management skills, and bigger financial
  pressure. With a series of events such as ban of using antibiotics in feed, COVID-19 cases, African Swine
  Fever and the price increase of raw materials, the entry barriers of feed industry have been raised yet
  again, customers have also remarkably increased their requirements on the comprehensive strength of
  feed suppliers, which has sped up the elimination of backward players. In 2021, there were 957
  large-scale feed mills with annual capacity over 100,000 tons, increased 208 plants compared to the
  prior year. These feed mills have produced 177.08 million tons of feed with a year-on-year increase of
  24.4%, which contributed towards 60.3% of China’s total feed production, rising by 7.5 percentage
  points. The feed industry has been further transformed to become more large-scale and intensive.
  B. Vertical integration of resources and continuous extension of industrial chain
  Animal husbandry industry consists of several industries such as feed production, animal health product,
  livestock and poultry raising, slaughtering and processing, etc., where the upstream activities are more
  related to crop planting, whilst the downstream activities focus more on agricultural and sideline food
  processing industries, with a mixture of other related industries in between to form an organic whole.
  As competition has intensified to edge out less qualified players, large-scale companies are continuously
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expanding their business scale. For reasons of risk control, profit growth, food safety and other needs,
apart from engaging in mergers and acquisitions, these giants involved in animal husbandry industry
gradually integrate resources to expand their businesses in both upstream and downstream industries
in order to break through the industrial chain and establish strong competitive advantages as well as
develop better anti-risk capabilities. Under the development trend of industrial chain integration, the
industrial divisions of large enterprises in agricultural and animal husbandry industries have been
gradually weakened, while seizing the resources of the whole industrial chain has become the theme of
the development of animal husbandry industry.
C.   Constantly strengthened environment protection promoting the concept of green development
being practiced
In recent years, China has put forward a series of regulations on environmental protection, such as the
revision of the Environmental Protection Law, the promulgation of the Environmental Protection Tax
Law, and the release of the Regulations on Pollution Prevention of Large-scale Raising of Livestock and
Poultry and the Action Plan for Pollution Abatement of Agriculture and Rural Areas, etc. These
successively launched policies have showed China's determination to heighten supervision on
environmental protection in animal husbandry industry, local governments have also issued certain new
regulations related to farm removal, ban of animal raising and restriction of farms, which will further
edge out less qualified players and reframe animal husbandry industry.
D.   Increasingly stringent supervisions on food safety highlighting the advantages of large-scale
companies
In the past several years, the circumstances food safety in China have been improving, but at present
the circumstances of the small-scale, and fragmented food industry with low entry barriers have not
been changed much, and the farm-to-table industrial chain is too long and too large with many risk
points. In October 2019, Premier Li Keqiang issued a Decree of State Council and released the new
edition on Food Safety Regulation of the People’s Republic of China, which not only provided clear
regulatory initiatives to address specific issues, but also strengthened the penalties for violations of the
law through the policy of "implementing penalties to individuals". The Regulation came into force from
December 1, 2019, the market has since been the most heavily regulated. In the future, more attention
will be paid to the normalization of food safety and industrial system. Stringent food safety supervision
will further squeeze out less qualified players, at the same time highlighting the strengths and
advantages of large integrated companies.
E.   Pig farming industry ending the era of high profits, the prevention of African swine fever
becoming normal
In 2021, the domestic pig production capacity recovered beyond expectations, the pig price fell sharply,
but the production capacity recovery and pork consumption were out-of-step, which resulted high-cost
pig breeding ended from high profit to heavy loss, those enterprises who aggressively expanded pig
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breeding suffered huge financial pressure. As a result, a key turning point has taken place in the industry.
The pig raising industry has ended the era of high profit, and the main line of the industry has changed
from "aggressive and fast expansion" to "cost reduction and efficiency improvement". In 2022, the pig
raising industry will continue to shift from "expansion speed competition" to "cost control competition".
The start of the cost war means that China's pig raising industry has entered a new stage. Under the
transformation and upgrading of high-quality development, the new pattern of supply and demand has
been reshaping. In the meantime, the prevention of African Swine Fever has become normal, and
biosecurity is still the primary problem that the industry needs to face at present, which further raises
the entry barriers of swine raising industry, and the economic efficiency and validity of the epidemic
prevention input has become an important factor affecting the total cost of pig farming.
F.   High pork prices curbing consumer demand, accelerating the adjustment of meat consumption
structure
In 2019, African swine fever has hit China’s swine industry particularly hard, with severe production
capacity losses and a remarkable increase in swine and pork prices, which fueled the prices of livestock
and poultry products to record highs. In 2020, the outbreak of COVID-19 has severely attacked the
national economy and weakened the consumption power of residents. It has been already quite
difficult to sell high-priced pork, the COVID-19 pandemic has once again reduced pork consumption,
purchasing pork for group meal dropped remarkably and food producers were forced to shift raw
materials to chicken and vegetarian food, which quickened the adjustment of consumption structure of
domestic meat products, and the overall consumption habits of residents have begun to change. In
2021, pig production capacity recovered beyond expectations, making pig prices fell sharply, but
residents' demand for pork is difficult to return to the consumption level before the occurrence of
African Swine Fever In addition, characterized by high protein, low fat and cholesterol levels, chicken
has been well accepted by residents as a viable alternative to pork, and white feather broilers have a
big advantage over swine such as growth rate, raising cost and environmental protection, etc. Seeing
the experiences of developed countries, China's per capita chicken consumption still has great growth
potential and a broad market.
2.   Development strategy of the Company
Wellhope’s long-term development objective is to become the world's leading enterprise across
agriculture, animal husbandry and food industries. In the next three years, the Company will vigorously
consolidate resources to further develop feed business, steadily develop broiler integration business,
further improve broiler industrial chain management, stabilize the foundation of pig raising industry
and strive to improve the production and management level, whilst complete the phased layout of the
food business and accelerate the development pace of food business.
According to the three-year plan, and based on the analysis and judgment of the economic and
industrial development trend in 2022, the Company has determined its business strategy for 2022, i.e.,
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by upholding the core values of integrity, responsibility, double-win, and the management philosophy
of innovation, high efficiency, and self-discipline, Wellhope will further heighten systemic management
and the core competences, whilst improve the synergy management among all business sectors. In
addition, it will focus on talents’ recruitment and echelon construction, improving and innovating
incentive mechanism, speeding up the construction of three platforms, including research and
development, information resource, finance and banking, making efforts to create competitive and
aggressive front platform(including product power, service ability, financial strength, marketing force),
cost-efficient middle platform(including production, purchasing, quality assurance, technology), and
energized back-end platform(including HR, finance, technology, R&D, purchasing, IT, corporate culture).
3.   Business plan for 2022
In 2021, the agriculture and animal husbandry industries faced severe challenges. In terms of feed, the
feed raw materials fluctuated with high prices, the consumption demands for feed in the second half of
the year was slowed down as a result of the downward animal raising industry. Pig prices slumped
continuously despite the higher-than-expected recovery of production capacity. In terms of broiler
industry, the entire market was deteriorated caused by the high price of day old chick, soaring feed
cost and sluggish customer consumption. Against such a backdrop, all employees of Wellhope joined
hands to forge ahead and overcome difficulties by vigorously expanding new markets, optimizing
marketing strategies, reducing internal costs and heightening working efficiency, as well as improving
operational capability. Besides, measures have also been taken to enhance the management of
accounts receivable, reasonably arrange capital expenditures, accelerate inventory turnover to ensure
sufficient cash flow. Under the concerted efforts made by all employees, Wellhope remained one of
the few enterprises that struggled to make profits despite the first big drop in the Company's
performance. In 2021, the Company achieved operating revenue of RMB 29.47 billion with a
year-on-year increase of 23.73%, the net profit attributable to shareholders of the Company recorded
RMB 119 million, declining 90.40% year on year.
In 2022, the Company will continue to adhere to the core values of integrity, responsibility, double-win,
with the goal of strengthening core competitiveness and broadening the Company's core competences,
and strive to create competitive and aggressive front platform, cost-efficient middle platform and
energized back-end platform. At the same time, the Company will continue to deepen market insight,
grasp the industry trend, according to the plan, rhythmically promote the production capacity layout
and reserve of talent, to lay a solid foundation for the realization of the Company's long-term plan.
A.   Feed business
Feed business has been always identified as the primary business of the Company. In 2022, the
Company will further enhance the strategic position of the feed business by promoting four strategic
transformations steadily, such as enhancing the interconnection of technology, procurement and
market, promoting the transformation from American-style daily ration to European formula, improving
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the core competitiveness of feed business to realize the transformation from tradition concentrated
feed to complete feed, upgrading technical service by improving the proportion of large-scale farm
customers while maintaining the channel advantages of distributors, and realizing the transformation
from focusing on channel advantage to attaching equivalent importance to channels and farms, making
investments with centralized resources to expand the feed business to realize the transformation from a
feed company in the northeast to a national feed company. The Company will, centering on the four
strategic transformations, further improve its decision implementation efficiency, optimize
organizational structure and enhance the capabilities of teams. Besides, the Company will try to provide
professional service with specialized personnel and specialized business lines and constantly increase
the configuration of key talents. Moreover, based on the comprehensive data analysis and benchmark
management, the Company will excavate the potential profit of various feed varieties, feed mills from
the perspective of cost and efficiency, constantly enhance the differentiation advantages of
profit-oriented products, and expand the production and sales scale of quantity-oriented products. In
the three provinces in northeast China, the Company will try to increase its market share steadily to
discover potential growth spaces. In areas other than northeast China, the Company will seek rapid
expansion of market share. In 2022, the Company has planned to increase the sales volume of feed with
a year-on-year growth of 15%.
B.   Broiler integration business
In 2022, production capacity will continue to be increased in broiler industry. Given the oversupply of
pork and the impact of COVID-19, this industry is expected to remain in a downturn. Under such
adverse conditions, the Company, taking ensuring safety, improving efficiency, protecting ecology and
increasing profits as the core guiding philosophy, will further improve its operational capability and
ensure safety margin. Meanwhile, the Company will also slow down the expansion and optimize the
structure of the industrial chain. For broiler breeder business, the Company will expand the scale of
breeders raising properly to increase the proportion of self-supplied chicks. Meanwhile, the Company
will continue to improve production indicators, day old chick quality, and the overall management level
of broiler farms. For broiler raising business, the Company will expand production steadily according to
the status quo of downstream industry and the demands, constantly increase the percentage of raised
broilers raised by own farms to slaughtering, and dynamically adjusted the policies on feeding fees for
farm owners to ensure proper allocation of profits between the Company and farm owners. For the
slaughtering business, the Company will, based on existing production capacity, seek for steady
development, increase the percentage of fresh products and actively develop high-quality customers,
try to realize the maximum comprehensive value with optimal product portfolios. For food business,
the Company will accelerate the progress of new projects, expand the scale of production and sales
rapidly, and improve its capability of undertaking large orders. Meanwhile, it will enhance R&D
capability to develop knock-out products, expand sales channels, cultivate marketing teams and
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constantly enhance its core capabilities and brand influence. In the future, the Company will allocate
more resources to its food business. In 2022, the Company plans to raise 690 million broilers by its
holding companies and associated companies, slaughter 730 million broilers in total.
C.   Swine raising business
In 2021, the production capacity of pig across the country witnessed a higher-than-expected recovery.
However, the production capacity recovery and consumption mismatched, which brought heavy losses
to animal raising companies that once enjoyed high profits. The priority of the industry also
transformed from rapid expansion to cost reduction and efficiency increase. In 2022, pig raising industry
will transform from competing with expansion speed to competing with cost. As the war on cost started,
pig raising industry in China has entered a new era. For the pig raising industry under transformation
toward high-quality development, a new supply-demand pattern has been shaping. In such context, in
2022, the Company will, following the prudent investment philosophy, maintain a safe development
pace for pig raising business by strictly controlling the production capacity and expanding scale
discreetly. Meanwhile, the Company will continue to implement the process-based performance
management system to enhance the skills of staff, improve the operational capability of pig farms,
optimize feed nutrition solutions, reduce the raising costs in a multi-dimensional way, and thereby
improve the core competitiveness of the pig raising business. In the next one to two years, the
Company will try to improve its cost management capability to an industry-leading level. Besides, ASF
prevention has been normalized after biosecurity becoming a key element affecting costs. In the future,
the Company will continue to take biosecurity as the priority to optimize its epidemic prevention
system and constantly reduce the costs and abnormal costs triggered by epidemics. In 2022, the
Company plans to market 900,000 to 1,000,000 heads of pig.
This business plan can not be deemed as the Company's performance commitment to investors, please
maintain sufficient risk awareness.
4.   Possible risks
A.   Risks of fluctuations in raw material prices
Most costs of the feed business come from raw materials. Factors in terms of production changes in
producing areas, import policies, purchasing, storage, and grants, exchange rate fluctuations, logistics
costs, etc., may cause fluctuations in the raw material market, which will affect the Company's feed
business costs and gross profit margins. With deepened globalization of the trade of agricultural
products in recent years, the supply-demand relationship and the trading price of raw materials have
been affected by market conditions such as spot and futures at home and abroad, and the price trend
has become more complex followed by increasingly fierce fluctuations, which further increases the
difficulties of the Company’s cost management. In addition, the fluctuations of COVID-19, Sino-US
relations, international political and economic environment, and other factors have also made the
purchase price of raw materials more variable.
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Solutions
a.   Wellhope has established strategic partnerships with many leading domestic and overseas raw
material suppliers. Meanwhile, it adopts three-level purchasing mode that includes centralized
purchasing of head office, bidding purchasing of different business regions and local subsidiary
purchasing to clarify the role of purchasing.
b. Wellhope combines its raw material trading business with purchasing management, i.e., the
professional and practical raw materials’ purchasing team conducts targeted forward-looking
researches and real-time tracking on the market to strategically reduce the purchasing price, such as
uniformly managing different variety of raw materials, adopting spot purchasing and futures together.
c. The purchasing team works closely with the R&D team to further optimize the purchasing cost by
way of re-formulating the feeds, i.e., changing the composition of the feed to use cheaper alternative
raw materials while achieving the same results.
d. Wellhope and Royal De Heus have set up an information sharing channel, which enables the two
sides to timely share the market trends of raw materials and additives. In addition, the two sides may
carry out joint purchasing cooperation in the future, which will greatly enhance the overall bargaining
power.
B.   Risks of fluctuations in livestock and poultry prices
Animal husbandry industry is a typical cyclical industry, and the hysteretic adjustment of supply causes
the prices fluctuating periodically. At present, China's animal husbandry industry is still dominated by
back yard farms and small-scale farms, these farm owners show the character of non-rational
decision-making with an obvious “herd effect”, which further aggravates the cyclical fluctuations in the
market price.
Solutions
a.   Wellhope always keeps high attention of price fluctuations of upstream and downstream products,
continues to deepen market research to accurately predict industry trends and adjust business
strategies. Meanwhile, Wellhope’s three primary businesses share resources and boost production
expansion as planned to effectively control the risk of price fluctuations.
b.   Wellhope's broiler integration business has established an industrial chain from broiler breeder
raising, day old chick hatching, feed production, commercial broiler raising, slaughtering, processing to
further processing of prepared food and cooked food. In the meantime, Wellhope’s swine raising
business has also been entering downstream industries, such as the smooth development of
slaughtering business. The continuous improvement of the industry chain makes the price fluctuations
of each sector in the chain can be fully hedged, which maximumly mitigate the price fluctuations of the
whole industry chain.
c.   Wellhope has always been committed to improving the production standard of each sector,
constantly innovating the practical operation technology and management mode of various businesses,
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reducing overall operating costs by optimizing the production indicators and improving per capita
efficiency. Costs advantage can mitigate the negative impacts of downward industry on the Company,
while improving the overall profitability when facing a booming market.
C.   Risks of serious animal epidemic
Feed and animal raising are Wellhope's two core businesses. Epidemic is one of the main risks faced by
animal raising companies. Once an animal epidemic happens, it will certainly cause panic in the market,
which will reduce the demands, then lessen the production, the income shrinks and the cost rises. The
feed industry mainly serves downstream animal raising industry, thus, the downstream market will
directly affect the performance of feed business. As an unpredictable emergency, an explosive epidemic
will undoubtedly have a strong impact on the Company's operations.
Solutions
a.   Wellhope attaches great importance to regional distribution and business structure, which is the
most direct way to disperse the risk of animal epidemic.
b.   Wellhope continues to improve the prevention technology of major epidemics, completes the
early warning system and strives to control epidemics effectively before spreading.
c.   When the epidemic comes, the speed of response is particularly critical, the faster to response, the
less to loss. Wellhope has set an emergency command system for major epidemics to minimize losses
when they occur.
d.   Wellhope has been continuously conducting post-epidemic analysis and researches. Meanwhile, it
has been constantly strengthening the ability to prevent epidemics from multiple aspects such as
animal nutrition and veterinary services.
e.   For African Swine Fever, Wellhope has formed a relatively complete prevention system from
product researches to farm management. Specific preventive measures have been detailed in Section III
hereof-Swine raising business.
D.   Risks of the industrial pattern adjustment caused by environmental protection policies
China has put forward some environmental protection regulations in recent years, such as
Environmental Protection Tax Law, etc., which show the government's determination to increase
supervision on environmental protection in animal husbandry industry, whilst the local governments
have also issued certain new regulations regarding farm demolition, prohibition or restriction of animal
raising. It can be seen that the continuously strengthened environmental protection is the trend of the
industry, also an inevitable reality, which will further weed out unqualified players and reframe the
industry.
Solutions
During the start-up period, Wellhope had input "saving resources, being committed to environmental
protection" as part of its Mission. During the past 26 years, Wellhope has always considered saving
resources and protecting environment as its important mission, taking strict compliance with laws and
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regulations, and implementing environmental protection requirements as key performance appraisal
indicators for managers.
a. Animal raising and slaughtering--In the face of increasingly strict environmental protection
requirements, all Wellhope’s subordinated entities have carried out a comprehensive identification of
environmental risk points, and formulated emergency plans for emergent environmental incident based
on actual circumstances and the requirements of local governments at all levels. In view of the key
pollutant discharge entity, Wellhope has made a complete self-monitoring program to identify
problems timely and eliminate hidden dangers, it also constantly increases personnel, capital
investment in environmental protection to ensure that the key pollutant discharge entities always meet
the national standards.
b. Feed processing-Wellhope has always performed all environmental standards of the state with the
most rigorous attitude, established complete control measures for waste gas, noise, wastewater, solid
waste and other pollution generated during the production process. Meanwhile, it uses eco-friendly
raw materials and additives in feed formulas, and continuously develops safe diet to reduce the
emissions of heavy metals, nitrogen and phosphorus.
E.   Risks of exchange-rate fluctuations
Wellhope's international business started early and has been developed rapidly, which can be affected
by exchange-rate fluctuations in raw material purchasing, product export, overseas investment,
including the following aspects. Firstly, international development has made the global purchasing of
raw materials becoming normally, therefore, the risk of exchange-rate fluctuations is particularly acute
for raw materials that are largely supplied from abroad. Secondly, Wellhope’s export business of broiler
parts products are growing rapidly with customers from many countries and regions across the world,
and the exchange-rate fluctuations are inevitably caused by the settlements of multiple currencies.
Finally, due to the large overseas investment and overseas operations, the cross-border capital
transactions and settlements will also be affected by exchange-rate fluctuations.
Solutions
a. Wellhope closely focuses on the dynamic international foreign exchange market, whilst enhances the
awareness of foreign exchange risk, and improves the researching and forecasting capabilities of the
foreign exchange market.
b. Wellhope continues to improve the bargaining power in foreign trade transaction by enhancing the
competitiveness of products, while reducing the exchange rate risks by using RMB for settlement,
adding insured value clause and the exchange-rate risk allocation clause in the contract.
c. By making full use of foreign exchange forwards, swaps and options (portfolios) and other
instruments to maintain the exchange-rate for foreign exchange exposure.
d. According to specific conditions of different countries, based on the principle of "using foreign
currencies in foreign trade", Wellhope reasonably manages the income and debts to control the
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exchange-rate risks.
F.   Risks of food safety
In recent years, there have been some food safety incidents in China, which affected consumers'
confidence in food safety. China has continuously improved the legislation on food safety and food
sources, conducted forceful measures on handling food violations. Once the food safety incident
happens, it will directly damage the interests of consumers and cause panic, which may greatly impact
the downstream demands, affect the brand and performance of the enterprises.
Solutions
Since its establishment, Wellhope has always attached great importance to the issues of food safety and
quality assurance, adhering to implement the quality policy of "six never" with the most rigorous
attitude--Never accept unqualified raw material, Never use abnormal equipment, Never allow
nonstandard operation, Never produce substandard product, Never ignore unsatisfied customer, Never
tolerate imperfect service. Wellhope’s head office has set up Food and Quality Safety Management
Committee, whilst all business sectors and corresponding subsidiaries have established food and quality
safety management group to ensure that the team always maintains a high sense of responsibility and
awareness.
a. Feed business-Wellhope has established a three-level quality management mechanism and testing
system that compose of head office, regional center and subsidiary. By adopting international standards
such as ISO9001, ISO22000 and ISO-IEC17025, and thoroughly implementing a series of quality
standards such as the "Feed Quality and Safety Management Practice" and "Veterinary Drug Production
Quality Management Practice" issued by the Ministry of Agriculture and Rural Affairs, Wellhope has
controlled the whole production process and established the traceability system. Meanwhile, it
vigorously popularizes near-infrared detection technology, improves detection efficiency to timely share
data and quickly realize risk early warning. Wellhope also focuses on the detection and monitoring of
heavy metals, harmful microorganisms, mycotoxins, which provides an important guarantee for the
safety of feed products. In addition, by learning from the technical experiences of antibiotic-free feed in
Europe, coupled with the current situation of China’s animal raising industry, Wellhope has achieved a
leading advantage in the field of antibiotic-free feed, and now all the feed products have successfully
transited to be antibiotic-free.
b. Animal raising and slaughtering business-In terms of production management, Wellhope strictly
monitors and checks the drug selection and drug residue control in broiler integration and swine raising
businesses. Whilst it constantly strengthens the quality management in slaughtering and processing,
earnestly implements the inspection and quarantine as well as drug residue detection. Regarding
business model, Wellhope's broiler integration business has formed an industrial chain including broiler
breeder raising, day-old chick hatching, feed production, commercial broiler rearing, slaughtering and
processing of raw meat, further processing of prepared and cooked food. The integrated operation
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ensures sufficient supply of raw materials in each sector of the chain, and strictly controls the whole
process of food and quality safety from the source. Through standardized management and streamline
operation, Wellhope consolidates the controls of bio-safety, drug residue and in-process hygiene to
achieve traceable food safety.




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                                       Section IV   Corporate Governance
I.        Overview of Corporate Governance
     In accordance with the Corporation Law, the Securities Law, the Guidelines for Governance of Listed
     Company and other requirements, Wellhope has constantly improved corporate governance and
     internal control, such as shareholder’s meeting, board meeting, supervisory board meeting, etc. In
     2021, Wellhope held 4 times of shareholders' meeting, 10 times of board meetings and 8 times of
     supervisory board meetings. The actual circumstance of the Company’s corporate governance has been
     basically in line with the requirements of the normative documents issued by China Securities
     Regulatory Commission. Wellhope’s corporate governance regarding shareholder’s meeting, board
     meeting, supervisory board meeting, information disclosure and stakeholder complied with the
     requirements of relevant documents.
     A.   Shareholder and shareholders’ meeting. Wellhope convened and held shareholders’ meeting in
     strict accordance with relevant laws, and adopted physical voting and online voting to ensure that all
     shareholders, especially non-controlling shareholders, could fully exercise their right to vote. The
     controlling shareholder (actual controller) of the Company conscientiously performed the obligation of
     good faith and did not damage the rights and interests of the Company and non-controlling
     shareholders.
     B.   Board directors and board meeting. The convening procedure of the board of directors complied
     with the requirements of laws and regulations. All directors actively attended the board meetings and
     shareholders’ meetings held by the Company, got familiar with relevant laws and regulations,
     understood the rights, obligations and responsibilities of directors, and safeguarded the legitimate
     rights and interests of all shareholders.
     C.   Supervisors and supervisory board meeting. Wellhope's supervisors, in accordance with the
     Company Constitution and relevant laws and regulations, have conscientiously performed their duties,
     supervised the Company's financial position, transactions with related party, periodic reports, as well
     as the compliance of the directors and senior managers regarding their performance of duties, and
     safeguarded the legitimate rights and interests of the Company and its shareholders.
     D.   Information disclosure. Wellhope strictly implemented its Information Disclosure Management
     Regulation, which has clarified the person taking charge of information disclosure to ensure that the
     disclosed information could be true, accurate, complete, timely and fair. It designated the board
     secretary to take charge of information disclosure and investor relations management, strictly
     implemented the Company’s regulations regarding information disclosure, such as Management
     Regulation on Insider Information Registration, so as to disclose information truly, accurately,
     completely and timely to guarantee that all shareholders could have equal right to know the
     information of the Company. Meanwhile, Wellhope constantly improved corporate governance
     structure and standardized internal operations in strict accordance with the requirements of the
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      Corporation Law, the Securities Law, relevant laws and regulations issued by China Securities
      Regulatory Commission.
      E.   Stakeholder. Wellhope fully respected and safeguarded the legitimate rights and interests of
      stakeholders, strived to achieve the coordination and balance among shareholders, employees, and
      other parties, and jointly promoted the sustainable, healthy and stable development of the Company.
II.        Shareholders' Meeting Convened during the Reporting Period
                                                                                            Disclosing Date of
                Meeting                    Date            Query URLs of Resolution
                                                                                                Resolution
      2021 First Extraordinary
                                      February 1, 2021            www.sse.com.cn            February 2, 2021
      Shareholders' Meeting
      2021 Second Extraordinary         February 19,
                                                                  www.sse.com.cn           February 20, 2021
      Shareholders' Meeting                2021
      2020 Annual Shareholders'
                                       April 20, 2021             www.sse.com.cn              April 21, 2021
      Meeting
      2021 Third Extraordinary
                                       July 19, 2021              www.sse.com.cn              July 20, 2021
      Shareholders' Meeting




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   III.        Information about Directors, Supervisors and Senior Managers

          1.   Changes in shareholdings and remuneration of incumbent and outgoing directors, supervisors and senior management during the reporting period
                                                                                                                                                                          Whether
                                                                                                                                                         Pre-tax
                                                                                                                       Changes in                                          obtain
                                                                                        Opening          Closing                                      remuneration
                                                          Start of       End of                                       shareholding     Reason of                       remuneration
     Name               Office title     Gender   Age                                 shareholding    shareholding                                     paid by the
                                                          tenure         tenure                                        (shares) in      changes                         from related
                                                                                        (shares)        (shares)                                     Company (RMB
                                                                                                                          2021                                         parties of the
                                                                                                                                                          10k)
                                                                                                                                                                          Company

Jin Weidong             Chairman          male    59    Feb. 3, 2015   Feb. 1, 2024    149,549,498     149,549,498                                             72.00        No

                        Director,
Qiu Jiahui                                male    50    Feb. 1, 2021   Feb. 1, 2024                                                                            70.00        No
                        President
Jacobus
Johannes de              Director         male    53    Feb. 3, 2015   Feb. 1, 2024                                                                                         No
Heus
                      Director, Chief
Shao Caimei              Technical       female   56    Feb. 3, 2015   Feb. 1, 2024     49,773,878      49,773,878                                             67.24        No
                          Officer
                      Director, Chief
Zhang Wenliang                            male    62    Feb. 3, 2015   Feb. 1, 2024       8,565,100       8,565,100                                            39.60        No
                     Financial Officer
                     Director, Board
Zhao Xin             Secretary, Chief    female   50    Feb. 3, 2015   Feb. 1, 2024       4,420,160       4,420,160                                            67.00        No
                       HR Officer
                      Independent
ZUO XIAOLEI                              female   69    Feb. 1, 2021   Feb. 1, 2024                                                                             9.00        No
                        Director
                      Independent
Jiang Yan                                female   49    Feb. 1, 2021   Feb. 1, 2024                                                                             9.00        No
                        Director
                      Independent
Zhang Shuyi                               male    58    Feb. 1, 2021   Feb. 1, 2024                                                                             9.00        No
                        Director

Wang Fengjiu         Vice President       male    53    Feb. 3, 2015   Feb. 1, 2024      47,964,602      47,964,602                                            59.08        No


Wang Xueqiang        Vice President       male    55    Feb. 1, 2021   Feb. 1, 2024       9,355,000       9,355,000                                            70.00        No

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                                                                                                                    Wellhope Foods Co., Ltd. 2021 Annual Report




Di Guo           Vice President    male     52   Feb. 1, 2021    Feb. 1, 2024     4,908,219     4,908,219                                     70.00        No

                 Chairman of the
Wang Zhongtao      Supervisory     male     58   Feb. 3, 2015    Feb. 1, 2024    46,625,229    46,625,229                                     70.00        No
                      Board
Marcus
Leonardus van      Supervisor      male     53   Feb. 3, 2015    Feb. 1, 2024                                                                              No
der Kwaak

Li Jun             Supervisor      male     50   Apr. 27, 2016   Feb. 1, 2024                                                                 37.92        No


Ren Bingxin        Supervisor      male     59   Mar. 27,2019    Feb. 1, 2024     5,429,500     5,429,500                                     25.00        No


Yuan Minger        Supervisor      female   52   Feb. 3, 2015    Feb. 1, 2024                                                                 32.40        No

                  Director and
Ding Yunfeng        President      male     59   Feb. 3, 2015    Feb. 1, 2021    81,929,558    81,929,558                                     48.00        No
                   (outgoing)
                                                                                                                    Bought from
                 Vice President                                                                                     the
Wang Zhenyong                      male     56   Feb. 3, 2015    Feb. 1, 2021     9,800,000     9,802,000   2,000                             70.00        No
                   (outgoing)                                                                                       secondary
                                                                                                                    market
                  Independent
Hu Jianmin          Director       male     63   Feb. 3, 2015    Feb. 1, 2021                                                                  0.50        No
                   (outgoing)
                  Independent
Liu Huan            Director       male     67   Feb. 3, 2015    Feb. 1, 2021                                                                  0.50        No
                   (outgoing)
                  Independent
Wang Zhe            Director       female   42   Feb. 2, 2018    Feb. 1, 2021                                                                  0.50        No
                   (outgoing)
         Total          /            /      /          /              /         418,320,744   418,322,744   2,000                 /          826.74         /




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      Name                                                                                          Work experience
                   Male, born in 1963, Chinese nationality, bachelor of veterinarian from Shenyang Agricultural University, master of physiology and biochemistry from Jilin University, doctoral
                   advisor of Shenyang Agricultural University, winner of the first batch of National Natural Science Foundation of China, core founder of Wellhope, serving as the Chairman of
                   Wellhope since 1995. After graduation, he worked in the university for two years. In 1991, he joined Continental Grain Company (the US), successively served as the sales
                   manager of China’s Northeast Region, national sales manager and assistant vice president of Asia Region. Currently he holds the posts of Vice President of China Feed Industry
                   Association, Vice President of China Animal Husbandry Industry Association, President of Liaoning Feed Industry Association, also the MBA interviewer of Peking University and
Jin Weidong        Tsinghua University, guest professor of Remin University of China, Ocean University of China and Northeast Agricultural University, etc. He has been awarded the honorary titles
                   of "China's Outstanding Private Science and Technology Entrepreneur", "National Outstanding Builder of the Socialist Cause", "China's Top Ten Economic Figures in the 30 Years
                   of Reform and Opening up of Feed Industry", "May 1st Labor Medal of Shenyang City", "Model Worker of Liaoning Province" and etc. In 2015, he was awarded as One of the
                   Top Ten Models of Entrepreneurship for Agriculture, Rural Areas and Farmers. Meanwhile, he was awarded as Outstanding Entrepreneur of Liaoning Province in 2017, and
                   awarded as Career-creating Talent regarding Science and Technology Innovation by China’s Ministry of Science and Technology in 2018. In 2019, he was selected as the fourth
                   batch of leading talents regarding technology entrepreneurship in the National Ten Thousand Talents Program, and in 2020 awarded as the National Model Worker.
                   Male, born in 1972, Chinese nationality, bachelor of veterinarian from Shenyang Agricultural University. After graduation from university, he worked in Dalian Broiler Breeder
                   Farm, a state-owned core breeding enterprise, engaged in technical and on-site management. He joined Wellhope in 2000, served successively as General Manager of
                   Haicheng Wellhope Feed Mill, Haicheng Xinzhongxin Feed Mill, Vice President of Former Huakang Feed Group, Marketing Director of Wellhope, President of Broiler Integration
Qiu Jiahui
                   Business Division, Vice President of Wellhope. Due to his outstanding performance and diligence, he has been elected as the board director and President of Wellhope on
                   February 1, 2021. Mr. Qiu Jiahui is the pioneer of Wellhope’s broiler integration business. With more than 10 years of leadership, the broiler integration business has achieved
                   rapid development.
Jacobus Johannes   Male, born in 1969, the Netherlands’ nationality, master's degree, been working in Royal De Heus since 1992, now serves as the CEO of Royal De Heus, board director of
de Heus            Wellhope.
                   Female, born in 1966, Chinese nationality, at the age of 25, she received her PhD in animal physiology and biochemistry from Nanjing Agricultural University. She is one of the
                   founders of Wellhope. She used to be a technician in a poultry breeding center of the Ministry of Agriculture and served as the formula manager at CONTINENTAL GRAIN
                   COMPANY(the US). Since founding Wellhope, she has always taken charge of the technology of Wellhope, successively serving as the Technology Director and Vice President.
Shao Caimei        Now she is the Board Director and CTO of Wellhope, also holds the posts of standing director of Animal Nutrition Branch of Chinese Association of Animal Science and
                   Veterinary Medicine, member of Chinese Feed Industrial Standardization Technical Committee, leader of the Comprehensive Trial Farm for National Swine Raising Industry
                   Technology System and etc. Meanwhile, she has been serving as the master supervisor of China Agricultural University and Shenyang Agricultural University. She has won a
                   number of first and second prizes of provincial-level science and technology progress and applied nearly 30 technical invention patents.
                   Male, born in 1960, Chinese nationality, master of quality cost management from Northeastern University, senior auditor, the first batch of China’s certified public accountant.
                   He used to work for the Shenyang Office of National Audit Office, mainly engaged in auditing of finance, national tax, customs and large enterprises. He joined Wellhope in
Zhang Wenliang     1996 and served successively as Financial Manager of Shenyang Wellhope Feed Mill, Auditing Manager of Wellhope, Financial Manager of Beijing Sanyuan Wellhope Feed Mill,
                   and Financial Director of Wellhope. He is currently the Board Director and CFO of Wellhope. Mr. Wenliang Zhang led and participated in some capital operation projects of
                   Wellhope, such as the shareholding system transformation, IPO and non-public offering new shares.
                   Female, born in 1972, Chinese nationality, bachelor of economics from Shenyang Agricultural University. She joined Wellhope in 1995 after graduation, successively served as
                   the Secretary to general manager, Director of Marketing Department, Director of HR Department, Human Resources Manager and Chief HR Director, Assistant to Chairman, etc.
Zhao Xin           Now holds the posts of Board Director, Board Secretary and CHO of Wellhope. Ms. Xin Zhao has more than 20 years of experience in human resources and enterprise
                   management, she is one of the managers who established Wellhope's human resources management system. In 2020 and 2021, she was awarded as "Outstanding Board
                   Secretary" in the Selection of China’s Valuable Public Companies.

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                    Female, born in 1953, Singapore’s nationality, famous economist, Ph.D. of International Finance and Econometrics from University of Illinois, USA. She used to be a lecturer in
                    the School of Economic Statistics at the National University of Singapore, associate professor at the Asian Institute of Management in the Philippines, chief economist and chief
ZUO XIAOLEI         president adviser of Galaxy Securities, independent director of Tongfang Co., Ltd. and Hubei Bank. Now she serves as the researcher at the Financial Center of Counsellors'
                    Office of the State Council of China. Ms. Xiaolei Zuo is one of the most influential economists in China, who has published more than 50 papers in the fields of econometrics,
                    international finance and securities market. She is the author of "Xiaolei's Perspective: My View on China's Economy" and other books.
                    Female, born in 1973, Chinese nationality, doctor of management from Institute of Fiscal Science of Ministry of Finance, certified public accountant, certified asset appraiser.
Jiang Yan           She worked in the Stock Issuance Supervision Department at China Securities Regulatory Commission from 2002-2016, now holds the posts of core consultant of several
                    investment banks such as Minsheng Securities Co., Ltd., and the independent director of Weichai Power Co., Ltd.
                    Male, born in 1964, Chinese nationality, doctor of ecology from Marie Curie University, France, doctoral advisor of Shenyang Agricultural University. Once he held the posts of
                    researcher of the Institute of Zoology of Chinese Academy of Sciences, Dean of Interdisciplinary Institute of Science and Technology of East China Normal University, Dean of
                    the School of Management of Zhejiang Ocean University. Now he is the Dean of the School of Animal Husbandry and Veterinary of Shenyang Agricultural University. In addition
                    to the scientific field, he used to serve as an independent director of Wellhope, vice president of Tiansanqi Group Co., Ltd. (Beijing), etc. Mr. Shuyi Zhang has made great
Zhang Shuyi
                    achievements in the field of science. He has been funded by the National Natural Science Foundation of China for Distinguished Young Scholars, supported by the "Changjiang
                    Rive Scholars" team project of the Ministry of Education, and been selected into the first and second levels of the National Millions of Talents Project, the "Hundred Talents
                    Program" of the Chinese Academy of Sciences, and the Climbing Scholars Program of Universities in Liaoning Province. He has been awarded special government allowance of
                    the State Council, second prize of national science and technology progress, first prize of natural science of Shanghai and other awards, etc.
                    Male, born in 1969, Chinese nationality, master of animal nutrition and feed science from Chinese Academy of Agricultural Sciences, one of the founders of Wellhope. He once
                    worked in the office of academic affairs of Shenyang Agricultural University and served as the sales manager of China’s Northeast Region at CONTINENTAL GRAIN COMPANY
Wang Fengjiu        (the Us). After the establishment of Wellhope, he has successively acted as Business Manager, Deputy General Manager, General Manager of some subsidiaries, President of
                    Wellhope. He is now the Vice President of Wellhope, who takes charge of Wellhope’s food business. He is also a standing member of the 15th Shenyang Committee of CPPCC,
                    Vice President of Liaoning Agricultural Integration Association and Shenyang Food Association.
                    Male, born in 1967, Chinese nationality, bachelor of animal husbandry from Shenyang Agricultural University. He once worked at Shenyang Institute of Applied Ecology of
                    Chinese Academy of Sciences. He joined Wellhope in 1995 and served successively as Sales Manager and Deputy General Managers, General Managers of some subsidiaries
Wang Xueqiang       and Vice President of Wellhope. He is now the Vice President of Wellhope. Mr. Xueqiang Wang is one of the important contributors to Wellhope's feed business management
                    system. The Liaoning Region under his leadership is now the benchmark of Wellhope's "quality management", also the base camp of Wellhope's business development and
                    talent growth.
                    Male, born in 1970, Chinese nationality, master of management from Shenyang Agricultural University. Joining Wellhope in 1996, he served successively as Salesman, Sales
                    Manager, Deputy General Manager and General Manager of some subsidiaries, President of Huakang Group, Chief Director of feed business in Jilin and Heilongjiang regions,
Di Guo
                    Secretary of the Board of Directors and Vice President of Wellhope. He is now the Vice President of Wellhope. Mr. Guo Di has rich experiences in marketing and enterprise
                    management, who has been appointed to take on important responsibilities in times of crisis. He is an innovator of business development in Jilin and Heilongjiang regions.
                    Male, born in 1964, Chinese nationality, Bachelor of Animal Husbandry in Shenyang Agricultural University, one of the founders of Wellhope. He once worked in Tianjin Huajin
                    Company as a technical director, a large state-owned enterprise, and the sales manager of six provinces in North China at CONTINENTAL GRAIN COMPANY(the US). After
Wang Zhongtao       founding Wellhope, he served successively as Purchasing Manager, Financial Manager, General Manager, etc, now holds the post of Chairman of the Supervisory Board. Mr.
                    Wang Zhongtao is the most important contributor to the development and growth of Wellhope’s trading business. Over the past 20 years, Wellhope’s trading business has
                    flourished and the business scale is among the top in China.
Marcus
Leonardus van der   Male, born in 1969, the Netherlands’ nationality, master's degree, CFO of Royal De Heus, supervisor of Wellhope.
Kwaak

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                Male, born in 1972, Chinese nationality, master of Business Administration from Northeastern University. He used to be the export salesman of Shenyang Grain, Oil and Food
                Import and Export Company, and the sales manager of Shenyang Tongfeng Trading Company. He joined Wellhope in 2004 and successively served as General Manager of
Li Jun          several trading subsidiaries. Now he is the Director of Wellhope trading business division, General Manager of Liaoning Expert Trading Company, and supervisor of Wellhope.
                Mr. Li Jun has been engaged in international trade for many years, who has rich experience in trading feed raw materials. He has made important contributions to the
                development of Wellhope’s trading business.
                Male, born in 1963, Chinese nationality, PhD in cell engineering from Ocean University of China. He joined Wellhope in 1998 and has served as Production Manager, Technical
                Manager, ISO System Manager and Deputy General Manager. Now he holds the post of Technical Director of broiler feed line and Supervisor. Mr. Ren Bingxin is the chief expert
Ren Bingxin
                of Wellhope’s broiler feed products, with rich experience in feed production and technology research and development. He is an important participant and contributor to the
                rapid development of Wellhope’s broiler integration business, and has obtained 2 authorized invention patents and 3 utility model patents during his tenure.
                Female, born in 1970, Chinese nationality, bachelor's degree, senior auditor, joined Wellhope in 2004, served successively as Deputy Financial Manager of Liaoning Wellhope
Yuan Minger
                and Financial Manager of Wellhope Aquatic Feed Company, now holds the posts of Supervisor and Audit Manager of Wellhope.
                Male, born in 1963, Chinese nationality, bachelor's degree, one of the founders of Wellhope. Once served as the deputy general manager of Liaohe Feed Group, the northeast
                regional manager and consulting manager of Continental Grain Company. After founding Wellhope, he served as General Manager of many subsidiaries, such as Gongzhuling
Ding Yunfeng
                Wellhope, Liaoning Wellhope, Shanghai Wellhope, etc., the Chairman of the third and fourth session of the Supervisory Board, the Director and President of the fifth and sixth
                session of Board of Directors.
                Male, born in 1966, Chinese nationality, Ph.D., joined Wellhope in 1996, served successively as Technical Manager, General Manager, Northeast Region Technical Director and
Wang Zhenyong
                Vice President. Now he is taking charge of international business.
                Male, born in 1959, Chinese nationality, Ph.D., professor of School of Animal Husbandry and Veterinarian of Shenyang Agricultural University, once held the post of the
Hu Jianmin
                independent director of Wellhope.
                Male, born in 1955, Chinese nationality, certified public accountant. He once held the post of independent director of Zhejiang Hailiang Company, China Europe Fund Company,
Liu Huan        Shouchuang Securities Company, and the independent director of Wellhope. Now he is the Deputy Dean of the School of Taxation of Central University of Finance and
                Economics.
                Female, born in 1980, Chinese nationality, Ph.D., a postdoctoral fellow at Center for Ecology and Evolutionary Biology of Yale University, and then worked at East China Normal
Wang Zhe        University as a researcher in the Interdisciplinary Institute for Advanced Studies in Science and Technology. Now she is a professor and doctoral advisor of School of Animal
                Husbandry and Veterinarian of Shenyang Agricultural University, once held the post of the independent director of Wellhope.




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2.   Post held by ongoing and outgoing Directors, Supervisors and senior managers in other entity
Post in other entities
                                                                                   Start of        End of
        Name                      Other entity                    Post
                                                                                   tenure          tenure
                         Shenyang Agricultural
      Wang Zhe                                                  Professor           2015
                         University
                         Shenyang Agricultural
     Hu Jianmin                                                 Professor           2000
                         University
                         Liaoning-Shenyang
     Hu Jianmin          Agricultural Wellhope                Board director        2016
                         Bio-Tech Company
                         School of Taxation of
                                                         Deputy dean and
      Liu Huan           Central University of                                      2010
                                                            professor
                         Finance and Economics
                         Shenyang Agricultural
     Zhang Shuyi                                                Professor           2016
                         University
                         Wuxi Kezhiqian
     Zhang Shuyi                                         Executive director         2012
                         Technology Company
                         Liaoning Petmate Bio-tech
     Zhang Shuyi                                              Board director        2016
                         Company
                                                              Independent
      Jiang Yan          Weichai Power Co., Ltd.                                    2020
                                                                director
Jacobus Johannes de
                         Royal De Heus                            CEO               2002
       Heus
 Marcus Leonardus
                         Royal De Heus                             CFO              2001
   van der Kwaak
                         Beijing BOYAR Agriculture
     Jin Weidong         and Animal Husbandry                  Supervisor           2010
                         Technology Co., Ltd.
                         Beijing Huikezhongda
     Jin Weidong         Information Consulting               Board director        2020
                         Company
                         Shenyang Shengjing Asset
     Jin Weidong         Management Group                     Board director        2019
                         Company
                         Changzhou Sangdichuan
     Jin Weidong         Agricultural Development        Executive director         2021
                         Company

3.   Remuneration of Directors, Supervisors and Senior Management
                                       According to the Company's performance appraisal management,
Decision-making     procedure    for
                                       related regulations and the stipulations of the Remuneration and
remuneration
                                       Performance Appraisal Committee of the Board of Directors.
                                       According to the remuneration level in the industry, the
                                       Company's business performance, job responsibilities, etc., and
                                       in accordance with the work plan made by the Board of Directors
Basis for determining remuneration
                                       at the beginning of the year, in combination with individual’s
                                       work performance and other qualitative and quantitative
                                       indicators.
                                       Paying in accordance with the annual performance of the
Actual payment                         Company, the work performance of senior managers and
                                       management ability, etc.
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  Total remuneration during the            Totally paid RMB 8.27 million to board directors, supervisory
  reporting period                         board directors and senior managers.

  4.      Changes in directors, supervisors and senior management

               Name                         Post                   Change                    Reason
            Qiu Jiahui               Board director                Election              General election
            Qiu Jiahui                 President                 Appointment             General election
          Wang Xueqiang              Vice President              Appointment             General election
               Di Guo                Vice President              Appointment             General election
           ZUO XIAOLEI            Independent director             Election              General election
             Jiang Yan            Independent director             Election              General election
           Zhang Shuyi            Independent director             Election              General election
            Wang Zhe              Independent director            Outgoing               General election
            Hu Jianmin            Independent director            Outgoing               General election
             Liu Huan             Independent director            Outgoing               General election
           Ding Yunfeng              Board director               Outgoing               General election
           Ding Yunfeng                President                  Outgoing               General election
          Wang Zhenyong              Vice President               Outgoing               General election
            Qiu Jiahui               Vice President               Outgoing               General election

IV.       Board meetings held in 2021

                  Meeting                              Date                            Resolution
        The 19th meeting of the 6th                                                   No. 2021-001
                                                   Jan. 15, 2021
        session of Board of Directors                                       announcement--meeting resolution
      The 1st meeting of the 7th session                                       No. 2021-008 announcement
                                                   Feb. 1, 2021
            of Board of Directors                                                  --meeting resolution
         The 2nd meeting of the 7th                                           No. 2021--018 announcement
                                                   Mar. 29, 2021
        session of Board of Directors                                              --meeting resolution
         The 3rd meeting of the 7th                                            No. 2021-037 announcement
                                                   Apr. 20, 2021
        session of Board of Directors                                              --meeting resolution
         The 4th meeting of the 7th                                            No. 2021-045 announcement
                                                   May 6, 2021
        session of Board of Directors                                               -meeting resolution
         The 5th meeting of the 7th                                            No. 2021-046 announcement
                                                   May 10, 2021
        session of Board of Directors                                              --meeting resolution
         The 6th meeting of the 7th                                            No. 2021-056 announcement
                                                   Jun. 30, 2021
        session of Board of Directors                                              --meeting resolution
      The 7th meeting of the7th session                                        No. 2021-076 announcement
                                                   Aug. 27, 2021
            of Board of Directors                                                  --meeting resolution
         The 8th meeting of the 7th
                                                   Oct. 27, 2021                2021 Third Quarter Report
        session of Board of Directors
         The 9th meeting of the 7th
                                                   Nov. 30, 2021               No. 2021-096 announcement
        session of Board of Directors




V.        Performance of duties of directors
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       1. Circumstance of attending board meeting and shareholders’ meeting
                                                                                                                  Shareholders'
                                                        Attendance of Board Meeting
                                                                                                                    Meeting
                                                                                                      Whether
                                 Number
                 Independent                                                                        continually
                                of board                                                                           Number of
    Name          director or                                 Via                   Number             fail to
                                meetings     Physical                      Via                                    shareholders'
                      not                                    Tele-                     of            physically
                                required     presence                     proxy                                     meeting
                                                           communi                  absences        attend the
                                to attend                                                                           attended
                                                                                                      meeting
                                 in 2021
                                                                                                     two times
Jin Weidong             no         10          10              6            0           0                no            2
Qiu Jiahui              no         9            9              3            0           0                no            3
Jacobus
Johannes de             no         10          10              10           0           0               no             0
Heus
Shao Caimei          no            10          10              6            0           0               no             2
Zhang Wenliang       no            10          10              6            0           0               no             2
Zhao Xin             no            10          10              2            0           0               no             4
ZUO XIAOLEI          yes           9            9              8            0           0               no             1
Jiang Yan            yes           9            9              8            0           0               no             1
Zhang Shuyi          yes           9            9              5            0           0               no             3
Ding Yunfeng         no            1            1              0            0           0               no             1
Hu Jianmin           yes           1            1              0            0           0               no             1
Liu Huan             yes           1            1              1            0           0               no             0
Wang Zhe             yes           1            1              1            0           0               no             0



       Number of board meetings held in 2021                                                   10
       Including on-site meeting                                                               0
       Number of meetings held via telecommunication                                           2
       Number of meetings held via on-site meeting and
                                                                                               8
       telecommunication

    VI.     Circumstance of Special Committee of Board of Directors
       1. Member of each committee
                        Committee                                                           Member
       Audit committee                                             Jiang Yan(head), ZUO XIAOLEI, Zhang Wenliang
       Nominating committee                                        ZUO XIAOLEI(head), Zhang Shuyi, Shao Caimei
       Compensation and appraisal committee                        Zhang Shuyi(head), Jiang Yan, Zhao Xin
                                                                   Jin Weidong(head), Jacobus Johannes de Heus, Qiu Jiahui,
       Strategy committee                                          Zhang Wenliang, ZUO XIAOLEI

       2. Meetings held by the audit committee

                                            Agenda                  Important comments
                 Date                                                                                Other circumstance
                                                                      and suggestions
                                  To deliberate 2020
                                  annual report,
                                                                   After full
                                  renewing contract with
                                                                   communication and
                                  accounting firm, 2020
            Mar. 26, 2021                                          discussion, all the                        Non
                                  audit committee
                                                                   proposals were
                                  performance report,
                                                                   unanimously approved
                                  2020 internal control
                                  evaluation report and
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                        other proposals
                                                    After full
                                                    communication and
                        To deliberate 2021 First
     Apr. 17, 2021                                  discussion, all the                Non
                        Quarter Report
                                                    proposals were
                                                    unanimously approved
                                                    After full
                                                    communication and
                        To deliberate 2021
    Aug. 25, 2021                                   discussion, all the                Non
                        Interim Report
                                                    proposals were
                                                    unanimously approved
                                                    After full
                                                    communication and
                        To deliberate 2021
     Oct. 25, 2021                                  discussion, all the                Non
                        Third Quarter Report
                                                    proposals were
                                                    unanimously approved

3. Meetings held by the nominating committee

                                Agenda               Important comments
         Date                                                                  Other circumstance
                                                       and suggestions
                        Deliberating the
                        proposal on the
                        election of the
                        Chairman of the Board
                        of Directors for the
                                                    After full
                        seventh term, the
                                                    communication and
                        election of members
     Jan. 29, 2021                                  discussion, all the                Non
                        and head of the
                                                    proposals were
                        committees of the
                                                    unanimously approved
                        Board of Directors, the
                        appointment of senior
                        management
                        personnel of the
                        Company

4. Meetings held by the compensation and appraisal committee
                                 Agenda           Important comments
        Date                                                                   Other circumstance
                                                     and suggestions
                         Deliberating the
                         compensation plan for
                         the board directors and
                         senior executives,
                                                 After full
                         unlocking restricted
                                                 communication and
                         shares after achieving
    Mar. 26, 2021                                discussion, all the                   Non
                         the performance
                                                 proposals were
                         objective of the second
                                                 unanimously approved
                         lock-up period
                         disclosed in 2018
                         Restricted Stock
                         Incentive Plan
5. Meetings held by the strategy committee
        Date                     Agenda           Important comments           Other circumstance
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                                                                  and suggestions
                                                              After full
                                  Deliberating proposals      communication and
            Jun. 28, 2021         about issuing               discussion, all the                Non
                                  convertible bonds           proposals were
                                                              unanimously approved

VII.       Employees of the Parent Company and Major Subsidiaries

       1. Headcount
              Full time employee of parent company                                                          262
             Full time employee of major subsidiaries                                                     7,576
                      Total full-time employees                                                           7,838
       The number of retired employees whose expenses are
                                                                                                             10
        borne by the parent company and major subsidiaries
                                                     Functions
                                   Line                                           Employees
                              Production                                                                  2,992
                                  Sales                                                                   2,581
                              Technology                                                                    818
                                Finance                                                                     400
                            Administration                                                                1,047
                                  Total                                                                   7,838
                                              Educational backgrounds
                       Educational background                                     Employees
                     Master's degree and above                                                              434
                          Bachelor's degree                                                               2,623
                             Junior college                                                               2,391
                         Below junior college                                                             2,390
                                  Total                                                                   7,838

       2. Remuneration policy
       Wellhope always follows the human resource strategy of providing a fair, just and merit-based
       environment for rewarding employees, builds a comprehensive compensation incentive system that
       includes salary policy, appointment management, long-term incentive and welfare protection,
       continuously improves and innovates the incentive mechanism, and excavates the ego-enhancement
       drive of employees and improves their satisfactions.
       In 2021, the Company revised the compensation management measures, optimized the compensation
       management-control mode, clarified the compensation management mode of key managers, whilst
       continued to promote the implementation of broadband compensation in some business sectors and
       regions, and strengthened the investigation of the compensation system of several benchmark
       enterprises. Under the backdrop of downward pig raising industry, the Company guaranteed the
       compensation and welfare of employees who work in pig raising subsidiaries, and attracted excellent
       talents by stable salary policies. The Company also constantly revised the Administrative Measures on
       Promotion to select more outstanding managers through scientific promotion system, as well as

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providing more challenging tasks to motivate employees.
Moreover, the Company has been paying close attention to the long-term incentives for outstanding
employees. In 2018, 372 key managers were granted restricted shares, they signed performance
agreements with the Company, and they could unlock the restricted shares according to the results of
working performance. By doing this, it can fully mobilize the enthusiasm and sense of ownership of key
talents and promote the rapid development of all business sectors. In 2020 and 2021, these motivated
managers successfully unlocked part of their restricted shares. Furthermore, the Company repurchased
20.9566 million shares through centralized bidding in 2021, paying RMB 200 million in total, the
repurchased shares will be used to implement employee stock ownership plans or equity incentive
plans.
In addition, the Company, in accordance with national laws and regulations, offers staff social
insurances and housing fund. Besides, it also provides other welfare, such as commercial insurance and
annual physical examination to benefit employees and their families, also enriches their benefits
through employee in-store purchase festival, Wings of Love charitable foundation and other ways to
share internal resource and improve satisfaction.
3.   Training plan
Led by strategic goals and human resource strategy, the Company gave full play to the advantages of its
training system accumulated over the years, and further strengthened the three-level training system in
2021, constantly improved the training management system that matches the Company's strategy and
the strategy of each business segment, focusing on key areas, being pragmatic and efficient.
A. Continuously improving the training system to make progress
All business sectors of the Company jointly implemented hierarchical echelon talent training plan,
including high-level trainings, middle management training camp, sales backbone training camp, new
employee training project, etc., which covered senior executives, general managers, middle managers
and key employees. At the same time, it optimized and innovated new employee training, strengthened
three-level training mode supported by head office, business regions and subsidiary, also heightened
the new employee training process and implementation effect, which was more suitable for new
employees.
B. Further developing the training courses to boost up business development
During the report period, the Company strengthened course development and promotion management,
launched management measures to improve the effectiveness of the online college platform, and
significantly improved learning enthusiasm and effectiveness through a variety of forms such as weekly
class, 727 course development project, video, internal trainer incentive, and bi-monthly tracking
management. There were 187 new courses updated in Wellhope Net Institute in 2021, with an average
of 14.7 hours of study. At the same time, the Company used live coverage to train managers, which
could unify thoughts, reach a consensus and rapidly output task list. Thereafter, by using three level
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        meeting and task list tracking to mine outstanding cases, common problems, summarize experience
        and promote.

        4. Labor outsourcing

        The total number of working hours                                                             5,165,029
        Total amount of remuneration paid for outsourcing                                    RMB 101,032,125.07

VIII.        Common Stock Profit Distribution or Capital Reserve Converted into Share Capital
        1. Cash dividend
        Driven by the goal of realizing long-term and sustainable development, the Company has established a
        sustainable, stable and scientific profit distribution system for investors based on considering its actual
        operation, shareholders’ need, social factors such as capital costs, external financing environment,
        current and future profitability, cash flow, project investment and capital demand, bank credit and debt
        financing environment, etc.
        The Company held the 2nd meeting of the 7th Session of Board of Directors to formulate and deliberate
        the Shareholders’ Dividend Plan for the Next Three Years (2020-2022), which had been approved its
        2020 Annual Shareholders’ Meeting. At least every three years, the Company re-reviews its
        Shareholders’ Dividend Return Plan for the Next Three Years to evaluate on-going profit distribution
        policy and make necessary modifications according to the opinions of shareholders (especially
        non-controlling shareholders), independent directors and supervisors, and determines the
        Shareholders’ Dividend Plan for that period.
        During the reporting period, according to the Proposal of 2020 Profit Distribution Plan approved by
        2020 Annual Shareholders’ Meeting on April 20, 2021: based on the total share capital on the equity
        registration date, the Company paid cash dividends of RMB 2.20 per 10 shares (tax included) to all
        shareholders, amounted to RMB 202,831,243.12. The dividends had been paid in June 2021.
        The 2021 profit distribution plan will be: In 2021, the Company will not pay dividend, issue bonus share,
        convert reserved funds into capital stock, and undistributed profits will be carried forward to the next
        year. According to the Share Repurchase Rules for Listed Companies issued by the CSRC, RMB
        200,003,612.37 paid by the Company for repurchasing its shares could be regarded as cash dividend.
        This profit distribution plan is pending to be submitted to 2021 Annual Shareholders' Meeting.




 IX.         Employee Equity Incentive Plan, Stock Ownership Plan or Other Incentive Measures and Impacts

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                            Overview                                          Query URLs
      On March 29, 2021, Wellhope’s 2nd meeting of
      the 7th Session of Board of Directors and the 2nd
      meeting of the 7th Session of Supervisory Board
      approved the proposals of Unlocking Restricted
      Shares after Achieving the Performance Objective
      Stated in the Second Lock-Up period of 2018
      Restricted Stock Incentive Plan, Adjusting the
      Repurchase Price of Restricted Shares,
      Repurchasing and Writing off Part of Locked
      Restricted Shares.
      1. 364 managers could totally unlock 4.26             Details can be obtained at www.sse.com.cn,
      million restricted shares.                            announcements disclosed on March 31, 2021,
      2. As Wellhope had paid cash dividends in             No.2021-018, 2021-019, 2021-024, 2021-025,
      2019and 2020, the repurchase price of per             2021-026
      restricted share had been adjusted as RMB 4.45
      per share.
      3. In view of 3 managers (Sun Zhumin, Zhang
      Weili, Zhao Chunxi) leaving the Company, they
      were no longer eligible for the incentive rules. 10
      managers did not meet the conditions of
      unlocking restricted shares due to their work
      performance appraisal, 99,700 shares held by
      these 10 individuals would be repurchased and
      written off by the Company.
      On April 6, 2021, Wellhope disclosed the
      announcement of Listing and Circulation of            Details can be obtained at www.sse.com.cn,
      Restricted Shares in the Second Lockup Period,        announcement disclosed on April 6, 2021, No.
      4.25 million restricted shares could be traded on     2021-033
      April 9, 2021
      On May 17, 2021, Wellhope disclosed the
      announcement of the Implementation of
      Repurchasing and Writing off Part of Restricted       Details can be obtained at www.sse.com.cn,
      Shares. 99,700 shares held by 13 individuals had      announcement disclosed on May 17, 2021, No.
      been repurchased and written off by the               2021-050
      Company. On May 19, 2021, these shares were
      written off.
X.        Internal Control System Construction and Implementation
      Wellhope will disclose the evaluation report of internal control when discloses 2021 Annual Report.
      Details, please refer to the website of Shanghai Stock Exchange (http://www.sse.com.cn).
XI.       Management and Control of Subsidiaries during the Reporting Period
      The Company implemented internal control management on its subsidiaries in strict accordance with
      relevant provisions of laws and regulations. By managing subsidiaries’ operation, human resource,
      finance, internal audit, information disclosure, investment and financing, business assessment and
      other management measures, the Company controlled the risk of subsidiaries. Each subsidiary
      uniformly implemented the standards and regulations issued by the Company, and established
      business plans and risk management procedures according to the Company's overall development
      strategic planning and annual business plan. Each subsidiary, in accordance with major event reporting
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                                                                    Wellhope Foods Co., Ltd. 2021 Annual Report


        regulations and review procedures, timely reported major business and financial events to the
        responsible person of the Company, and reported major events to the Company's board of directors or
        shareholders' meeting. During the reporting period, the subsidiaries operated stably, the Company has
        no major defects in the management and control of the subsidiaries, and the internal control of the
        subsidiaries have been effectively implemented.
XII.        Explanation of Audit Report for Internal Control
        SuyaJincheng CPA LLP issued the Audit Report, put forward that Wellhope has maintained effective
        internal control over financial reports in all major aspects on December 31, 2021 in accordance with
        relevant regulations. Details please refer to the website of Shanghai Stock Exchange
        (http://www.sse.com.cn).
XIII.       Circumstance of Rectification regarding Self-inspection on Corporate Governance
        According to the self-inspection list of public companies' governance issued by the China Securities
        Regulatory Commission at the end of 2020, from January to April 2021, the Company inspected its
        corporate governance. Through self-inspection, the Company has established a relatively complete and
        reasonable corporate governance structure and internal control system in accordance with relevant
        laws, regulations and rules such as the Company Law, the Governance Standards for Listed Companies,
        etc. Through the inspection, the Company found that the responsibility assigning mechanism has not
        been established, then the Company actively implement rectification measures by revising Related
        Party Transaction Management Regulation, and supplemented the responsibility assigning mechanism.
        The company will, in accordance with the provisions of laws and regulations, further improve the
        management of board of directors, supervisory board and shareholders’ meeting, strengthen the
        management of corporate governance and internal control, continuously improve the operation of
        public companies.




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                              Section V Environment and Social Responsibility
I.   Environment information
1. Information of pollutant-discharging subsidiaries disclosed
Puyang Wellhope Food Company (hereinafter referred to as "Puyang Wellhope"), a subsidiary of
Wellhope, has been listed as the company with pollution discharging of Puyang City. Dalian Zhongjia
Wellhope Food Company (hereinafter referred to as "Zhongjia Food") and Dalian Huakang Xinxin Food
Company (hereinafter referred to as "Dalian Huakang"), subsidiaries of Wellhope, have been listed as
the company with pollution discharging of Dalian City. Kaifeng Wellhope Meat Food Company
(hereinafter referred to as "Kaifeng Wellhope"), a subsidiary of Wellhope, has been listed as the
company with pollution discharging of Kaifeng City. Shenyang Huakang Broiler Company (hereinafter
referred to as "Shenyang Huakang"), a subsidiary of Wellhope, has been listed as the company with
pollution discharging of Shenyang City. Pingyuan Wellhope Food Processing Company (hereinafter
referred to as "Pingyuan Wellhope"), a subsidiary of Wellhope, has been listed as the company with
pollution discharging of Handan City. Changchun Wellhope Food Company (hereinafter referred to as
"Changchun Wellhope"), a subsidiary of Wellhope, has been listed as the company with pollution
discharging of Changchun City. Chifeng Wellhope Fuxinyuan Food Company (hereinafter referred to as
"Chifeng Wellhope"), a subsidiary of Wellhope, has been listed as the company with pollution
discharging of Chifeng City. Shandong Heyuan Food Company (hereinafter referred to as "Shandong
Heyuan"), a subsidiary of Wellhope, has been listed as the company with pollution discharging of
Weihai City. Dunhua Fengda Agriculture and Animal Husbandry Development Company (hereinafter
referred to as "Dunhua Fengda"), a subsidiary of Wellhope, has been listed as the company with
pollution discharging of Dunhua City. Daqing Wellhope Food Company (hereinafter referred to as
"Daqing Wellhope"), a subsidiary of Wellhope, has been listed as the company with pollution
discharging of Daqing City.
Details are presented as follows.




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                                                            Number of                                                                                                                                                       Whether discharge
                                            Way of                         Distribution of                                                                                      Total amount of            Total approved
Company       Primary pollutants                            discharge                            Emission concentration               Pollutant discharge standards                                                            excessive
                                           discharge                           outlets                                                                                             discharge                 emissions
                                                              outlet                                                                                                                                                           pollutants
                                                                           1 waste water
                                                                           emission
                                                                           outlet located
                                                                           in the
           Waste water (COD,
                                                                           southeast
           ammonia nitrogen, total      Waste
                                                                           corner of the     COD--40.253mg/L,
           phosphorus, PH,              gas—direct
                                                                           sewage            ammonia nitrogen --3.582mg/L,     Discharge Standard of Water Pollutants for
           suspended solids,            discharge after     1 outlet for
                                                                           monitoring        total phosphorus --0.417mg/L,     Meat Processing Industry (GB 13457-1992).    COD--11.381t/a,              COD--15.58t/a,
 Puyang    biochemical oxygen           treatment,          waste gas, 1
                                                                           station, 1        total nitrogen --15.855mg/L,      Boiler Air Pollutant Emission Standard (GB   ammonia nitrogen             ammonia nitrogen          No
Wellhope   demand, animal and plant     waste water--       for waste
                                                                           waste gas         SO2--0mg/ m,                      13271-2014)                                  --1.013t/a                   --2.95t/a
           oil, total coliform, total   indirect            water
                                                                           exhaust outlet    nitric oxide --22mg/ m,
           nitrogen). Waste gas (SO2,   discharge
                                                                           distributed in    particulate matter --2.1mg/ m
           nitric oxide, particulate
                                                                           the boiler
           matter)
                                                                           room in the
                                                                           northeast
                                                                           corner of the
                                                                           factory
                                                                           Waste water
                                                                           enters the
           Waste water (COD,                                               sewage plant      COD--41.35mg/L,
                                        Waste
           ammonia nitrogen, total                                         through the       ammonia nitrogen--1.98mg/L,       Comprehensive Wastewater Discharge
                                        gas—direct
           phosphorus, PH,                                  1 outlet for   pump; the         total nitrogen--21.46mg/L,        Standard of Liaoning Province (GB
                                        discharge after
Zhongjia   suspended solids,                                waste gas, 1   exhaust gas       total phosphorus-- 2.64mg/L,      21/1627-2008).                               Simplified management,
                                        treatment,                                                                                                                                                              Non                No
 Food      biochemical oxygen                               for waste      outlet is         PH--7.27,                         Boiler Air Pollutant Emission Standard (GB   no emissions
                                        waste water--
           demand, total nitrogen).                         water          distributed in    particulate matter--22.9mg/m,     13271-2014)
                                        access to sewage
           Waste gas (SO2, nitric                                          the boiler        sulfur dioxide--209mg/m,
                                        works
           oxide, particulate matter)                                      house on the      nitric oxide--132mg/m
                                                                           north side of
                                                                           the company
                                                                           Wastewater
           Waste water (COD,            Waste water--                      discharge
                                                                                                                               Comprehensive Wastewater Discharge           Waste water enter the
           ammonia nitrogen, total      put into the pipe                  outlet is         COD--300mg/L,
                                                            1 outlet for                                                       Standard of Liaoning Province (GB            pipe network, no
           phosphorus, PH,              network after                      distributed in    ammonia nitrogen--30mg/L,
 Dalian                                                     waste gas, 1                                                       21/1627-2008).                               discharge. Using of
           suspended solids, total      treatment,                         the southeast     total phosphorus--5mg/L,                                                                                           Non                No
Huakang                                                     for waste                                                          Boiler Air Pollutant Emission Standard (GB   biomass boiler, no exhaust
           nitrogen).                   waste                              corner of the     total nitrogen--50mg/L
                                                            water                                                              13271-2014)                                  emissions
           Waste gas (SO2, nitric       gas—direct                        company's
           oxide, particulate matter)   discharge                          sewage
                                                                           treatment
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                                                                                                                                                                            Wellhope Foods Co., Ltd. 2021 Annual Report



                                                                           workshop;
                                                                           exhaust gas
                                                                           outlet is
                                                                           located on the
                                                                           roof of the
                                                                           company's
                                                                           boiler house
                                                                           Wastewater
                                                                           discharge
           Waste water (COD,
                                                                           outlet is
           ammonia nitrogen, total                                                           COD--43mg/L,
                                                                           distributed in
           phosphorus, PH,               Waste water—     1 outlet for                      ammonia nitrogen--6.5mg/L,        Level 2 standard of Discharge Standard of
                                                                           the northeast                                                                                    COD--3.43t/a,             COD--3.6t/a,
 Kaifeng   suspended solids,             indirect          waste water,                      total phosphorus-1.17mg/L         Water Pollutants for Meat Processing
                                                                           corner of the                                                                                    ammonia                   ammonia                  No
Wellhope   biochemical oxygen            discharge         1 for waste                       sulfuretted                       Industry (GB 13457-1992)
                                                                           company's                                                                                        nitrogen--0.77t/a         nitrogen--0.79t/a
           demand, animal and plant                        water                             hydrogen—1.45mg/m3,
                                                                           sewage
           oil, total coliform, total                                                        ammonia—1.86mg/m3
                                                                           monitoring
           nitrogen)
                                                                           infrastructure
                                                                           station


                                                                           Wastewater
                                                                           discharge         COD--40mg/m3,
                                                                           outlet is         suspended matter--8mg/m3,
           Waste water (coliform                                                                                               Discharge Standard of Water Pollutants for
                                                                           distributed in    ammonia
           group, 5 days biochemical     Waste                                                                                 Meat Processing Industry (GB 13457-1992).
                                                                           the southeast     nitrogen--25.915mg/m3,
           oxygen demand,                gas—direct                                                                           Comprehensive Wastewater Discharge
                                                                           corner of the     5 days biochemical oxygen
           suspended matter, animal      discharge after                                                                       Standard (GB 21/1627-2008).
                                                                           company's         demand--4.3mg/m3,
           and plant oil, ammonia        treatment,        1 outlet for                                                        Boiler Air Pollutant Emission Standard (GB
                                                                           sewage            total phosphorus--4.05mg/m3,                                                   COD--6.5556t/a,           COD--84t/a,
Shenyang   nitrogen, PH, chemical        waste water--     waste gas, 1                                                        13271-2014)
                                                                           monitoring        animal and plant                                                               ammonia                   ammonia                  No
Huakang    oxygen demand, total          put into the      for waste                                                           Integrated Emission Standard of Air
                                                                           base station.     oil--5.33mg/m3,                                                                nitrogen--0.984t/a        nitrogen--13.44t/a
           phosphorus). Waste gas        municipal pipe    water                                                               Pollutants (GB 16297-1996).
                                                                           The exhaust       particulate matter--26.9mg/m3,
           (particulate matter, sulfur   network after                                                                         Emission Standards for Odor Pollutants (GB
                                                                           gas outlet is     sulfur dioxide--9mg/m3,
           dioxide, nitrogen oxides,     treatment                                                                             14554-92)
                                                                           located at the    nitrogen oxides--133mg/m3,
           smoke blackness, mercury
                                                                           boiler house in   mercury and its
           and its compounds)
                                                                           the northeast     compounds<0.003ug/m3,
                                                                           corner of the     ringelman emittance