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美的集团:2023年年度报告(英文版)2024-04-17  

Midea Group Co., Ltd.


The 2023 Annual Report




       March 2024




            1
                           The 2023 Annual Report of Midea Group Co., Ltd.




                              Letter to Shareholders

Amidst the profound changes in the market environment and formidable challenges in
2023, Midea remained steadfast in implementing the annual business principle of
"Stabilize Profitability & Drive Growth”. Our focus on certainties over the long cycle has
ultimately resulted in our best-ever business results. In 2023, Midea recorded total
revenue of RMB373.7 billion, with a net profit reaching RMB33.7 billion. Our net operating
cash flow surpassed RMB57.9 billion. Additionally, Midea ranked No. 278 on the Fortune
Global 500 list and was included on the Fortune China ESG Impact list and the Fortune
Most Admired Chinese Companies list in 2023. We were also lauded by Forbes as an
Industry Benchmark for Sustainable Development Industrial Enterprises in China. We
extend our heartfelt gratitude to all Mideans for your going ever onwards. With
determination and calmness, we have been pushing our way through the thick mud of all
the difficulties. Extraordinary dedication even in the most ordinary positions and a deep-
rooted entrepreneurial spirit have been the cornerstone of Midea's continuing vitality for
generations, warming every corner of Midea like sunshine every single day. Appreciation
also goes to all of our shareholders for your steadfast support through thick and thin. Your
trust has been the driving force and bedrock of our unremitting pursuit of long-term growth
and sustained shareholder returns.


We stand at a new juncture, where we can view the vast world from a fresh perspective. In
the past, our business journey resembled a mountaineering expedition, relying solely on
our capabilities for success. However, running a business today is more akin to surfing the
waves, navigating through rippling uncertainties. We are often caught off guard by the
sudden decline of once glorious corporations and rapid falls of new-money. Even industry
giants are adapting swiftly. Corporate succession has accelerated, with reshuffles and
phaseouts happening every day. The rules of the game are being rewritten, and business
paradigms are shifting, leaving every sector and individual facing similar challenges, as
we find ourselves in uncharted territory. It's time to bid farewell to illusions and the past

                                                    2
                           The 2023 Annual Report of Midea Group Co., Ltd.



cycle, breaking free from outdated thinking and embarking on a journey of reflecting on
and challenging ourselves. In this process, resilience and determination are crucial.


In the face of sluggish global growth, how does Midea secure its growth? How does Midea
cultivate new competitive strengths amidst waves of technological advancements and
shifting business models? With formidable challenges overseas, how do we expedite our
global business distribution? In the face of anxieties over economic restructuring and
shifts in growth models, how do we navigate through the cycles?


These challenges test our corporate governance, compliance, operational systems, and
agility. In this world, there's no room for pessimism or optimism; only realism. As Game of
Thrones, a popular TV drama, aptly put, "Chaos isn't a pit. Chaos is a ladder”. Our choices,
not fate, determine our path. In this ever-evolving era, our success depends solely on how
we define ourselves. What is certainty? To be certain is to ascend beyond time and space,
and to summarize common sense knowledge and methods. To achieve industrial
upgrades from basic to premium offerings and from low to high added value, it is essential
to harness the cost-efficiency strengths and the force of technological advancement. In
essence, innovation and creativity play a pivotal role in this process. The greatness of a
company lies in taking common sense to the utmost level, doing the right things,
upholding principles, and weathering any storm with resilience. It's not time or
circumstances that trap us, but our mindset. We must reflect on ourselves, confront
challenges head-on, and brave the waves. Guided by our common sense knowledge and
courage as a compass, we are ready to confront storms and sail into uncharted territory.


In 2024, Midea will focus on enhancing value chain-wide efficiency alongside structural
growth through upgrades. Several economic crises occurred in the world’s history.
Maintaining ample liquidity, high-performance operations with low cost and high efficiency,
and competitiveness of core business operations is key to navigating economic crises and
market downturns. Hence, Midea must stay committed to business model upgrades,
structural upgrades, and industrial upgrades and navigate the ever-evolving environment
and changes with strategic certainty.
                                                    3
                            The 2023 Annual Report of Midea Group Co., Ltd.



Business model upgrades: Midea will adhere to the “Chinese Market DTC (Direct To
Customer), Overseas OBM Priority” strategy. The essence of the DTC strategy is
customer-oriented retailing. Meanwhile, global breakthroughs are critical at this time. A
truly globalized company is localized. With an internationalized headquarters, we aim to
make ourselves at home across the world. To this end, we will resolutely strengthen
overseas infrastructure for after-sales services, logistics, branding, etc.


Structural upgrades: Upholding a customer-oriented principle, we will redouble our efforts
to enhance our "Three Generations" capabilities across research, reserves, and
development. We will recruit high-calibre professionals worldwide, including top global
talent, experts, and scientists, to drive technological advancement and innovation. Seizing
opportunities brought by structural upgrades, Midea aims to establish itself in this era as a
pioneering enterprise.


Industrial upgrades: We will continue to balance ToC and ToB business development. We
are fully aware that the development of ToB business involves longer cycles and additional
time. To that end, we will exhibit strategic patience and persistence and continue to invest,
gradually laying the groundwork for developing capabilities of overcoming challenges.


There are no friends of times, only friends of trends. The end of an era inevitably heralds
the dawn of another. In the ebb and flow of industries and in every economic crisis, only a
select few enterprises emerge victorious. This is a constant process where new
businesses rise and old ones fall. To be a friend of trends in this era full of uncertainties,
we must surmount confusion and foster courage. Over the past 55 years, Midea has
adeptly navigated changing times, remaining steadfast in the face of challenges. What has
propelled Midea forward amidst these ever-shifting tides? It's the entrepreneurial spirit
deeply ingrained in our core, driving vitality for generations and fostering sustained growth
and progress. This spirit is Midea's legacy. We are dedicated to fostering an environment
where every individual is valued, irrespective of their background, and where the
entrepreneurial spirit thrives for generations to come. We will seek out those bold sailors
bound for all ports in the world. With an extensive business portfolio comprising the smart
                                                     4
                           The 2023 Annual Report of Midea Group Co., Ltd.



home business and the commercial and industrial solutions, Midea boldly embraces
evolution, braving the waves to explore broader business prospects.


While no one can precisely predict Midea's future, just as in 2014, we couldn't foresee our
development in 2024, nor anticipate the profound changes in 2023 when we were at the
end of 2022. Yet, Midea's future lies ahead, filled with unexplored markets, regions, and
countries, as well as with undeveloped business, waiting for us to deliver better and better
business results. Together, they constitute the unwritten chapters of Midea's future. As
stated in Blossom Shanghai, a blockbuster TV series in China, running a business is like
navigating an ocean; we must row steadfastly until we reach our destination. Midea must
brave the waves and forge ahead towards our goal. When the horizon widens and the
water turns azure in front of us, we will know that we’ve arrived at the ocean of endless
possibilities.


We look forward to continuing this journey with our shareholders. Let’s witness Midea’s
power to flourish!




                                                                  Board of Directors, Midea Group


                                                                             March 2024




                                                    5
                          The 2023 Annual Report of Midea Group Co., Ltd.




    Section I Important Statements, Contents and Definitions

The Board of Directors, the Supervisory Committee, directors, supervisors and
senior management of Midea Group Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee that the information presented in this report is free
of any misrepresentations, misleading statements or material omissions, and shall
together be wholly liable for the truthfulness, accuracy and completeness of its
contents.

Mr. Fang Hongbo, Chairman of the Board and CEO of the Company, Ms. Zhong
Zheng, Vice President, CFO and Director of Finance of the Company, and Ms. Chen
Lihong, head of the accounting department (equivalent to accounting manager) of
the Company, have represented and warranted that the financial statements in this
report are true, accurate and complete.

All directors of the Company attended the Board meeting to review this report.

The future plans and other forward-looking statements mentioned in this report
shall not be considered as promises of the Company to investors. Therefore,
investors are kindly reminded to pay attention to possible investment risks.

The Board has considered and approved the following dividend payout plan: based
on the 6,920,391,836 shares at the disclosure date of this report (the total share
capital of 6,968,950,724 shares minus the repurchased 48,558,888 shares in the
repurchased share account at that date), it is proposed that the Company should
distribute a cash dividend of RMB30 (tax inclusive) per 10 shares to all the
shareholders and should not carry out any bonus issue or convert capital surplus
into share capital. When the profit distribution plan is implemented, if any change
occurs to the total shares eligible for profit distribution, the profit distribution plan
shall be based on the total shares eligible for profit distribution at the record date of
the profit distribution, and the total dividend amount shall be adjusted under an
unchanged dividend per share.

This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version
shall prevail.


                                                   6
                                     The 2023 Annual Report of Midea Group Co., Ltd.




                                                     Contents




LETTER TO SHAREHOLDERS ................................................................................................ 2

SECTION I IMPORTANT STATEMENTS, CONTENTS AND DEFINITIONS ............................. 6

SECTION II COMPANY PROFILE AND KEY FINANCIAL RESULTS ...................................... 10

SECTION III MANAGEMENT DISCUSSION AND ANALYSIS ................................................. 15

SECTION IV CORPORATE GOVERNANCE ........................................................................ 122

SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITY ....................................... 158

SECTION VI SIGNIFICANT EVENTS ................................................................................... 200

SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS ..... 220

SECTION VIII PREFERENCE SHARES ............................................................................... 229

SECTION IX BONDS ............................................................................................................ 230

SECTION X FINANCIAL REPORT ........................................................................................ 235




                                                                  7
                        The 2023 Annual Report of Midea Group Co., Ltd.




                  Documents Available for Reference


1. The original of The 2023 Annual Report of Midea Group Co., Ltd. signed by the
legal representative;

2. The financial statements signed and stamped by the legal representative, the CFO
& Director of Finance and the head of the accounting department;

3. The original of the auditor’s report with the seal of the accounting firm, and
signed and stamped by CPAs;

4. The originals of all company documents and announcements that are disclosed
to the public via newspaper designated for information disclosure during the
Reporting Period; and

5. The electronic version of The 2023 Annual Report that is released on
http://www.cninfo.com.cn.




                                                 8
                                      The 2023 Annual Report of Midea Group Co., Ltd.




                                                      Definitions


                            Term                                                         Definition
The “Company”, “Midea”, “Midea Group” or the “Group”   Midea Group Co., Ltd.
Midea Holding                                                  Midea Holding Co., Ltd.
KUKA                                                           KUKA Aktiengesellschaft
TLSC                                                           Toshiba Lifestyle Products & Services Corporation
Hiconics                                                       Hiconics Eco-energy Technology Co., Ltd.
WDM                                                            Beijing Wandong Medical Technology Co., Ltd.
CLOU Electronics                                               ShenZhen CLOU Electronics Co., Ltd.
Swisslog                                                       Swisslog Holding AG
Servotronix                                                    Servotronix Motion Control Ltd.
WINONE                                                         WINONE Elevator Company Limited
Reporting Period                                               1 January 2023 to 31 December 2023




                                                                  9
                                    The 2023 Annual Report of Midea Group Co., Ltd.




         Section II Company Profile and Key Financial Results

1. Corporate Information

Stock name                    Midea Group                         Stock code               000333
Stock exchange where the
shares of the Company are     Shenzhen Stock Exchange
listed
Name of the Company in
                              美的集团股份有限公司
Chinese
Abbr. of the Company name in
                             美的集团
Chinese
Name of the Company in
                              Midea Group Co., Ltd.
English (if any)
Abbr. of the Company name in
                             Midea Group
English (if any)
Legal representative          Fang Hongbo
                              Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,
Registered address
                              Foshan City, Guangdong Province, China
Postal code                   528311
Past changes of registered
                              N/A
address
                              Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,
Business address
                              Foshan City, Guangdong Province, China
Postal code                   528311
Company website               http://www.midea.com
E-mail                        IR@midea.com


2. Contact Us

                                                     Board Secretary             Representative for Securities Affairs

                Name                    Jiang Peng                             You Mingyang

                                        Midea Headquarters Building, No. 6     Midea Headquarters Building, No. 6
                                        Midea Avenue, Beijiao Town, Shunde     Midea Avenue, Beijiao Town, Shunde
               Address
                                        District, Foshan City, Guangdong       District, Foshan City, Guangdong
                                        Province, China                        Province, China

                   Tel.                 0757-22607708                          0757-26637438

                   Fax                  0757-26605456                          0757-26605456

                E-mail                  IR@midea.com                           IR@midea.com


3. Information Disclosure and Place Where this Report Is Kept

                                                            The website of the Shenzhen Stock Exchange
Stock exchange website where this Report is disclosed
                                                            (http://www.szse.cn)
                                                            China Securities Journal, Securities Times and Shanghai
Media and website where this Report is disclosed
                                                            Securities News, as well as http://www.cninfo.com.cn


                                                             10
                                     The 2023 Annual Report of Midea Group Co., Ltd.


Place where this Report is kept                                  Company Investor Relations Department


4. Company Registration and Alteration

Unified social credit code                 91440606722473344C
Changes in main business activities
                                           None
since the Company was listed (if any)
Changes of controlling shareholder of
                                           None
the Company (if any)


5. Other Relevant Information

Accounting firm engaged by the Company
Name of the accounting firm        PricewaterhouseCoopers Zhong Tian LLP
Business address of the            11/F., PricewaterhouseCoopers Center, 2 Corporate Avenue, 202 Hu Bin Road,
accounting firm                    Huangpu District, Shanghai 200021, PRC
Name of accountants writing
                                   Yao Wenping and Wu Fangfang
signatures

Sponsor engaged by the Company to continuously perform its supervisory function during the

Reporting Period

□Applicable √N/A

Financial advisor engaged by the Company to continuously perform its supervisory function during the

Reporting Period

□Applicable √N/A


6. Key Accounting Data and Financial Indicators

Whether the Company performed a retroactive adjustment to or restatement of accounting data

□ Yes √ No
                                                                                     2023-over-2022
                                                   2023                2022                               2021
                                                                                       change (%)

Operating revenue (RMB'000)                       372,037,280         343,917,531            8.18%       341,233,208

Net profit attributable to shareholders
                                                   33,719,935          29,553,507           14.10%        28,573,650
of the Company (RMB'000)

Net profit attributable to shareholders
of the Company before non-recurring                32,974,908          28,607,973           15.26%        25,929,086
gains and losses (RMB'000)

Net cash flows from operating activities
                                                   57,902,611          34,657,828           67.07%        35,091,704
(RMB'000)

Basic earnings per share (RMB/share)                      4.93                4.34          13.59%               4.17

Diluted earnings per share                                4.92                4.33          13.63%               4.14



                                                                 11
                                   The 2023 Annual Report of Midea Group Co., Ltd.


(RMB/share)


Weighted average ROE (%)                            22.23%             22.21%            0.02%          24.09%

                                                                                 Change of 31
                                             31 December      31 December       December 2023     31 December
                                                 2023             2022             over 31            2021
                                                                                December 2022

Total assets (RMB'000)                         486,038,184        422,555,267           15.02%      387,946,104

Net assets attributable to shareholders
                                               162,878,825        142,935,236           13.95%      124,868,124
of the Company (RMB'000)

Indicate whether the lower of the net profit before and after non-recurring gains and losses was

negative for the last three accounting years, and the latest auditor’s report indicated that there was

uncertainty about the Company’s ability to continue as a going concern.

□ Yes √ No

Indicate whether the lower of the net profit before and after non-recurring gains and losses was

negative.

□ Yes √ No


7. Differences in Accounting Data under Domestic and Overseas Accounting
Standards

7.1 Differences in the net profit and net assets disclosed in the financial reports prepared under
China Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)


□Applicable √N/A

No such differences for the Reporting Period.


7.2 Differences in the net profit and net assets disclosed in the financial reports prepared under
CAS and foreign accounting standards


□Applicable √N/A

No such differences for the Reporting Period.


8. Key Financial Results by Quarter

                                                                                                         RMB'000

                                          Q1 2023            Q2 2023             Q3 2023            Q4 2023

Operating revenue                           96,262,922        100,725,480            94,122,108        80,926,770



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                                         The 2023 Annual Report of Midea Group Co., Ltd.


Net profit attributable to
                                                     8,041,853             10,190,438         9,485,190       6,002,454
shareholders of the Company

Net profit attributable to
shareholders of the Company
                                                     7,672,681              9,979,172         9,188,736       6,134,319
before non-recurring gains and
losses

Net cash flows from operating
                                                     9,272,312             20,512,362        15,002,382      13,115,555
activities

Whether there are any material differences between the financial indicators above or their summations

and those which have been disclosed in the Company’s quarterly or semi-annual reports

□Yes √No


9. Non-recurring Gains and Losses

√Applicable □N/A

                                                                                                               RMB'000

                       Item                                2023                2022            2021          Note
Gain or loss from disposal of non-current
                                                             -233,657              -59,854         77,527
assets

Except for effectively hedging business
related to normal business operations of the
Company, gain or loss arising from the
change in the fair value of financial assets
held for trading, derivative financial assets,
financial liabilities held for trading, derivative           -345,146             -604,446        995,824
financial liabilities, and other non-current
financial assets, as well as investment
income or loss produced from the disposal
of the aforesaid financial assets and
liabilities

Other non-operating income and expenses
except above-mentioned items (mainly
government grants, reversed impairment
                                                            1,345,521            1,777,103       2,352,849
provisions for receivables that are tested
individually for impairment, compensation
income, fine income, etc.)

Less: Corporate income tax                                       143,692           103,624        668,578

        Minority interests (after tax)                       -122,001               63,645        113,058

Total                                                            745,027           945,534       2,644,564    --

Particulars about other items that meet the definition of non-recurring gain/loss:

□Applicable √N/A

Explain the reasons if the Company classifies an item as a recurring gain/loss item, which is

enumerated as a non-recurring gain/loss in the .

□Applicable √N/A




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                               The 2023 Annual Report of Midea Group Co., Ltd.




            Section III Management Discussion and Analysis

1. Industry Overview for the Reporting Period

1.1 Summary of the business scope


Midea is a leading global technology group comprising the Smart Home, Energy Solutions and

Industrial Technology, Intelligent Building Technology, Robotics & Automation, and Other Innovation

businesses. With a business portfolio that is focused on the coordinated development of the ToC and

ToB businesses, Midea offers various smart home products and services to individual consumers, as

well as provides diversified commercial and industrial solutions for corporate clients. To be specific,

Midea Smart Home primarily covers smart appliances, smart home and related peripheral industries

and ecological chains, undertakes the construction of intelligent scenarios for end users, user

operations and data value discovery, and is committed to providing end users with the best experience

of entire-house smart home appliances and service. Midea Energy Solutions and Industrial Technology,

with technology as the core driver, commands key technologies in “green energy” and “key industrial

components”. It operates many brands including GMCC, Welling, CLOU Electronics, HICONICS,

SERVOTRONIX, MR, MOTINOVA, MSCT, TOSHIBA, SUNYE, etc., with its products covering high-

precision core components such as compressors, motors, chips, valves, reducers, auto parts, motion

control and automation, high- and low-voltage variable frequency drive, energy storage and cooling

modules. It provides green, efficient and intelligent products and technology solutions for pan-industrial

customers across the world. Midea Intelligent Building Technology is principally engaged in products

and services in relation to buildings, as well as the relevant operations. With iBUILDING, Midea’s digital

building service platform, as the core, its business covers HVAC, elevators, energy, building control, etc.

Its primary products include VRF units, large chillers, unitary units, machine room air conditioners,

escalators, passenger elevators, freight elevators, etc., as well as building automation software and

building weak electricity integrated solutions. Supported by “Building Equipment and Facilities + Digital

Technology + Industrial Ecosystem”, it facilitates logistics, information, feeling and energy flows of

buildings to empower buildings with digital and low-carbon technologies and build sustainable smart

space. Midea Robotics & Automation primarily focuses on providing solutions of industrial robotics,

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                                The 2023 Annual Report of Midea Group Co., Ltd.



automatic logistics systems, and transmission systems for future factory-related fields, as well as

solutions for health care, entertainment, new consumption, etc. The Other Innovation Business mainly

includes Annto, which provides customers with end-to-end digital and intelligent supply chain solutions;

Midea Cloud, which provides industrial software and digitalisation consulting services for intelligent

manufacturing and industrial interconnectivity through its industrial internet platform MIoT; Midea

Lighting, which focuses on the R&D, production, and sales of lighting and intelligent pre-decoration

electrical products; and WDM, which is committed to innovation in medical imaging technology,

providing high-quality medical imaging products and services for clinical use.


With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire Your

Future” as its mission, “Embrace what’s next - Aspiration、Customer First、Innovation、Collaboration、

Dedication” as its values, “High-quality Development and High-performance Operations” as its

management and operation standard, Midea integrates global resources and promotes technological

innovation to create a better life for over 400 million users, major customers and strategic partners in

different areas worldwide every year with satisfying products and services. In face of higher

requirements for products and services in the digital Internet era, Midea continues to promote its

strategic focus of “Technology Leadership, Direct to Users, Digitization & Intelligence Driven, and

Global Impact”, so as to build Midea in the new era. To be specific, it strives to achieve Technology

Leadership by building scale advantages in R&D and strengthening the efforts and investment in core

and cutting-edge technologies; be Direct to Users through direct contact and interaction with users and

reinventing product service and business models; be Digitization & Intelligence Driven through

“Comprehensive Digitalization and Comprehensive Intellectualization”, as well as improving efficiency

internally and focusing on users externally; and achieve Global Impact by seeking breakthroughs in key

regions in terms of market, channel and business model dimensions and serving global users.


Midea, a global operating company, has now established a global platform with around 200

subsidiaries, 33 R&D centers, 40 major manufacturing bases, and more than 190,000 employees. Its

business covers more than 200 countries and regions. Overseas, Midea has 17 R&D centers and 21

major manufacturing bases in more than ten countries.


1.2 Position in the home appliance industry

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                               The 2023 Annual Report of Midea Group Co., Ltd.



Midea Group ranks No. 278 on the Fortune Global 500 list unveiled in August 2023, marking its eighth

consecutive year on the list. Meanwhile, Midea has also been named to the 2023 Fortune China ESG

Impact list for its high-value practices in environmental management and social contribution, in addition

to being included in the 2023 Fortune Most Admired Chinese Companies list for its outstanding

performance in business resilience, sustainability, social responsibility and the like. In June 2023, the

Forbes magazine released its 2023 Global 2000 list and Midea ranks No. 199, up 18 places from last

year. Also, Midea Group has been named as one of the Forbes 2023 World’s Top Companies for

Women and the 2022 Forbes World’s Best Employers, among others. In the “2022 Forbes China

Sustainable Development Industrial Enterprises Top 50 Selection” held in February 2023, Midea was

selected as an Industry Benchmark for Sustainable Development Industrial Enterprises by virtue of its

solid performance in green manufacturing, carbon neutrality, sustainable development and ESG

practices. As shown on the “TIME World's Best Companies 2023” list jointly released in September

2023 by America’s TIME magazine and Statista, the world's top business data platform, Midea Group

earned itself a spot and was rated “very high” in terms of “Growth Rate”. Midea Group was successfully

selected and performed very high in the Growth Rate dimension of the list. In July 2023, the Summit

Forum of Top Enterprises in China Light Industry released the 2022 list of “Top 200 Enterprises in

China Light Industry”, and Midea Group once again topped the list with an outstanding score of 98.07.

In March 2023, Midea won the China Industrial Grand Prize at the Seventh China Industrial Grand

Prize Ceremony jointly organized by the China Federation of Industrial Economics and 13 national

industry associations for its excellent performance in technology innovation, quality management and

branding, among others. By the end of 2023, five of Midea’s factories had been included in the “Global

Lighthouse Network” initiated by the World Economic Forum, covering air conditioners, refrigerators,

laundry appliances, microwave ovens, dishwashers, etc., which demonstrates Midea’s leading position

in intelligent manufacturing and digital development among manufacturers worldwide. Meanwhile,

Midea takes the lead among domestic home appliance makers by ranking No. 39 and No. 36

respectively on the 2023 China 500 list and the 2023 Tech 100 list released by Brand Finance, a British

brand assessment institution. Midea has been given excellent credit ratings by the three major

international credit rating agencies, Standard & Poor’s, Fitch Ratings and Moody’s. The ratings are in a

leading position among home appliance manufacturers worldwide as well as among Chinese non-

state-owned enterprises. Particularly, Standard & Poor’s has raised the credit rating on Midea to “A”,

                                                       17
                                 The 2023 Annual Report of Midea Group Co., Ltd.



making it the highest-rated private manufacturer in China.


In 2023, Midea has successfully retained the "Number One Engine" of ToC business on the domestic

market. According to data provider AVC, Midea ranks first in the industry with respect to both the online

and offline domestic market share for eight home appliance categories, namely, residential air

conditioners, countertop pan-microwave ovens, countertop electric ovens, electric radiators, electric

fans, induction cookers, electric kettles, and air fryers.


  Offline market shares and rankings of the Company’s primary home appliance products (by value of
                                          retail sales) in 2023

           Product category                            Market share                    Ranking

     Residential air conditioners                          34.9%                           1

         Laundry appliances                                26.9%                           2

            Clothes dryers                                 23.8%                           2

             Refrigerators                                 15.2%                           2

  Countertop pan-microwave ovens                           61.5%                           1

      Countertop electric ovens                            48.7%                           1

          Induction cookers                                46.9%                           1

           Electric radiators                              43.9%                           1

             Electric fans                                 43.7%                           1

            Electric kettles                               41.9%                           1

             Rice cookers                                  39.4%                           1

               Air fryers                                  32.0%                           1

          Water dispensers                                 26.2%                           1

      Electric pressure cookers                            40.5%                           2

         Electric baking pans                              32.5%                           2

               Blenders                                    28.7%                           2

            Water purifiers                                17.8%                           2

        Electric water heaters                             22.3%                           3

               Freezers                                    11.5%                           3




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                                 The 2023 Annual Report of Midea Group Co., Ltd.



  Online market shares and rankings of the Company’s primary home appliance products (by value of
                                         retail sales) in 2023

          Product category                             Market share                 Ranking

     Residential air conditioners                          34.5%                        1

         Laundry appliances                                38.1%                        2

            Clothes dryers                                 40.5%                        1

            Refrigerators                                  19.0%                        2

  Countertop pan-microwave ovens                           51.6%                        1

      Countertop electric ovens                            25.9%                        1

          Induction cookers                                55.2%                        1

            Electric kettles                               26.4%                        1

          Electric radiators                               23.0%                        1

             Electric fans                                 22.8%                        1

               Air fryers                                  20.6%                        1

           Water purifiers                                 18.3%                        1

      Electric pressure cookers                            38.9%                        2

            Rice cookers                                   26.9%                        2

        Electric water heaters                             29.5%                        2

         Electric baking pans                              28.1%                        2

               Freezers                                    12.5%                        2

          Water dispensers                                 14.2%                        3

               Blenders                                    13.3%                        3
* Air conditioners refer to floor-standing and wall-mounted ones only.


1.3 Industry Overview


A. Home Appliance Industry


In 2023, as the external environment continued to improve, the economy saw an ongoing upward trend,

and domestic demand steadily expanded, the gross domestic product ("GDP") grew by 5.2% year on

year. Meanwhile, the domestic home appliance industry experienced growth in both export and

domestic sales. According to the statistics released by the General Administration of Customs, China's


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total export value of home appliances reached RMB617.42 billion in 2023, marking a 9.9% increase

compared to the previous year. According to the data from AVC, the domestic home appliance retail

market hit a size of RMB849.8 billion in 2023, showing a 3.6% year-on-year increase. In terms of

categories, different categories exhibited different development trends. Products such as air

conditioners, refrigerators, laundry appliances, and major kitchen appliances, due to their high visibility,

exhibited a structural upgrade trend driven by the demand for newer and more advanced models.

Meanwhile, categories such as dishwashers, built-in microwave-steamer-ovens, cleaning appliances,

and water purifiers were experiencing a steady increase in their market penetration rates. In terms of

consumers, consumers showed a "K-shaped" differentiation pattern. While rapid growth was seen in

the high-end home appliance market, there was also notable demand for highly cost-effective home

appliances. In terms of products, industry focus was still placed on green, healthy, and smart home

appliances. Regarding retail, there was a notable shift towards whole-process services, with a

heightened emphasis among retailers on the shopping experience, convenience, and the quality of

post-sale services. In 2024, policies will be focused on green, smart, and elderly-friendly home

appliances. Local governments and home appliance enterprises will be encouraged to introduce more

practical subsidy policies, thus expanding green consumption and continually enhancing the

sustainability of consumption.


According to the data from AVC, the domestic retail sales of air conditioners were RMB211.7 billion in

2023, up by 7.5% year on year. Due to the improved macroeconomic landscape and the favourable

consumer environment, 2023 was the first year of growth recovery for the air conditioning sector after

three years of subdued performance. In terms of products, an upgrade continued in the horsepower

("HP") structure. Particularly, both online and offline sales of 2-HP wall-mounted air conditioners surged

by 30.2% and 32.1%, respectively, compared to the previous year. In terms of price, the strategy of

boosting sales using favourable prices was adopted for the large-capacity wall-mounted air

conditioners, while the pricing structure for floor-standing air conditioners continued its upward trend. In

the offline market, products in the RMB5,000 to RMB6,000 range accounted for nearly 27% of 2-HP

wall-mounted air conditioners, while those priced within a range of RMB9,000 to RMB10,999

represented more than 19% of 3-HP floor-standing air conditioners. From a functionality perspective,

the sales share of new Energy Efficiency Grade 1 products grew continuously, surpassing 84% in the


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offline market. Furthermore, health, comfort, and intelligence-related functions played a significant role

in fueling growth across the industry.


According to the data from AVC, the domestic retail sales of laundry appliances were RMB93.4 billion

in 2023, up 5.8% year on year, and the retail sales of clothes dryers reached RMB12.9 billion, up 23.8%

year on year. The wash and care segment enjoys a large market, diverse demand scenarios, and

highly inelastic demand. As a major driving force, the washer-dryer suites captured more than 15% of

the retail sales in the wash and care industry in 2023. Moreover, they experienced steady and robust

upgrading of the product structure. According to the projection by AVC, the average price of clothes

dryers will increase by 8.5% year on year, and products priced at RMB8,000 and above will constitute

over 70% of the washer-dryer suites.


According to the data from AVC, the domestic retail sales of refrigerators were RMB133.3 billion in

2023, up by 7.0% year on year. The product structure of refrigerators was significantly optimised. In

terms of price, the average online product price saw a year-on-year increase of 9.2%, whereas offline

products witnessed a 5.7% rise. In the offline market, the retail sales share of refrigerators priced at

RMB8,000 and above approximated 55%. In terms of products, cross-four-door and French-style multi-

door refrigerators emerged as the main growth drivers of high-end refrigerators. Their combined retail

sales share in the offline market exceeded 71%. Meanwhile, driven by renovation scenarios, the trend

towards the "compact yet spacious" feature became more prominent, with attention also given to a high

ratio of freezer capacity. With the integration of home appliances and home scenarios, the penetration

rate of built-in refrigerators has been steadily rising. In 2023, the retail sales shares of built-in

refrigerators in the online and offline markets reached 17.6% and 36.7%, respectively.


According to the data from AVC, the domestic retail sales of major kitchen appliances were RMB167

billion in 2023, up by 5.3% year on year. Overall, the market exhibited features such as steady demand

for inelastic categories and a growing preference for high-quality products. In 2023, performance

disparities were seen among categories. The retail sales of inelastic categories such as range hoods,

stoves and water heaters reached RMB99.8 billion, marking a 6.5% year-on-year increase. Meanwhile,

quality-living categories, including dishwashers, water purifiers, and sterilising cabinets, saw retail sales

totaling RMB42.3 billion, reflecting an 8.6% year-on-year growth. However, integrated stoves

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experienced a 4.0% decline. By categories, the retail sales of water heaters hit RMB50.5 billion, rising

by 7.4% year on year. Due to the accelerated replacement and upgrade, the retail sales share of gas

water heaters increased to 41.3%. Smart features, health-related functions, and increased capacity of

water heaters contributed to their structural upgrades. Water purifiers achieved a total of RMB20.5

billion in retail sales, marking an 11% increase year on year, driven by significant and rapid capacity

iteration in the online market. The sales of water purifiers with a capacity of 1,000 G accounted for

more than 33% of online market sales, representing a nearly 10% increase from the previous year. The

retail sales of dishwashers reached RMB11.2 billion, up by 9.6% year on year, driven by large built-in

sets. Full-size built-in dishwashers accounted for 74% of retail sales in the offline market. Function

upgrading continued. In terms of functions, functions such as the integration of functions of washing,

sterilisation, drying and storage, layered and separate washing, and automatic recognition and program

matching have become mainstream.


According to the data from AVC, the total retail sales of small kitchen appliances in 2023 amounted to

RMB54.93 billion, representing a 9.6% year-on-year decrease. Despite an overall decline in this

category, certain products, such as soy milk makers, electric steamers, and coffee machines, saw

significant increases in retail sales, up by 18.8%, 17.5%, and 13.0%, respectively, compared to the

previous year. Moreover, inelastic and big single core items such as rice cookers and electric pressure

cookers experienced notable price increases due to growing consumer demand for quality. Additionally,

the further development of the "single economy" and "silver economy" has driven the demand for

small-capacity single products and appliances with elderly-friendly designs.


According to the data from AVC, the domestic retail sales of cleaning appliances reached RMB34.4

billion in 2023, showing a 6.8% year-on-year increase. By categories, cleaning appliances achieved a

boost in both performance and product experience thanks to technological advancement. Specifically,

floor scrubbers remained the top performer, experiencing the fastest growth in the cleaning appliance

industry. The retail sales of floor scrubbers amounted to RMB12.2 billion, marking a remarkable 22%

year-on-year increase. Additionally, constant innovations, such as high-temperature drying and deep

sterilisation technology of floor scrubbers, have contributed to the enhanced product functionality.


B. Robotics and Automation Industry

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World Robotics 2023 Industrial Robotics released by the International Federation of Robotics (“IFR”)

showed that robotics technology has been rapidly advancing. For example, collaborative robotics,

utilising sensors and visual recognition technology, can respond in real-time to changes in their

environment. With improved safety performance, their range of applications is rapidly expanding.

Intelligent robot grippers, leveraging sensors and visual recognition technology, can identify materials

and apply appropriate force to manipulate workpieces, making them more responsive. Through

software technology and open platform communication architectures, the integration and plug-and-play

convenience of robots have been further optimised. By providing more intuitive and user-friendly

interfaces and enabling natural language or graphical programming, robot programming has become

easier. Sensors, vision systems, and 5G technology assist robots in adjusting parameters based on

real-time conditions, achieving self-optimisation capabilities. By integrating cloud computing technology,

cloud robotics has discovered a broader array of applications, significantly reducing the maintenance

costs of using robots. Additionally, robotics technology is also contributing to sustainability in many

fields. According to IFR data, the global industrial robot installations reached a record high of 553,052

units in 2022, marking a 5% growth over the high base of 2021. In terms of regions, Americas achieved

a year-on-year growth of 8%, Europe achieved a year-on-year growth of 3%, and Asia achieved a year-

on-year growth of 5%. Among the newly installed robots, 73% were installed in Asia. Domestic robot

installations in China increased by 5% year-on-year, reaching 290,258 units in 2022, accounting for 52%

of the global installations. IFR also predicted that the compound annual growth rate from 2023 to 2026

will reach 7%, with the global industrial robot installations expected to reach 718,000 units by 2026.

According to the latest statistics of IFR, in terms of industrial robotic density (the average number of

industrial robotics per 10,000 workers), South Korea ranks No.1 in the world with 1,012 robotics, while

the robotic density of China has increased from 25 to 392 robotics (close to Japan’s 397 robotics)

during the decade from 2013 to 2022, ranking No. 5 across the world. Since 2016, China has been the

fastest growing and largest industrial robotics market in the world. Supported by diverse factors such

as flexible demands of the manufacturing sector, declining demographic dividend, emerging markets

and the development of innovative technologies, industrial robotics will be applied to more and more

areas, with great potential and prospects.


According to MIR analysis, in 2023, China’s industrial robot industry entered a period of adjustment,


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transitioning from a phase of market growth explosion to a new cycle featuring existing market share

capture and position securing in the segmented incremental markets. Under this circumstance, the

demand side becomes the focal point of the industrial chain. In the second half of 2023, industrial robot

manufacturers implemented measures such as product promotions, enhanced channel expansion, and

other incentives to accelerate inventory clearance, and these efforts have proven to be effective. The

industrial robot market showed improvement in the second half of the year compared to the first half,

demonstrating increased resilience. From the perspective of downstream industry demand, the

demand in the photovoltaic industry cooled off towards the end of the year but still maintained rapid

growth. The automotive, consumer electronics, and general industry sectors experienced some

recovery but fell short of expectations. The demand in the lithium battery industry showed significant

divergence, with strong investment in energy storage batteries while the demand for power batteries

experienced destocking and investment slowdown. According to MIR data, the shipment volume of

industrial robots in China in 2023 was 283,154 units, representing a year-on-year growth of 0.4%.

Looking at specific models, collaborative robotics and lightweight vertical multi-joint robots have shown

a growth trend, while other models such as planar multi-joint robots, heavy-duty vertical multi-joint

robots, and delta robotics have experienced some decline in shipment volume. According to MIR

predictions, by the end of 2023, the “destocking” phase in the market had nearly concluded, and

market demand will gradually pick up. The year-on-year growth rate of industrial robot shipments in

China in 2024 is expected to be between 5% and 10%.


C. Intelligent Building Technology Industry


In the intelligent building technology industry, Midea focuses on products, services and related

businesses with respect to buildings. It aims to provide users with comprehensive, intelligent and

sustainable building solutions based on the digital building platform and by facilitating the logistics,

information, feeling and energy flows. The smart building ecosystem mainly includes HVAC, elevator,

intelligent building (building automation) and integrated energy management. From the perspective of

the industry competition pattern, domestic HVAC, elevator and building control have the same pattern

and two major characteristics. The first is the high proportion of foreign and joint venture brands; the

second is the low market concentration. According to the data from HVAC, ChinaIOL.com and


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Changjiang Securities Research Institute, the proportion of foreign brands of commercial air conditioner

in 2023 was about 43%, and the long tail effect was obvious as only four manufacturers have a share

of more than 10%. For elevators, the data from the Business Yearbook of Elevator Industry in China

indicate that the proportion of foreign and joint venture brands in the elevator market is as high as 70%,

while the revenue scale and market share of the top domestic brands are still low. In 2023, the four

major brands of Kone, Mitsubishi, Hitachi and OTIS's revenues exceeded RMB20 billion in China. The

building control market is also dominated by Honeywell, Siemens, Johnson Controls, Schneider and

other foreign brands. From the perspective of the market size and development prospects, according to

the data from ChinaIOL.com, the sales revenue (excluding tax) of domestic commercial air conditioners

in 2023 was RMB142.9 billion, up 11% year on year, of which domestic sales accounted for about 88%;

the compound growth rate in the past three years was 13%. The application field of commercial air

conditioner is mainly divided into residential, commercial, industrial and public building. By business

type, the sales of ToB business accounted for more than 70%, and the revenue surpassed RMB100

billion in 2023. In industrial development, the periodicity of the non-residential part of commercial air

conditioner was smaller than that of residential part, which was more related to infrastructure

investment. For example, government public construction, transportation, data center, culture,

education and entertainment, medicine and other downstream segmentation still maintained a good

growth trend, and a long-term high growth rate. According to the data from the National Bureau of

Statistics, in 2023, the domestic output of elevators, escalators and lifts was 1.557 million units,

maintaining a solid year-on-year growth of approximately 4%, the majority of which were sold

domestically. Judging from the operating data of major manufacturers, the output value of a single

elevator was about RMB200,000, considering the average factory price of a single elevator equipment

and the maintenance business; the annual market size of domestic elevator equipment was RMB250-

300 billion, and the scale of the elevator industry was even larger. The data from EqualOcean

Intelligence shows that the current market size of intelligent building, which was about RMB7.1 billion in

2021, is relatively small. The equipment-based businesses such as commercial air conditioner and

elevator are "organs" in building construction, whereas building control is the "nervous system" which

controls various equipments for the high-efficiency and low-carbon operation of buildings, and

determines the overall quality of building solutions. Overall, the domestic revenue of the smart building

industry alone is approximately RMB400 billion, and the compound annual growth rate of the industry is

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between 5% and 10% (revenue caliber). Meanwhile, the rollout of the Action Programme to Promote

Large-Scale Equipment Renewal and Consumer Goods Replacement by the State Council may bring

stronger demand.


As indicated in a report released by the Changjiang Securities Research Institute, new opportunities

are ushered into the smart building industry, which are "carbon emission peak and carbon neutrality",

"digital and intelligent transformation" and "domestic replacement". With the establishment of the dual-

carbon strategy, the intelligent and low-carbon process of building construction is expected to

accelerate. Buildings account for a relatively high proportion of energy consumption and carbon

emissions in China. According to data from the Building Energy Efficiency Research Centre of Tsinghua

University, the carbon emissions of building operation accounted for about 22% of the total domestic

carbon emissions in 2021, and the proportion will further increase for the growing newly started

buildings and the decreasing inventory buildings. Therefore, as one of the major sources of carbon

emissions in the whole society, the low-carbon or even zero-carbon process in the construction field will

undoubtedly be propelled. In the recent years, a series of "carbon emissions peaking and carbon

neutrality" policies were successively issued, such as the Opinions on Implementing the New

Development Concept to Achieve Peak Carbon Emissions and Carbon Neutrality in a Complete,

Accurate and Comprehensive Manner, the Opinions on Advancing the Green Development of Urban

and Rural Development, the Action Plan for Peak Carbon Emissions by 2030, and the 14th Five-Year

Plan for Comprehensive Work on Energy Conservation and Emission Reduction. China’s local

governments have issued their action plans for peaking carbon emissions while the ministries and

committees of the central government rolled out documents for the same purpose, such as the Opinion

on Fiscal Support for Peaking Carbon Emissions and Achieving Carbon Neutrality issued by the

Ministry of Finance, the 14th Five-Year Plan for Building Energy Efficiency and Green Buildings issued

by the Ministry of Housing and Urban-Rural Development, and the Advanced, Energy-saving and

Accessible Levels of Energy Efficiency for Key Energy Consuming Products and Equipment (2024

Edition) unveiled by the National Development and Reform Commission. All these policies mention

buildings, HVAC, etc., with a view to improving the building energy consumption management system,

enhancing the building energy consumption monitoring capacity, building energy saving management

capacity, and building energy efficiency level, and promoting the large-scale development of ultra-low


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energy consumption, near-zero energy consumption, and low-carbon buildings. With stronger policy

incentives and constraints, the building energy-saving upgrading, intelligent operation, and cooperative

energy management are bound to become the main measures for the targets in addition to the

construction of low-carbon building standards and administrative supervision. As to the market side, the

electricity price reform, "power rationing" and other measures have raised the cost and the input-output

ratio in building energy saving renovation, energy management, and digital operation, and thus more

and more market entities begin to positively carry out the “dual carbon” strategy and energy saving

renovation. Taken as a whole, under the background of "dual carbon", the building construction, as one

of the main sources of energy consumption and carbon emissions in the whole society, accelerates the

process of energy conservation and carbon reduction, and catalyzes the outbreak of demand for

efficient low-carbon building solutions. The demand for digital intelligent building will also increase

significantly, as the development level of buildings is a key link in "smart city" and still lagging behind

under the trend of digital economy. At the same time, with continuous progress of communication,

computing power and algorithms, the system-level control such as HVAC and elevators will move to the

building-level control - the first is the space expansion brought by changes from "control" to "service";

the second is the narrowing gap to foreign enterprises with first mover advantage. Additionally, the

more positive and clear signal comes from the transformation and upgrading of the elevator industry

driven by digital intelligence. In 2018, the General Office of the State Council issued the Opinions on

Strengthening the Quality and Safety of Elevators for the purpose of promoting the elevator installation

on existing residences and the maintenance of old elevators. Specifically, the maintenance should

press for quality, and resources should be allocated on the basis of fully grasping the operation of

elevators, hence the application of information technology such as big data and IoT is getting more

important. In 2020, the State Administration for Market Regulation divided the maintenance methods of

different elevators according to the standard of "whether there is a remote monitoring system based on

IoT". The domestic replacement of commercial air conditioner has undergone three processes: single

unit, multi-split unit, and large chiller. The share of homegrown brands was approximately 57% in 2023,

and that of the homegrown brands of large chillers, where the barriers are relatively high, is also

increasing. The commercial air conditioner industry has entered the stage of domestic replacement in

all aspects, and thus there is a large space for future growth. Compared with air conditioner, the

domestic replacement process of elevator is relatively slow, but the relevant market pattern will be

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optimized with the gradually weakened real estate dividend, the changes in maintenance mode, and

the application of IoT. In the medium and long term, there will be more opportunities and increasing

competition in the smart building industry with the market structure of "high proportion of foreign

investment & low market concentration". On the one hand, the policy of "double carbon" is fostering the

energy-saving upgrading and smart operation under the context of high proportion of carbon emissions

and energy consumption by buildings. On the other hand, with the improvement of digital intelligence,

the input-output effect of smart buildings is changing qualitatively.


2. Business Scope in the Reporting Period


In 2023, despite the gradual recovery of domestic market demand and the overall rebound of the

economy, the global political and economic environment remained complex and the business

environment remained challenging due to fluctuations in overseas economies, currency movements

and the deterioration of geopolitical conflicts overseas. Against this backdrop, Midea Group held firm to

its operating philosophies, effectively implemented its annual operating principle of “Stabilize Profit &

Drive Growth”, and continued to focus on its core businesses and products. As a result, Midea

delivered the best business results in its entire history, as well as various remarkable advancements,

with better key indicators such as profitability and cash flow, demonstrating its operational resilience

and long-term, high-quality growth. For 2023, Midea achieved, on a consolidated basis, total revenue of

RMB373.7 billion, up 8% YoY; and a net profit attributable to its shareholders of RMB33.7 billion, up 14%

YoY.


A. Focused on users and scene-based product planning, and continuously refined the whole

value chain leveraging Midea’s multi-category advantages and digital technologies, so as to

upgrade business scenes, products and services


In order to carry on with the “customer-oriented” strategic reform, the Company creates more user

value in business scenes, products and services which are in direct contact with users. Based on users'

yearning and pursuit for a better life, Midea pursues higher goals such as originality, sustainable selling

points and technology explicitness, and continues to empower itself with the tool of big data, so as to

achieve the vision of "Bring Great Innovations to Life". In addition, based on user needs and


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consumption trends, Midea offers its own products and ecosystem products. It provides users with

differentiated entire-house smart solutions with the deep integration of “smart home appliances + smart

home”; and launches homegrown core terminals, such as smart central control and household smart

host which deeply integrate home appliances and smart home systems, making life at home more

efficient, convenient, healthy and comfortable. By doing so, it aims to lead the way in the innovation of

smart household appliances.


Residential air conditioners:


Based on three major directions of carbon neutrality, air value, and smart home, Midea has focused on

its technological strategy of “cooling, heating, energy conservation, intelligence, health, and comfort”,

and rebuilt the “Three Generations”, exploring disruptive and differentiated product technologies to

enhance product competitiveness. In 2023, Midea’s R290 technology for air conditioners achieved

another breakthrough. The new Efficlima product achieved a seasonal coefficient of performance

(SCOP) of 6.3 and a seasonal energy efficiency ratio (SEER) of 12.17. Compared to R32 refrigerant,

which was mainly sold in 9000BTU models of the same power range, R290 Efficlima refrigerant

achieved a reduction of approximately 447kg CO equivalent emissions. In recognition of Midea’s

contributions to the implementation of the HCFCs Phase-out Management Plan (HPMP) and ozone

layer protection in the room air conditioner industry, the Foreign Environmental Corporation Centre of

the Ministry of Ecology and Environment, the United Nations Industrial Development Organisation, and

the China Household Electrical Appliances Association jointly awarded Midea Air Conditioner the first-

phase HPMP certification for the room air conditioner industry. Additionally, Midea’s R290 air

conditioning products are TV-certified, surpassing the highest level of energy efficiency in the

European Union. Targeting entire-house air solutions, Midea has taken the lead in launching the 1:1

Freshness Air Machine, which truly achieves a comprehensive health air system with professional-

grade sterilisation, purification, fresh air, and dehumidification. It is equipped with a 2000-fold high-

energy pulse sterilisation system, achieving an air purification efficiency of up to 400m/h and a fresh

air volume of up to 210m/h. By utilising high cooling capacity and breezeless technology, it achieves

rapid cooling and a golden comfort sensation of 0.1m/s, while also incorporating linked temperature

and humidity control technologies to provide a comfortable experience throughout the seasons. Midea


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"Cool Kitchen" Series Kitchen Air Conditioner provides a solution to address core pain points in

Chinese kitchens. This series is characterized by "large cooling capacity", "cooking smoke resistance",

and "easy-to-install design", effectively meeting users' demand for a comfortable and cool kitchen.

Moreover, it employs a new system design equipped with technologies such as the graphene thermal

conductivity coating, copper pipe sprayed with anti-corrosion coating, black magic box for oil filtration of

the outdoor unit, and water misting, achieving advantages in new scenes, such as high heat transfer

performance, corrosion resistance, and zero water discharge. The All-Season III Commercial Air

Conditioner relies on the industry’s first entire-house intelligent air solution that meets the criteria of

“whole-space, full intelligence, good air, and customisation.” It utilises continuous enhanced vapor

injection technology to achieve robust operation even in environments as low as -2°C. Equipped with a

T3-level ultra-high-temperature compressor and employing full liquid cooling zone heat management

technology, it achieves robust cooling at temperatures as high as 58°C, maintains high-performance

cooling at 43°C, and operates efficiently at 35°C. Integrated with a “multi-system multi-module central

control core,” it can connect to “entire-house floor heating, entire-house fresh air, entire-house humidity

control, and entire-house health,” allowing customizable entire-house air management.


Laundry appliances and refrigerators:


In view of the four demand directions of cleanness, health, efficiency and care, Midea comprehensively

builds its core competitiveness in the global laundry and care industry. It has launched the Washer-

Scrubber, the first solution in the industry that integrates the functions of a washing machine and a floor

scrubber. Specifically, this product is equipped with a shared water system for its base and washer,

demonstrating Midea's novel integrated design in the waterway, air path, dust collection, and circuit.

Moreover, it employs the internationally advanced AI-powered Light Dry Cleaning technology. The hot-

water-flushing floor scrubber enables potent airflow, penetration, and efficient drying while boasting a

cleaning ratio of the mop as high as 1.10. Additionally, the AUTO-PROTECT chlorine dioxide slow-

release anti-bacterial technology is employed to enable food-level sterilization, safe and

environmentally friendly. This product adopts AI technology to accurately judge the stain scene and

achieve precision mopping through reverse torque. Furthermore, patented technologies, such as the

Auto-Dos dual-chamber self-dispensing system and the Auto-Cut automatic hair-cutting technology,


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are used for this product. To be more specific, the Auto-Dos system allows precise dispensing of

different cleaning solutions through automatic proportioning. As for the two chambers, the left chamber

is intended for cleaning solutions for floor and mop cleaning, enabling thorough dissolution of heavy oil

and dust. The right chamber houses an automatic cleaning station and drainage system and enables

sterilization and stain removal. The Auto-Cut technology can accurately identify, suck, and cut the hair

at the corner, effectively preventing hair entanglement and blockages. Also, this product is equipped

with a high-definition camera, which, through large-scale modelling training on the home scene images

using AI technology, allows this product to proactively detect stains on the floor and perform deep

cleaning in specific areas. More importantly, this invention has won the Red Dot Design Award and the

iF Design Award. COLMO New Image Zero Built-In Washer-Dryer Suite adopts automatic electronic

pop-open doors with the industry’s first zero built-in technology, crystal clear dazzling window, and

white cloud wave appearance. The glass doors are seamlessly integrated with the machine, and can

automatically open after washing and drying. The laundry appliance features clean care soft washing,

and employs multi-phase detergent rapid dissolving direct spraying technology, achieving the industry’s

highest detergent utilisation rate. It has obtained certifications for washing waterproof levels of technical

jackets, light exercise wear and tear and elastic recovery performance, and international green

woolmark. The clothes dryer is equipped with the new second-generation full variable frequency

technology, miniaturised with high energy density, leading the industry in low noise, and fast drying

performance. To respond to the green strategy, Midea made arrangements for the development of the

full-life-cycle green wash and care technology for products. This move made Midea K03 Washing

Machine the first laundry appliance in China to be certified by the Life Cycle Assessment. Concurrently,

this product reached the highest energy efficiency rating in Europe, attributed to a decrease of 43% in

annual electricity consumption as compared to conventional models. Moreover, the novel ultra-thin

platform reduced the weight of the entire machine by 10%. Through the optimisation of eco-friendly

packaging materials and the degree of recyclability, the consumption of non-biomass resources during

the whole life cycle of this product is reduced by 26% compared to traditional products on the market.

Midea has introduced several localised new products in overseas markets, such as the M01 Series

Front-Loading Washing Machine tailored for the high-efficiency energy-saving requirements of the

European market, the versatile Toshiba front-loading series products designed for the low water

pressure demand in the ASEAN market, Midea Stirring Fully Automatic Washing Machine Series with

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A-level energy efficiency targeting the Brazilian market, and MA501, Midea’s first smart wave drying

paired washing machine, launched for the North American market.


Midea focuses on three major technological innovations for refrigeration, i.e. the “High-energy Photon

Pulse Sterilization Technology”, the “High Activity ORR-based Ultra-low Oxygen Catalysis Refrigeration

Technology”, and the “Precise Ice Temperature Technology-coordinated Plasma-based Preservation

and Purine Regulation Technology for Aquatic Products”. COLMO EVOLUTION Tianshu Refrigerator is

equipped with the industry's first AI-Door automatic door opening and closing technology, allowing the

90-degree panoramic door opening. This series is also the first one in the industry to have employed

the -40℃ cryogenic technology, allowing AI molecular-level nutrient management and thus capable of

significantly increasing the anthocyanin content and effectively inhibiting purine. TOSHIBA Large-

capacity Built-in Pear Suite Refrigerator employs the self-developed vacuum insulation material in

combination with the novel horizontal evaporator to ensure small dimensions but a large capacity.

Moreover, the front bottom cooling system and dual-axis free-track hinge effectively help users

maximize space efficiency. The industry's pioneering constant-humidity fruit and vegetable preservation

technology and meat freshness enhancement technology are employed to accurately provide a

suitable storage environment for each type of food ingredient. This series boasts the industry's quickest

60-minute ice-making function and is equipped with three technologies, namely the "pulse sterilization

technology", "low-oxygen preservation technology", and "purine reduction technology". Additionally, a

number of homegrown products have been launched in overseas markets, such as the first French-

style refrigerator with chilled water function for the North American market and the new Built-in BMF

series for the European market.


Kitchen appliances and other home appliances:


Aiming at delivering a more comfortable kitchen environment, Midea starts with the kitchen

environment and cooking smoke and has rolled out range hoods that enable efficient smoke suction.

To protect users' health, a range of products, including dishwashers, steam ovens, and rice cookers,

has been introduced to respond to users' demands for kitchenware cleaning and sterilization, and

healthy cooking. Midea Smoke-free Series Range Hood employs multiple technologies. Specifically,

the MAX efficient dual air ducts are used to ensure efficient smoke suction; the FCS future chip power

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engine is used to achieve the highest suction in the industry of 28 m/min and wind pressure of 1,200

Pa; the nautilus shell-like design and the aerodynamic streamline wing-like design are incorporated to

reduce the smoke discharge resistance, increase the smoke discharge velocity, and effectively lower

noise; the intelligent collaborative cruise technology enables automatic start-up and air volume and

wind pressure regulation; the unique 110℃ high-temperature steam technology is used to deliver a

cleaning and sterilization rate of more than 99%, which, at the same time, has been granted the

authoritative "level-1 smoke removal" certification in the industry. Midea Concentrated Flame

Fragrance Creating Gas Stove is equipped with a pioneering Concentrated Flame burner that can

effectively increase the covered pot area by 80%, improve warming-up efficiency by 40%, and enhance

temperature picking-up efficiency by 28%, far surpassing the industry’s Grade 1 Fragrance Creating

standard. It utilises the Tianyuan high-efficiency Concentrated Flame plate, achieving a thermal

efficiency of up to 70%. With the pioneering synchronous valve firepower control, it can synchronise

and adjust the inner and outer ring flames for uniform combustion. COLMO AVANT Series Dishwasher

boasts the industry’s highest cavity occupancy ratio, with three-layer dish baskets capable of

accommodating and washing more tableware. They integrate innovative technologies such as Dual

Flow deep cleaning, ion deodorisation, and ultimate hot air drying, surpassing the highest national

water efficiency standards. The industry-first dual-axis variable track hinge enables 5mm micro-seam

insertion, meeting the demand for kitchen integration.


Midea Real Taste Built-in Microwave-Steamer-Oven-Fryer Combo features a zero built-in design and

employs microclimate temperature and humidity dual-control technology. This automatically adjusts the

temperature and humidity environment during baking according to the ingredients, significantly

enhancing food texture. It innovatively upgrades the “Steam with Only One Cup of Water” technology,

with steam time lasting up to 120 minutes, while increasing steam utilisation and reducing water

buildup in the cavity. It utilises self-developed MIX fat burning algorithms, achieving an air frying de-

fatting rate of over 95%. It also features multi-layer simultaneous baking function and innovative air

duct design combined with rapid heating algorithms, enabling multiple ingredients to be baked

simultaneously and uniformly. Targeting the high-end market, Toshiba’s first built-in waterwave stove

and Toshiba Stone Kiln Microwave Oven have been introduced, while products such as FSR Large

Oven and Cabinet-style Freestanding Gas Oven have been launched for the North American market.


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Midea Red Flame Premium Aroma Series Rice Cooker focuses on “fragrant and delicious rice” by

innovatively employing top-cover IH heating to achieve a high-temperature red flame plate at 131°C.

Combined with bottom and side heating, it enables three-dimensional enveloped heating, bringing out

the deep aroma of rice. Midea Quick Tender Series Electric Pressure Cooker focuses on

“deliciousness and speed” by using 2200W 3D intense fire to cover the pot and 3D high-pressure

tender locking technologies to lock in juices and enhance flavour from all angles, meeting users’

demands for efficient and delicious cooking. Midea Hot Series Air Fryer focuses on “healthy and good

taste” by using innovative three-dimensional heat source technology and a brand-new air duct design

to improve the uneven cooking issue of traditional air fryers. It can also intelligently control cooking

temperature, airflow, humidity, etc., to achieve multidimensional tastes and satisfy the need for healthy

and tasty food. Midea Level-1 Silence Quiet Blender, through original noise reduction technology and

structural optimisation, solve the pain point of loud noise during use. Additionally, with the small space

grinding system, its residue rate is less than 0.5%, and its food crushing performance reaches an

industry-leading level.


For entire-house water use scenarios, COLMO Tianshu Electric Water Heater features AI-Core instant

heating engine technology and “20x Capacity Expansion” technology. This enables a large water flow

rate of 10L/min and produces an extensive hot water volume of 1,200L, achieving the Leader certificate

from the CHEARI. With AI power adaptation and ATC adaptive constant temperature control systems,

it enables cold to hot bidirectional electronic adjustment, achieving precise control for every Celsius of

water temperature, meeting the water needs of the whole family in whole scenes. It adopts the

industry’s first hexahedral structure design with a sapphire-cut surface. As the industry’s first variable

frequency high-flow water purifier, Midea Waterfall 1,000G Water Purifier introduces the innovative

Waterfall system, boosting flow rate by 36%. Leveraging five-dimensional noise reduction technology, it

achieves the lowest noise level in the industry. With a spiral flow channel design, it enhances anti-

clogging capabilities. Utilising multi-membrane RO filter technology, it offers a lifespan of up to five

years. Its swirl water inlet design eliminates the need for scale inhibitors and has received authoritative

certification for Super Grade 1 Water Efficiency and water conservation in the industry. Midea has

launched an industry-first 360°spill-proof electric kettle with an innovative structure to prevent leakage

when pouring. It features built-in gravity pendulums and anti-leakage gravity ball structures, ensuring


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comprehensive spill prevention when tilted. Employing a unique combination of a straight spout and a

bottle flow channel structure, it effectively guides water flow, precisely controlling the stream to ensure

smooth pouring.


In the field of entire-house cleaning, Midea has released the next generation of Dust-free Floor

Scrubber Series GX5 Pro and G9. They feature integrated functions of “vacuuming, mopping, and

washing,” addressing pain points such as hair entanglement, water residue, and incomplete cleaning.

With a unique dual scraper design, they effectively prevent hair entanglement, while the triple-edged

floor brush cleans corner areas efficiently. Additionally, they come with self-cleaning roller brushes and

air-drying odor removal functions, providing a more lightweight and user-friendly experience through

their lightweight body design combined with self-traction assistance. The Smart Eye Series Robotic

Vacuum Cleaners V10 and V12 have undergone comprehensive upgrades, including automatic dust

collection, automatic cleaning, and hot air drying functions for their docking stations. They are equipped

with a 5,000Pa suction power to enhance cleaning efficiency and utilise “AI structural light + 3D

recognition” to achieve precise obstacle avoidance and escape.


B. Adhered to technological innovation, established a digital R&D system for agile innovation,

improved the "Three Generations" R&D model, implemented the strategy of “Innovation

Patentability, Patent Standardization, Standard Internationalization and Midea Standard Goes

Out”, and promoted the strategy of “Technology Leadership” in a comprehensive manner


Midea continued to invest in R&D. Through larger investments in this respect, it aims to achieve

leadership in R&D achievements and product trends, as well as a stronger presence in the industry and

a better R&D environment. The Company made innovations with respect to mechanism, and

developed more leading products through both excellent user experience and differentiated

technologies, reform of the whole value chain of R&D using digital technology, and deep integration of

big data analysis and R&D. It kept reforming its product development model according to the strategic

focus of “Leading Products”. An innovative R&D model featuring a “Three-Tier Technical Committee

System” and a “Four-Tier R&D System” from the organizational dimension and “Three Generations”

from the technology dimension has been put in place and constantly refined to support the fulfillment of

the goal of “Being the Number One or the Only One” in respect of various product categories.

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Centering on customer needs and based on different organizations and technologies, the Company

carries out innovative product development, research on cutting-edge platforms, research on core

components, creation of differentiated selling points and improvement of the basic product performance.

Through group development of products across the world, building a global product platform, as well as

increasing product development efficiency by way of group planning and group development, Midea is

building “Technology Leadership”. As of the end of 2023, Midea boasts 16 national-level science and

innovation platforms, including national key laboratories, national open innovation platforms for artificial

intelligence, national cross-industry and cross-field platforms, national industrial design centres and

corporate technology centres, post-doctoral research stations, etc.; as well as 70 provincial- or

ministerial-level science and innovation platforms, including provincial and ministerial-level corporate

technology centres, engineering technology research centres, industrial design centres or key

laboratories. Under the guidance of the strategy of “Technology Leadership”, the innovation platform

serves as the core of its technology innovation system and is responsible for the implementation of

technology development strategies and the commercialization and application of technology innovation

achievements, thus driving Midea’s transformation towards a global technology group in a faster

manner.


Midea Group is committed to investing in the research of core technologies and has made significant

breakthroughs in the main tracks and in the field of new industrial technology. In the field of smart

home, Midea has developed several key technologies through the project of “Research and

Industrialisation of Key Technologies for Entire-house Smart Air Solutions”. These technologies include

coordinated control technology for entire-house air treatment equipment, proactive hosting control

technology, and high-efficiency cooling technology for high-ambient temperature environments. They

effectively address issues such as coordinated control of various air treatment devices in the whole

house, personalised proactive services, and adaptability to high-ambient temperature cooling, providing

users with intelligent air solutions. Through the project of “Research and Industrialisation of Key

Technologies for High Power Density Digital Variable Frequency Power Supplies”, catering to the

needs of high space utilisation and multifunctional integration of kitchen appliances, Midea has focused

on breakthroughs in key technologies such as small volume, high power density, and high reliability of

digital variable frequency power supplies for kitchen appliances to meet the diverse needs of users in


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various scenarios. Additionally, through the project of “Research and Industrialisation of Key

Technologies for Natural Refrigerant Electro-thermal Hybrid Heat Pump System with High Energy

Efficiency”, Midea has introduced the concept of micro-channel flat tube uniform flow & reduced

charging technology for the first time, and developed a low GWP refrigerant electro-thermal hybrid

water heater based on intelligent logic modelling, achieving the A+ energy efficiency level of EU

appliances. Furthermore, Midea has utilised reconfigurable Helmholtz resonance cavity vibration

isolation technology to optimise compressor systems, achieving low-noise effects for water heaters. In

the field of commercial and industrial solutions, through the project of “CO2 Rotary Compressor for

Thermal Management of Electric Passenger Vehicles”, Midea is the first to use rotary compressors in

passenger cars. This application of rotary compressors in eco-friendly refrigerant thermal management

areas leads comprehensively in key performance parameters such as energy efficiency ratio, noise,

vibration, pulsation, and oil discharge rate under design conditions. Through the project of “High-

efficiency and High-reliability Integrated Electromechanical Control Maglev Variable Frequency

Centrifugal Unit”, Midea has developed system stability analysis and gain matrix tuning technology

based on advanced nonlinear matrix inverse solution. This includes the research and development of

multimodal self-optimising mode identification technology and variable speed state signal tracking

detection technology to enhance the stability of maglev compressor system operation. Through the

project of “Research and Application of Full-time and Full-domain Coordinated Optimisation Control

and Panoramic Intelligent Operation and Maintenance Technology for Environmental Control System”,

Midea has developed the optimisation control technology of the environmental control system based on

a hybrid drive model of data mechanisms. This achieves rolling load prediction based on time series,

effectively improving the overall energy efficiency of the environmental control system. By the end of

2023, Midea had won a total of three national science and technology awards, and more than 440

provincial and ministerial science and technology awards, as well as received over 340 "Internationally

Leading/Advanced" certificates for its technologies. In terms of industrial design, Midea leads the way

in user experience and interaction upgrading with ongoing innovations. In 2023, Midea won a total of

135 industrial design awards, including 33 Red Dot Design Awards, 49 iF Design Awards, 47 IDEA

Awards, and six G-mark Awards.


Midea has strengthened the transformation of R&D achievements while carrying out the core


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technology research. By the end of 2023, Midea held more than 80,000 valid patents. In 2023, Midea

was granted more than 4,000 invention patents around the globe. Midea continues to improve patent

quality. It won multiple awards at the 2023 24th China Patent Awards. To be specific, the "Frame

Components of the Clothing Handling Device and the Clothing Handling Device" won a Silver Invention

Award, the "Stand-alone Air Conditioner (CH)" won a Silver Design Award, and the Excellence Award

was received for eight patents including the "Control Method and Control Device of the Air Conditioner,

the Air Conditioner, and the Storage Medium of the Air Conditioner", the "Rotor Core, the Rotor and the

Motor", the "Control Method, Control Device, Computer Equipment and Storage Medium for Robotic

Motions", the "Magnetic-bearing Compressor, the Air Conditioner and the Setting Method for the

Protective Air Gap Value", the "Range Hood", the "Control Method for Defrosting Food in the

Microwave Oven and the Microwave Oven", the "Air Cylinder, the Compression Mechanism and the

Compressor", and the “Smart Door Lock”. In addition, 21 provincial-level patent awards were granted to

Midea during 2023.


In order to provide strong support for the fulfillment of the strategic objective of “Technology

Leadership”, Midea further implements the “3+1” standardization strategy of “Innovation Patentability,

Patent Standardization, Standard Internationalization and Midea Standard Goes Out”. And through a

two-tier (Group-business divisions) standardization management system and the double drivers of

“standard innovation + product innovation”, Midea shifts innovation achievements to advanced

technological standards. During 2023, Midea put forward the standard quality priority for the first time,

and furthered the technology strategy project standard transformation campaign. In the year, it took

part in the formulation/revision of 235 new technological standards, including five international

standards, 70 national standards, 28 industry standards, and 132 local and group standards. And it led

the introduction of the standard of “Household and Similar Refrigerating Appliances—Purification and

Health” into the ASEAN, playing a part to promote high-quality development of the “Belt and Road”.

Besides, the said standards also include “Standard for Functional Requirements of Toolchain for

Artificial Intelligence Model Deployment on Edge Devices”, “Ergonomics - Accessible Design - Part 4: A

Method for Estimating Minimum Legible Font Size for People at Any Age”, “Carbon Footprint of

Products—Product Category Rules—Air Conditioners”, “Technical Requirements for Household and

Similar Tumble Washer-dryer”, “Specification for Home Integration Built-in Effect Evaluation for Built-in


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Refrigerator”, “Standard Samples of Induction Cookers for Thermal Efficiency (86%) Testing”, “Electric

Dishwashers for Household Use-Methods for Measuring the Performance”, “Standard Samples of

Reference Microwave Ovens for Thermal Efficiency Testing”, “Programmable Controllers—Part 2:

Equipment Requirements and Tests”, “Energy Storage Thermal Management—Refrigeration (Heat

Pump) Units”, “Evaluation Requirements for the Organization of Appraisals of Energy Conservation and

Carbon Reduction for Household Appliance Manufacturers”, “Fine Bubble Technology”, as well as

green and low-carbon standards such as “Carbon Footprint Measurement Rules for Household

Appliance Products—Room Air Conditioners”, and “Carbon Efficiency Ratio Calculation Methods for

Products—Room Air Conditioners”. Additionally, Midea leads an international standardization taskforce

at IEEE (Institute of Electrical and Electronics Engineers), is the secretariat institution of the 3rd

Household Appliances Standardization Technical Committee of Guangdong Province, and hosted the

2023 Working Meeting of the National General Group for Artificial Intelligence Standardization.

Additionally, Midea won 40 new standardisation expert seats in relevant organisations at home and

abroad, and undertook seven provincial and above-level standardisation pilot projects.


C. Deepened the channel transformation, further improved the channel efficiency and rebuilt the

retail service abilities so as to achieve direct connection with customers


Being customer-oriented, Midea continues to enhance vertical efficiency and horizontal synergy

efficiency, as well as accelerate retail growth and transformation. Through the reform of direct retailing,

Midea has been continuously promoting the "vertical efficiency improvement" of offline channels, and

advancing the transformation of new operator empowerment. By improving operators' digital drive,

retail empowerment, engineering projects and other five capacities, it optimises the operation

competence and consistency of omni-category operators, and realises "One Midea" for all markets,

ensuring the consistency of user service and experience. As online and offline markets integrated at a

faster speed, based on changes in levels, characteristics, needs and ways of spending in different

channels, Midea drives the retail transformation based on user demands and experience, and keeps

refining the retail operations system, so as to achieve direct connection with retail customers.


In 2023, online sales (including online sales in lower-tier markets) as a percentage of Midea's total

sales surpassed 50% in the domestic market. In the e-commerce channel, Midea continued to push

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ahead with the upgrade of scenario-based product suites and the breakthrough of trending product

categories. Additionally, Midea redoubled its efforts at channel segmentation and made arrangements

for interest-based e-commerce platforms, which delivered continuous breakthroughs. During the "18

June" and “Double 11” shopping festivals in 2023, Midea ranked first in the industry for 11 consecutive

years in terms of total sales online. Also, efforts were made to promote the integration of online and

offline business in the domestic market, rapidly develop new business models such as O2O and OMO,

and build the abilities of the shared inventory system and digitalized delivery. Meanwhile, by promoting

omni-channel development of Midea's customer system in the e-commerce ecosystem, Midea

improved the efficiency of customer operation and met the consumer needs for scenario-based and

one-stop shopping through the development of multi-category ecological stores. Midea continued to

strengthen stores' retail capabilities and, starting from self-run exclusive stores, improved their whole-

chain retail experiences and helped stores carry out digital retail transformation driven by new systems

and tools. First, it continued to upgrade the "Midea Cloud Sales+" ecosystem, developed Midea's own

retail business platform, and successfully accomplished the “physical operation centre” reform and the

full upgrade of the "Midea Cloud Sales" system. As a result, the "Midea Cloud Sales" App recorded a

year-on-year increase of over 100% in the daily average page views (PV), and the efficiency of direct

retail was significantly boosted. Second, it reconstructed the retail system of stores based on the

"Midea Cloud Sales" App and the "Midea Home Delivery" mini-app to provide service support functions

such as store management, shopping guide, financial instruments and cloud warehouse. Third, with the

support of digital marketing tools, it promoted service models such as model rooms of real estate

projects, trade-ins, and precious traffic attraction, as well as facilitated stores' online and offline whole-

scene marketing and promotions, thereby empowering online and offline integration, customer

acquisition and potential customer conversion. Fourth, it developed a digital and intelligent platform

operations system to improve stores' management efficiency and conducted classified product

operation and hierarchical store management based on the label-based system for products and stores

so that retail data and business activities can be reviewed online and stores can carry out rapid

analysis and precise operation. By providing industry-leading digital platform services, Midea has

completed the all-product-category, pre-decoration, and retail upgrades of more than 17,000 stores,

and has established more than 8,000 benchmark stores of digital retail. Midea made vigorous efforts to

expand into the new retail market (lower-tier markets). As a result, Midea gained the largest overall

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share of the core new retail channel platforms in the industry and has fully expanded into stores in new

retail markets, achieving a product penetration of more than 98%. Through joint, product suite-based

and scenario-based display, it provided a full range of shopping experience. And it continued to work

on new categories and products and exploit new potential on the new retail market. As a result, Midea

has outperformed its peers in terms of the sales of emerging products such as residential central air

conditioners, dishwashers, air fryers, and clothes dryers. With the introduction of models such as

collective procurement and vouchers, it has improved consumption quality. In this context, the average

prices of Midea’s products in all categories have risen by more than 10% in the new retail channels.

Meanwhile, by offering cleaning, clothes care and exchange instead of repair in a year services, Midea

has been providing high-quality whole-chain consumer services at the pre-sale, in-sale and post-sale

stages, and strengthened the user royalty in the new retail channels. In terms of marketing, Midea

promotes brand image enhancement, content-based marketing and digital traffic attraction, and

redefines Midea Entire-house Smart Appliances with "Humanising Technology", "Humanising AI" and

"Humanising Design". From single products, product suites, to entire-house products, it creates active,

comfortable smart home experience that varies with users in different scenarios. Highlighting premium-

brand product suites, Midea empowers terminals with its resources in high-end circles, creates user

experience value, and cultivates perception and sense of identity with long-term systematic marketing

and promotion activities. On popular social media platforms, Midea effectively reaches users with new

categories of products through whole-new content marketing, digital marketing, and precision

marketing to enhance brand presence, user-initiated searches and marketing-based traffic attraction.


Midea continues to enhance consistent end consumer experiences. Based on the "M-Smart" platform,

it integrates online and offline user services, allowing users to experience products offline and buy

products online, thus strengthening out-of-store marketing capabilities and expanding the coverage of

post-sales services. By doing so, Midea ensures that consumers can achieve the same shopping

experience at franchised stores as they do on e-commerce platforms, improves product promotion of

offline stores and the effect of distribution and traffic direction of online stores, continues to attract

footfall for stores, and strengthens the marketing capabilities of offline stores. In terms of user

operations, Midea utilises a diverse approach across online and offline touchpoints, leveraging digital

tools such as WeChat Enterprise and mini-apps to connect with users. By deeply exploring user needs


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and pain points, Midea has built an integrated TOB/C operation system. This involves accurately

segmenting user groups, providing targeted products and services, strengthening member benefits and

service systems to enhance user satisfaction. Furthermore, through user co-creation platforms, Midea

motivates more users to actively participate in product co-creation, review, and recommendation

activities. By the end of 2023, Midea’s private domain users had exceeded 20 million, and the

registered members had surpassed 180 million. Based on the “1+3+4+N” axis of the entire-house

smart strategy, Midea has built long-term competitive capabilities. Focusing on the three core terminals

of smart central control, home gateway, and smart sensors, it has established a matrix of smart home

products. By integrating a full range of smart home appliances, Midea has launched the system of four

major appliances, offering visual, proactive, and intelligent home appliance integration functions and

services. This forms a entire-house product system and capability of “smart home appliances + smart

home”. Midea has established standardised processes and targeted support throughout the entire

chain including investment attraction, store establishment, scene design, solution sales, installation,

and commissioning. It continuously optimises efficiency tools, providing simple and easy-to-use digital

tools such as “Design Helper”. It has initially established a smart technology service system covering

multiple regions, forming comprehensive support capabilities for intelligent solution design, delivery,

installation, commissioning, acceptance, and after-sales service.


Centering around three types of targets: users, customers, and engineers, Midea perseveres in the

business model reform of the user service system to improve service quality and user experience and

provide one-stop entire-house smart home appliance service solutions. First, Midea upgraded service

standards based on the peak experience principle, refined the service procedure and technical process

for various categories of home appliances and introduced them to the public through press conferences

and mainstream media, as well as enabled users to review service standards online at any time.

Second, Midea has set up a butler-style service system tailored to specific service scenarios such as

factory-installation, product suites, high-end brands, and special user groups. Based on the entire

product lifecycle, it proactively engaged with users to provide differentiated butler service models for

different groups. Third, the delivery and installation services of product suites have been improved to

optimise the user experience and facilitate the transformation of single-product stores into product-suite

service stores. It aimed to establish a product suite service network with “one district, one county, one


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point”, achieving comprehensive coverage of product suite business in domestic counties and markets.

Additionally, it has built an engineer training and certification system to enhance the multi-category

service capabilities of engineers. By leveraging the transformation of service networks and multi-skill

training, it has implemented a service model where product suite purchasers have “one contact person,

one visit” service experience. Fourth, it has enhanced entire-house smart service capabilities by

establishing entire-house smart service training bases based on store distribution and providing

specialised training. Through engineer certification for entire-house smart service capabilities and the

establishment of professional service teams, it has gradually achieved comprehensive coverage of

entire-house smart services. Fifth, in-depth insights into user and customer return and exchange

service needs have led to direct returns and exchanges for users, allowing them to view, expedite, and

review their returns and exchanges. The return and exchange service process was simplified to

enhance the return and exchange service experience. Sixth, Midea enhanced the service experience of

high-end brands by selecting excellent service outlets, realising “one appointment and one delivery and

installation” for high-end brand product suites. In some regions, pilot programs were provided for

integrated services including “sales-delivery-installation-maintenance-repair”. Special certification was

offered for high-end brand engineers, and engineer service incentives were established. Through

projects such as “Service Butler” and “High-end Private Care”, the aim was to enhance user stickiness,

creating a distinctive premium service experience that leaves a lasting impression.


Annto, a subsidiary of Midea Group, is a technological innovation-based supply chain management

company and is committed to providing customers with end-to-end integrated, digital and intelligent

supply chain solutions. Annto deeply fosters itself in the industrial supply chain service sector and,

adhering to the "customer-centric" business philosophy, provides customers with end-to-end digital and

intelligent supply chain solutions ranging from production and logistics services from raw materials to

finished products, a shared inventory system from online to offline channels, ToB/C integration, to

integration services of warehouse distribution logistics and integration services of delivery and

installation. It helps enterprises promote channel reform and supply chain efficiency improvement and

improve competitiveness, and keeps supporting customers' high-quality growth and sustainable

development. With the industry-leading practical experience in channel reform of major enterprise

customers such as Midea and the continuous improvement of the intelligent warehouse network


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system for domestic supply chains, Annto has covered thousands of brand customers in daily chemical,

beverage, wine, food, home appliances, home furnishing and new energy industries, with its market

share and brand presence steadily strengthened. Annto continues to strengthen the in-depth

integration of technology with the logistics and supply chain business to create a comprehensive end-

to-end intelligent logistics platform. Through the development of the integrated intelligent logistics

platform, it opens up the digital chain covering production logistics, warehousing and distribution

networks, distribution capacity and end service platforms. It has realised the effective application of

multiple self-developed digital control capabilities, enabled online control of the logistics elements of

“people, vehicles, goods and sites”, and significantly improved the efficiency of supplier operation,

intelligent warehousing management, whole-process visible distribution, dynamic scheduling of

transport capacity and whole-process control of delivery and installation. By doing so, it facilitates

customers’ digital upgrades. In terms of production logistics, through the pre-production logistics model

reform of “pre-planning, pre-material preparation and pre-quality control”, Annto realised direct

distribution to stations, and improved lean logistics of incoming materials and reduced factory

inventories. It also supported the digital transformation of suppliers and realised whole-value-chain

coordination of replenishment/pick-up plans, label and bar code management and transport-packaging

integration, lowering logistics costs and enhancing delivery quality and efficiency. In terms of the

warehousing and distribution network, with the support of mobile terminals, automation equipment and

5G technology application, Annto realised whole-scene mobile operations. Supported by AI

technologies and big data models, it enhanced its warehousing network planning capability with

warehouse locating algorithm and warehousing network model planning algorithm, and provided more

professional and efficient warehousing network planning solutions. In terms of transport capacity

management, Annto has put in place an urban distribution transport capacity scheduling platform, line

operation and analysis platform, logistics network planning platform and other platforms based on

intelligent algorithms, and optimised transport and distribution costs and distribution quality with the

whole-process visible, intelligent transport scheduling application for urban trunk line distribution. By

planning vehicle routes and using algorithms and tools to select superior line operators, it supported

the reform of transport capacity resources control of operation centres, and matched intelligent

algorithms used for the tendering and procurement of scheduling resources to supply and demand. In

terms of end services, Annto focused on online management of outlet and engineer resources,

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developed the intelligent management platform and "Annto Service +" mini-app to output refined

services, such as installation appointment, complied delivery and installation, precise appointment and

integration of delivery and installation of large home appliances, home furnishing products and

charging piles, based on big data and mobile technologies, and to improve customer/user service

experience. In addition, Annto builds a product operation system. Guided by the Voice of Customer

(VOC) platform, it empowers more than 230,000 internal and external users with digital tools,

establishes a closed-loop service system, responds quickly to users' suggestions and needs, and

significantly improves user satisfaction.


In 2023, Annto adhered to the “1+3” service model, enhancing its end-to-end service capability.

Production and logistics are important parts of the manufacturing supply chain under the “1+3” service

model. Centering on the role of an expert in advanced, lean and digital logistics in the manufacturing

industry, Annto applied its experienced “Lighthouse Factory” supply chain solution to manufacturing

customers, and consolidated its core strengths from aspects of lean logistics and digital empowerment.

In terms of transportation mode and transport capacity, a door-to-door parts pick-up model has been

created through consolidation warehouses. The sites were chosen based on the concentration of parts

suppliers, cargo volume, distribution frequency, and routes, with consolidation points already

established in Changzhou and Wenzhou to significantly improve service efficacy. In terms of green

recycle packaging, Annto formulated the standards for packaging of incoming parts, promoted

recyclable standard lease cartons at Lighthouse factories in response to Midea’s Green Strategy, and

has provided hundreds of customers with recyclable standard lease carton services that supports the

development of green logistics. In terms of digital capacity building, it focused on the improvement of

digital capacity of Midea’s Lighthouse factories, created the service model of “product set pre-service,

quality pre-service and plan pre-service” for the manufacturing supply chain, trialed at some factories,

and improved the full set rate of material orders of factories, management and control of quality and the

turnover rate of inventories. Upstream parts suppliers were provided with label cloud service to

optimise the synergistic effect between upstream and downstream industrial chains. Annto achieved an

efficiency upgrade through the integration services of “a shared inventory system” and “warehouse

distribution logistics.” On the warehousing side, Annto built its warehousing capacity based on

warehousing network planning. It created an IoT intelligent park management system, constructed an


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industry-leading warehousing operation system, and provided customers with whole-scene, whole-

chain warehousing operation solutions. With self-researched site selection and continuous optimisation

of all-category warehousing network layout routes, it accomplished a 6% decrease in average mileage

per unit, a 22% decrease in average time per unit, and an 8% increase in the proportion of same-day

and next-day deliveries. Its smart park relied on the IoT intelligent management system, distinguished

scene requirements, created a differentiated service combination, and supported the independent

deployment of internal and external customers. Annto premised its warehousing operation capability on

lean enhancement and benchmark/pilot breakthroughs as its method. It simultaneously promoted

iterative upgrades of “lean”, “information-based”, and “automated,” establishing a whole-chain lean

warehousing operation system from base warehouse to regional distribution centre warehouse. On the

trunk line distribution side, Annto integrated line resources, built the line traffic monitoring system and

line cost capacity and supported the optimisation of transport capacity and structure as guided by line-

based operation. Leveraging the transport capacity and structure model for core lines and core cities, it

constructed line resource capacity to achieve the optimal capacity structure solution. Meanwhile, it

promoted the dispatcher transitions to operating route capacity and online management of single

vehicles, made the whole chain visible online, and built the high-efficiency whole-vehicle performance

platform with individual transport capacity resources. It established a routinised and standardised “zero-

carriage” network by promoting cooperation in industrial belt and ecosystem parks. This was achieved

through the integration of resources and structural optimisation, which resulted in a transformation of

transport capacity, and the creation of national front-end assembling and point-to-point delivery

capabilities. It promoted product-wise line operation on the basis of line-based operation, and

constructed the “zero-carriage” network composed of one-way short chains. Through technical tools

and management reform, Annto promoted online management of business at all links, thus improved

customer experience. On the urban distribution side, Annto emphasised on “warehousing network

planning, traffic integration, route operation, and transport capacity transformation”. It achieved

warehousing efficiency through warehouse capacity integration, and optimised personnel efficiency and

flat effect. Annto concentrated on route traffic, expanded direct control over the routes, adjusted

transport structure, and increased the total amount of controllable transport capacity, including 6,900

units of new energy transport capacity. Based on a mature distribution centre network and over

200,000 mature routes, it efficiently covered over 99% of the towns across the nation. By optimising

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and iterating algorithm tools according to dispatch factors, dispatch procedures, order profiles, and

customer profiles, Annto achieved an optimal one-click scheduling with an adoption rate of over 95%. It

deepened strategic cooperation in the fast-moving consumer goods industry, initially established a

regional distribution network for fast-moving consumer goods, and combined DTC strategy and b/C

integration capacity building to achieve next-day delivery for over 80% of orders and delivery within 48

hours for over 94% of orders. On the end delivery and installation service side, Annto strengthened its

“2C integrated delivery and installation” capabilities to support businesses in connecting with users.

Based on terminal capabilities building, it optimised the delivery and installation management platform

and “Annto+” mini-programme, continued to deepen network capacity building, launched digital

management and service tools, and achieved online management and operation of final delivery and

installation engineers nationwide. By the end of 2023, it was cooperating with over 4,000 domestic

outlets, with more than 40,000 delivery and installation engineers. Focusing on home appliances, home

furnishing, new energy, healthy travel and life services, it provided standardised service products,

including the integration of delivery and installation of home appliances, “three-guarantee and five-

guarantee” services, new energy-related “surveying and installation” services. It optimised service

processes through strong-control appointment, text message rescheduling, emergency delivery, suite

delivery, positioning signing, and so on. Combined with integrated and smart supply chain service

capabilities, it comprehensively improved the final delivery and installation service.


D. Promoted “Global Impact”, enhanced localized operations overseas and adhered to a

customer-oriented principle when it comes to products


In 2023, numerous risks and challenges such as fluctuation of macro economy, fierce change of

exchange rate and continuing high inflation were seen in overseas home appliance markets, yet the

overseas business of Midea sustained large-scale growth and stable earnings in performance, whose

operating tenacity was improved. Aiming at the local primary markets, Midea continued to forward-

deploy its overseas business organisations. It established the European, Middle East, and African

(EMEA) regional headquarters and the American regional headquarters, which have already begun

operations, in order to respond to the market more quickly and meet local customer demands more

effectively. Meanwhile, the role of the international business headquarters transitioned to the Centre of


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Excellence (CoE), providing further support for the organisational capabilities of the overseas

marketing teams. It established and perfected organisational teams in various regions, continuously

integrated localisation talents into the system of internationalisation and optimisation talents, and

continuously promoted a diverse, equitable, and inclusive (DEI) corporate culture. The overseas R&D

centre also increased its investments and expanded in scale, optimised its talent system to ensure

continuing development of overseas business. Meanwhile, Midea built up the core capability system on

all fronts, involving studies on front-end users’ demands, definition and development of products,

channel expansion, sales and operation, user service, etc. It organised teams in various regions across

the globe to hold several meetings to share and discuss local best business practices and future

development plans, promoting global business expansion and enhancing team cohesion. It continued

to build a digitised human resources system. In 2023, the basic module of the global human resources

system was launched, and a whole-module human resources system will be in use worldwide by 2025.

Midea continued to expand its overseas manufacturing layout, expedited the introduction of the "China-

based Supply for the World + Local Supply" model, promoted the construction of manufacturing bases

in Brazil, Indonesia, Italy, Thailand, India, Mexico, and Egypt, among others, and promoted

coordination and support between domestic and overseas teams in the manufacturing end. In addition,

it started the Overseas Manufacturing Plants 632 Project and thus realised standardised manufacturing

flow and data management. The first phase of the project has been completed and put into use. Based

on the successful practices of domestic Lighthouse factories, Midea selected excellent employees for a

lean manufacturing system and developed overseas lean manufacturing talents, as well as carried out

pilot programmes of automation-oriented transformation in overseas manufacturing bases, thus

improving its overseas manufacturing efficiency and delivery capability. Meanwhile, it kept enhancing

the EHS management system of overseas factories and established the risk prevention mechanism to

ensure safe and stable operation of its overseas manufacturing bases. Midea refined its global service

system and improved its service capability worldwide. Always being customer-oriented, refinements

were made from the four dimensions of spare parts delivery, customer contact, service network and

service technology engineering to improve customer services and experience. Also, Midea continued to

operate its global spare parts centre in an efficient manner, enabled online and visualised order

fulfillment, and strove for global professional operation. Meanwhile, the service network comprising

iService, the overseas after-sales service system, and the cloud call centre platforms has been

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improved. In 2023, the cloud call system has been made available in 10 countries and regions

including Italy, Singapore, Hong Kong, Malaysia, Germany, Mexico, the United States, Canada and

Australia. Also, Midea optimised the management of master data for global outlets and service

engineering, enabling shared interfaces between call centres and after-sales service systems, which

has significantly improved service accuracy and efficiency. Meanwhile, supported by speech analysis,

semantic recognition and access to social media by intelligent voice robots, Midea continued to build a

fast-response and proactive global service system. The introduction of Amazon Connect, a global,

omnichannel cloud contact centre, into Midea enabled the Company to achieve the iterative upgrade of

its global contact centre, thereby achieving the whole-procedure closed-loop management ranging from

user reaching to service completion, while significantly reducing operating cost and improving voice call

quality. The Amazon cloud security tool has been adopted to satisfy the overseas requirements for data

security and effectively protect privacy and data security for end users. Midea insisted on improving the

structure of its own brand products and enhancing product efficiency. In the North American market, the

growth in variable frequency air conditioner products was significant, with sales revenue of variable

frequency window air conditioners increasing by over 120% year-on-year, and that of variable

frequency portable air conditioners increasing by over 140% year-on-year; and multi-door refrigerators

increased by over 300% year-on-year. In the EMEA market, sales revenue of double-door refrigerators

(over 300L) increased by over 110% year-on-year, and sales revenue of large-capacity front-loading

washing machines increased by over 60% year-on-year. Midea insisted on user-oriented product

development and strengthened the ability to understand local users. In North America, South America,

Asia Pacific, and Europe, it built user research and market insight teams with rich experience to

promote product innovation and brand building. To strengthen its development of overseas self-owned

brands, Midea sped up its efforts to make breakthroughs in self-owned brands worldwide, facilitated the

synergy of brands, products and services, deepened its access to users in the front-end market,

expanded product and brand promotion, and enhanced the brand awareness in all links of operation

and service. Through the improvement of brand value in joint efforts with the world-famous Manchester

City Footfall Club (the Man City), Midea reached hundreds of millions of footfall fans around the world.

The team star Erling Haaland was selected as Midea Global Brand Spokesperson, and the relevant

advertisement was exposed more than 900 million times globally, representing a stronger brand

presence. Drawing on the experience of the North America-specific brand development model, Midea

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strengthened the influence of its brands from numerous perspectives, including offline retail experience,

shopping guide team development, social media launch and marketing of entire-house collection

products, in Asia-Pacific and Middle Eastern markets. Besides, it boosted online content-based

marketing inside and outside its websites, upgraded its content planning, visual presentation and

shopping experience in all aspects, advanced the building of its brands' official websites, refined the

brand matrix, as well as established marketing resource pools. Midea sped up the expansion and

refinement of its overseas channel layout, used digital tools to empower retail, strengthened the retail

network in scale and depth, as well as promoted the introduction of specialised channels and channel

structure upgrades. As a result, hundreds of air conditioner-specific channel customers were developed

in the Asia-Pacific market, and the scale of channels for built-in products increased more than 30%

year on year in the European market. Also, Midea increased the activity of retail business, improved

the display of new products in retail outlets, and enhanced the interaction with customers and their

brand awareness, in addition to leveraging digital tools to empower traffic acquisition, transformation

and upgrade, user accumulation and other aspects. Midea continued to improve the coverage of its

management system for purchase, sales and inventory in retail outlets, continuously optimised and

enriched application scenarios of the system to improve the sales efficiency of stores, and took

advantage of module- and tool-based system operating model to speed up its iteration of retail stores'

promotion tools, thereby improving flexibility in promotional retail and convenience in retail operation. In

the overseas market, it leveraged new media content-based marketing to enhance the interaction

between products and users, promoted the application of innovative technology through pilot

programmes, and optimised the contents launched in quality and efficiency. Moreover, Midea further

flattened its channels with continuous efforts and accelerated its endeavours to facilitate the

transformation of DTC retail model in North America market, thus achieving an incremental yield as

considerable as tens of millions of dollars in 2023, up approximately 50% year on year. Midea

continuously delved into overseas e-commerce businesses to support the development of its own

brands, and made progress in multiple aspects such as business growth, structural optimisation, and

brand building. In 2023, e-commerce sales revenue increased by 16% year-on-year, and e-commerce

operations covered over 30 major countries or regions worldwide, focusing on a balanced development

model across multiple channels, modes, and countries. Midea established its own e-commerce data

analysis system to achieve data-driven and whole-chain closed-loop from product to user. It fully

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enhanced the operational efficiency and profitability performance of the value chain to create unique

data capabilities. It continued to maintain the market-leading position and sales channel vitality of core

categories. For instance, in the US online market, the market share of microwave ovens remained at

an industry-leading level, and the categories such as dehumidifiers also grew against the trend. The

scale and share of range hoods, refrigerators, laundry appliances and other categories also increased.

At the same time, it continued to optimise product structure and create hot-selling Stock Keeping Unit

(SKU). During overseas e-commerce shopping festivals such as BFCM and Prime Day, Midea had

over 100 products that entered the best-selling list in their respective categories, and ranked in the top

ten in sales in more than 20 categories. It boosted content and traffic operation to increase its voice on

social media. Influencer cooperation projects have attracted tens of millions of viewers and resulted in

hundreds of live broadcasts. Midea also advanced the construction of brand official websites and

Amazon flagship stores, gradually forming a flagship matrix layout of three major brands across seven

major sites.


Midea continuously enhanced its international logistics service supporting capabilities. In 2023, the

cumulative shipment volume of Midea Group’s global production bases exceeded 800,000 TEUs, with

the proportion of prepaid clause volume increasing by 14%. It continued to build an end-to-end agile

delivery capacity, enhancing customer satisfaction, and establishing a stable, efficient, safe, and

collaborative supply chain system to support the global breakthrough of overseas business. Midea

expanded the logistics supply ecosystem and deepened cooperation with strategic partners, trunk lines,

tractors, railways, wharves and other parties to optimise the competitive advantage of export costs,

achieving a year-on-year decrease in pre-port operation costs of 13%. Meanwhile, it promoted multi-

mode operation to reduce carbon emissions to achieve green logistics. Midea strengthened the quality

control of order operations, established service evaluation standards and application mechanisms,

improved the quality and delivery efficiency of various operations, and the abnormal cost decreased by

more than 60% year-on-year. Midea built overseas local logistics capabilities, deepened local

operations and delivery, and established local logistics teams at multiple overseas manufacturing

bases to achieve integrated import and export operations. It completed the construction of numerous

warehousing and distribution networks to achieve short-chain delivery of overseas orders. Through

forward warehouses in Belgium and Greece, it covered nine countries in Europe, shortening the order


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delivery cycle to more than three days. The spare parts warehouses in the United Arab Emirates were

established to improve the timeliness and satisfaction of post-sale services for its own brands in the

Middle East. The operation of finished products warehouses in Thailand were launched to meet local

delivery and export shipment needs, and at the same time, the overseas e-commerce logistics and

international express business were expanded to enhance multi-product operational capabilities.


In 2023, the depreciation of the Japanese yen led to an increase in the cost of imported products in the

Japanese market. The continued price increases in consumer goods inhibited the willingness to spend.

The overall demand weakened in the home appliances market, causing more intense competition.

Focusing on user experience consistently, TLSC stayed cool-headed when handling numerous

challenges of uncertainty. Through strengthening the coordination with the Group and the relevant

product divisions, it effectively improved product quality, optimised the product development process,

and ensured the launch of new products and stable supply of products. By taking multiple measure like

enhancing communication with key customers, strengthening retail in the market and the development

of new channels, it sustained a leading market share for refrigerators, microwave ovens and other

products. By taking such measures as stabilizing price and improving products structure, it effectively

alleviated the adversity of market scale downturn. And it delivered further improvements in profitability

through efficiency gains and cost reductions, with an increase in profit. Meanwhile, TLSC continued to

boost synergies with the Group and the relevant divisions on branding, R&D and innovation, supply

chain integration, quality improvement, etc., so as to build a strong product portfolio for the global

market together, thereby enabling business of TLSC to expand to and cover more than 120 countries

and regions.


E. Stepped up the comprehensive digitalization to materialize data- and platform-based

operations in the whole value chain, and thus to become more competitive in the digital era


With a focus on the “Digitisation & Intelligence Driven” strategy, Midea stepped up the comprehensive

digitalisation to materialise data- and platform-based operations in the whole value chain, and thus to

become more competitive in the digital era. In terms of domestic sales, Midea promoted a customer-

centric DTC transformation strategy. Through measures such as “visible delivery time of production

capacity, no sales without delivery dates, and automatic order review,” it achieved 100 % visibility of

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order delivery dates and over 96 % automatic order review, enhancing delivery efficiency. The

Company pushed forward “worry-free retail and a O2O shared inventory system,” and the stock

stagnation rate dropped by 14%, with the average inventory period of central warehouses shortened by

13 days. By implementing “consumer direct returns and exchanges, logistics signing and appointment

adjustments, and the establishment of evaluation systems”, it enhanced the customer experience.

Midea further drove retail channel transformation through actions like “trade-in activities,” “model room,”

and “precise traffic attraction,” leading to retail sales surpassing RMB3.5 billion. It directed channel

inventory back to authenticity, accomplishing the integration of “retail order, logistics order, installation

order,” the whole retail logistics installation chain was online and visible, ensuring the authenticity and

controllability of overall retail data. The usage rate of cloud warehouse reached 100%, and the

inventory with long storage time in the cloud warehouse decreased by 10% compared to the previous

year.” The fulfillment timeliness rate of cloud warehouse ToC delivery reached 92%. Through store

sales tools such as “Design Helper” and “Decoration Calendar,” online product selection and visitor

access were realised. Over 15,000 sales guides have used these tools, producing nearly 100,000

proposals, thereby increasing the design efficiency of terminal store guides by up to 90%. The

continued improvement of data empowerment, operator empowerment, and tool empowerment through

retail tools such as Retail Assistant has enhanced overall operational efficiency, with the activity rate of

operators nearing 90%, and an online task rate of 100%. In terms of overseas sales, Midea focused on

the global business efficiency enhancement and digital transformation, and comprehensively launched

the “Digital 3.0” project. Through end-to-end panoramic analysis of the value chain, it focused on the

digital capabilities of overseas staff, product management, order management, overseas manufacturing,

overseas logistics, overseas e-commerce, direct access to overseas users, and supply chains,

promoting domestic digital transformation experience abroad and facilitating the “Global Impact”

strategy. Coupled with business digital perception capabilities based on user insights, Midea

continuously created innovative products to meet customer needs and enhance user experience.

Through the iBOS integrated sales platform system that was fully implemented across overseas

subsidiaries, it integrated end-to-end whole-process information on project production, shipment,

logistics, and orders, realised whole-chain data visualisation, and improved overseas order fulfillment

efficiency by 30%. It promoted the improvement of overseas channel management systems, which

have covered five countries, with the registrations of channel customers exceeding 1,000, further

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enhancing the channel operation framework system. The newly established MideaClub system

supported the establishment of professional installation channels and has been implemented in four

countries. By early 2024, the number of registered installers exceeded 1,700, with the number of

installation orders nearly 10,000, advancing the online data adaptation of overseas installation services.

The overseas e-commerce platform I-ECOM can connect to eight major e-commerce platforms to

obtain data, with the total amount of data accessed exceeding 300 million. The platform can support

the e-commerce business of various Midea units and conduct operational analysis from various

dimensions such as market, competition, selling points, and reviews. The newly added post-sale

knowledge base enhanced digital capabilities such as the analysis of Voice of Customer (VOC). A

membership system has been piloted in Brazil and a Customer Data Platform (CDP) has been

launched online, supporting Midea’s overseas DTC strategy. Through the digital platform, Midea

achieved product planning and development driven by user insights and technological innovation,

forming an innovative mechanism for its own overseas brand business. Midea also optimised the digital

capabilities of overseas manufacturing and completed the digital system building of overseas

manufacturing bases such as the Brazilian factory. In terms of ToB business, Midea planned and built

the ToB business template based on multiple industrial forms. It designed and defined the ToB end

repeat purchase and project-based business templates, and overall planned the capabilities of the ToB

marketing platform to provide digital service capabilities for pre-sales, mid-sales, and post-sale. In 2023,

in the fields of intelligent building technology and energy solutions and industrial technology, pre-sales

digital empowerment was completed, building a customer-centric model to achieve digital capability

support from business opportunities to contract orders. At the same time, using energy solutions and

industrial technology business as a pilot, the design of the ToB end repeat purchase business template

was completed, and it has been launched in some businesses, achieving the digital empowerment of

integrated domestic and overseas sales orders, inventory management, logistics management, and the

integration of business and finance. This has facilitated business increment creation and improved

order fulfillment efficiency by over 15%. In terms of supply chain and manufacturing, Midea supported

global planning and order integrated operations through the Integrated Supply Chain (ISC) platform,

contributing profits of over RMB150 million and saving 100,000 work hours for the whole value chain.

Midea promoted the compliance and controllability of the end-to-end workflow of the overseas supply

chain. Efficiency in pricing, supporting systems, and personnel increased by 15%, achieving supply

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quality synergy and improving quality indicators by 10%. Midea furthered the construction of several

“dark factories”, the domestic manufacturing data operation platform was fully launched and was

promoted in overseas factories. Based on reliability reverse analysis, incoming materials’ dynamic

testing was realised, and the assembly scheduling of several overseas factories was put online. The

one-click order ratio of knocked-down parts (KD) enhanced to 98%, achieving traceability of domestic

and overseas KD key material quality, real-time visibility of production progress, abnormal working

hours warning, etc., reducing working hours by up to 30%. Midea enhanced production and research

collaboration, empowered through the digital process platform, shortening the process route generation

cycle by 90% and improving transfer production efficiency by 62.5%. Midea further optimised its energy

and carbon emission management system, improved the Energy Carbon Management Platform and

the Industrial Park Microgrid Management System. Besides, EHS management in parks achieved

intelligent collection, analysis, early warning, and closed-loop handling of abnormal situations at all

monitoring points. MIoT, Midea’s industrial internet platform, can provide over 90 solutions covering

nine key fields, including safe manufacturing, energy conservation and emission reduction, quality

control, supply chain management, R&D design, production and manufacturing, operation

management, warehousing and logistics, and operation and maintenance services. Midea served over

500 large enterprises to achieve digital transformation and upgrading. MIoT was successfully selected

as a “Cross-industry and Cross-field Industrial Internet Platform” by the Ministry of Industry and

Information Technology in 2022 and 2023. Midea’s “model-based three-dimensional structured process

design solution” by Midea Cloud successfully made the “2023 Annual List of Leading Smart

Manufacturing System Solution Projects” jointly selected by the Ministry of Industry and Information

Technology and the State Administration for Market Regulation in 2023. It was also recognised as a

leader in the IDC MarketScape: Manufacturing Vendor Assessment Report for Overall Solution of

China Digital Factories.


Midea steadily advanced its data empowerment initiatives, strengthened the construction of a digital

talent ecosystem, and enhanced the integration of digital capabilities with practical business operations.

Thousands of digitally proficient personnel have been trained, possessing practical skills.

Simultaneously, efforts were concentrated on data empowerment within core business scenarios such

as research and development, marketing, supply chain, overseas markets, and ToB domains. In the


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realm of smart home business, novel concepts were discovered through the fusion of large and small

data methodologies, facilitating the creation of popular and innovative products. Digital site selection

capabilities now encompass all store types, facilitating the application of sales operation chain data and

advancing real-time online retail data and channel data sharing. Operational efficiency is enhanced

through data operation, while thousands of product SKUs are covered by intelligent stocking and

replenishment systems, effectively reducing inventory levels and establishing anomaly alert systems.

Leveraging overseas digital planning efforts, numerous new products were crafted, and the global

Voice of Customer (VOC) platform integrated data from multiple channels. This integration realises a

closed-loop tracking function from “customer voice” to “problem improvement”, continuously traversing

and analysing the entire chain of data. It provides accurate and effective data-based evidence for

channel optimisation and product pricing in overseas operations. Breakthroughs in digital planning

within the ToB domain were achieved, leveraging data analysis to facilitate business opportunity

discovery. A business data analysis framework was constructed around project-based operations,

enhancing the competitive edge of ToB business operations.


Midea continued to strengthen the building of digital base and information security, focusing on the

supply and stability assurance of basic resources. The first phase of construction of the cloud base of

Midea in Guian has been completed, with a reserve of over 60,000 positions, capable of supporting

Midea’s future computing needs for digital development over the next 10 years. Nineteen security

measures have been implemented, including the transformation of DRUPS in data centres, network

isolation, and risk assessment of the park, continuously eliminating more than 370 hidden dangers,

promoting stability construction, achieving a year without P-level faults, and completing the construction

of a self-developed cloud host platform. The construction of big data and database service platforms

has been completed, with the efficiency of data development and management increased by more than

three times, and both the data volume and computational tasks of the big data platform have increased

significantly. The efficiency of the research and development process has been continuously improved,

with a 15% increase in front-end construction efficiency, a 35% increase in deployment efficiency, and a

22% increase in software release process efficiency achieved through engine optimisation. A

comprehensive defence system, security operation system, and privacy compliance system have been

established, comprehensively promoting application security governance and “left-shift” application


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security, escorting the stable operation of business security. In addition, innovative use of AIGC large

models, natural language processing (NLP), and recommendation algorithms has led to the launch of

86 intelligent Q&A application scenarios, providing consulting services to employees, service engineers,

salespersons, and cooperative customers, with a user base exceeding 750,000. The AI drawing

platform has also been built to address the pain points of external tool usage, providing design

solutions for business needs.


Midea promoted the strategy of "Digitization & Intelligence Driven" and accelerated the implementation

of "Comprehensive Intellectualization" to "Customize a Smarter Midea Life for You" In terms of

intelligent products, Midea remained committed to improving the comprehensive user experience of

Midea products, consolidating the entire-house basic guarantee capability, and creating a customer-

oriented Midea Smart Life solutions. In 2023, the MSmartLife App continued to improve its application

experience, reducing device abnormal offline rate by 17%, plugin white screen rate by 79%, and

application cold start time by 25%. The comprehensive performance reached an industry-leading level,

creating a stable and smooth user experience. As at the end of 2023, the registered users of the

MSmartLife App exceeded 55 million, and the monthly active users exceeded 8.2 million. Based on the

overarching entire-house smart strategy, Midea has constructed long-term competitive capabilities.

Focused on three core terminals: intelligent central control, home gateway, and smart sensors, Midea

has established a multi-category matrix of smart home products including smart door locks, lighting

drivers, and switch panels. Integrating the full range of smart home appliances, Midea has launched

four major appliance systems, providing visual, proactive, and intelligent functions and services for

home appliances and home integration, forming a entire-house product system and capability of “smart

home appliances + smart home”. In September 2023, Midea released the industry’s first large-scale

language model “Meiyan” in the smart home field. Based on the semantic depth understanding and

powerful generation capabilities of general large-scale models, it has the advantages of precise replies

and rapid responses within the domain, satisfying users’ interaction needs in aspects such as “clothing,

food, housing, and enjoyment”. Midea also launched the next-generation proactive service-based

“Midea’s Home Brain”, based on the “Meiyan” large model, possessing four core capabilities: intelligent

connection, intelligent perception, natural interaction, and autonomous decision-making, supporting

eight major subsystems and numerous application scenarios including entire-house air and entire-


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house water. Midea’s independently developed full-stack solutions including chips, modules, and AI

algorithm edge deployment toolchain Aidget have addressed the challenge of large-scale deployment

of AI algorithms in IoT edge devices with limited computing resources, achieving innovative

breakthroughs in IoT edge intelligence technology in the smart home field, and won the 2023 Top Ten

Technological Advancements in China’s Internet of Things selected by the Chinese Institute of

Electronics and the China Institute of Communications. In addition, Midea actively participated in the

drafting and formulation of relevant industry standards both domestically and internationally, so as to

promote the wider popularization and application of new technologies in the industry and enhance

industry influence. In 2023, Midea established task groups and assumed the chairman of the task

groups in the IEEE Computer Society/Artificial Intelligence Standards Committee (C/AISC) and IEEE

Robotics and Automation Society's Standing Committee for Standards Activities (RAS-SCSA), in

addition to being a co-leader and a co-leader unit in the Smart Life Task Group of the Artificial

Intelligence Sub-Committee of the China National Information Technology Standardization Network

(NITS).


F. In view of consumer stratification, launched multiple brands and diversified product

portfolios, and enhanced the promotion of the core values of these brands to empower retail

sales and user operation


In 2023, Midea continued to promote the "COLMO+TOSHIBA" dual high-end brand strategy. In the

year, the overall retail sales of the dual high-end brands saw a year-on-year growth of over 20%.

COLMO serves high-end users with premium entire-house smart solutions. In the area of products,

after five years of development, COLMO's high-end entire-house smart solutions comprehensively

cover two major segments of smart home appliances and smart home, including a variety of home

appliance categories such as commercial air conditioners, entire-house water, refrigerators, wine

cabinets, clothes dryers, laundry appliances, nursing cabinets, kitchen appliances, and small domestic

appliances. Also, it released the industry's first large model in the field of home furnishing, upgraded

the high-end entire-house smart solutions, and launched the first entire-house smart door lock and the

AIRCUBE, solidifying the industry positioning of "Smart Villa Expert". EVOLUTION New Image Suite—

Moonstone Grey and Cloud White launched by COLMO, with product upgrades of being completely


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built-in, customized, and compatible in combination with differentiated, custom panels, meet the needs

of elite consumers when at home. COLMO launched the TURING advanced customised entire-house

water system, using AI intelligent technology to customize the natural high-level water ecosystem

through five dimensions of safety, purity, skin touch, temperature sensation, and taste. Starting from

different water usage scenarios, COLMO has created five major products: TURING pre-filter, central

water softener, central water purifier, water purifier-heater, and sparkling water direct drinking machine,

providing a customizable entire-house water system solution that comprehensively meets the high-end

water-associated needs of elite users. COLMO Washer-Scrubber has integrated and upgraded

washer-dryers and robot vacuum cleaners, and they are equipped with AI-powered light dry-cleaning

technology, creating a new form and species in the home appliance industry. COLMO AVANT Gas

Water Heater features the industry-first Reco dual-core technology, efficiently recovering heat from the

flue gas and achieving purification, recovery, and reuse of condensate water. At the user and market

ends, COLMO has constructed a user rights system centred around the entire lifecycle of home

appliances, enhancing the overall user experience and launching highlight benefits and services such

as deep appliance cleaning, 1V1 butler service, and exclusive member activities, covering over 1.3

million member users. The number of COLMO members increased by over 200% year-on-year in 2023,

with a nearly 400% increase in monthly active users on the COLMO mini-app. According to the data

from AVC, the proportion of COLMO products in the high-end market increased significantly in the first

half of 2023, with drinking water products accounting for over 57%, water purification products

accounting for over 18%, and cabinet air conditioners accounting for 16%. Additionally, retail sales of

COLMO household products increased by 58% year-on-year. At the brand and channel end, COLMO

leveraged cooperation with high-end IP resources through three major marketing activities: the Elite

Life Festival, the Ultimate Brand Month, and the COLMO Lifestyle Summit. It also targeted high-end

sports user groups by consecutively naming the Wuxi Marathon, sponsoring the Rolex Shanghai

Masters, and cooperating with the Ultra Gobi. Through communication and cooperation with the

designer community through events like Design Shenzhen, Design Shanghai, and Guangzhou Design

Week, COLMO accelerated the development of high-end whole-scene channel distribution. Currently, it

has established over 800 experience stores in more than 250 cities.


Toshiba upholds its positioning as “the first Takumi and exquisite brand of high-end home appliances”,


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committed to creating a breakthrough star-level lifestyle for consumers with its inherited Takumi and

exquisite aesthetics. As a globally renowned home appliance brand with a century of history, Toshiba

has emerged as a new choice for high-end consumer groups in the domestic market. In 2023,

Toshiba’s domestic market retail sales recorded a year-on-year increase of over 60%. During the “618”

and “Double 11” periods, online retail sales grew by 92% and 40% respectively year-on-year. In terms

of products, according to third-party data, Toshiba 450 White Pearl Refrigerator, focusing on the zero

built-in demand, ranked first in sales among products priced above RMB8,000. The sales of Toshiba’s

high-end microwave-steamer-oven combo products ranked first among products priced above

RMB5,000. Toshiba also launched the first “Cozy Home” suite that covers multiple scenarios and

categories, focusing on kitchen, water, and bathroom scenarios, with spatial layout, residential feel, and

authentic aesthetics as the core concepts, creating a heartfelt living space for sophisticated lifestyle

enthusiasts. The total retail sales of the entire suite exceeded RMB500 million in 2023. Toshiba’s star

Stock Keeping Unit (SKU), the Toshiba Electric Fan “Huaxinfeng”, achieved sales of 50,000 units in

2023 and has been ranked first in the industry for five consecutive months according to AVC statistics.

In terms of brand, with a focus on the brand proposition of “Details Matter”, Toshiba has established a

complete brand communication chain, effectively covering the 5A crowd, from brand dissemination to

end empowerment. This includes activities such as the debut of “Cozy Home” at Japanese airports,

national designer tour salons, key city roadshows, and quarterly store experiences. In terms of channel,

Toshiba actively promoted retail transformation. Toshiba completed the cooperation with over 200

brand operators, built 260 star-level life pavilions of Toshiba brand and over 350 Toshiba brand joint

halls, promoted the realisation of a latest unified terminal image and preliminarily completed the

building of the national retail system.


WAHIN continued breaking the boundaries of traditional home appliance models. The brand insists on

innovation, embracing the Generation Z with "Trendy Designs, Practical Functions and Fun

Interactions". It strengthened the slogan "Young and Daring" for branding, and positioned itself as a

brand of "young, high-tech and trendy appliances", continuing to provide users with good-looking,

interesting and surprising products with easy-to-use technology. The total retail sales of the brand in

2023 was close to RMB9 billion. During the "Double 11" period, the sales of WAHIN products reached

close to RMB1.2 billion. Particularly, WAHIN air conditioning products ranked among the top three in


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JD.com, Tmall and Douyin by value of retail sales. In terms of brand, in 2023, WAHIN collaborated with

partners such as champion of the China Rally Championship and the School of Art Management of the

Central Academy of Fine Arts during the spring and Youth Day seasons, initiating synergistic efforts to

explore novel modes of youthful marketing. This endeavour led to the introduction of artist-customised

trendy products and virtual store metaverse marketing strategies, garnering favour among younger

demographics. During the summer of 2023, WAHIN engaged in cross-industry collaboration with the

top-tier Chinese anime “Soul Land”, employing AIGC technology for the first time in brand event

marketing. It launched limited-edition iced beverages and air conditioning fragrances, continuously

delving into trendy and enjoyable scenarios. On “Double Eleven” in 2023, capitalising on the fervour

surrounding the League of Legends S13 World Championship, WAHIN partnered with the JDG team to

unearth the sustained emotional value of its products, perpetuating the cultivation of brand

differentiation. In 2023, WAHIN’s brand exposure exceeded 4.4 billion UV, with a year-long increase in

followers across all platforms surpassing 686,000. In terms of marketing, WAHIN is a solid TOP3 in the

air conditioner industry. In 2023, it mainly promoted structural models, such as 3-HP floor-standing, 2-

HP wall-mounted and fresh air conditioners to build the user mind of "WAHIN Magic Machine" series

products. Through the matrix penetration of all-platform introduction of off-site celebrities, the search

indexation of "WAHIN Air Conditioner" in Douyin and Xiaohongshu increased by more than 120% and

200% respectively year on year, with a total of 280 million visits across the Internet. The e-commerce

search ranking of "WAHIN Air Conditioner" elevated to TOP15, which is an impressive result of the

traffic attraction and sales promotion efforts. As such, the brand has achieved dual gains on brand

presence and product sales.


G. With technological innovation as the core driving force, focused on green energy and key

industrial components, grasped growth opportunities in the industry, and provided green,

efficient and intelligent products and technology solutions for pan-industrial customers across

the world


Midea Energy Solutions and Industrial Technology is a co-builder in digital transformation and green

sustainable development across the global pan-industrial sector. With the vision of "Technology Drives

the Whole World”, it provides technologically advanced, reliable and eco-friendly key components for


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the consumer appliance and industrial automation segments based on decades of experience in the

home appliance and HVAC industries, as well as offers green energy solutions across the entire

energy value chain based on its expertise in energy management. The Industrial Technology Research

Institute and a strategic development organisation have been established in 2021 to focus on both

independent development and acquisitions. Based on the solid root technology system, such as

thermal management technology, drive control technology, energy storage technology, power and

electronic technology, etc., a complete industrial chain layout and product matrix have been put in

place in the field of key industrial components and new energy. Continuous efforts are also made to

increase the investment in key and cutting-edge technologies, and enhance the introduction of senior

experts in the industry. In 2023, Midea Energy Solutions and Industrial Technology received a number

of awards in the industry, including eight science and technology awards that are of the provincial level

or above. To name a few, a first prize of 2023 Science and Technology Progress Award of China

National Light Industry Council for the "Research and Industrialisation of Key Technologies for Highly

Adaptable Silent Variable Frequency Compressor", a first prize of the 2023 National Business Science

and Technology Progress Award for the "Research and Industrialization of Key Technologies for High

Power Density Permanent Magnet Motor and its Compressor", and a second prize of the 2022 Science

and Technology Progress Award of Guangdong Province from Guangdong Provincial Department of

Science and Technology for the "Research and Industrialization of Key Technologies for the New-

generation Cross-category and Low-carbon Motor Systems". In 2023, more than 1,500 patent

applications were lodged and nearly 400 invention patents were granted, in addition to two 24th China

Excellence Awards for Patents. Also in the year, seven technologies of which the development was led

by Midea Energy Solutions and Industrial Technology (namely, "Research and Application of Key

Technologies for High Power Density Permanent Magnetic Motors and Compressors", "Research and

Application of Key Technologies for Energy-efficient R290 Rotary Compressors", "Research and

Application of Key Technologies for Green and High-quality Thin Permanent Magnet Motors",

"Research and Application of Key Technologies for Quasi-dual-stage Reciprocating Compressors and

Cooling Systems", “Research and Application of Key Technologies for High Capacity Highly Efficient

Variable Frequency Scroll Compressor”, “Research and Industrialisation of Key Technologies for

Integrated Rotary Compressor”, and “CO2 Rotary Compressor for Thermal Management of Electric

Passenger Vehicles”) have been recognized by bodies of experts in the industry as "Internationally

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Advanced". Meanwhile, the "R290 Mini-sized Double-cylinder Large-capacity Inverter Compressors"

and the "Novel Ultra-high Power Density DC Brush-less Fans for Large Variable Refrigerant Flow (VRF)

Air Conditioning Systems" developed by Midea Energy Solutions and Industrial Technology won the

2023 AWE Award for Core Components. Additionally, two subsidiaries of Midea Energy Solutions and

Industrial Technology, namely Guangdong Meizhi Precision-Manufacturing Co., Ltd. and Guangdong

Welling Motor Manufacturing Co., Ltd., were included by the Ministry of Industry and Information

Technology into the 2022 List of Green Manufacturing and recognized as national "Green Factories".


By maintaining the focus on the field of key industrial components for consumer appliances, Midea

Energy Solutions and Industrial Technology continued to consolidate its leading position in the industry.

First, according to the 2023 data from ChinaIOL.com, in terms of residential air conditioner

compressors, its global market share increased to 45%, continuing to rank first in the world, while it

achieved breakthroughs in overseas markets for scroll compressors, and launched the brand new

product of R290 Heat Pump Compressor in the European region, providing a new experience that is

energy-efficient, safe, reliable, low-carbon and environmentally friendly, and contributing to the

sustainability of the heating, ventilating, and cooling industries. Second, in terms of refrigerator

compressors, its global market share reached 16%, ranking second in the industry, and breakthroughs

were achieved regarding the core customer base in several overseas markets such as the US, Brazil,

and India. Third, in terms of motors, its global sales shares recorded approximately 40% and 22% for

residential air conditioner motors and laundry appliances motors, respectively, maintaining the

advantage as an industrial leader, which, coupled with the launch of a high-efficiency silent product of

Household Fresh-air Outer Rotor Motor, provided a firm support for the expansion of new market

segments. The Foshan Xingtan Base for components of consumer appliances has been established to

make a forward-looking layout in intelligent manufacturing of mechanical and electrical products. Midea

has comprehensively automated, digitalized and intellectualized the production layout, process design

and production management, seeking to build an Industry 4.0 intelligent manufacturing demonstration

base in China. The integration work on the Thai compressor company proceeded well, which has

helped significantly increase the overseas production capacity of refrigerator compressors. The Thai

motor factory's construction has been completed, initially establishing overseas mass production

capacity for ECM motors. Third, through the facilitation of the mass production in 2023 in the


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manufacturing base in India, the first self-built overseas base for A/C compressors, the global supply

capacity for the key components continued to increase. Additionally, Midea Energy Solutions and

Industrial Technology continued to invest more in R&D of chip products and technologies, as 14 chip

products of four major series (namely, master control, touch control, inverter, and IPM) have been put

into mass production and introduced to the market (over 30 million chips sold in the year), with an

internationally advanced performance regarding the quality indicators for the same type of products.

This is followed by the successful supply of these products to mainstream manufacturers of household

appliances, and the earning of the Best MCU of the Year of the 2023 China IC Design Achievement

Award from AspenCore for MCU MR88F001 (a master control chip product).


In response to the rapid growth of the renewable energy industry, Midea Energy Solutions and

Industrial Technology focused on providing comprehensive, effective, and integrated green energy

solutions throughout the entire energy value chain. These solutions encompass large-scale energy

storage, commercial and industrial energy storage, residential energy storage, smart grids, photovoltaic

EPC, and new energy vehicle components. In the energy supply segment, it offered photovoltaic

solutions; in the energy allocation segment, it provided intelligent power distribution system solutions; in

the energy consumption segment, it delivered new energy vehicles and pedelec components that

achieve higher energy efficiency, as well as efficient and energy-saving variable frequency drives; in

the energy regulation segment, it offered energy storage solutions that enhance load adjustability and

ensure power supply reliability; and in the energy management segment, it provided intelligent energy

solutions. With respect to new energy, in 2023, CLOU Electronics tightly grasped opportunities from the

global energy storage industry by accelerating localization in the Northern American market. It has

incorporated a company in America to further strengthen its presence in the overseas market. The

abilities to design energy storage products and provide localized services have been improved, and

active measures have been taken to conduct business expansion in the energy storage markets of

Asia, Africa and South America based on the channel advantage of foreign power grids, so as to

achieve the global layout of the energy storage business. In terms of products, in 2023, CLOU

Electronics passed the review as a corporate technology centre recognized by the national government.

The Aero product series have been integrated into a platform, which supports rapid deployment and

installation, thereby greatly reducing the time needed for on-site grid connection. Moreover, it launched


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the Aqua series (liquid-cooling product portfolio) to provide one-stop services for customers from early-

stage investment to the full-life-cycle capacity increase at the DC side. Meanwhile, it is planning for the

development of the second-generation liquid-cooling products in order to provide integrated energy

storage solutions. In the field of smart grids, Midea Energy Solutions and Industrial Technology has

steadily advanced its business development, actively participating in projects with the State Grid

Corporation of China and the China Southern Power Grid. In the 2023 tender procurement for

electricity meters (including electricity consumption information collection) by the State Grid

Corporation of China, it was among the first-choice suppliers. It also secured contracts as a

mainstream supplier in the framework tender for distribution network equipment by the China Southern

Power Grid. Additionally, it intensified efforts to expand into overseas markets, achieving significant

year-on-year growth. It obtained relevant certification qualifications for low-voltage metering switch

products and actively participated in the formulation of enterprise technical standards for metering

switches with the State Grid Corporation of China. It completed the development and inspection of the

entire series of electricity meters and electricity consumption information collection products for the

State Grid Corporation of China and the China Southern Power Grid in 2022. It also completed the

research and development of intelligent pole-mounted switches with integrated functions (capacitive

tapping), digital pole-mounted switch products, integration terminal function and protocol consistency

testing devices for the State Grid Corporation of China, multi-version single-phase/three-phase

electricity meter simultaneous online testing production line, and remote testing system for charging

piles. Concurrently, it expedited international certification for new products, with the overseas 24 series

new products passing third-party authoritative organisation SGS certification and accelerated aging test

(ALT). In terms of the supply chain and manufacturing, in 2023, the resources of the supply chain were

integrated to reduce the procurement costs. Meanwhile, the reduction in the bids made to win projects

related to any category of components or parts for intelligent power grids has been achieved.

Furthermore, taking the advantage of large projects, the rapid cost reduction for core energy storage

components has been promoted. Additionally, the cell resources were supplemented, and leading

battery suppliers were employed. On the other hand, the efficiency and automated degree of

production was improved by promoting the full-automation-oriented renovation of the production line for

single-phase electric energy meters, and introducing a fully-automated module production line to the

energy storage base in Yichun. Also, planning and implementation of the expansion of the new liquid-

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cooling line has been completed. Hiconics consistently practiced Midea Group’s “Green Strategy” of

sustainable development. In the field of new energy, it rapidly developed residential energy storage and

photovoltaic EPC businesses. In the residential energy storage sector, it adopted an independent

research and development production model, vigorously introducing research and development

personnel and enhancing production capacity layout. Simultaneously, it invested in the construction of

high-standard testing centres within the industry, advanced product certifications in major overseas

markets, met various requirements of global customers, and has secured significant orders from

multiple overseas markets. It has established integrated research and production capabilities for

energy storage inverters, battery packs, and other vertical integration, covering various core segments

of the industry chain. Combining overseas market demands, it developed products such as single-

phase and three-phase integrated residential energy storage systems, and also positioned itself in

solar inverters, charging piles, and component-level power electronic products. In the photovoltaic EPC

field, by establishing a photovoltaic EPC operation headquarters, it quickly seized opportunities in

energy structure transformation and promotes the layout of domestic businesses and backend

capabilities. It offered solutions including residential photovoltaic solutions, zero-carbon industrial and

commercial parks solutions, and smart energy convergence solutions externally, experiencing rapid

operating revenue growth. Continuously increasing investments, it established a new research and

development base in Suzhou, improved the layout of the research and development system, upgraded

and transformed production lines, enhanced self-production capabilities in core areas, and constructed

manufacturing bases in Anqing to comprehensively support medium and long-term manufacturing

needs. Simultaneously, it deepened internal and external sales transformations, reshaped overseas

marketing teams, and successfully built marketing channels in mainstream overseas markets such as

Europe and the Americas.


Deepening its focus on intelligent transportation components, Midea Energy Solutions and Industrial

Technology leverages its solid core technology in the consumer electronics field to quickly develop

three major product lines: Automotive Grade thermal management, electric drive systems, and chassis

actuation systems. The existing eight product lines of the three major systems gradually went into

production and delivery, and the total shipment of 750,000 units in 2023, representing a YoY increase

of 400%. In terms of technological breakthroughs, following the industrial trend of integration, the


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upgrading from components to modules has been implemented. Based on the solid mastery of thermal

management technologies for years, Midea launched the Integrated Module for Thermal Management

(Comprehensively Integrated) after the introduction of the water-end integrated modules and the

refrigerant integrated modules. In terms of market expansion, over 20 new customer-oriented

designated cooperation projects were initiated in 2023. Furthermore, the compressor products have

been recognized by multiple customers and have covered all model types of multiple mainstream

automobile manufacturers. Meanwhile, the first customer-oriented designated cooperation project for

the Integrated Module for Thermal Management (Comprehensively Integrated) has been received, with

the estimated output value of potential orders exceeding RMB300 million. Additionally, the

independently developed product of the 800V Silicon Carbide High Rotation Speed Motor Compressor

continues to win recognition from more major car makers at home and high-end customers abroad. In

terms of capacity guarantees, thermal management, electric drive, and chassis actuation product lines

have all started mass production. Furthermore, the mass production and deliveries of products such as

compressors and valve terminals have been achieved at the new energy vehicle parts manufacturing

base in Anqing. Midea Energy Solutions and Industrial Technology acquired Wuhan TTium Motor in

2022, officially entering the field of two-wheeled travel and expanding its business in the key

components of pedelecs. Furthermore, by introducing Midea's supply-chain system and advanced

experience of large-scale production, it set up modern factories in China and Vietnam. Moreover, it

successfully pitched to multiple industrial leaders in Europe, concluded agreements with domestic

strategic customers, and continued to improve the product matrix of E-bikes in 2023.


In the field of industrial automation, Servotronix, Hiconics, SUNYE and other brands under Midea

Energy Solutions and Industrial Technology provide complete solutions from the sensing to the control

level for customers in the process, hybrid and discrete industries, helping industrial customers improve

quality and efficiency, and achieve digital transformation and green development. As a specialist in full

process innovation in industrial automation, Servotronix focuses on the entire industrial automation

chain, including software tools, motion controllers, servo drives, servo motors, and encoders, and

continuously provides customised motion control solutions for customers in various fields. Meanwhile, it

enhanced the application of products and technologies in new fields, with a focus on customers from

industries such as lithium batteries, photovoltaics, semiconductors, robots, laser processing, and


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consumer electronics by conducting targeted customer pitching campaigns and providing them with

integrated solutions. Based on its advantage of the advanced technological strength, it launched

multiple products such as the BD3 AC Servo System, the CDHD2S Linear Drive, the DC304

Manipulator Control System for Integrated Display and Control, the SoftMC804 Medium-sized Motion

Controller, and the Vision Motion Controller within 2023. Additionally, it continued to promote reforms in

marketing management and enhance process management, and used digital information systems to

develop the full-value-chain closed-loop management system from business leads to payment

collection, so as to improve the ability to acquire business leads and achieve their successful

conversion. As a domestic top brand in the field of high-voltage variable frequency drives, Hiconics has

formed industrial drive solutions with high-voltage and low-voltage variable frequency drives as its core

products. Also, it actively participates in the revision of national and international standards related to

variable frequency drives to promote wider application of technologies in the industry. Hiconics’ HCA

series of high-performance high-voltage variable frequency drives won the "Outstanding Product

Innovation Award" issued by the China Power Supply Society for its high power density, highly

integrated design, high-speed operation and other features. As for low-voltage variable frequency

drives, SUNYE under Hiconics continues to launch differentiated products. Furthermore, Midea Energy

Solutions and Industrial Technology actively works on reducer and other key component technologies.

Its self-developed high-performance harmonic reducer won the “Leaderobot 2023 Robot Reducer

Technology Breakthrough Award” at the Annual Conference of China Robots. It also improved its

business layout regarding the harmonic reducer products for SCARA robots, six-axis robots and

collaborative robots. While the new factory for reducers has completely put into operation and the

previous bottleneck on the precision processing technology for harmonic reducers has been eliminated,

independent production and delivery of the reducer products have been achieved, with the delivery of

over 6,000 units.


H. Seized market opportunities amid domestic and international circulations, responded to

China’s goals regarding “carbon emission peak” and “carbon neutrality”, made technological

innovations and business model upgrades, and provided customers with full-stack solutions

for intelligent buildings




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Midea Intelligent Building Technology, with the vision “to be a global leader in building technology" and

the mission of "co-building sustainable smart space", has transformed from a commercial air

conditioning product supplier to an integrated solution service provider for intelligent building

ecosystems. Midea Intelligent Building Technology has six major product manufacturing bases and

seven R&D centres worldwide, with a sales network covering global markets. It has formed the largest

and most comprehensive professional smart building product matrix and service network in China. In

2023, according to Commercial Air Conditioner Market data, Midea ranked No. 1 in terms of

commercial air conditioner sales in the domestic market, and the market shares of Midea's core

products, such as centrifugal units, screw chillers and modular units, are the highest among domestic

brands. According to the data from ChinaIOL.com, Midea leads the way in the domestic VRF market

compared with other domestic or foreign brands, with a market share exceeding 20%. As shown by

data from www.abi.com.cn, the output and unit sales of Midea’s centrifuge products exceeded 2,200

units in 2023, surpassing foreign top brands to grasp the largest domestic market share of centrifugal

units. Meanwhile, data from ChinaIOL.com show that in 2023, Midea Commercial Air Conditioner

accounted for more than 27% of China's total commercial air conditioning export value. According to

the European Heat Pump Association's data forecasts, to achieve the REPowerEU plan, the number of

heat pumps in the European market will increase to 60 million units by 2030. In view of that, Midea

Intelligent Building Technology is continuously expanding its heat pump production base in Italy, and

comprehensively enhancing Midea's competitiveness in the European market.


Midea Intelligent Building Technology launched the "GREEN FOR ONE" strategy and the "Digitalization,

Engineering, Procurement, Construction, and Operation (DEPCO)" model at the 2nd TRUE Building

Technology Summit held at the beginning of 2023. Specifically, the "GREEN FOR ONE" strategy helps

all practitioners to respond to challenges from the low-carbon industrial transformation from four

dimensions, namely products, ecosystem, services, and, the industry. The DEPCO model is a

complete set of service standards and systems to effectively implement "smart building" projects, which

is people-oriented and operating objectives-centred. In 2023, Midea Intelligent Building Technology

participated in domestic and overseas industry exhibitions, such as ComVac ASIA 2023, AHR EXPO,

ISH Frankfurt, the China Heat Pump Exhibition (HPE), the China Refrigeration Expo, the China

International Intelligent Building Exhibition, China International Medical Equipment Fair (CMEF)


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(Spring), the China Hospital Construction Conference and International Hospital Build and

Infrastructure Exposition (CHCC), the China Animal Husbandry Expo, the Entrepreneurs Summit of

Energy Conservation Service Industry, the Industrial Green Development Achievements Exhibition, and

the Shanghai International Carbon Neutrality Expo in Technologies, Products and Achievements, to

demonstrate a series of product development results and solutions. These included the K WING

Magnetic Levitation Centrifugal AC Compressor and its key component—the Magnetic Levitation

Variable Frequency Centrifugal Compressor, the R290 Air-source Heat Pump, the Carbon Neutrality-

oriented Air-source Heat Pump Unit, the M-Thermal Air Source Heat Pump, the Full Variable

Frequency Air-source Heat Pump Unit for Cooling and Heating, the R32 Variable Frequency Air-cooled

Module Unit, the Variable Frequency Direct Heating Circulating Hot Water Unit, the Water-cooled

Screw Variable Frequency High-temperature Heat Pump Unit, the Variable Frequency Air Source

Blaze Heating Unit, and the Dual Grade I Sideward Variable Frequency Blaze Unit. Meanwhile, what

was demonstrated also covered the integrated energy solution, the customised HVAC solutions for

scenarios, such as livestock and poultry greenhouses and slaughtering, Midea's comprehensive energy

solutions for low-carbon industrial parks, the Intelligent Operation Center (IOC) Platform of Midea

Intelligent Building Technology Jingzhou Factory, the smart hospital solution “LIFE2.0” for medical

customers, Midea's two brand-new digital carbon reduction platforms--the "iBUILDING Product Carbon

Footprint Management Platform" and the "iBUILDING Virtual Power Plant Operation and Management

Platform", KONG DDC M0 and KONG NZ Systems. Particularly, the integrated energy solution, based

on the iBUILDING Midea Building Digital Platform, enhances the comfort of users through the building

load sensing and prediction technology for HVAC. Concurrently, the coupling control of energy

consumption facilities, such as PV, energy storage, heat pumps, and air conditioners, are achieved to

satisfy management requirements, such as green energy supply, dynamic power distribution, efficient

power supply, and the interaction between power supply and load, power the whole house with

renewable electricity, and create a healthy and comfortable living environment. The smart hospital

solution LIFE2.0 empowers the evolution and upgrading of specific scenarios such as wards, outpatient

clinics, surgeries, testing, imaging, machine room facilities, command centres and other healthcare

spaces through “a big platform and small scenarios" and the integration of the four flows of LIFE. This

solution can help promote the change from system integration to scenario application, and help smart

hospitals build "future-oriented" capabilities. The iBUILDING Product Carbon Footprint Management

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Platform empowers enterprises with the real-time collection, query, and integrated authentication of

data on carbon footprint throughout the lifecycle of products. Additionally, this platform has multiple

functional modules, such as carbon footprint modelling, carbon footprint analysis, supply chain

management, carbon footprint report management, and supply chain authentication management,

establishes strategic cooperation with authentication agencies, such as SGS and TV SUD, and can

generate review reports in line with requirements of varied authentication agencies. The iBUILDING

Virtual Power Plant Operation and Management Platform, based on Midea's many commercial air

conditioning systems for commercial buildings nationwide, supports the power system in peak shaving.

Meanwhile, through Midea Intelligent Building Technology's energy efficiency management solutions, it

has accelerated the connection to the water-cooled air conditioning system, constantly expanded its

adjustable load capacity. Furthermore, this platform can assist the government in maintaining reliable

power supply to residents and enterprises, support power companies to achieve peak shaving and

ensure the safe and stable operation of power grids, and help users to obtain subsidy benefits of

energy conservation and emission reduction. Moreover, Midea Intelligent Building Technology signed

the Load Aggregation Platform Cooperation Agreement with the China Electric Power Research

Institute in 2023 to jointly create an air conditioning load aggregation platform, which will be promoted

to all subsidiaries of State Grid Corporation of China, promote the digital reform of load management,

and support the orderly and stable power supply in all regions.


With respect to product development, Midea Building Technologies, in 2023, successively launched

multiple new products to consolidate its business in areas such as HVAC, building automation, and

elevators. These include the launch of the whole-new MCube Series Energy Storage Thermal

Management AC Liquid-Cooled Unit and the new-generation R290 Refrigerant Nature Series Integral

Heat Pump in Europe. Among these, the MCube Series Energy Storage Thermal Management AC

Liquid-Cooled Unit can operate reliably in various harsh environments, maximising the safety and

stability of energy storage containers. It is UL- and CE-certified, reaching a leading level in the industry.

Additionally, it achieved a 75% reduction in heating energy consumption and a 23% increase in cooling

energy efficiency through full-frequency intelligent control technology and innovative heat pump

technology, significantly improving the adaptability of low-temperature batteries. The new-generation

Nature Integral Heat Pump utilises R290 refrigerant with an extremely low GWP value of 3, featuring


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exceptional performance in extreme temperatures. It is the first product to be HP Cold-resistance

Certified by Intertek across the world, functions well in ultra-low temperatures. Midea K WING Magnetic

Levitation Centrifugal AC Compressor and its key component Magnetic Levitation Variable Frequency

Centrifugal Compressor showcased research and development achievements in the field of oil-free

magnetic levitation. Midea K WING Magnetic Levitation AC Compressor adopted a high-speed motor

direct drive structure and magnetic levitation bearing technology, eliminating the need for other

mechanical transmission structures and lubricants. The magnetic levitation variable frequency

centrifugal compressor can deliver 100% oil-free air, ensuring compressed air meets the high-quality

level of ISO08573-1 Class 0, meeting the strict requirements for compressed air purity in industries

such as pharmaceuticals, food, and beverages. Midea’s newly developed K WING Screw Evaporative

Cooling Chiller Unit optimised the cooling water system using evaporative cooling technology, providing

greater energy savings compared to air-cooled units, with easier installation and maintenance. It

effectively addressed issues such as large footprint, high energy consumption, high noise levels, and

operational difficulties of traditional chiller units. To address the four major pain points in water machine

operations, Midea officially launched the Chiller Smart Operation Solution, which includes iManager

and Chiller Doctor. iManager, supported by iBUILDING’s underlying digital capabilities, is a large-scale

intelligent software platform for property and equipment maintenance managers of commercial air

conditioner equipment. Chiller Doctor covers online, offline/local network intelligent operation and

maintenance, realising software-hardware linkage through 4G intelligent edge gateways, facilitating the

digital and intelligent upgrades of chillers. The new-generation VRF VC MAX with cooling function only,

equipped with an efficient and powerful scroll compressor with enhanced vapor injection, satisfies

refrigeration requirements within a wide range of temperature. Atom X, specifically designed for the

North American market, integrates 24V unitary units and VRF units, and combines the sideward

outdoor unit and the indoor unit. It can not only reduce the installation space for the outdoor unit, but

also maintain the current interior architectural style. Coupled with the automatic filling of refrigerants, it

can be flexibly applied to the North American market dominated by alternative scenarios. Atom T is a

series of multifunctional VRF units and products that integrate air cooling and heating and water

heating functions, adopt the R32 environmentally friendly refrigerant, and are developed for the

European Union market. The outdoor units of the whole series can meet the requirements of diverse

family scenarios. Additionally, the series meets the EU and Australian subsidy requirements for energy

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efficiency. The MDV Power series of light commercial air conditioners features fully variable frequency

technology, high efficiency, and energy conservation. Midea's third-generation full DC technology that it

carries can help save 20% more energy. It satisfies complex installation requirements through long

piping and high drop height. The standard 35Pa external static pressure of this product enables strong

heat dissipation. Being compatible with built-in and ducted internal units, it can be applied in multiple

scenarios, such as shops, catering, leisure, and entertainment. With the MDV New Gen Series VRF as

a targeted product, Midea powered into emerging markets, supporting VRF transformation needs with

new and old processes and a full-process system, and intelligently and efficiently output optimal

solutions through transformation design software. The newly released KONG DDS (Direct Digital

Sphere) system aims to solve problems such as complex installation and high maintenance costs of

traditional building automation systems. DDS features small size, easy installation and maintenance,

flexibility, and adaptability to building control upgrade needs. The digital elevator brand, LINVOL,

introduced the Evin-E/Evik-E passenger elevator, a digital and intelligent elevator solution specifically

designed for residential buildings. This solution was aimed at enhancing management and services

throughout the entire lifecycle. Utilising the MECS frequency-conversion integrated control system and

elevator Internet of Things ("IoT") technology, it has achieved highly integrated, precise, and efficient

control. The elevators feature precise leveling technology, as well as multiple protection settings, such

as door light curtain protection, CPU WDT protection, and reverse operation/speed protection, ensuring

both comfort and safety for passengers. Moreover, Midea's digital building platform, iBUILDING, has

been utilised to build a digital operation and maintenance system that covers all scenarios of buildings.

The construction of the Phase I factory of the Xiaotang Intelligent Manufacturing Base for LINVOL has

been completed and the second-generation machine room freight elevator was introduced. These

industry-leading strides in terms of speed and lifting height have assisted Midea in unlocking its

potential for vertical space in buildings. Additionally, Midea Swimming Pool Heat Pump received the

world’s first TV Süd certificate for swimming pool heat pump recycled material content and the first

government procurement demand standard certification (cooling unit for green data centre cooling

systems) issued by the China Quality Certification Centre (CQC).


As building energy consumption is increasing its proportion of the energy consumption of the whole

society in the progress of urbanization, accelerated efforts have been made in the construction of


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"zero-carbon buildings" with "green energy system" as the core. In building energy management, the

iBUILDING Midea Building Digital Platform conducts intelligent energy adaptation and management

with a customised design based on the building's characteristics. At present, the iBUILDING smart

building business has stepped into industrial parks, medical institutions like hospitals, and public

facilities. In terms of market expansion, in 2023, Midea Intelligent Building Technology secured multiple

market orders and provided products and services to clients across various industries. These include

projects such as the National Museum of Chinese Writing, the Chengdu Universiade, the Rajkot

Greenfield International Airport in India, the Yuanjiang Railway Station Plaza in the China-Laos Railway,

the Zhengzhou-Jinan High-Speed Railway, the Ningbo Metro Line 6, the Huawei Artificial Intelligence

Computing Centre, the Shanghai Xinjiangwan Office Park of Douyin Group, the Centralised

Procurement Project of China Mobile for High-pressure Chiller Units, the Wyndham Grand Zhaoqing

Downtown at Seven Star Crags, the Xi’an TUS-Children’s Hospital, among others. Industrial projects

encompassed the Chang’an Automobile Yubei Factory and Liangjiang Factory, the CRRC’s factory for

the production of 100-meter-long large blades, the centralised procurement project for commercial air

conditioner for Li Auto, and the Keda Intelligent Industrial Park in Guangzhou. Multiple projects of

Midea Intelligent Building Technology have won awards, resulting in constantly improving market

recognition and influence. Particularly, the iBUILDING Intelligent Operation Centre and the Heyou

International Hospital Project both entered the Fortune magazine’s list of China's Best Designs 2023.

And three awards of the 2023 Red Dot Award and four awards of the iF Design Award 2023 were

granted to Midea Intelligent Building Technology’s ChillerDoctor Gateway, the Cassette Indoor Unit

with 360° Circular Air Exhaust, the R290 Air-source Heat Pump Unit, Midea Headquarters Building

Intelligent Operations Center (IOC), Midea Jingzhou Factory Intelligent Operation Center (IOC), and

Midea Industrial Park West District Intelligent Operation Center (IOC). The three iBUILDING smart

building benchmark projects--Midea Headquarter Building, the Jingzhou Factory of Midea Intelligent

Building Technology, and the West District of Midea Industrial Park--won the 2023 Asia Design Prize.

Projects such as the Shanghai Tongji Hospital IOC, the Midea Headquarters Building IOC, and the

Midea Jingzhou Factory IOC received the A’ Design Award and the Successful Design Award. Midea

Headquarters Building, Shanghai Tongji Hospital, and Midea Intelligent Building Integrated Digital

Management Cloud Platform iBUILDING Portal were awarded at the 16th International Design Awards

(IDA). In the 2023 “Blue Sky Cup” evaluation of efficient HVAC systems, Midea’s high-efficiency HVAC

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system for the Shanghai Citigroup Tower and the M-BMS ultra-efficient intelligent environmental control

system for the Beijiao Park Metro Station both received the “Excellent Engineering Award”. The M-BMS

ultra-efficient intelligent environmental control system for the Dadao Metro Station also received the

“Energy Saving Technology Award”. Midea was recognised as a typical case in Guangdong Province’s

“Carbon Peak and Carbon Neutrality” initiative for its case study titled Aiding Green Sustainable

Development with Zero-Carbon Production Lines, Workshops, Parks, and Products. Midea’s "Smart

Clean Space Solution" won the titles, "Preferred Solution" and "Quality Solution" of Operating Room

Planning, Design and Construction of the Second "Professional Promotion Project of High-quality

Development of Hospitals in China--Golden Ruyi Award". Additionally, LINVOL smart elevators for

villas were recognized as the "User Preferred Home Elevator Brand" at the First National Home

Elevator Summit.


In regard to technological innovation and standardization, Midea Intelligent Building Technology

continuously strengthened R&D input and made remarkable results in 2023. For example, the "Key

Technologies and Industrialization of Wide Temperature Range Full Condition High-efficiency Multi-

split Air Conditioning Systems", jointly completed by Midea, Shanghai Jiao Tong University, Xi'an

Jiaotong University, and Guangdong Midea Environmental Technologies Co., Ltd., won the First Prize

of Industry-university-research Cooperation Innovation of the China Industry-university-research

Cooperation Innovation and Promotion Award. The project “Wide Temperature Range High Efficiency

and Energy Saving Air Source Heat-pump Heating Key Technologies and Industrialisation” completed

by Midea in collaboration with Shanghai Jiao Tong University was awarded the Innovation Award First

Prize of the 2023 Invention and Entrepreneurship Awards by the China Association of Inventions.

Midea’s key technology and industrialisation projects for wide temperature range multi-scenario high-

efficiency multi-connected air conditioning systems, as well as research and application projects for

smart building IoT control systems and virtual debugging platforms, were respectively awarded the First

Prize and Second Prize of the 2022 Productivity Promotion (Innovative Development) Awards. The

project “Efficient Equipment Room Multi-Intelligent Body Distributed Control System and Virtual

Debugging Platform Technology Research and Application” by Midea was awarded the First Prize of

the 2023 Energy Conservation and Emission Reduction Technological Progress Awards. The project

“Large-scale Multi-connected Heat Pump Type Air Conditioning High-precision Digital Simulation and


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Industrial Application” jointly completed by Midea and Shanghai Jiao Tong University won the First

Prize of the 2023 China Simulation Federation Scientific and Technological Award. The project “Key

Technologies for Low Carbon Lifecycle of Large-scale Multi-connected Heat Pump Type Air

Conditioning Based on Digital Simulation” completed by Midea in collaboration with Shanghai Jiao

Tong University and the project “Key Technologies and Applications of Ultra-efficient Intelligent

Environmental Control and Operation Maintenance System for Rail Transit Stations” completed by

Midea in collaboration with Guangzhou Metro Group respectively won the first prize and second prize

of the 11th China Association of Refrigeration Scientific and Technological Progress Award; Midea’s

“Heat Transfer Enhancement Mechanism and Industrialisation of New Heat Exchangers Based on

Non-uniform Collaboration of Wind Speed and Fin” and “Research on New Corrosion-resistant

Aluminum Tube Technology and its Industrial Application in High Energy Efficiency All-aluminum Heat

Exchangers” respectively won the first prize and second prize of the 2023 Science and Technology

Progress Award of Guangdong Light Industrial Council. Four of Midea products, namely the "MDV8

Unbounded VRF Unit", the "65kW-R32 Medium- And High-temperature Commercial Heat Pump Unit",

the "Magnetic Levitation Ice Storage Chiller Unit", and the "Smart Building IoT Controller", were

recognized as "Innovative Products of the 2023 China Refrigeration Expo" by the Organizing

Committee of China Refrigeration Expo. Midea’s two technological achievements, “High-efficiency and

High-reliability Integrated Electromechanical Control Magnetic Levitation Variable Frequency

Centrifugal Unit” and “Key Technologies and Applications of Coordinated Optimisation Control and

Panoramic Smart Operation and Maintenance of Environmental Control System” were evaluated by the

expert team of academicians organised by China Machinery Industry Federation and recognised as

“Internationally Advanced”. Midea’s “Key Equipment and System Technology for Direct Evaporative

Cooling and Waste Heat Recovery in High-altitude Data Centres” completed in collaboration with Tibet

Ningsuan Technology Group Co., Ltd., Xi’an Polytechnic University and other units were evaluated by

the China Refrigeration and Air-Conditioning Industry Association and recognised as “Reaching the

Overall Internationally Advanced Level”. Midea’s “Ultra-efficient Intelligent Environmental Control

System for Rail Transit” and “Multi-agent Adaptive Energy-saving Control Technology” were

successfully selected into the Recommendation Catalog of Energy-saving Technologies and

Equipment (Products) of Guangdong Province (Version 2023) organised by the Energy Bureau of

Guangdong Province, providing technical support for promoting comprehensive green transformation of

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social and economic development and achieving the goals of carbon peaking and carbon neutrality.

Moreover, the "Magnetic Levitation Variable Frequency Centrifugal Ice Storage Dual-condition Unit"

and the "R32 All DC Variable Frequency High-efficiency Commercial Heat Pump" developed by Midea

Intelligent Building Technology won two Gold Awards and the "Air-cooled Variable Frequency Screw"

won a Bronze Award at the 48th Geneva International Inventions Exhibition. With respect to industry

standardization, Midea participated in the formulation or revision of multiple national standards, industry

standards, and group standards, including the national standards of the Water-source High

Temperature Heat Pumps Using The Vapor Compression Cycle and the Chiller (Heat Pump) Units for

Energy Storage Batteries, the industry standards of the Magnetic Levitation Centrifugal Compressors

with Refrigerants, the Air Conditioning Units for Enclosed Space of Communication Base Stations, and

the Technical Specification for Field Measurement of Energy Efficiency and Energy Saving of Multi-split

Air Conditioning System, and the group standards of the Green Intelligent Multi-split Air Conditioning

(Heat Pump) Units. Additionally, Midea Intelligent Building Technology won the title, 2023 Organization

with Outstanding Contribution to Heat Pump Standardization of the China Energy Conservation

Association.


I. Strengthened innovation in robotic product development, promoted high-performance

operations in the whole value chain and integration in the industrial chain, as well as

accelerated development of the robotics business for the China market


KUKA, a subsidiary of Midea, is a world-renown robotics manufacturer. Relying on its industry-leading

movement algorithm, KUKA can ensure superior movement performance of robotics products

throughout their life cycle, and its mature design concept can continuously give birth to new products

able to lead the market. In 2023, KUKA continued to promote the innovation of various products and

technologies. In the field of general industry, KUKA launched KR CYBERTECH series of robots, which

are suitable for processing and manufacturing scenarios from grip and handling to polish, oriented to

price sensitive markets, with multiple advantages such as lower costs, higher quality, and more

comprehensive functions, and thus easier for customers of small and medium-sized enterprises to

achieve automation upgrades. Among the series, KR CYBERTECH KR 20 E robots can operate under

different working conditions, with a payload up to 20 kg and an operation distance up to 1820 mm. At


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the International Foundry Trade Fair held in Germany in 2023 (GIFA 2023), KUKA showcased KUKA

cell4_premachining manufacturing cells and KR FORTEC ultra heavy-duty robots for customisable

automation. Among them, the cell4_premachining manufacturing cells have compact modular design,

can be applied in reprocessing casting scenarios such as polish and smoothing, saw cutting, milling,

cleaning, and grinding, and can achieve finishing treatments of different materials, parts, and

components with maximum flexibility and user-friendliness. The robotic manufacturing cells include KR

QUANTEC nano robot, library milling application, powerful motor spindle, quick tool-replacing

mechanism, KUKA three-axis positioner kp3-v2v-3, etc. At the Leading Exhibition for Smart Automation

and Robotics held in Munich in 2023 (Automatica 2023), KUKA displayed its latest version of KR

QUANTEC series robots. This series of products can save energy consumption up to 60%, with a

payload up to 300 kg and an operation distance up to 3,904 mm, and can be applied in many market

segments such as automobile, casting, and medicine, with such advantages as excellent performance,

economy, and flexibility. At the 2023 World Robot Conference, KUKA unveiled its new KR FORTEC-2

ultra series, representing KUKA’s fifth-generation heavy-duty robot series. With an impressive payload

of up to 800kg and a minimal weight of only 2.2 tons, it boasts an excellent payload-to-weight ratio.

With a maximum reach of 3.7 meters and a wide range of motion, it can be widely applied in fields such

as automotive, battery, and aerospace, offering advantages such as high precision, rigidity, and

reliability. In the field of human-robot collaboration, KUKA demonstrated its product mix of LBR iisy

collaborative robot and the new version of operating system iiQKA.OS, and also showcased such

products as KMR iisy mobile collaborative robot. Among the products, LBR iisy is a sensitive, precise,

and easy-to-operate collaborative robot. Its edgeless arm design allows personnel and collaborative

robots to work safely side by side, and all joints are equipped with integrated torque sensors that can

instantly detect the slightest touch. Featuring an ergonomic product design, and being easy to operate,

solid and durable, LBR iisy can carry a payload of 3-15 kg. In comparison, KMR iisy mobile

collaborative robot is a mix of collaborative robot and transport platform that are comprehensively

integrated, comprising LBR iisy collaborative robot with a payload of 11 or 15 kg, and KMP 1500P

mobile platform bearing an additional load up to 200 kg. Fast, safe, and mobile, KMR iisy can be

applied in various scenarios such as installation, internal logistics, and robotic service system. In the

medical field, KUKA displayed at the European Robotics Forum 2023 an innovative medical product

application, namely "Arthritis Ultrasound Robot", which helps physicians to quickly diagnose patients'

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rheumatoid arthritis through ultrasonic imaging by using KUKA's highly sensitive light-duty LBR Med

medical collaborative robotics. Besides, at the International Conference on Robotics and Automation

held in London in 2023 (ICRA 2023), KUKA and its partners demonstrated how the LBR Med robotics

could be applied in highly complex and sensitive medical scenarios such as brain tumour biopsies, by

simulating tumour biopsies in the real-time tracking models and enabling physicians to place biopsy

needles with the aid of the robotics. In addition, the extra flexible magnetic endoscopy provided by

Atlas Endoscopy can effectively overcome the defects of conventional colonoscopy such as discomfort,

sedation-related complications, and high variability of examination results, and this technique also

mainly applies KUKA LBR Med medical collaborative robotics to achieve operation and examination.

Italian startup Robota utilises KUKA’s KR 6 AGILUS robot in a surgical instrument sterilisation chamber.

It accurately identifies dental surgical instruments and performs disinfection operations on them,

enabling unmanned operation for 24 hours, significantly saving time for medical institutions. In 2023,

with respect to market development, KUKA and Siemens Healthineers further expanded their

cooperation in such fields as minimally invasive surgery, and in the next two years, KUKA will provide

Siemens Healthineers’ angiography system with 300 robots, of which, KUKA KR QUANTEC robots will

be the core components. Since 2016, globally there have been more than 550 hospitals using this set

of medical system. KUKA also intensified its cooperation with FAW-Volkswagen. In the latter’s

manufacturing base in southern China, which is capable of producing 300,000 sets of battery packs

annually, approximately 100 KUKA Robotics were applied in multiple manufacturing links of battery

pack product lines such as weld, bond, and assembly, involving KUKA's multiple series of robot

products such as KR QUANTEC, KR FORTEC, and KR titan. KUKA is also designing a CO2-neutral

battery assembly system for Finnish automotive parts supplier Valmet Automotive. Through this system

and leveraging KUKA’s industry experience and professional capabilities, Valmet Automotive aims to

set new standards in energy efficiency and is committed to achieving sustainable production of electric

vehicle battery systems.


KUKA continuously promotes the integration and expansion of resources in the Chinese market and

intensifies organizational reform and product iteration with a focus on industrial applications and key

customers. On the market front, in 2023, KUKA China continued to intensify its cooperation with

leading customers in the new energy sector by offering integrated solutions to major NEV


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manufacturers, which has been recognised and praised by customers. KUKA China was honoured with

awards such as BYD’s Annual Best Partner, Sunwoda’s Excellent Partner, and FAW-Volkswagen’s

Outstanding Partner. In the consumer electronics industry, KUKA achieved breakthrough progress,

with products such as six-axis robots and SCARA robots entering the supply chain systems of industry-

leading brands and being widely used. In the field of logistics automation, KUKA provided logistics

automation upgrade services to many enterprises including GAC Aion, Melaleuca, Neoperl, and VX

Logistics. In the medical industry, KUKA can provide one-stop intra-hospital logistics and pharmacy

automation solutions, and has provided intra-hospital smart logistics product services to hospitals such

as Jingzhou Central Hospital, Zhu Jiang Hospital, the Second Affiliated Hospital of Nanchang

University, Guowen (Changchun) International, Jinan Central Hospital, and West China Tianfu Hospital.

On the product development front, in 2023, KUKA China launched three series of five robot products,

including three SCARA KR20 robots adapted to CS box 2 controllers for the consumer electronics and

new energy industries, Delta KR3 SDR for the food, pharmaceutical, and electronics industries, and KR

Cybertech 20 E and other robot products. In addition, in 2023, KUKA China also completed the first

independently developed vision product, 2D vision lite, to assist SCARA products in achieving market

breakthroughs in the consumer electronics industry. KUKA participated in joint research and

development projects such as 3D vision applications and 2D vision applications to empower robot

system business. In terms of robot application integration, KUKA China continued to cultivate the DTC

model, closely meeting user needs, and providing continuous support for the automation transformation

of customers in different industries. For example, by providing humanoid broom-pan robots to help

customers achieve intelligent brewing of high-quality liquor, supporting ranches in achieving dairy

farming automation through the combination of KR IONTEC robots and 3D vision positioning systems,

and providing protein extraction automation solutions for biotechnology companies in collaboration with

Bioyond Robotics. With respect to manufacturing and supply chain, in 2023, the second phase of

Midea KUKA Intelligent Manufacturing Park (Shunde, Guangdong) has been put into full operation,

which comprehensively promoted the localization of robot supply, and supported manufacturing

automation and digital transformation. The park has also introduced suppliers covering a variety of key

components for robotics to improve the layout of the industrial chain. As such, a park with the most

complete industrial robotics industrial chain in China has taken shape. Moreover, the KUKA FORTEC-2

production line has been officially put into operation, further ramping up the capacity of heavy-duty

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robots. Furthermore, KUKA East China Manufacturing Base (Kunshan, Suzhou) has also been officially

put into use in 2023. As a manufacturing base for the integrated application products of KUKA China’s

industrial automation, Swisslog Logistics, and Swisslog Healthcare, among others, it has further

improved KUKA China's capacity layout. In 2023, the patented technology independently developed by

KUKA China, namely the "control method, device, computer equipment and storage media for robotics

motion", had the honour to win the 24th China Patent Excellence Award. The Intelligent Robotics

Industrial Design Centre under KUKA China has successfully entered the sixth list of national-level

industrial design centres by the Ministry of Industry and Information Technology. Furthermore, KUKA

also proactively assisted Midea Group in boosting its intelligent manufacturing. By the end of 2023, the

robot density of Midea reached 570 units per 10,000 persons, and Midea Group will further increase its

input to boost its intelligent manufacturing capacity.


J. Deepened the long-term incentive and protected the interests of shareholders


In 2023, Midea continued to encourage the core management to take responsibility for the Company’s

long-term development and growth by further enhancing its long-term incentive schemes. Midea has

launched nine stock option incentive schemes, seven restricted share incentive schemes, eight global

partner stock ownership schemes, five business partner stock ownership schemes and the 2023 stock

ownership scheme, which have helped, in a more effective manner, to align the long-term interests of

senior management and core business backbones with that of all shareholders. Midea Group protects

its shareholders’ interests by ensuring a consistent dividend policy. It shares its growth with

shareholders with a cumulative amount of cash dividend payouts that is about to exceed RMB107

billion (inclusive of the proposed 2023 final dividend) since the Group’s listing in 2013. In addition to the

consistent dividend payouts, the Company has carried out a string of share repurchase plans. To

further stabilize the market capitalization and protect the shareholders’ interests, the Company has

launched share repurchase plans for four consecutive years since 2019. And the repurchased shares

would be used for equity incentive schemes and employee stock ownership schemes.


3. Core Competitiveness Analysis

With the following core competitive edges, Midea is able to fully grasp development opportunities and


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achieve significant growth.


A leading global technology company in smart home and commercial and industrial solutions


As a leading global technology company in smart home and commercial and industrial solutions, Midea

provides services to customers in over 200 countries and regions. It leads the way in various markets,

including various household appliances and their key components, commercial air conditioners,

robotics and automation. In 2023, Midea Group’s revenue reached RMB373.7 billion, marking its eighth

consecutive year on the Fortune Global 500 list, demonstrating its global leadership and outstanding

performance. Midea persists in consolidating its market leadership in the global home appliance

industry. According to a report by Frost & Sullivan, based on sales volume and revenue in 2022, Midea

is the world’s largest home appliance supplier. Currently, Midea has an extensive brand matrix

targeting high-end, mass-market, and young consumer segments, and provides various smart home

appliance products. Based on sales volume in 2022, Midea’s products ranked first in six categories in

both online and offline markets in Mainland China. Furthermore, Midea has become a sizable provider

of commercial and industrial solutions, leading the way in multiple markets. According to production

volume, Midea ranked first in the residential AC compressor market in 2022, with a global market share

of 44%. Also, based on production volume, Midea ranked first in residential air conditioner and laundry

appliance motors, with global market shares of 39.0% and 17.5%, respectively. According to a report

by Frost & Sullivan, based on revenue in 2022, Midea is the largest commercial air conditioner supplier

in Mainland China and the fifth largest globally. Additionally, according to Frost & Sullivan’s report,

KUKA Group, a subsidiary of Midea, is one of the “Big Four” industrial robot companies globally and

the second largest heavy-duty robot company based on sales volume in 2022.


World-leading research and development capabilities for sustainable innovation


Midea possesses leading research and development capabilities and is committed to allocating

significant resources to R&D efforts. From 2021 to 2023, the total R&D investment exceeded RMB39

billion, with R&D spending surpassing RMB14 billion in 2023 alone, showing a continuous upward

trend. As of December 2023, Midea has over 23,000 R&D personnel worldwide, accounting for over 50%

of its non-production staff. According to a report by Frost & Sullivan, as of 31 December 31 2022,


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Midea ranks seventh globally in the total number of patent families and first among Chinese enterprises

and in the global home appliance industry, with over 28,000 invention patents.


Midea has established and continues to enhance its R&D system, including research units and teams

within the Corporate Research Centre (CRC) and various business divisions. Based on research on

technology, users, and markets, Midea has adopted a “Three Generations” R&D model and

continuously optimised the “Four-Tier R&D System”. This system relies on the CRC for cutting-edge,

basic, and common technologies, while business divisions focus on product technologies, collectively

constructing world-class R&D capabilities. Midea strengthens the operation mechanism of the “Three-

Tier Technical Committee System”, as well as drives the exploration of cutting-edge technologies,

breakthroughs in core technologies, and the layout of technology commercialisation projects. It also

promotes the alignment of technology strategies with medium and long-term product planning, driving

growth through the dual-wheel propulsion of technology and products. The building of a global R&D

network has been accelerated. The Group has set up a total of 33 R&D centers in 11 countries. With

the “2+4+N” global R&D network, it has gained the advantage of scale in R&D across the world.

Domestically, Midea Global Innovation Center in Shunde District, Foshan City and Midea Global

Innovation Center in Shanghai are the cores of Midea’s R&D arm. Overseas, with Midea America

Research Center, Midea Germany Research Center, Midea Japan Research Center and Midea Italy

Research Center as the cores, Midea makes use of the regional technological advantages, integrates

global R&D resources, and builds complementary global R&D capabilities. Following the strategy of

“Technology Leadership”, it attracts more and better talents, particularly top technology leaders and

talents, to build a competitive edge of talents.


While strengthening its global R&D network, Midea also works on constructing an open platform of

innovative ecosystems. Through deepening the implementation of technology projects to integrate

quality technological resources across the world, a global innovation system has been put in place. By

way of integrating various resources of large companies, technology companies, universities, research

institutes and innovation consulting agencies, a technology ecosystem has been put in place and

continuously expanded, which has access to enormous resources for technological innovation.

Additionally, a scientist system has been established with seven academician workstations/workshops


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and 18 academicians on more than 200 cooperation projects. These projects cover green, energy-

saving, health, intelligent, robotics, automaton, medical and energy technologies, among others. In

terms of basic research, the Group cooperates with domestic and foreign scientific research institutions,

such as the University of Illinois at Urbana-Champaign, Purdue University, The University of Sheffield,

University of Minnesota System, UC Berkeley, Tsinghua University, Shanghai Jiao Tong University,

Zhejiang University, the Chinese Academy of Sciences, Harbin Institute of Technology, Xi’an Jiaotong

University, Huazhong University of Science and Technology and South China University of Technology,

in order to establish joint labs for deepening technological cooperation. The Group also upgrades and

make innovations on cooperation models by carrying out strategic cooperation with tech companies

such as BASF, Honeywell, 3M, and SCHOTT to build a global innovation ecosystem through multiple

channels. Midea continues to achieve major technological breakthroughs and product innovations

through R&D investment, and its R&D achievements continue to optimise its product portfolio and

refine its brand image, as well as contributing to the technological progress of the industry.


High-performance operations and digitisation throughout the value chain


Every operational link of enterprises, including supply chain, manufacturing, sales, and product

development, faces intricate processes and vast scales. Every year, Midea procures raw materials and

components worth hundreds of billions of RMB from over 8,000 suppliers and sells products across

more than 200 categories to tens of thousands of small and medium-sized retailers and other

customers. Therefore, digitisation is crucial for the Company’s operations. More than 5,000

professionals within the Group are dedicated to the digital transformation and upgrade of the Group.


In terms of the supply chain, Midea’s Integrated Supply Chain (ISC) management system sets an

example of excellent supply chain management operations. It provides a vital system architecture for

efficiently fulfilling customer orders and managing global supply chains, achieving intelligent

replenishment and faster inventory turnover, and enhancing the collaborative efficiency of production,

supply, and sales throughout the value chain. The ISC management system enables seamless

connection with suppliers and automation of the procurement process based on sales and inventory

data. Supported by an efficient supply chain and big data, inventory building and replenishment of the

entire warehouse product portfolio can be achieved in an efficient manner, greatly improving production

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efficiency.


With respect to intelligent manufacturing, leveraging digital technologies, Midea is committed to

building high-quality, flexible, green and efficient factories. Five factories have been recognised as

“Lighthouse Factories” by the World Economic Forum, representing significantly improved production

efficiency. After digital transformation, the residential AC factory in Nansha, Guangdong, has reduced

operating costs by 23% and increased production efficiency by 36%. The experience of Lighthouse

Factories is rapidly promoted across multiple production bases globally. Midea’s intelligent

manufacturing capabilities combined with efficient supply chains enable a rapid response to customer

demands, aligning production with customer needs, increasing production efficiency, and reducing

inventory.


In terms of market channels, Midea leverages digital technologies to directly connect with an extensive

network of small and medium-sized retailers, continuously optimising sales channel networks. Through

the “Midea Cloud Sales” platform, small and medium-sized retailers can directly order products,

promoting the sales of core products and new products. Midea continues to enhance the functionality

of “Midea Cloud Sales” and constructs the “Midea Cloud Sales+” ecosystem covering all tiers of

markets. As a core competitive edge, Midea possesses an exclusive store system that covers

extensive markets. And it says steadfast in promoting the enhancement and transformation of the

exclusive store system in service, operation, and comprehensive retailing, among other capabilities.


In terms of product development, Midea improves its product development capabilities through

digitisation. By establishing a digital product planning platform, Midea rapidly translates technology into

products that meet customer needs. It keeps advancing platform modularisation to increase the

accuracy of product planning. During the period from 2021 to 2023, the project development cycle

(calculated based on the average time from project initiation to completion) has been shortened by

approximately 16%. Leveraging its comprehensive product portfolio and considerable economies of

scale, combined with a digital consumer engagement model, Midea continuously enhances user

research and insight capabilities to assist in formulating efficient research and development strategies

and developing products and solutions that meet market demands.



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High-performance operations and economies of scale throughout the value chain has brought

operational efficiency advantages that are difficult to replicate. Midea’s “T+3” model, supported by

comprehensive digitisation, efficient supply chain management, and production and sales channel

operations, has led to improvements in multiple efficiency indicators year by year. For example, the

average cycle time from order placement to delivery in the domestic market decreased from 21 days in

2021 to 12.5 days in 2023, significantly lower than the industry average.


A comprehensive and continuously deepening global network


In the domestic market, with its continuous efforts over the years, Midea has formed a multi-channel

network which has a complete business layout and covers a wide range of areas, thus meeting the

purchase needs of online and offline consumers for household appliances. Midea continues to improve

its offline business layout around user needs, and has created a network layout of comprehensive

household appliance stores, specialty stores of self-owned products, traditional retailers and e-

commerce franchise stores, covering the entire market from first-tier cities to townships. It also provides

professional scenario-based solutions for corporate customers. Particularly, Midea boasts a unique

exclusive shop system in the industry with more than 20,000 outlets, where various needs of users

from new decoration to updates can be met in pre-decoration stores, flagship stores, professional

stores, combo stores and other stores. Midea continuously provides industry-leading digital platform

services to retail stores. It also focuses on expanding and constructing premium brand stores for

COLMO and Toshiba. Centred around "smart suite operation" and "entire-house renovation solutions",

Midea actively cooperates with home decoration, furniture, building materials, and design channels,

seeking to capture front-end traffic. The Company has built over 2,500 "home decoration + appliances"

deeply integrated brand stores. In 2023, the retail sales on the pre-decoration market saw a year-on-

year increase of over 80%. With exclusive stores as the core, the Company builds a “Midea Cloud

Sales +” ecosystem covering markets at all tiers, establishes an exclusive store system with core

competitiveness for various markets, as well as firmly promotes and transforms the exclusive store

service, operation, and all-product-category retailing capabilities, among others. In addition, Midea is

also accelerating the development of new channels such as Pinduoduo, Douyin, Kuaishou, and

Xiaohongshu. These efforts, together with membership operation, product suite promotion and


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intelligent transformation, can drive sales and user growth.


In overseas markets, Midea has put in place a global network for research and development,

manufacturing, and marketing, representing the capability for global development. With 17 overseas

research and development centres in 10 countries, Midea integrates global R&D resources to build

complementary advantages in global technological research and development. Among the 40 major

production bases globally, 21 are located overseas. As such, Midea is able to realise global production

and delivery, seizing growth opportunities in overseas markets. Overseas sales contribute to over 40%

of Midea’s total sales, with products exported to over 200 countries and regions worldwide. In many

overseas markets, online and offline sales networks have been established, with approximately 5,000

after-sales service outlets. Continuously deepening the application of digital sales platforms in

overseas markets, over 9,000 retailers in Southeast Asia have joined Midea’s overseas sales platform.

As of 31 December 31 2023, Midea has over 30,000 overseas employees. Midea also continuously

deepens and expands its global business network through strategic acquisitions and joint ventures.

The rapid growth of Midea’s overseas original brand manufacture (OBM) business is evident, with OBM

revenue exceeding 40% of overseas smart home revenue in 2023. Mainly featuring Toshiba, Midea,

and Comfee brands, OBM products have demonstrated strong competitiveness in numerous overseas

markets. In 2023, on the Amazon platform in the United States, the market shares of Midea’s own-

brand window air conditioners and microwave ovens approached 30% and exceeded 40%, respectively.

Additionally, TLSC achieved a turnaround from loss to profit within approximately three years after the

acquisition, showcasing Midea’s capabilities in global business integration and global brand

management.


Sustained growth in the business of commercial and industrial solutions


Midea has established a rapidly growing business of commercial and industrial solutions. Revenue

from this business as a percentage of total revenue has increased from 18.5% in 2020 to over 26% in

2023, with revenue from the said business approaching RMB100 billion in 2023. Commercial and

industrial solutions have become one of the main engines driving the continuous growth in Midea’s

business.



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Midea Energy Solutions and Industrial Technology, with technology as the core driver, commands key

technologies in “green energy” and “key industrial components”. With a rich brand portfolio, it continues

to deepen cooperation with customers in high-growth areas such as consumer appliances, industrial

automation, photovoltaic energy storage, and intelligent transportation, among others. It provides global

pan-industrial customers with green, efficient and intelligent products and technological solutions. The

business group continues to increase investment in key and cutting-edge technologies. Through the

acquisition of new energy companies—CLOU Electronics and Hiconics, it has entered the energy

storage industry with tremendous market potential.


Midea Intelligent Building Technology offers integrated solutions for intelligent buildings in various fields,

including infrastructure, utilities, industrial parks, and agricultural facilities. Its comprehensive smart

solutions mainly cover smart low-carbon solutions, smart rail transit, smart hospitals, and smart parks.

With the digital platform iBUILDING at its core, it empowers building equipment and enhances the

operational and management efficiency of building facilities. It has successfully provided solutions for

landmark projects such as the Jakarta-Bandung High-Speed Railway in Indonesia and the National

Stadium (Bird’s Nest) in Beijing.


With KUKA Group at its core, the robotics and automation systems business, as one of the world-

renowned providers of intelligent robotic automation solutions, KUKA provides comprehensive products,

system integration, and services to customers in various industries such as automobile, electronics,

consumer goods, logistics/e-commerce, healthcare, and more. KUKA continues to consolidate and

enhance its market leadership in the field of robotics and automation solutions. In 2023, both revenue

and profit of KUKA Group hit record highs. Its business performance in China was particularly

outstanding, with revenue contribution from KUKA China increasing from 15% in 2020 to over 22% in

2022.


Midea possesses diversified commercial and industrial solutions, providing integrated solutions to

clients across multiple industries. In horizontal expansion, it consistently enriches product categories,

expands scale, and enhances efficiency advantages. In vertical expansion, it continuously develops

and iterates compressors, motors, and other key industrial components, and enters cutting-edge

technology fields through acquisitions, such as servo systems and industrial robots. Through both

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horizontal and vertical expansions, Midea creates industrial synergies, laying a solid foundation and

injecting strong momentum for the sustained growth of its business of commercial and industrial

solutions.


Advanced corporate governance and values


Midea is built to grow on the back of advanced governance mechanism, future-proof values, and

managerial mindset growth. Midea’s corporate governance emphasises the shared responsibilities,

rights and obligations, striving to establish an internal entrepreneurial group and fully inspire

entrepreneurial spirit. Midea has long been committed to creating maximum value for employees,

customers, shareholders, and society. To recognise employee contributions and acknowledge

performance, Midea has established a multi-tiered long-term incentive mechanism primarily based on

stock incentives. As of the end of 2023, Midea has launched nine Stock Option Incentive Schemes,

seven Restricted Share Incentive Schemes, and 14 Stock Ownership Schemes for its management

teams and key employees at different levels. Midea is committed to providing the best experience for

customers, striving to deeply understand their needs and preferences, and optimising product

development and business models accordingly. Over the years, Midea’s product portfolio has

continuously expanded to meet diverse customer needs. The trust and support from shareholders are

crucial to Midea’s development. Midea is dedicated to creating value for shareholders and sharing

growth with them. Since its listing in 2013, Midea has paid out a total of RMB86.7 billion in cash

dividends and implemented share repurchases totaling over RMB27.1 billion. Midea attaches great

importance to environmental and social responsibility, striving for sustainable development. It was

recognised as an Industry Benchmark for Sustainable Development Industrial Enterprises in the “2022

Forbes China Sustainable Development Industrial Enterprises Top 50 Selection”. In “Forbes China

2023 ESG Inspiring Cases” selection, it was recognised as one of the ESG Case Companies with

Practical Reference Significance.


4. Analysis of Main Business

4.1 Overview

See contents under the heading “2. Business Scope in the Reporting Period”.

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4.2 Revenues and Costs

4.2.1 Breakdown of operating revenue

                                                                                                           Unit: RMB’000

                                      2023                                     2022
                                           As a percentage of                       As a percentage of YoY Change (%)
                          Amount             total operating          Amount          total operating
                                              revenue (%)                              revenue (%)
Total                        372,037,280             100.00%          343,917,531           100.00%               8.18%

By business segment

Manufacturing                333,060,319             89.52%           305,846,997             88.93%              8.90%

By product category

HVAC                         161,110,843             43.31%           150,634,586             43.80%              6.95%
Consumer
                             134,691,669             36.20%           125,284,737             36.43%              7.51%
appliances
Robotics,
automation
systems and other             37,257,807             10.01%            29,927,674              8.70%             24.49%
manufactured
products
By geographical segment

PRC                          221,131,596             59.44%           201,272,589             58.52%              9.87%

Outside PRC                  150,905,684             40.56%           142,644,942             41.48%              5.79%

By sales model

Online                        77,330,838             20.79%            68,012,355             19.78%             13.70%

Offline                      294,706,442             79.21%           275,905,176             80.22%              6.81%

Note: Consumer appliances in the table above primarily include refrigerators, laundry appliances, kitchen appliances and

small domestic appliances.

During the Reporting Period, the energy solutions and industrial technology revenue was RMB27.9

billion, up 29% year-on-year; the intelligent building technology revenue was RMB25.9 billion, up 14%

year-on-year; and the robotics & automation revenue was RMB31.1 billion, up 12% year-on-year.


4.2.2 Business segments, products, geographical segments or sales models contributing over
10% of the operating revenue or profit

√Applicable □N/A
                                                                                                           Unit: RMB’000
                                                                        YoY change of    YoY change of    YoY change of
                      Operating                        Gross profit
                                     Cost of sales                         operating      cost of sales    gross profit
                      Revenue                            margin
                                                                         revenue (%)           (%)         margin (%)



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By business segment
Manufacturing         333,060,319      238,575,505             28.37%             8.90%             4.94%            2.70%
By product category
HVAC                  161,110,843      119,912,866             25.57%             6.95%             3.17%            2.73%
Consumer
                      134,691,669        90,239,157            33.00%             7.51%             3.19%            2.80%
appliances
Robotics,
automation
systems and
                       37,257,807        28,423,482            23.71%            24.49%            20.11%            2.78%
other
manufactured
products
By geographical segment
PRC                   221,131,596      163,562,521             26.03%             9.87%             7.93%            1.33%
Outside PRC           150,905,684      109,918,852             27.16%             5.79%             0.85%            3.57%
By sales model
Online                 77,330,838        52,961,520            31.51%            13.70%            11.79%            1.17%
Offline               294,706,442      220,519,853             25.17%             6.81%             3.45%            2.43%

Under the circumstances that the statistical standards for the Company's main business data adjusted

in the Reporting Period, the Company's main business data in the recent year is calculated based on

adjusted statistical standards at the end of the Reporting Period

□Applicable √N/A


4.2.3 Whether revenue from physical sales is higher than service revenue

√Yes □No
      Business
                              Item               Unit                 2023                  2022          YoY Change (%)
      segment
                                             In thousand
                           Sales                                          597,163.1          547,765.0               9.02%
      Home                                    units/sets
    appliances            Output                 Ditto                    580,947.3          539,852.5               7.61%
                         Inventory               Ditto                     92,512.9           87,067.8               6.25%

Reason for any over 30% YoY movements in the data above
□Applicable √N/A

4.2.4 Execution of significant sales and purchase contracts in the Reporting Period

□Applicable √N/A

4.2.5 Breakdown of cost of sales

                                                                                                              Unit: RMB’000

                                                 2023                                 2022
   Business                                           As a percentage                     As a percentage     YoY Change
                       Item
   segment                              Amount         of total cost of      Amount        of total cost of       (%)
                                                          sales (%)                           sales (%)


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                 Raw materials         175,242,843            83.39%     170,337,613         83.63%             2.88%
Home             Labor costs            13,676,011              6.51%     12,746,704          6.26%             7.29%
appliances       Depreciation            3,521,545              1.68%       3,242,335         1.59%             8.61%
                 Energy                  2,886,391              1.37%       2,760,289         1.36%             4.57%


4.2.6 Changes in the scope of the consolidated financial statements for the Reporting Period

√Yes □No
The detailed information of changes in the consolidation scope in the current period is set out in Note 5

to the Financial Statements. Entities newly included in the consolidation scope in the current period

through acquisition mainly include ShenZhen CLOU Electronics Co., Ltd. and its subsidiaries (please

refer to Note 5(1)(a)), while details of those through incorporation can be found in Note 5(2)(a). The

detailed information of subsidiaries no longer included in the consolidation scope in the current period

is set out in Note 5(2)(b).


4.2.7 Major changes in the business, products or services in the Reporting Period

□Applicable √N/A

4.2.8 Main customers and suppliers

Major customers of the Company
Total sales to top five customers (RMB'000)                                                                43,667,937
Total sales to top five customers as a percentage of the
                                                                                                              11.74%
total sales for the year (%)
Total sales to related parties among top five customers
                                                                                                                       0
as a percentage of the total sales for the year (%)

Information about top five customers
                                                                                        As a percentage of the total
   No.                    Customer                         Sales revenue (RMB'000)
                                                                                            sales revenue (%)
    1                     Customer A                                       25,454,192                           6.84%
    2                     Customer B                                        7,330,760                           1.97%
    3                     Customer C                                        5,046,912                           1.36%
    4                     Customer D                                        3,230,985                           0.87%
    5                     Customer E                                        2,605,088                           0.70%
  Total                        --                                          43,667,937                         11.74%

Other information about top five customers
□Applicable √N/A
Major suppliers of the Company
Total purchases from top five suppliers (RMB'000)                                                          15,872,076
Total purchases from top five suppliers as a percentage
                                                                                                                6.19%
of the total purchases for the year (%)


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Total purchases from related parties among top five
suppliers as a percentage of the total purchases for the                                                                    0
year (%)

Information about top five suppliers of the Company
                                                                                             As a percentage of the total
    No.                     Supplier                         Purchase (RMB'000)
                                                                                                   purchases (%)
     1                    Supplier A                                          4,998,223                              1.95%
     2                    Supplier B                                          4,568,479                              1.78%
     3                    Supplier C                                          2,152,149                              0.84%
     4                    Supplier D                                          2,119,501                              0.83%
     5                    Supplier E                                          2,033,724                              0.79%
   Total                       --                                            15,872,076                              6.19%

Other information about top five suppliers
□Applicable √N/A

4.3 Expense

                                                                                                             Unit: RMB'000
                                                                                             Reason for any significant
                             2023                  2022               YoY Change (%)
                                                                                                     change
Selling and
distribution                   34,880,875           28,716,121                    21.47%
expenses
General and
administrative                 13,476,908            11,582,664                   16.35%
expenses
Finance costs                   3,261,656             3,387,491                   -3.71%
Research and
development                    14,583,311           12,618,506                    15.57%
expenses


4.4 R&D investment

√Applicable □N/A
Information about R&D personnel

                                            2023                           2022                     YoY Change (%)

Number of R&D personnel                              23,242                           20,782                       11.84%
R&D personnel as a
percentage of total                                 11.69%                           12.50%                         -0.81%
employees
Educational background of
                                            ——                           ——                           ——
R&D personnel
Bachelor’s degree                                   12,633                           12,353                         2.27%

Master’s degree                                      5,115                            4,457                       14.76%

Doctoral degree                                            648                             548                     18.25%

Other                                                 4,846                            3,424                       41.53%


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Age structure of R&D
                                         ——                         ——                            ——
personnel
Below 30                                               7,204                         6,566                     9.72%

30~40                                              11,842                           11,208                     5.66%

Over 40                                                4,196                         3,008                    39.49%

Note: “Other” under “Educational background of R&D personnel” in the table above includes personnel

under privacy protection.

Information about R&D investment

                                         2023                        2022                        YoY Change (%)

R&D investment (RMB’000)                       14,583,311                   12,618,506                       15.57%
R&D investment as a
percentage of operating                                3.92%                        3.67%                      0.25%
revenue

Reasons for any significant change in the composition of R&D personnel and the impact
□Applicable √N/A
Reasons for any significant YoY change in the percentage of R&D investment in operating revenue
□Applicable √N/A
Reasons for any significant change in the percentage of capitalized R&D investment and rationale
□Applicable √N/A

4.5 Cash flow

                                                                                                        Unit: RMB'000

               Item                             2023                         2022                 YoY Change (%)
Subtotal of cash inflows from
                                                   372,833,745                  343,767,987                    8.46%
operating activities
Subtotal of cash outflows due to
                                                   314,931,134                  309,110,159                    1.88%
operating activities
Net cash flows from operating
                                                       57,902,611                   34,657,828                67.07%
activities
Subtotal of cash inflows from
                                                   122,203,235                  102,953,948                   18.70%
investing activities
Subtotal of cash outflows due to
                                                   153,423,090                  116,463,458                   31.73%
investing activities
Net cash flows from investing
                                                       -31,219,855              -13,509,510                  -131.10%
activities
Subtotal of cash inflows from
                                                       37,112,135                   54,739,462                -32.20%
financing activities
Subtotal of cash outflows due to
                                                       55,022,348                   65,594,343                -16.12%
financing activities
Net cash flows from financing
                                                       -17,910,213              -10,854,881                   -65.00%
activities
Net increase in cash and cash
                                                        8,755,292                   10,581,929                -17.26%
equivalents



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Explanation of why the data above varied significantly

√Applicable □N/A

a. Primarily driven by an increase in cash received from sale of goods or rendering of services, net

cash flows from operating activities increased 67.07% from last year.

b. Primarily driven by an increase in cash paid to acquire investments, net cash flows from investing

activities decreased 131.10% from last year.

c. Primarily driven by a decrease in cash received from borrowings, net cash flows from financing

activities decreased 65.00% from last year.

d. Net increase in cash and cash equivalents decreased 17.26% from last year.

Explanation of main reasons leading to the material difference between net cash flows from operating

activities during the Reporting Period and net profit for the year

√Applicable □N/A

It is primarily due to the increased operating payables.

5. Analysis of Non-Core Business

□Applicable √N/A

6. Assets and Liabilities

6.1 Material changes of asset items

                                                                                                    Unit: RMB'000

                      31 December 2023               1 January 2023
                                                                            Change in
                                      As a                         As a                  Explanation about any
                                                                            percentage
                                 percentage of                percentage of                material change
                     Amount                      Amount                         (%)
                                  total assets                 total assets
                                      (%)                          (%)
Cash at bank
                  81,673,846           16.80%    55,270,099         13.08%      3.72%
and on hand
Accounts
                  32,884,739            6.77%    28,237,973           6.68%     0.09%
receivable
Contract assets      4,045,925          0.83%     4,498,956           1.06%    -0.23%

Inventories       47,339,255            9.74%    46,044,897         10.90%     -1.16%
Investment
                     1,293,629          0.27%       809,936           0.19%     0.08%
properties
Long-term
equity               4,976,109          1.02%     5,188,817           1.23%    -0.21%
investments



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Fixed assets            30,937,963           6.37%     26,082,992         6.17%       0.20%
Construction in
                         4,681,220           0.96%      3,843,777         0.91%       0.05%
progress
Right-of-use
                         3,048,785           0.63%      2,339,878         0.55%       0.08%
assets
Short-term
                         8,819,176           1.81%      5,169,480         1.22%       0.59%
borrowings
Long-term
                        46,138,736           9.49%     50,685,948         12.00%      -2.51%
borrowings
Contract
                        41,765,475           8.59%     27,960,038         6.62%       1.97%
liabilities
Lease liabilities        2,047,319           0.42%      1,507,480         0.36%       0.06%

Indicate whether overseas assets account for a larger proportion in total assets.
□Applicable √N/A

6.2 Assets and liabilities measured at fair value

√Applicable □N/A
                                                                                                             Unit: RMB'000

                                                   Profit or           Amount
                                                  loss from Cumulative provide
                                                  change in fair value  d for Purchased
                                      Opening                                             Sold in   Other          Closing
               Item                               fair value change impairm     in the
                                      balance                                           the period changes         balance
                                                    during recorded in ent in   period
                                                      the     equity     the
                                                    period             period
Financial assets
1. Financial assets held for
                                                                                             17,607,07
trading (excluding derivative         3,284,593    284,587            -       15,811,293                  17,190 1,790,588
                                                                                                     5
financial assets)
2. Derivative financial assets         752,451     -12,067    125,812          1,254,362       194,374 -255,430 1,670,754
                                                                                                                   13,330,00
3. Receivables financing             13,526,540          -            -                  -     196,532         -
                                                                                                                           8
4. Other debt investments and                                                                                      11,013,47
                              17,626,302                 -            -             30,000 7,253,610     610,784
other                                                                                                                      6
5. Investments in other equity
                                        41,359           -     -1,025                    -           -    -2,460     37,874
instruments
                                                       -
6. Other non-current financial
                                     10,625,244 1,128,35     -266,696              172,008 2,597,153     964,885 7,769,938
assets
                                                       0
                                                                                             27,848,74 1,334,96 35,612,63
Sub-total of financial assets        45,856,489 -855,830     -141,909         17,267,663
                                                                                                     4        9         8
Investment properties
Productive living assets
Others


                                                                                             27,848,74 1,334,96 35,612,63
Sub-total of the above               45,856,489 -855,830     -141,909         17,267,663
                                                                                                     4        9         8
Financial liabilities                 1,895,310    272,054    -38,001              150,077     520,924     3,662 1,762,178




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   6.3 Restricted asset rights as of the end of this Reporting Period


   As of the end of this Reporting Period, there were no such circumstances where any main assets of the

   Company were sealed, distrained, frozen, impawned, pledged or limited in any other way.


   7. Investment made

   7.1 Total investment amount


   √Applicable □N/A
          Total investment amount of the     Total investment amount of last year
                                                                                               YoY Change (%)
           Reporting Period (RMB’000)                    (RMB’000)
                               153,423,090                            116,463,458                                 31.73%


   7.2 Significant equity investment made in the Reporting Period

   □Applicable √N/A

   7.3 Significant non-equity investments ongoing in the Reporting Period

   □Applicable √N/A

   7.4 Financial investments

   7.4.1 Securities investments

   √Applicable □N/A
                                                                                                            Unit: RMB’000

                                                    Gain or
                                                               Cumula
                                     Mea           loss from
                                                               tive fair
Type                                 sure           change                                  Gain or                    Fund
         Code of Abbreviat Initial        Opening                value Purchas Sold in              Closing
   of                                men             in fair                                loss in          Accounting ing
         securitie ion of investme        carrying             change ed in the the                 carrying
secur                                  t             value                                    the               title   sour
            s     securities nt cost      amount               recorde period period                amount
 ities                                met            during                                 period                       ce
                                                                  d in
                                      hod              the
                                                                equity
                                                     period
                                     Fair
Over                                                                                                        Financial
                                     valu                                                                                Own
 seas             XIAOMI-                                                                                   assets
         1810                769,972 e    586,342 252,053        9,936              -59,180 254,576 791,674              fund
listed            W                                                                                         held for
                                     met                                                                                 s
stock                                                                                                       trading
                                     hod
                                     Fair
Over                                                                                                         Financial
                                     valu                                                                                Own
 seas             SoundHo                                                                                    assets
         SOUN                157,203 e     51,889 10,395          920          -             10,395   63,204             fund
listed            und AI                                                                                     held for
                                     met                                                                                 s
stock                                                                                                        trading
                                     hod
 Dom                                 Fair                                                                   Financial
                                                                                                                         Own
estica                               valu                                                 -                 assets
         688165 EFORT        178,534      274,120 136,138                                   125,451 299,001              fund
  lly                                e                                              100,570                 held for
                                                                                                                         s
listed                               met                                                                    trading


                                                                 97
                                          The 2023 Annual Report of Midea Group Co., Ltd.


stock                                    hod
 Dom                                     Fair
                                                                                                                 Financial
estica                                   valu                                                                                   Own
                                                                                                                 assets
  lly    688322 Orbbec     300,000       e    134,670   150,612                                  150,612 285,282                fund
                                                                                                                 held for
listed                                   met                                                                                    s
                                                                                                                 trading
stock                                    hod
 Dom                                     Fair
                                                                                                                  Other non-
estica                                   valu                                                                                Own
                                                              -                                        - 1,455,24 current
  lly    688249 Nexchip    1,000,00      e          -                       1,675,42                                         fund
                                                        220,185                                  220,185        4 financial
listed                            0      met                                       9                                         s
                                                                                                                  assets
stock                                    hod
 Dom                                     Fair
                                                                                                                    Financial   Rais
estica                                   valu
                                                                                                                    assets      ed
  lly    688159 Neoway          31,600   e     29,100     6,194        -               -65,261    42,526      6,365
                                                                                                                    held for    fund
listed                                   met
                                                                                                                    trading     s
stock                                    hod
 Dom                                     Fair
                                                                                                                 Financial      Rais
estica                                   valu
                                                                                                                 assets         ed
  lly    688162 JEE             88,180   e    153,353   -41,135        -                         -41,135 112,218
                                                                                                                 held for       fund
listed                                   met
                                                                                                                 trading        s
stock                                    hod
 Dom                                     Fair
                                                                                                                    Financial   Rais
estica                                   valu
                Real-                                                                                               assets      ed
  lly    301135                 40,000   e     62,101     7,761                         -1,017     8,213     69,297
                Design                                                                                              held for    fund
listed                                   met
                                                                                                                    trading     s
stock                                    hod
 Dom                                     Fair
                                                                                                                 Other non-     Rais
estica                                   valu
                                                                                                                 current        ed
  lly    688097 BOZHON          55,000   e     89,746    24,341                              -    24,341 114,087
                                                                                                                 financial      fund
listed                                   met
                                                                                                                 assets         s
stock                                    hod
 Dom                                     Fair
                Highpow                                                                                             Financial   Rais
estica                                   valu
                er                                                                                                  assets      ed
  lly    001283                 20,000   e     38,030   -14,299                        -32,514     1,729      7,245
                Technolo                                                                                            held for    fund
listed                                   met
                gy                                                                                                  trading     s
stock                                    hod
 Dom                                     Fair
                                                                                                                    Financial   Debt
estica          ST                       valu
                                                                                                                    assets      restr
  lly    002157 Zhengba           210    e          -         0                 210                    0        210
                                                                                                                    held for    uctur
listed          ng                       met
                                                                                                                    trading     ing
stock                                    hod
                           2,640,69        - 1,419,35                       1,675,63       -         3,203,82             -          -
           Total                                        311,875 10,856                       356,523
                                  9                 1                              9 258,542                7


   7.4.2 Derivatives investments

   √Applicable □N/A

   A. Derivatives investments for hedging purposes in the Reporting Period

   √Applicable □N/A
                                                                                                                     Unit: RMB'000

                                                                                                                         Closing
                                                  Gain or                                                              amount as
                                                              Cumulative
                                                 loss from                                                                   a
                      Initial                                  fair value     Purchased     Sold in
      Type of                      Opening       change in                                                 Closing     percentage
                   investment                                   change          in the       the
     derivative                    amount        fair value                                                amount         of the
                     amount                                   recorded in       period      period
                                                 during the                                                            Company’s
                                                                 equity
                                                   period                                                              closing net
                                                                                                                         assets


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   Futures
                    85,017         85,017               0         -3,925              0          0        81,092       0.0498%
  contracts
    Forex
                  352,895         352,895      -233,247         167,738       128,792      37,722        118,788       0.0729%
  contracts
   Cross-
  currency
                4,276,688       4,276,688      -815,482        -266,696               0          0     3,137,717       1.9264%
interest rate
   swaps
    Total       4,714,600       4,714,600 -1,048,729           -102,883       128,792      37,722      3,337,597       2.0491%
Explanation of significant changes in accounting
policies and specific financial accounting principles in
                                                             No change
respect of the Company's hedges for the period as
compared to the prior period
                                                             Actual loss from derivatives investments during the Reporting
Actual gain/loss in the period
                                                             Period was RMB-1,903.841 million.
                                                             The Company's major risks during the Reporting Period
                                                             included foreign exchange risk exposures and raw material
                                                             price risks. Foreign exchange risks included foreign currency-
                                                             denominated asset and liability exposures arising from
                                                             overseas sales, raw material purchases, financing and other
Results of hedges                                            operations. And raw material price risks included exposures to
                                                             fluctuations in spot trading market prices for bulk material
                                                             purchases. These uncertainties arising from currency
                                                             fluctuations were effectively hedged against by buying
                                                             derivative contracts of the same amount and maturity but in
                                                             opposite directions.
Source of derivatives investment funds                       All from the Company’s own funds
                                                               For the sake of eliminating the cost risk of the Company's bulk
                                                             purchases of raw materials as a result of significant fluctuations
                                                             in raw material prices, the Company not only carried out futures
                                                               business for some of the bulk materials, but also made use of
                                                              bank financial instruments and promoted forex funds business,
                                                              with the purpose of avoiding the risks of exchange and interest
                                                                rate fluctuation, realizing the preservation and appreciation of
                                                                  forex assets, reducing forex liabilities, as well as achieving
                                                                     locked-in costs. The Company has performed sufficient
                                                                   evaluation and control against derivatives investment and
                                                                    position risks, details of which are described as follows:
                                                              1. Legal risk: The Company's futures business and forex funds
                                                                 businesses shall be conducted in compliance with laws and
                                                                      regulations, with clearly covenanted responsibility and
                                                             obligation relationship between the Company and the agencies.
                                                                  Control measures: The Company has designated relevant
                                                                   responsible departments to enhance learning of laws and
Risk analysis of positions held in derivatives during         regulations and market rules, conducted strict examination and
the Reporting Period and explanation of control                  verification of contracts, defined responsibility and obligation
measures (Including but not limited to market risk,            well, and strengthened compliance check, so as to ensure that
liquidity risk, credit risk, operational risk, legal risk,     the Company's derivatives investment and position operations
etc.)                                                         meet the requirements of the laws and regulations and internal
                                                                               management system of the Company.
                                                                2. Operational risk: Imperfect internal process, staff, systems
                                                             and external issues may cause the Company to suffer from loss
                                                                    during the course of its futures business and forex funds
                                                                                              business.
                                                                   Control measures: The Company has not only developed
                                                                      relevant management systems that clearly defined the
                                                                   assignment of responsibility and approval process for the
                                                             futures business and forex funds business, but also established
                                                              a comparatively well-developed monitoring mechanism, aiming
                                                                   to effectively reduce operational risk by strengthening risk
                                                                      control over the business, decision-making and trading
                                                                                             processes.
                                                             3. Market risk: Uncertainties caused by changes in the prices of
                                                                   bulk commodity and exchange rate fluctuations in foreign
                                                                    exchange market could lead to greater market risk in the
                                                              futures business and forex funds business. Meanwhile, inability

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                                     The 2023 Annual Report of Midea Group Co., Ltd.


                                                                 to timely raise sufficient funds to establish and maintain
                                                               hedging positions in futures operations, or the forex funds
                                                          required for performance in forex funds operations being unable
                                                           to be credited into account could also result in loss and default
                                                                                             risks.
                                                                 Control measures: The futures business and forex funds
                                                                 business of the Company shall always be conducted by
                                                           adhering to prudent operation principles. For futures business,
                                                                the futures transaction volume and application have been
                                                           determined strictly according to the requirements of production
                                                                  & operations, and the stop-loss mechanism has been
                                                                implemented. Besides, to determine the prepared margin
                                                          amount which may be required to be supplemented, the futures
                                                             risk measuring system has been established to measure and
                                                                calculate the margin amount occupied, floating gains and
                                                            losses, margin amount available and margin amount required
                                                                   for intended positions. As for forex funds business, a
                                                            hierarchical management mechanism has been implemented,
                                                           whereby the operating unit which has submitted application for
                                                            funds business should conduct risk analysis on the conditions
                                                             and environment affecting operating profit and loss, evaluate
                                                           the possible greatest revenue and loss, and report the greatest
                                                               acceptable margin ratio or total margin amount, so that the
                                                          Company can update operating status of the funds business on
                                                            a timely basis to ensure proper funds arrangement before the
                                                                                         expiry dates.
                                                          The Company carried out recognition and measurement
                                                          according to “Section VII Recognition of Fair Value” in the
                                                          Accounting Standard No. 22 for Business Enterprises—
                                                          Recognition and Measurement of Financial Instruments.
                                                          Changes in the fair value of derivatives were recognized at
Changes in market prices or fair value of derivative      RMB-1,151.612 million during the Reporting Period.
products during the Reporting Period, specific            1. The fair value of futures contracts was determined on the
methods used and relevant assumption and                  basis of publicly quoted prices in the futures market.
parameter settings shall be disclosed for analysis of     2. The fair value of forex contracts was determined based on
fair value of derivatives                                 banks’ quoted prices for foreign exchange products.
                                                          3. The main parameter assumptions used in the analysis of the
                                                          fair value of cross-currency interest rate swaps included interest
                                                          rate paid, interest rate received, frequency of interest received,
                                                          frequency of interest paid, interest rate curve, exchange rate
                                                          curve, etc.
Litigation involved (if applicable)                       N/A
Disclosure date of the announcement about the
                                                          29 April 2023
board’s consent for the derivative investment (if any)
Disclosure date of the announcement about the
general meeting’s consent for the derivative             20 May 2023
investment (if any)
                                                          The Company's independent directors are of the view that the
                                                          futures hedging business is an effective instrument for the
                                                          Company to eliminate price volatility and implement risk
                                                          prevention measures through enhanced internal control,
                                                          thereby improving the operation and management of the
Special opinions expressed by independent directors       Company; the Company's foreign exchange risk management
concerning the Company's derivatives investment and       capability can be further improved through the forex funds
risk control                                              business, so as to maintain and increase the value of foreign
                                                          exchange assets and the abovementioned investment in
                                                          derivatives can help the Company to fully bring out its
                                                          competitive advantages. Therefore, it is practicable for the
                                                          Company to carry out derivatives investment business, and the
                                                          risks are controllable.


B. Derivatives investments for speculative purposes in the Reporting Period


□ Applicable √ N/A

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No such cases in the Reporting Period.


7.5 Use of funds raised


□ Applicable √ N/A

No such cases in the Reporting Period.


8. Sale of Major Assets and Equity Interests

8.1 Sale of major assets


□Applicable √N/A

No such cases in the Reporting Period.


8.2 Sale of major equity interests


□ Applicable √ N/A


9. Analysis of Major Subsidiaries

√Applicable □N/A
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
                                                                Total       Net       Operating Operating
                                                                                                          Net profit
                        Company        Business    Registered assets (in assets (in    revenue profit (in
    Company name                                                                                          (in RMB
                          type          scope       capital     RMB        RMB         (in RMB    RMB
                                                                                                           million)
                                                               million)   million)      million) million)
Guangdong Midea                    Manufacturing
                                                 USD158.58
Kitchen Appliances      Subsidiary of home                       23,257     12,394      16,237      2,512     2,211
                                                 million
Manufacturing Co., Ltd.            appliances
Chongqing Midea Air-              Manufacturing
                                                RMB50
Conditioning Equipment Subsidiary of home                        15,000      1,623      25,802      1,737     1,493
                                                million
Co., Ltd.                         appliances
                                   Manufacturing
Wuxi Little Swan                                 RMB732,48
                        Subsidiary of home                       25,504      6,290      23,830      1,535     1,393
Electric Co., Ltd.                               7,764
                                   appliances
                                     Manufacturing
GD Midea Heating &
                                     of commercial RMB500
Ventilating Equipment   Subsidiary                               16,618      2,629      18,624      1,459     1,324
                                     air           million
Co., Ltd.
                                     conditioners

Acquisition and disposal of subsidiaries during the Reporting Period

√Applicable □N/A

The detailed information of changes in the consolidation scope in the current period is set out in Note 5

to the Financial Statements. Entities newly included in the consolidation scope in the current period

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through acquisition mainly include ShenZhen CLOU Electronics Co., Ltd. and its subsidiaries (please

refer to Note 5(1)(a)), while details of those through incorporation can be found in Note 5(2)(a). The

detailed information of subsidiaries no longer included in the consolidation scope in the current period

is set out in Note 5(2)(b).


10. Structured Bodies Controlled by the Company

√Applicable □N/A

As of the end of the Reporting Period, one structured entity was included in the Group’s consolidated

financial statements, which is a private-equity fund controlled by the Group. As a manager and investor

of the structured entity, the Group has relevant management power in and variable returns from the

entity, and has the ability to exercise its management power to impact the returns.


11. Outlook for the Future Development of the Company

Development strategies of the Company


Midea adheres to the strategic focus of “Technology Leadership, Direct to Users, Digitization &

Intelligence Driven, and Global Impact”, focuses on “Comprehensive Digitalization and Comprehensive

Intellectualization”, drives balanced development of ToC and ToB businesses under the guidance of the

strategic focus, as well as builds a complementary cycle among diverse industries. The Company

drives profitability improvement through the enhancement of product strength and core technologies in

the ToC end, providing strategic support for the transformation of the ToB business. Also, it continues to

strengthen its globalisation capability, striving to transform from a China-based company to a global

one. While maintaining its superiority in efficiency, the Company drives growth through innovation and

builds product and technological advantages. Midea are built to grow on the back of advanced

governance mechanism, future-proof values, and managerial mindset growth. Midea will continuously

improve the governance mechanism by empowering responsibilities, rights and obligations, clarify

decentralization and authorization, constantly refine the agent mechanism, optimize the incentive and

constraint system, encourage entrepreneurship and boost organizational vitality, and establish a flat

and agile organization and optimization process. It will also adhere to the values of long-termism and

altruism, truly put employees, users, customers and partners at the center of all things, and improve the


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                               The 2023 Annual Report of Midea Group Co., Ltd.



EHS governance and ESG rating. Additionally, the Management will endeavor to achieve all-round

growth both spiritually and intellectually. Meanwhile, Midea will continue to improve the talent structure,

build diverse teams that are inclusive and collaborative, and create a simple, straightforward, flat and

equal environment. In the meantime, it will constantly improve consistency management across the

Group, so as to achieve consistent operations, corporate culture and values and philosophies, which

will ensure the sustained and steady development of the Company.


With strategic certainty, Midea is well prepared for uncertainties in the future. It firmly upgrades its

business models. In terms of the home appliance business, the key is to achieve further growth through

business model upgrades such as the Chinese Market DTC reform and the Overseas OBM Priority

strategy, and to explore new approaches to continuously drive cost reduction and efficiency

improvement through the combination of the through-value-chain, no-breakpoint, seamless, and

people-never-see-people digitalisation capabilities and lean management. It is also important to insist

on structural upgrading, i.e. adjusting large structures, refining small structures, and creating new

structures. The key is to provide high-quality, differentiated products. The Company continues to invest

in and improve the "Three Generations" R&D system to increase added value and profitability of

products, better support technological research and development and structural upgrading, and

continue to invest in the future in order to achieve stable and sustained high-quality growth. In addition,

Midea insists on business upgrading. By further increasing investment in the ToB business,

continuously improving product strength, realising value chain autonomy, grasping opportunities to

quickly seize market share, the Company fully fires up the "Second Growth Engine". With the

customer-oriented principle as the root of corporate innovation and reform, the Company accelerates

DTC breakthroughs. Grasping capital flow, cargo flow, information flow and other information of the

whole value chain through direct contact with customers/users, the Company is able to deepen the

implementation of an online system for policies and visualisation of the whole order process. By doing

so, it can gather retail data in real time, and acquire first-hand information on customer needs for its

reform and innovation. Further, the Company shortens the factory-to-user process through the

development of online capabilities and the further online-offline integration, so that the products and

services can be delivered to the users at the lowest cost and the fastest speed.




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                                The 2023 Annual Report of Midea Group Co., Ltd.



Key operation points in 2024:


In 2024, based on the core strategic focus with “Technology Leadership” as the core, Midea will adhere

to the operating principles of “enhancing value chain-wide efficiency alongside structural growth

through upgrades”. It will strive for a bigger business size through structural growth, globalised regional

expansion and upgrading of the ToB business. Continuous efforts will be made to optimise cash flow,

improve cost management and focus on developing competitive businesses at both the strategic and

operational levels. By working on overall efficiency improvement instead of partial fine-tuning, Midea is

in a position to better cope with market volatility and uncertainty. It will endeavour to achieve its annual

objectives in a steady and high-quality manner. Meanwhile, further efforts will be made to promote the

decentralisation and improvement of the governance mechanism, develop an internal entrepreneurial

group, and fully stimulate entrepreneurial spirit. Midea will strive to be the best it can be in a long cycle,

looking at its own problems and shortcomings in a calm and rational manner.


Midea will focus on "efficiency, performance and results". It will continue to drive business

breakthroughs, advance faster with innovation, as well as explore new approaches, models, products

and capabilities. On the product end, the Company will continue to strengthen the product structure

adjustment, the development of new product categories and breakthroughs in weak product categories;

on the channel end, efforts are being made to promote the expansion of new markets, the use of new

approaches, and the development of new business forms such as interest-based e-commerce; and on

the operation end, the Company will insist on controlling operating risks and expenses, balancing

investments and returns, driving higher profitability and improving cash flow. Key tasks for 2024 include:


a. Based on the core strategy of “Technology Leadership”, Midea will increase investment in R&D,

improve talent structure, carry out the tasks of technology innovation, product innovation, business

model innovation, and process innovation, as well as build a mechanism that can support “Technology

Leadership”. Midea will continue to promote the transformation of R&D organisations, enhance

research capabilities, establish the scientist system, attract global research talents and high-end R&D

personnel, improve the R&D network, accelerate the cultivation of overseas R&D capabilities,

strengthen the development and management of overseas R&D organisations, advance the planning

and implementation of overseas R&D centres by various business units, and focus on the construction

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                               The 2023 Annual Report of Midea Group Co., Ltd.



of research organisations and overseas OBM R&D teams as well as talent structure to develop

differentiated products with potential brand effects. Through the implementation of the “Three

Generations” plan, it will promote the improvement of operational quality, establish a quantified

evaluation system for the “Three Generations,” use leading research projects and common technology

projects as leverage, and continuously build a future technological leadership moat from the

dimensions of technology, patents, and standards. It will continuously optimise the structure of projects

related to exploring cutting-edge technologies, breakthroughs in core technologies, and technology

transfer to promote the implementation of research results and enhance product capabilities. It will

continue to advance the product technology planning of dual high-end brands, guide the product

structure upgrade of relevant product business units with “big structures, small structures, and new

structures”, and further support business development through the layout and implementation of new

products.


b. Midea will keep a high-quality development direction and stick to organic, sustained and effective

organic growth. In the process of implementing new strategies to boost new growth areas, the key lies

in improving operational efficiency. Therefore, Midea will optimize the delivery cycle, enhance the

inventory turnover, improve the cash cycle, and implement the shared inventory system. Being

customer-oriented, Midea will strive to be “Direct to Users” through user research, user insight, product

plan transforming and user operation. Midea will promote the T+3 business model reform and high-

performance operations in the whole value chain in every link from product planning to after-sales

service, so as to increase efficiency in the whole value chain and the data-driven efficiency. Channel

reform will be firmly pushed forward for the front-end market. In order to win in competition, it is

important to develop high-end products to refine the product mix. Midea will plan for, establish and

refine business middle platforms, especially data and technology middle platforms. In the meantime, it

will maintain overall consistency by sticking to “One Midea, One System, One Standard”. In face of

common problems such as fluctuations in exchange rates and prices of bulk raw materials, as well as

sourcing management, Midea will firmly promote its internal coordination and sharing mechanism and

keep perfecting the relevant solutions. It will also maintain effective investments, control non-operating

expenses, increase labor productivity, improve human resource allocation efficiency, promote lean

management and provide fresh impetus for continual growth through relentless innovation.


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                               The 2023 Annual Report of Midea Group Co., Ltd.



c. In the domestic market, based on the “Direct to Users” strategy, Midea will continue to deepen the

reform of its organisational structure, improve retail capacity, and develop user operation and back-end

capacity. Midea will also commit itself to intelligent experience terminals and user experience. In terms

of channel transformation, Midea will deepen DTC transformation, transform the value chain and

business model, focus on the development of retail capabilities and the enhancement of user

operations around customers and users, precisely and efficiently improving end-to-end experiences

such as services, products, and supply chains; at the customer-oriented M2b link, digital operation

empowerment will be carried out, delivery efficiency will be improved through mechanisms such as

visual delivery period, overdue compensation, simplified online policies, and empowered cloud

warehouses, customer liquidity will be increased, inventory sharing will be promoted, online and offline

product pools will be interconnected, and a shared inventory system of innovative shared business

models will be achieved, improving store inventory turnover efficiency; At the b2C link, focusing on

users, digital retail empowerment will be carried out, retail resources and policies will be optimised, a

model of operating multiple stores with one business will be promoted, and user experience will be

enhanced; Based on digital systems and tools, increased investment will be made in building a retail

middle platform, cultivating user operation capabilities and data analysis decision-making capabilities,

supporting retail transformation; enhancing the front-end category store user service capabilities and

cross-store customer service guidance and recommendation capabilities of shelf e-commerce

platforms, optimising the allocation of internal and external traffic resources, deepening internal traffic

special   cooperation and     developing KOLs and            private   domain    traffic, while accelerating

content/interest-based e-commerce channel layout; strengthening the construction of online customer

ecosystem, focusing on cultivating stores for all categories and multiple categories of customers,

expanding customer scale, improving channel structure, enhancing online and offline integrated

business capabilities, unifying cross-category marketing, and promoting online and offline integration.

With respect to marketing, Midea will empower the retail end and customers through the refinement of

event operations, structured product marketing, and standardised retail experience. With consistent

online and offline branding, the Company will strengthen the node integrated marketing capability. By

integrated branding strategy, content and advertising, it is able to strengthen the quality of content and

branding effect, increase brand and product visibility, and reach customers effectively. Meanwhile, the

Company will continuously expand the base of private domain users to enhance user satisfaction and

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                              The 2023 Annual Report of Midea Group Co., Ltd.



royalty. In terms of user operation and service, Media will, focusing on user experience, improve

product design iterations and purchasing service experiences, accelerate the establishment of two-way

communication channels with private domain users, optimise membership operation capabilities, and

improve user satisfaction and loyalty; through refined hierarchical management of service outlets and

engineer training certification systems, service capabilities and service quality will be enhanced; Media

will also expand sales customer service evaluation scenarios, realise intelligent analysis and closed-

loop management of evaluation results for service providers, and bridge the whole-scene evaluation

chain for service providers; through improving performance capabilities, optimising products, and

reshaping channels, a service product operation platform will be built to achieve commercial operation,

continuously promote service process restructuring, service-side sales diversion, and digital

transformation of services, providing users with a one-stop service experience. In terms of intelligence,

based on existing products, Midea will continue to develop its comprehensive smart home system,

focusing on the construction of a “wired + wireless” high-stability communication technology, an

integrated decision-making hub combining “cloud + edge”, and a deep integration control system of

“smart home + smart appliances”, establishing a leading comprehensive smart home system. Midea

will continue to invest in research and development, developing technologies such as smart sensing, AI

control strategies, and large-scale model applications, introducing smart products with differentiation

and leadership, continuously optimising key capabilities such as voice interaction, refining key products

such as intelligent control screens, and enhancing the competitiveness of comprehensive smart home

solutions. Midea will build exquisite sales experience scenarios, create ultimate user store journeys,

and establish highly standardised stores. By combining popular Stock Keeping Unit (SKU) with

packages, Midea will formulate different product marketing combinations, integrating home furnishings

and appliances to drive sales growth. Midea will optimise and upgrade digital tools, reduce the

threshold for store design services, and provide a complete experience of “product solutions +

standardised sales services + full-chain design and installation capabilities” to enhance user

satisfaction and brand presence.


d. In the overseas market, Midea will adhere to the front-end organisational system and regionalised

development as the core, accelerate the front-end infrastructure construction, build a front-end market

resource sharing platform, cultivate an international organisation and talent system, particularly


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                               The 2023 Annual Report of Midea Group Co., Ltd.



emphasising the strengthening of localisation teams, and initiate the “Global Talent Development and

Reserve Plan”. Midea will firmly invest in the construction of its proprietary brands, focusing on

products, retail, and channels. On the product side, guided by user orientation, Midea will continuously

enhance product strength and structural upgrades, improve product efficiency, adhere to the “OBM

Priority” strategy, and promote the differentiation and competitiveness of proprietary brand products. On

the channel side, Midea will continue to focus on the development of overseas e-commerce, product-

centric, efficiency-oriented, actively exploring new models, embracing AI tools, focusing on the entire

value chain operation, achieving high-quality growth and sustainable development. On the logistics and

warehousing side, Midea will focus on customer needs, establish online process control towers, build

end-to-end logistics delivery capabilities for manufacturing, channels, and customer service for

overseas proprietary brands, deploy multi-level, multi-purpose, and globally covered warehouse

networks, achieve inventory sharing and short-chain delivery, establish manufacturing material

warehouses, multi-channel finished product sales warehouses, and post-sale spare parts warehouses,

establish a globally consistent customs compliance management system, and simultaneously promote

product data governance, and formulate standardised processes for import and export business at

overseas bases. On the service side, Midea will continue to build a global service system covering call

centres, spare parts warehouses, technical support, IT systems, and organisational capabilities, relying

on special funds to improve OBM infrastructure, benchmarking industry benchmarks, piloting the

development of comprehensive overseas service solutions in three countries. Midea will continue to

carry out basic service capacity building, promote the application of intelligent tools such as AIGC, and

access social media and brand official websites to improve the efficiency and quality of call centres.

Midea will optimise and promote the application of a global service knowledge base, establish training

centres in key markets, systematise training management, update service personnel’s knowledge and

skills, improve the quality of technical materials and intelligent applications, establish localised repair

capabilities in multiple scenarios and technologies, and improve network coverage and single-rate

completion in key markets. This aims to further enhance service quality, providing customers with

consistent and high-quality service experiences, and improving the digital capabilities of after-sales

service.


e. In 2024, Midea will continue to deepen the implementation of its dual high-end brands strategy,


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further strengthening the dual-engine power of COLMO and Toshiba brands. The COLMO brand will

advance the combination of territory retail and precision distribution, continue to expand brand store

construction, deepen cloud warehouse transformation, while focusing on crowd assets, layout sales

accounts, and achieve online and offline full-domain operations. COLMO will further evolve around

products and user experience, launching more product suites to consolidate and enhance the high-end

market position of air conditioners and refrigerators, and build a diversified portfolio of high-end

products around the comprehensive smart air and water heating solutions for the whole house. In the

field of comprehensive smart home, COLMO will launch products such as home smart hosts, smart

dimming drivers, and switch panels, and based on its self-developed large-scale model capabilities,

provide users with more complete, reliable, and intelligent smart home appliances and integrated home

solutions. To further enhance the brand store image and experience, COLMO will provide one-stop

purchase through entire-house smart home appliance solution design services, and enhance user

repurchase and recommendation rates through integrated delivery and installation, 1V1 manager

services, appliance cleaning, and other member rights and services.


Targeting the segmented high-end market, the Toshiba brand will continue to deploy multiple

categories such as refrigerators, laundry appliances, small domestic appliances, and kitchen

appliances, further expanding scenarios in entire-house water usage, heating, and kitchen. Meanwhile,

it will strengthen brand consistency, promote multi-category suite-based products to provide a refined

living experience, upgrade brand image and build brand mindset, and deeply focus on layer marketing

to strive for a dual breakthrough in customer base and scale. The Toshiba brand will complete

nationwide coverage of brand operators in the channel end and focus on key efforts in core cities,

relying on brand operators to build self-operated star-rated living halls. It is expected that the

cumulative number of star-rated living halls and brand joint halls will reach 1,000, focusing on retail and

emphasising the cultivation of retail teams to improve store output. In the e-commerce channel,

Toshiba will build a “2+5+8” customer system as a key growth driver. On the brand side, Toshiba will

establish an independent membership system, complete the supplementation of membership benefits,

achieve user precipitation, and strengthen multi-product integration and cultivate loyal users.


WAHIN will continue to differentiate and innovate around users, products and product accessories. It


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will build a multi-category product portfolio, pursue best product functions, promote product category

innovation, and provide consumers with smart, comfortable and scenario-based experience. It will

continue to promote marketing innovation, maintain its focus on forward-looking young consumers,

continuously target young groups through school-enterprise cooperation, and explore diversified cross-

field models during graduations and job-hunting seasons. Continued efforts will be made to improve the

conversion chain, promote synergy between sales and marketing, as well as empower the conversion

to e-commerce sales. Also, it will expand content-driven "virtual stores" based on “e-commerce

channels + new media”, create new shopping scenarios, and drive sales through branding.


f. Midea will continue to focus on the “Digitisation & Intelligence Driven” strategy, with a focus on three

main directions: enabling domestic DTC transformation, deepening overseas digitalisation 3.0, and

enhancing ToB data application to improve and perfect data application capabilities. In the domestic

market, Midea will promote the implementation of the DTC strategy, achieve retail-driven

transformation, improve end-to-end service, product, and supply chain experiences, achieve a shared

inventory system of full-channel inventory integration, enhance turnover efficiency, and meet the

growth in sales scale with minimal inventory. Midea will enhance the digital coordination capabilities of

new product launches and price management, deepen the application of big data and algorithms,

optimise the Midea Cloud Sales platform, and improve the efficiency of the domestic full value chain.

Further improvements in cloud warehouse construction will enhance the retail operational experience,

achieve accurate and comprehensive retail terminal data, and real-time online capabilities. In the

manufacturing sector, Midea will comprehensively enhance overseas manufacturing digitalisation,

deepen assembly production scheduling applications, achieve overseas mixed-flow production

applications and online assembly, improve the efficiency of overseas supply chain operations, shorten

supplier introduction cycles and improve distribution efficiency, integrate end-to-end order process

information, and establish scenarios such as integrated logistics automatic distribution and

manufacturing data operation. Domestically, Midea will promote integrated assembly solutions, achieve

integrated headquarters assembly scheduling and simplified logic, promote supplier sourcing

transformation, deepen the end-to-end application of bulk cutting demand to settlement, drive

inspection dynamicization and onlineization based on VOC/VOP, promote process digitisation to

shorten process design cycles, establish an EHS operations centre to achieve risk control and agile


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scheduling, deepen occupational health applications, optimise energy and carbon management

platforms, and develop standardised solutions for energy and carbon management and microgrid to

assist in year-round energy conservation and emission reduction. In the ToB business field, Midea will

continue to increase digital investment, comprehensively explore and establish project-based digital

business templates, lead in the implementation of intelligent building technology business to improve

order delivery performance, achieve end-to-end order visibility, enhance customer service quality, and

actively enable various ToB industries with digital capabilities.


Regarding intelligent ask-and-answer products, Midea will focus on the capabilities of intelligent

question-and-answer, intelligent tutoring, AI dialogues, etc., around the “knowledge + AIGC algorithm +

application”, targeting core scenarios. Midea will break through the bottlenecks of terminal customers

and overseas multilingual intelligent question-and-answer applications, establish data and knowledge

operation mechanisms, and improve response accuracy. The construction of the AI drawing platform

will cover the entire chain of “creative concept - material production - graphic processing”, striving to

achieve the efficiency improvement goals of AIGC application promotion. The plan for cloud-native

systems is to build a fully self-developed infrastructure platform based on container platform, host

platform, storage platform, network platform, monitoring platform, and middleware platform to meet the

availability and data reliability requirements of mainstream public clouds. Midea will enhance the depth

of the security defence system, solidifying the information security architecture of “preventing intrusion,

detecting, preventing leakage, ensuring compliance, and emphasising operation”, combining security

automation orchestration and security GPT technology to improve the automation and intelligence of

security operations. In the infrastructure field, focusing on cloud business migration and establishing a

rapid response emergency system, Midea will continue to focus on stability construction, strengthen

monitoring capabilities, achieve smooth migration of business systems, and ensure stable operation of

the business.


g. Midea aims to drive further growth in its energy solutions and industrial technology business,

continuously expand business boundaries, and accelerate growth. In 2024, in the field of green energy,

Midea will promote internal business integration, focus on the grid market, explore non-grid markets,

expand the new energy market, promote further integration of residential energy storage products with


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smart homes, and create efficient and safe integrated household energy storage solutions for home

scenarios. Leveraging overseas channel advantages, Midea will expand overseas market customers,

focus on large-scale energy storage as well as industrial and commercial energy storage markets in

Europe, strengthen the promotion of household energy storage in overseas markets, achieve global

layout of energy storage business, and accelerate the expansion of photovoltaic EPC business. Midea

will continue to promote platform-based research and development, optimise product processes,

accelerate overseas new product development and certification, continuously reduce costs and

improve efficiency, optimise inventory management capabilities, and enhance operational management

quality. Midea will increase investment to enhance intelligent manufacturing capabilities, further deploy

energy storage capacity, promote capacity expansion of the Yichun production line, and build

manufacturing bases in Anqing and Shunde. Focusing on the main business and accelerating the

growth of new industries, Midea will initially build differentiated competitive capabilities for the future. In

the field of smart transportation, integrating the innovative advantages of the Midea system, Midea will

accelerate the establishment of new energy vehicle components that meet customer needs in terms of

“quality, cost, and delivery (QCD)” capabilities, achieve comprehensive improvements in customers,

products, and manufacturing capabilities. Midea will continue to expand the market, explore more

domestic and foreign key customers, focus on leading new energy vehicle customers, enhance the

market coverage and market share of various thermal management products for different vehicle

models to ensure rapid growth in sales operating revenue. Simultaneously, Midea will increase product

technology investment, promote the product technology development of surface-mounted permanent

magnet synchronous motors (SPM) and interior permanent magnet synchronous motors (IPM), and

carry out the development of next-generation platform product technologies, gradually realising the

development     path    of   “components-components-systems”.       Midea       will   continuously   improve

manufacturing capabilities, complete the expansion of electric power steering (EPS) motor production

lines, and achieve sustained capacity improvement. In the field of core components for consumer

appliances, Midea will continue to enhance digitalisation and data operations, increase investment in

R&D resources, improve the processes and mechanisms of technology and platform research,

optimise the product mix, and driving profitability. Also, it will make continuous breakthroughs in new

products, technologies, and applications, providing customers with eco-friendly, efficient, and intelligent

products and technology solutions. Continued breakthroughs will be driven in market segments, and

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mass production of valve, pump and other products will be promoted. Moreover, the Company will

improve production efficiency and strengthen product cost advantages, bolster its global supply chain

capabilities, as well as enhance global competitiveness by fully leveraging the local advantages of the

factories in India and Thailand. Aiming to establish an Industry 4.0 smart manufacturing demonstration

base, it will strive for comprehensive digital and intelligent transformation in the Foshan Xingtan

Industrial Park. Midea will create an overseas professional service platform, offering one-stop services

for small and medium-sized customers and specialised services for large customers, achieving

breakthroughs with overseas key customers and increasing the global market share of its products.

The Company continues to strengthen the competitiveness of its chips for home appliances. It is

developing high-quality industrial-grade chips for home appliances such as master control, touch

control, and variable frequency chips, in addition to driving integration of chips. Relying on the

advantages of the Group's industrial chain cluster, continuous efforts are also made to drive internal

sales and its percentage, as well as attract other major home appliance makers. In terms of industrial

automation, Midea will further consolidate its technological expertise in motion control, adapt to market

conditions and competitive strategies, utilise its technological advantages, and carry out differentiated

research and development. Focused on the iterations and upgrades of controllers and the combination

of controllers and drives, Midea will explore more product applications, and promote integrated

solutions. Additionally, it will further refine the layout of harmonic reducer product lines, develop more

top customers in the industry, and drive production and shipment breakthroughs for multiple products.


h. Midea will fully leverage the advantages of domestic rapid response and manufacturing capabilities,

continuously enhancing KUKA’s global competitiveness. In terms of research and development, Midea

will continue to increase research and development investment, accelerating the innovation of core

components and software systems through the collaboration of internal and external resources of

Chinese and German research teams. In terms of market development, Midea will actively cooperate

with leading enterprises in various industries to expand into new energy, general industry, electronics,

medical, logistics, and service sectors, accelerating the layout in new industries. In manufacturing,

Midea will improve the domestic manufacturing layout, leveraging domestic manufacturing bases to

accelerate the formation of advantages in the industrial robot industry chain, further enhancing

operational efficiency, shortening product delivery cycles. Simultaneously, Midea will initiate the Phase


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III ToB of the KUKA East China production base to provide basic support for integrated business and

establish collaborative robotic capacity. Through industry-education integration, Midea will accelerate

the layout of the KUKA education sector, expedite talent recruitment, strengthen the team size for pre-

sales, post-sale, and project implementation, and provide talent reserves for business expansion.


i. Midea will adhere to the value positioning of production logistics and continue to deepen digitisation

and greenisation. On one hand, Midea will achieve the integration of the upstream and downstream

value chains through digital connectivity, launching applications such as tag clouds and building a

digital collaboration platform for production logistics to assist small and medium-sized manufacturing

enterprises in digital transformation, and continuously promote the integration of the manufacturing

industry and the service sector. On the other hand, in the field of green circular packaging, Midea will

focus on building a more complete packaging circulation and recycling network around factories,

covering more regions and categories to continuously improve the utilisation rate of packaging

resources and practice a green and low-carbon development path. Also, it will continue to deepen the

warehouse and distribution b/C integrated business, release more operational vitality through deep

mechanism change, and actively explore new business models to provide services for more customers.


Annto is committed to using smart supply chains as a lever to enhance the full-chain value of enterprise

customers and improve the service experience of individual users, gradually transforming into a

digital/operational logistics enterprise, with a significant increase in the number and scale of external

customers year by year. First, Annto will enhance service quality, focus on user experience, and

achieve “online business, online service, online management” in whole scenes, creating an integrated

closed-loop service. Second, Annto will firmly move towards digitisation, introducing professional

talents and strengthening the construction of knowledge-based and technology-based teams,

increasing investment in the development of digital systems for full-chain operation platforms and

management platforms. Third, Annto will continue to promote standardisation and intelligence in

aspects such as warehouse optimisation, traffic integration, route operation, structural changes in

transportation capacity, and intelligent scheduling. Fourth, Annto will continue to deepen the

warehouse and distribution b/C integrated business, release more operational vitality through deep

mechanism change, and actively explore new business models.


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Risks Faced by the Company and Countermeasures:


a. Risk of macro economy fluctuation


The market demand for the Company’s consumer appliances, HVAC equipment, industrial robotics,

among other products, can be easily affected by the economic situation and macro control. If the global

economy encounters a heavy hit and consumer demand slows down in growth, the growth of the

industries in which the Company operates, may slow down accordingly, and as a result, this may affect

the product sales of Midea Group.


b. Risks in the fluctuation of production factors


The raw materials required by Midea Group to manufacture its consumer appliances and core

components primarily include different grades of copper, steel, plastics and aluminum. At present, the

household appliance manufacturing sector belongs to a labor intensive industry. If the price of raw

materials fluctuate largely, or there is a large fluctuation in the cost of production factors (labor, water,

electricity, and land) caused by a change to the macroeconomic environment and policy change, or the

cost reduction resulted from lean production and improved efficiency, as well as the sale prices of end

products cannot offset the total effects of cost fluctuations, the Company’s business will be influenced

to some degree.


c. Risk in global asset allocation and overseas market expansion


Internationalization and global operations is a long-term strategic goal of the Company. The Company

has built joint-venture manufacturing bases in many countries around the world. Progress has been

made day by day regarding the Company’s overseas operations and new business expansion.

However, its efforts in global resource integration may not be able to produce expected synergies; and

in overseas market expansion, there are still unpredictable risks such as local political and economic

situations, significant changes in law and regulation systems, and sharp increases in production costs.


d. Risk in foreign exchange losses caused by exchange rate fluctuation


As Midea carries on with its overseas expansion plan, its overseas sales have accounted for more than

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40% of the total revenues. Any sharp exchange rate fluctuation might not only bring negative effects on

the overseas operations of the Company, but could also lead to exchange losses and increase its

finance costs.


e. Market risks brought by trade frictions and tariff barriers


Due to the rise of anti-globalization and trade protectionism, China will see more uncertainties in export

in 2023. The trade barriers and frictions of some major markets will affect the export business in the

short run, as well as marketing planning and investment in the medium and long run. Political and

compliance risks are rising in international trade. These can mainly be seen on compulsory safety

certificates, international standards and requirements, and product quality and management systems

certification, energy-saving requirements, the call for increasingly strict environmental protection

requirements, as well as with rigorous requirements for recycling household appliances waste. Trade

frictions caused by anti- dumping measures implemented by some countries and regions aggravate the

burden in costs and expenses for household appliance enterprises, and have brought about new

challenges to market planning and business expansion for enterprises.


In face of the complicated and changeable environment and risks at home and abroad, Midea will

strictly follow the Company Law, the Securities Law, the CSRC regulations and other applicable rules,

keep improving its governance structure for better compliance, and reinforce its internal control system

so as to effectively prevent and control various risks and ensure its sustained, steady and healthy

development.




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12. Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. in the Reporting Period

√Applicable □N/A
                                                                                                                                                  Index to main inquiry
     Date               Place      Way of visit   Type of visitor                Visitor                            Discussions
                                                                                                                                                      information
                                                                        ICBC Credit Suisse Asset
                                                                      Management, Panjing Invest,
                                                                                                              1. In terms of the continuous
                                                                      BOCIM, Everbright Pramerica
                                                                                                        improvement in the penetration rate of    Log Sheet of Investor
                                                                    Fund, Hwabao WP Fund, Taikang
                                                                                                       residential commercial air conditioners,   Relations Activities for
  10 February        Midea Group                                     Asset, China Securities Capital
                                    By phone        Institution                                        what are the Company's layouts in this      10 February 2023
     2023                HQ                                             Management, UBS SDIC,
                                                                                                         field? 2. What achievements did the          disclosed on
                                                                    Tianhong Asset Management, TF                                                  www.cninfo.com.cn
                                                                                                           Company make in the heat pump
                                                                     Securities Asset Management,
                                                                                                                    business in 2022?
                                                                     Oriental Alpha Fund, Rongtong
                                                                                  Fund
                                                                                                            1. What are the Company's latest
                                                                                                         developments in the automotive parts
                                                                    Taiping Asset Management, UBS
                                                                                                          field? 2. What achievements did the
                                                                    SDIC, Hwabao WP Fund, HuaAn
                                                                                                             Company make in research and         Log Sheet of Investor
                                                                    Fund, Maxwealth Fund, DH Fund
                                                                                                         development in 2022? 3. It has been      Relations Activities for
  28 February        Midea Group                                     Management, Great Wall Fund,
                                    By phone        Institution                                            noted that the Company's Building       28 February 2023
     2023                HQ                                         BNB Wealth Management, HSBC
                                                                                                           Technology Division and Industrial         disclosed on
                                                                       Jintrust Fund Management,                                                   www.cninfo.com.cn
                                                                                                       Technology Business Group participated
                                                                     Zhong Ou Asset, Ping An Asset
                                                                                                            in the 2023 AHR Expo. Could you
                                                                      Management, China Universal
                                                                                                        please provide some information about
                                                                                                                          this?
                                                                     Pengyang Asset Management,
                                                                     CITIC Securities, Orient Fund      1. Midea Building Technology Division
                                                                       Management, Dajia Asset              recently held the second TRUE         Log Sheet of Investor
                                                                    Management, Franklin Templeton       Conference for Building Technology.      Relations Activities for
                     Midea Group
 17 March 2023                      By phone        Institution       Sealand Fund Management,         What are the new changes? 2. What are         17 March 2023
                         HQ
                                                                         Generali China Asset          the recent developments in cooperation         disclosed on
                                                                                                         between the Company and external          www.cninfo.com.cn
                                                                     Management, Tianhong Asset
                                                                         Management, Gfund                            institutions?
                                                                     Management, China Securities

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                                                              Capital Management, Taikang
                                                              Asset, Minsheng Royal Asset
                                                              Management, Bosera Funds,
                                                                      Bosera Funds
                                                                                                   1. Questions for Mr. Fang Hongbo:
                                                                                                Regarding the acquisition of WDM, how
                                                                                               will you position WDM in the market and
                                                                                                 within the Midea Group? What effects
                                                                                               does Midea hope to achieve through the
                                                                                                  acquisition of WDM? 2. In 2022, the
                                                                                                 main business gross profit margin was
                                                                                                  25.1%, compared to 23.7% in 2021,
                                                                                                which increased significantly. What are
                                                                                                the main reasons for this increase? Is it
                                                                                                     due to product price increases or
                                                                                                  decreases in raw material prices? 3.
                                                                                                   Please introduce the research and
                                                                                                development situation and future plans
                                                                                                    of Midea Group. 4. The significant
                                                                                               increase in dividends in 2022 is because      Log Sheet of Investor
             Midea Group   https://m.jhbs   Institution and                                       the Company's short-term cash flow        Relations Activities for 6
6 May 2023                                                      The Company's investors
                 HQ          how.com/         individual                                         situation is good or because there are     May 2023 disclosed on
                                                                                               very good expectations for the future? 5.      www.cninfo.com.cn
                                                                                                  What is the development situation of
                                                                                                        Midea in the field of cleaning
                                                                                                     appliances? 6. In the continuous
                                                                                                expansion process of the ToB business
                                                                                                   field, what are the key points of the
                                                                                                Company's development? 7. What were
                                                                                                 the EBIT of KUKA and KUKA China in
                                                                                               2022? Thank you. 8. In Q4 2022, part of
                                                                                                  the operating costs were adjusted to
                                                                                                      selling expenses, resulting in a
                                                                                               significant year-on-year change in gross
                                                                                                profit margin. Has there been a change
                                                                                                      in the new revenue criteria for
                                                                                                       transportation and installation
                                                                                                  expenses? Will this adjustment also

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                                                                                                      occur in 2023? etc.




                                                           Wellington Management
                                                      Hongkong Limited, Morgan Stanly
                                                          Asia Limited, Fubon Fund             1. What are the Company's current
                                                          Management (Hong Kong)                  development status and future
                                                      Limited, PineBridge Investments       development plans for high-end brands?
                                                        Asia Limited, Great Wall Fund          2. What progress has the Building
                                                        Management Limited, Haitong                Technology Division made in
                                                       International Securities Limited,        implementing the "Dual Carbon"           Log Sheet of Investor
               Midea Group                                                                                                               Relations Activities for
13 June 2023                 By phone   Institution   Industrial Securities International   strategy and promoting the "Digitization"
                   HQ                                                                                                                   13 June 2023 disclosed
                                                      Asset Management Limited, D. E.       process? 3. What new initiatives has the    on www.cninfo.com.cn
                                                       Shaw Investment Management            Company taken in practicing corporate
                                                           (Shanghai) Limited, WT              social responsibility and promoting
                                                         AssetManagement Limited,              sustainable development? 4. What
                                                      Neuberger Berman Asia Limited,        recent breakthroughs has the Company
                                                      T.Rowe Price HongKong Limited,                made in the medical field?
                                                        Balyasny Asset Management
                                                              (Hong Kong) LTD
                                                        Capital Investment, Foresight           1. What are the Company's new
                                                       Fund, Morgan Stanley Huaxin                initiatives in promoting smart
                                                                                                                                         Log Sheet of Investor
                                                      Fund, New China Pension, Value         manufacturing? 2. What new progress
               Midea Group                                                                                                              Relations Activities for
18 July 2023                 By phone   Institution       Partners, New Thinking              has the Company made in its "Global
                   HQ                                                                                                                   18 July 2023 disclosed
                                                      Investment Management, China          Impact" strategy this year? 3. What new     on www.cninfo.com.cn
                                                         Asset Management, China                collaborations has the Company
                                                         Merchants Securities Asset          engaged in within the automotive parts

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                                                                  Management, BlackRock Asset     sector? 4. What recent advancements
                                                                   Management, Foresea Life       has the Company made in the medical
                                                                     Insurance, Golden Trust                      field?
                                                                Investment Management, Harvest
                                                                 Fund, Bosera Funds, China Life
                                                                    Insurance, Guotai Junan
                                                                  Securities Asset Management,
                                                                  BNB Wealth Management, HZ
                                                                   Bank Wealth Management
                                                                  Wideview Asset Management,
                                                                          Dacheng Fund
                                                                                                    1. Please introduce the development
                                                                                                        situation and highlights of Midea
                                                                                                  Group's ToB business in the first half of
                                                                                                     the year. 2. What are the main new
                                                                                                   products planned by Midea in the next
                                                                                                   stage? 3. a) Will the high growth of air
                                                                                                     conditioning this year affect demand
                                                                                                   next year? b) What are the company's
                                                                                                  sales growth expectations for the next 5
                                                                                                    years? c) Has the Company's goal of        Log Sheet of Investor
                             https://rs.p5w                                                       achieving a trillion-dollar target by 2027   Relations Activities for
19 September   Midea Group                    Institution and
                             .net/html/134                         The Company's investors          in Building Technology and Industrial       19 September 2023
    2023           HQ                           individual
                               915.shtml                                                          Technology business units changed? 4.            disclosed on
                                                                                                         Since the acquisition of CLOU          www.cninfo.com.cn
                                                                                                    Electronics by the Company, has the
                                                                                                        operating performance of CLOU
                                                                                                  Electronics improved from losses? Has
                                                                                                      there been any improvement in the
                                                                                                  ability to obtain energy storage orders?
                                                                                                   No improvement. 5. How does Midea
                                                                                                     plan to advance amidst the trend of
                                                                                                  smartification? 6. How is the progress of
                                                                                                        the investment in Hiconics? etc.




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                                                     China Asset Management, China
                                                       Southern Asset Management,
                                                      Morgan Stanley, Ping An Fund
                                                                                              1. What are the reasons for the
                                                      Management, Zhongrong Fund,
                                                                                         Company's listing in Hong Kong? What
                                                      Foresea Life Insurance, Bosera
                                                                                          is the proportion of issuance? 2. What
                                                         Funds, Great Wall Fund,                                                     Log Sheet of Investor
                                                                                             are the latest achievements of the
                                                     Penghua Fund, E Fund, GF Fund                                                   Relations Activities for
16 November   Midea Group                                                                 Company in digital transformation? 3.
                            By phone   Institution    Management, Orient Securities                                                   16 November 2023
    2023          HQ                                                                           How is KUKA advancing in the
                                                        Asset Management, Bank of                                                        disclosed on
                                                                                         integration and expansion of resources       www.cninfo.com.cn
                                                     Communications Schroder Fund
                                                                                         in the Chinese market? 4. What are the
                                                     Management, Huatai-PineBridge
                                                                                           new developments in the Company's
                                                          Investments, AEGON-
                                                                                        global layout in the energy storage field?
                                                       INDUSTRIAL Fund, Foresight
                                                        Fund, Green Court, Canada
                                                                 Pension
                                                     Penghua Fund, China Merchants
                                                           Fund, Ping An Fund
                                                                                             1. What new initiatives has the
                                                      Management, China Southern                                                     Log Sheet of Investor
                                                                                        Company taken in overseas expansion?
                                                       Asset Management, Baoying                                                     Relations Activities for
18 December   Midea Group                                                               2. What new progress has the Company
                            By phone   Institution     Fund Management, Springs                                                       18 December 2023
    2023          HQ                                                                     made in smart manufacturing? 3. What
                                                        Capital, Great Wall Fund,                                                        disclosed on
                                                                                            achievements has Midea made in            www.cninfo.com.cn
                                                     Wellington Fund, Dacheng Fund,
                                                                                         product carbon footprint management?
                                                        Invesco Great Wall Fund
                                                              Management




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                        Section IV Corporate Governance

1. Basic Situation of Corporate Governance

Any incompliance with the applicable laws, administrative regulations, and regulations issued by the

CSRC governing the governance of listed companies

□Yes √No

No such cases in the Reporting Period.


The Company is constantly improving its corporate governance in strict accordance with the Company

Law, the Securities Law and the relevant regulations of the China Securities Regulatory Commission.

There are five special committees under the Board, namely the Strategy Committee, the Audit

Committee, the Nomination Committee, the Remuneration and Appraisal Committee, as well as the

ESG Committee. They were designed to provide consultation and advice to the Board and validate the

professionalization and efficiency of discussions and decision-making. The Company has established

clear rules of procedure for its shareholders' meeting, board of directors, Supervisory Committee and

special committees under the board, as well as the Work Rules for Company Secretary. It has also

established a set of standard documents including Information Disclosure Management System, Funds

Raising Management System, Connected Transaction Management System, Wealth Management

Entrustment Management System, Insider Registration System, External Guaranty Decision-making

System, Foreign Investment Management System, and Management System for Finance Flow with

Connected Parties, Internal Auditing System. The shareholders' meeting, the Board of Directors, the

Supervisory Committee and operations management departments have clear authority and

responsibility. Each performs its own functions and maintains its stability effectively. Their scientific

decision-making and coordinated operations have laid a firm foundation for the sustained, healthy and

steady development of the Company.


The Company has also launched core management team shareholding plans and equity incentive

plans for core research, quality control, technical, production and management staff, which helps to

develop a sound shareholding structure for the future growth of the Company.

                                                      122
                                 The 2023 Annual Report of Midea Group Co., Ltd.


2. Independence of assets, personnel, finance, organizations and businesses which
are separate from the controlling shareholder and the actual controller

The Company is totally autonomous with respect to business, personnel, assets, organizations, and

finance from Midea Holding Co., Ltd., the controlling shareholder of the Company, therefore

maintaining integrity and independency in both business and operations.


2.1 Business independence:


The Company has a complete industrial chain for its manufacturing business, a completely distinct

purchase and sales system, and an independent and comprehensive business operation capability.


2.2 Personnel independence:


The Company is completely autonomous from the controlling shareholder regarding its personnel. The

labor, personnel and remuneration management of the company are totally unrelated. All senior

management members received remuneration from the Company except those that hold only a

director’s position in the controlling shareholder.


2.3 Asset integrity:


The Company has its own independent production system as well as ancillary production systems and

facilities. Intangible assets such as industrial rights, trademark ownership and non-patent technology

are held by the Company.


2.4 Organization independence:


The Company has set up an independent organizational structure which maintains its independent

operation. The Company has the right to appoint or remove any personnel so there is no overlapping

with the controlling shareholder.


2.5 Financial independence:


The Company's financial management is independent from the controlling shareholder. The Company


                                                         123
                                The 2023 Annual Report of Midea Group Co., Ltd.



has its own accounting department, accounting system, financial management system, and bank

accounts and independently makes financial decisions and pays its own taxes according to relevant

laws.


3. Horizontal Competition

□Applicable √N/A

4. Annual and Extraordinary General Meetings of Shareholders Convened during
the Reporting Period

4.1 General meetings of shareholders convened during the Reporting Period

                                   Investor
   Meeting           Type        participation    Convened date       Disclosure date      Disclosure index
                                     ratio
    First
Extraordinary
                                                                                          Announcement No.
  General
                Extraordinary     56.9880%        6 January 2023      7 January 2023    2023-001, disclosed on
 Meeting of
                                                                                          www.cninfo.com.cn
Shareholders
   of 2023
2022 Annual
                                                                                          Announcement No.
  General
                     Annual       57.7129%         19 May 2023         20 May 2023      2023-026, disclosed on
 Meeting of
                                                                                          www.cninfo.com.cn
Shareholders
  Second
Extraordinary
                                                                                          Announcement No.
  General
                Extraordinary     57.8273%         13 July 2023         14 July 2023    2023-057, disclosed on
 Meeting of
                                                                                          www.cninfo.com.cn
Shareholders
   of 2023
    Third
Extraordinary
                                                                                          Announcement No.
  General
                Extraordinary     58.2956%        11 October 2023     12 October 2023   2023-082, disclosed on
 Meeting of
                                                                                          www.cninfo.com.cn
Shareholders
   of 2023


4.2 Extraordinary general meetings of shareholders convened at the request of preference
shareholders with resumed voting rights

□Applicable √N/A




                                                        124
                                                       The 2023 Annual Report of Midea Group Co., Ltd.



5. Directors, Supervisors and Senior Management

5.1 General information

                                                                                                  Shares     Shares
                                                                                Shares held                                                 Shares held   Reason
                                                        Starting     Ending                     increased   decreased          Other
                                          Incumbent/                            at the year-                                                   at the       for
 Name      Gender   Age    Office title                 date of      date of                       in the     in the    increase/decrease
                                            Former                                  begin                                                   period-end     share
                                                        tenure       tenure                        period     period          (share)
                                                                                  (share)                                                     (share)     changes
                                                                                                  (share)    (share)
                          Chairman of
Fang
            Male    56    the Board       Incumbent     2012/8/25   2024/9/16   116,990,492                                                 116,990,492
Hongbo
                          and CEO
He
            Male    56    Director        Incumbent     2012/8/25   2024/9/16              0                                                          0
Jianfeng
                          Director and
Gu
            Male    60    Vice            Incumbent     2014/4/21   2024/9/16              0                                                          0
Yanmin
                          President
                          Director and
Wang
            Male    47    Vice            Incumbent     2021/9/17   2024/9/16              0                                                          0
Jianguo
                          President
                          Director        Incumbent     2023/7/13   2024/9/16
Fu
            Male    55    Vice                                                        200,000                                                  200,000
Yongjun                                   Incumbent     2021/9/17   2024/9/16
                          President
Yu
            Male    64    Director        Incumbent     2018/9/26   2024/9/16              0                                                          0
Gang
Xue                       Independent
            Male    59                    Incumbent     2018/9/26   2024/9/16         179,914                                                  179,914
Yunkui                    Director
Guan                      Independent
            Male    46                    Incumbent     2018/9/26   2024/9/16              0                                                          0
Qingyou                   Director
Han                       Independent
           Female   51                    Incumbent     2018/9/26   2024/9/16              0                                                          0
Jian                      Director
                          Chairman of
Dong                      the
            Male    38                    Incumbent    2020/10/16   2024/9/16              0                                                          0
Wentao                    Supervisory
                          Committee
Zhao        Male    48    Supervisor      Incumbent     2014/4/21   2024/9/16              0                                                          0

                                                                                125
                                                   The 2023 Annual Report of Midea Group Co., Ltd.

Jun
Liang                    Employee
           Female   40                 Incumbent    2017/3/30   2024/9/16              0                            0
Huiming                  Supervisor
Zhang                    Vice
            Male    50                 Incumbent    2018/4/23   2024/9/16         516,575                      516,575
Xiaoyi                   President
Hu                       Vice
            Male    66                 Incumbent    2014/8/18   2024/9/16         400,000                      400,000
Ziqiang                  President
Wang                     Vice
            Male    56                 Incumbent    2014/8/18   2024/9/16         420,000            -42,000   378,000
Jinliang                 President
Li                       Vice
            Male    47                 Incumbent     2020/7/3   2024/9/16         480,700            -40,000   440,700
Guolin                   President
Zhao                     Vice
            Male    38                 Incumbent   2023/12/26   2024/9/16         102,700                      102,700
Lei                      President
Guan                     Vice
            Male    44                 Incumbent    2021/9/17   2024/9/16         535,000                      535,000
Jinwei                   President
                         Vice
                                                    2022/12/1
                         President
Zhong
           Female   42   CFO           Incumbent    2022/2/22   2024/9/16         276,152                      276,152
Zheng
                         Director of
                                                    2019/3/22
                         Finance
                         Chief
Zhao
           Female   41   People        Incumbent    2022/2/22   2024/9/16         480,000            -36,000   444,000
Wenxin
                         Officer
                         Vice
Bai Lin     Male    43                 Incumbent    2022/5/30   2024/9/16          95,079                       95,079
                         President
                         Vice
                         President
Wei
            Male    61   and Chief     Incumbent    2022/8/29   2024/9/16              0                            0
Chang
                         Technology
                         Officer
Jiang                    Board
            Male    50                 Incumbent   2013/10/30   2024/9/16         518,600            -24,000   494,600
Peng                     Secretary




                                                                            126
                                The 2023 Annual Report of Midea Group Co., Ltd.



Indicate whether any director, supervisor or senior management resigned before the expiry of their

tenures during the Reporting Period.

□ Yes √ No

Changes in directors, supervisors and senior management

√Applicable □N/A
       Name               Office title         Type of change               Date        Reason
    Fu Yongjun             Director               Elected                2023/7/13         -
    Wei Chang           Vice President           Appointed               2023/12/27        -
     Zhao Lei           Vice President           Appointed               2023/12/27        -


5.2 Brief biographies


Professional backgrounds, main work experience and current responsibilities in the Company of the

incumbent directors, supervisors and senior management


Mr. Fang Hongbo, male, holder of a Master's degree, is the Chairman of the Board and CEO of Midea

Group. He joined Midea in 1992 and previously served as the General Manager of Midea Air-

Conditioning Division, CEO of Midea Refrigeration Electric Appliances Group, Chairman of the Board

and CEO of GD Midea Holding Co., Ltd., etc.


Mr. He Jianfeng, male, holder of a Bachelor's degree, is a Director of Midea Group. He is also the

Chairman of the Board and President of Infore Group Co., Ltd.


Mr. Gu Yanmin, male, holder of a Doctoral degree, joined Midea in 2000 and has functioned as the

Head of Planning & Investment, Head of Overseas Strategy & Development, Vice President and Head

of Overseas Business Development of Midea Air-Conditioning & Refrigeration Group, Head of

Overseas Strategy of Midea Group. Currently he is a Director and Vice President of Midea Group, the

President of the Robotics & Automation Division, as well as the Chairman of the Supervisory

Committee of KUKA.


Mr. Wang Jianguo, male, a Master’s degree holder, joined Midea in 1999. He was once the Director of

the Supply Chain Management Department of Midea Group’s Residential Air Conditioner Division, the

Director of the Administration and Human Resources Department of Midea Group, and the General


                                                        127
                               The 2023 Annual Report of Midea Group Co., Ltd.



Manager of Midea Group’s Refrigeration Division. Currently, he is a Director and Vice President of

Midea Group, the President of the Smart Home Business Group, and the President of Midea

International Business, in addition to being in charge of the TLSC Division, and legal affairs.


Mr. Fu Yongjun, male, holder of a Master’s degree, joined Midea in 1999 and previously worked as the

General Manager of Midea Environment Appliances Division, the General Manager of Midea

Component Division, and the President of Midea Electromechanical Division. He is now a Director, Vice

President, and the President of the Energy Solutions and Industrial Technology Business Group, of

Midea Group.


Mr. Yu Gang, male, holder of a Doctoral degree given by the Wharton School of the University of

Pennsylvania, is the Honorary Chairman and a co-founder of YHD.COM. He once served as the Global

Supply Chain Vice President of Amazon and the Global Procurement Vice President of Dell. He is now

a Director of Midea Group, as well as a co-founder and a Co-Chairman of the Board of Directors of 111,

Inc.


Mr. Xue Yunkui, male, is a holder of a Doctoral degree given by the Southwest University and a holder

of a Post-Doctoral degree given by the Shanghai University of Finance and Economics. He used to be

the associate dean and a doctoral supervisor at the School of Accountancy of Shanghai University of

Finance and Economics, a Founding Vice President of Shanghai National Accounting Institute and

Cheung Kong Graduate School of Business, the Secretary-General of China Association of Accounting

Professors, a Vice Chairman of the Steering Committee of the National Accounting Institute under the

Ministry of Finance, etc. He is now an accounting professor of Cheung Kong Graduate School of

Business, and an Independent Director of Midea Group.


Mr. Guan Qingyou, male, obtained a PhD degree in economics from Chinese Academy of Social

Sciences ("CASS") and Post-doctoral degree from Tsinghua University. He previously worked as

Program Director at the Institute for Contemporary China Studies, Tsinghua University, Division Chief of

the main office of China National Offshore Oil Corporation, Vice President of Minsheng Securities Co.,

Ltd., and Head of Minsheng Securities Research Institute. Other positions currently held by him include

Dean of Reality Institute of Advanced Finance, professor at School of Economics, Hainan University,


                                                       128
                              The 2023 Annual Report of Midea Group Co., Ltd.



Chairman of China Institute of Private Sector, Director of China Society of Economic Reform, member

of APEC China Business Council Digital Economy Committee, Chief Economic Advisor of China

Fortune Securities, independent director of Midea Group Co. Ltd., Nanhua Futures Co., Ltd., Hangzhou

Hikvision DIGITAL Technology Co., Ltd., Shaanxi International Trust Co., Ltd., and Ucap Cloud

Information Technology Co., Ltd., and member of the Fiscal Reform and Development Think Tank

under the Ministry of Finance, Academic Committee of China Center for Urban Development under the

National Development and Reform Commission, and Expert Advisory Committee on Industrial

Economic Operation under the Ministry of Industry and Information Technology ("MIIT").


Ms. Han Jian, female, holder of a Doctoral degree given by the Cornell University, is a professor of

management in China Europe International Business School, a specialist of the World Economic

Forum, as well as an Independent Director of Midea Group.


Mr. Dong Wentao, male, a Master's degree graduate, joined Midea in 2016. And he once served in the

Legal Affairs Department, the Investor Relations Department, etc. of Midea Group, with over 10 years

of experience in legal affairs, risk control, market value management, capital operation, etc. He is now

the Chairman of the Supervisory Committee.


Mr. Zhao Jun, male, a Master's degree graduate, joined Midea in 2000 and has functioned as the

Director and the CFO of GD Midea Holding Co., Ltd. He is now a Supervisor of Midea Group, the

Executive President in Midea Holding Co., Ltd., as well as a Non-Executive Director of Midea Real

Estate Holding Limited.


Ms. Liang Huiming, female, is a holder of a Bachelor’s degree. Joining Midea in 2007, she used to

serve as the Chief Business Administration Commissioner in Midea Group’s Administration and Human

Resources Department. She is now the Chief Legal Entity Management Commissioner of the Investor

Relations Department and the Employee Supervisor of Midea Group.


Mr. Guan Jinwei, male, holder of a Master’s degree, joined Midea in 2002 and previously worked as

the Deputy General Manager of the Commercial Air Conditioner Division and the General Manager of

an overseas marketing company of Midea Group, as well as an Assistant to the President of Midea


                                                      129
                               The 2023 Annual Report of Midea Group Co., Ltd.



International and the General Manager for the ASEAN region, among others. He is now a Vice

President, and the President of the Building Technologies Division, of Midea Group.


Mr. Bai Lin, male, holder of a Bachelor’s degree, joined Midea in 2002. He once served as the Asia

Pacific General Manager of the Refrigeration Group, the General Manager of the overseas marketing

company of the Refrigerator Division, the General Manager of the domestic marketing company of the

Refrigerator Division, and the President of the Refrigerator Division. And he is now a Vice President

and the China President of Midea Group.


Mr. Zhao Lei, male, holder of a Master’s degree, joined Midea Group in 2011. He used to serve as the

North China Director of the Residential Air Conditioner Division, China Retail Director, the General

Manager of the domestic marketing company of the Laundry Appliance Division, and President of the

Laundry Appliance Division. And he is now a Vice President of Midea Group and the President of its

Residential Air Conditioner Division.


Ms. Zhong Zheng, female, holder of a Master’s degree, joined Midea in 2002. She once was the

Director of Finance of the Financial Center and the Component Division, as well as the Audit Director of

Midea Group, etc. She is now a Vice President as well as the CFO and Director of Finance of Midea

Group.


Mr. Zhang Xiaoyi, male, is a holder of a Master’s degree. Joining Midea Group in 2010, he used to

serve as the head of the overseas process IT system, the head of the supply chain system, and the IT

Director of Midea Group, etc. He is now a Vice President and the CDO of Midea Group.


Mr. Li Guolin, male, holder of a Master’s degree, joined Midea in 1998 and previously worked as a

Vice President of the Residential Air Conditioner Division, and the President of the Small Domestic

Appliance Division of Midea Group. He is now a Vice President, CSO, and the Director of Quality and

Supply Chain of Midea Group.


Mr. Hu Ziqiang, male, holder of a Doctoral degree, joined Midea in 2012, and has formerly worked for

GE and Samsung and as a Vice GM in Wuxi Little Swan Co., Ltd. At present he is a Vice President of

Midea Group, in addition to being the Chairman of the Board of Beijing Wandong Medical Technology

                                                       130
                                   The 2023 Annual Report of Midea Group Co., Ltd.



Co., Ltd., a listed company subordinate to Midea Group.


Mr. Wang Jinliang, male, holder of a Master’s degree, joined Midea in 1995 and previously worked as

the Vice President of China Marketing in Midea Group, and was GD Midea Holding’s Vice President

and Marketing Head. He is now a Vice President of Midea Group.


Mr. Wei Chang, male, holder of a Doctoral degree, joined Midea in 2022. He used to be the Technical

Director for Water Treatment and Polymers at the Global R&D Centre and the Greater China General

Manager for Water Treatment Products at General Electric. He also served as the Director of the

National Institute of Clean and Low-Carbon Energy of CHN Energy from 2014 to 2022. Currently, he is

a Vice President and the Chief Technology Officer of Midea Group.


Ms. Zhao Wenxin, female, holder of a Master’s degree, joined Midea in 2004. She used to be a

Deputy General Manager and the Overseas Marketing General Manager of the Residential Air

Conditioner Division in Midea Group, a Vice President of Midea International, etc. Currently, she is the

Chief People Officer and Director of Human Resources of Midea Group.


Mr. Jiang Peng, male, holder of a Master’s degree, joined Midea in 2007 and used to be the

Representative for Securities Affairs and Board Secretary for GD Midea Holding Co., Ltd. He is now the

Board Secretary and Director of Investor Relations of Midea Group.




Posts held in shareholding entities

√Applicable □N/A
                                                                     Beginning                       Allowance from
                                                                                     Ending date of
    Name             Shareholding entity           Position         date of office                  the shareholding
                                                                                      office term
                                                                        term                              entity
 He Jianfeng    Midea Holding Co., Ltd.           President           2016-01               -              No
  Zhao Jun      Midea Holding Co., Ltd.      Executive President      2020-03              -              Yes
Note           N/A



Posts held in other entities

√Applicable □N/A
                                                                    Beginning date Ending date of Allowance from
    Name                     Other entity               Position
                                                                     of office term office term       the entity


                                                              131
                                  The 2023 Annual Report of Midea Group Co., Ltd.


                                                   Chairman of the
 He Jianfeng   Infore Group Co., Ltd.                Board and        1995-06          -      Yes
                                                      President
                                                      Executive
             111, Inc.                             Chairman of the    2011-04          -      Yes
                                                        Board
  Yu Gang
                                                      Executive
             Zall Smart Commerce Group Ltd.         Director and      2015-08          -      Yes
                                                    Co-Chairman
                                                    Independent
             Ouyeel Co., Ltd.                                         2022-08       2025-08   Yes
                                                       Director
             Zhuhai Wanda Commercial                Independent
 Xue Yunkui                                                           2021-03       2024-03   Yes
             Management Group Co., Ltd.                Director
                                                    Independent
             Bank of Shanghai Co., Ltd.                               2021-01       2024-01   Yes
                                                       Director
             Beijing Rushi Research Information Chairman of the
                                                                      2017-12          -      Yes
             Consulting Service Co., Ltd.               Board
                                                    Independent
             Shaanxi International Trust Co., Ltd.                    2022-07       2025-07   Yes
                                                       Director
                                                    Independent
Guan Qingyou Nanhua Futures Co., Ltd.                  Director
                                                                      2019-02       2025-02   Yes

             Ucap Cloud Information Technology Independent
                                                                      2022-09       2025-09   Yes
             Co., Ltd.                                 Director
               Hangzhou Hikvision Digital           Independent
                                                                      2021-03       2024-03   Yes
               Technology Co., Ltd.                   Director
Note                        N/A

Punishments imposed in the recent three years by the securities regulators on the incumbent directors,

supervisors and senior management as well as those who left in the Reporting Period

□Applicable √N/A


5.3 Remuneration of directors, supervisors and senior management


The following describes the decision-making procedures, grounds on which decisions are made and

actual remuneration payment of directors, supervisors and senior management.


The decision-making remuneration procedure for directors, supervisors and senior management: The

remuneration is proposed by the Board Remuneration Committee and approved by the Board.

Decisions are made finally after the deliberation of shareholders' meeting.


The remuneration of directors, supervisors and senior management consist of basic annual payments

and performance-related annual payments according to the Salary Management System for the

Directors, Supervisors and Senior Management which has been approved by the Company. Basic

payment is determined based on the responsibility, risk and pressure of directors, supervisors and

senior management. The basic annual payment remains stable. Performance-related annual payment


                                                          132
                                   The 2023 Annual Report of Midea Group Co., Ltd.



is related to the completion rate of corporate profit, the assessment result of target responsibility

system and the performance evaluation structure of their own department. The remuneration system

for directors, supervisors and senior management serves the Company's strategy, and shall be

adjusted with the Company's operating conditions in order to meet the Company’s development

requirements. The basis for adjusting the remuneration of directors, supervisors and senior

management are as follows:


a. Wage growth in the industry


b. Inflation


c. Corporate earnings


d. Organizational structure adjustment


e. Individual adjustment due to a change in position




Remuneration of directors, supervisors and senior management during the Reporting Period
                                                                                                        Unit: RMB'000

                                                                                     Total before-tax   Remuneration
                                                                       Incumbent/     remuneration       from related
     Name               Position              Gender          Age
                                                                         Former         from the        parties of the
                                                                                        Company            Company
                Chairman of the Board
 Fang Hongbo                                    Male             56    Incumbent         13,540
                      and CEO
  He Jianfeng           Director                Male             56    Incumbent            0                Yes
                   Director and Vice
  Gu Yanmin                                     Male             60    Incumbent          9,880
                       President
                   Director and Vice
 Wang Jianguo                                   Male             47    Incumbent         11,430
                       President
                   Director and Vice
  Fu Yongjun                                    Male             55    Incumbent         11,540
                       President
   Yu Gang              Director                Male             64    Incumbent           450

  Xue Yunkui     Independent Director           Male             59    Incumbent           450

 Guan Qingyou    Independent Director           Male             46    Incumbent           450

   Han Jian      Independent Director         Female             51    Incumbent           450
                   Chairman of the
 Dong Wentao                                    Male             38    Incumbent           960
                Supervisory Committee



                                                           133
                                     The 2023 Annual Report of Midea Group Co., Ltd.


   Zhao Jun                Supervisor              Male                48      Incumbent           0              Yes

 Liang Huiming        Employee Supervisor         Female               40      Incumbent          420

  Guan Jinwei            Vice President            Male                44      Incumbent        11,780

   Zhao Lei              Vice President            Male                38      Incumbent        15,480

                     Vice President, CFO and
 Zhong Zheng                                      Female               42      Incumbent         9,450
                        Director of Finance

    Bai Lin              Vice President            Male                43      Incumbent        10,090

 Zhang Xiaoyi            Vice President            Male                50      Incumbent         7,990

  Hu Ziqiang             Vice President            Male                66      Incumbent         3,350

   Li Guolin             Vice President            Male                47      Incumbent         6,490

 Wang Jinliang           Vice President            Male                56      Incumbent         6,060
                     Vice President and Chief
  Wei Chang                                        Male                61      Incumbent         7,730
                        Technology Officer
 Zhao Wenxin           Chief People Officer       Female               41      Incumbent         6,350

  Jiang Peng             Board Secretary           Male                50      Incumbent         3,360

     Total                      --                   --                --           --         137,700              --

Other information

□Applicable √N/A


6. Activities of Directors during the Reporting Period

6.1 Board meetings convened during the Reporting Period

     Meeting              Convened date         Disclosure date                             Resolutions
                                                                       See the Announcement on Resolutions of the 15th
                                                                       Meeting of the Fourth Board of Directors
The 15th Meeting
                                                                       (Announcement No. 2023-008), which has been
of the Fourth              27 April 2023         29 April 2023
                                                                       disclosed on http://www.cninfo.com.cn, China
Board of Directors
                                                                       Securities Journal, Securities Times, and Shanghai
                                                                       Securities News dated 29 April 2023
                                                                       See the Announcement on Resolutions of the 16th
                                                                       Meeting of the Fourth Board of Directors
The 16th Meeting
                                                                       (Announcement No. 2023-029), which has been
of the Fourth              20 June 2023         21 June 2023
                                                                       disclosed on http://www.cninfo.com.cn, China
Board of Directors
                                                                       Securities Journal, Securities Times, and Shanghai
                                                                       Securities News dated 21 June 2023
                                                                       See the Announcement on Resolutions of the 17th
                                                                       Meeting of the Fourth Board of Directors
The 17th Meeting
                                                                       (Announcement No. 2023-061), which has been
of the Fourth              21 July 2023          22 July 2023
                                                                       disclosed on http://www.cninfo.com.cn, China
Board of Directors
                                                                       Securities Journal, Securities Times, and Shanghai
                                                                       Securities News dated 22 July 2023
                                                                       See the Announcement on Resolutions of the 18th
The 18th Meeting                                                       Meeting of the Fourth Board of Directors
of the Fourth              28 July 2023          29 July 2023          (Announcement No. 2023-065), which has been
Board of Directors                                                     disclosed on http://www.cninfo.com.cn, China
                                                                       Securities Journal, Securities Times, and Shanghai


                                                                 134
                                       The 2023 Annual Report of Midea Group Co., Ltd.


                                                                      Securities News dated 29 July 2023




                                                                      See the Announcement on Resolutions of the 19th
                                                                      Meeting of the Fourth Board of Directors
The 19th Meeting
                                                                      (Announcement No. 2023-071), which has been
of the Fourth             9 August 2023         10 August 2023
                                                                      disclosed on http://www.cninfo.com.cn, China
Board of Directors
                                                                      Securities Journal, Securities Times, and Shanghai
                                                                      Securities News dated 10 August 2023
The 20th Meeting                                                      The Semi-Annual Report 2023, together with its
of the Fourth            30 August 2023                   -           summary, was approved with nine affirmative votes, 0
Board of Directors                                                    negative notes and 0 abstentions.
                                                                      See the Announcement on Resolutions of the 21st
                                                                      Meeting of the Fourth Board of Directors
The 21st Meeting
                          18 September           19 September         (Announcement No. 2023-074), which has been
of the Fourth
                              2023                   2023             disclosed on http://www.cninfo.com.cn, China
Board of Directors
                                                                      Securities Journal, Securities Times, and Shanghai
                                                                      Securities News dated 19 September 2023
                                                                      See the Announcement on Resolutions of the 22nd
                                                                      Meeting of the Fourth Board of Directors
The 22nd Meeting
                                                                      (Announcement No. 2023-084), which has been
of the Fourth            30 October 2023        31 October 2023
                                                                      disclosed on http://www.cninfo.com.cn, China
Board of Directors
                                                                      Securities Journal, Securities Times, and Shanghai
                                                                      Securities News dated 31 October 2023
                                                                      See the Announcement on Resolutions of the 23rd
                                                                      Meeting of the Fourth Board of Directors
The 23rd Meeting
                          26 December            27 December          (Announcement No. 2023-091), which has been
of the Fourth
                              2023                   2023             disclosed on http://www.cninfo.com.cn, China
Board of Directors
                                                                      Securities Journal, Securities Times, and Shanghai
                                                                      Securities News dated 27 December 2023


6.2 Attendance of directors in Board meetings and meetings of shareholders

                          Attendance of directors in Board meetings and meetings of shareholders
               Presence
                due at                                                Presence                    Absence
                               Presence
                 Board                        Presence at Board        at Board      Absence    from Board     Presence at
                               at Board
              meetings in                         meetings by         meetings     from Board    meetings       meetings of
 Director                      meetings
                   the                        telecommunication       through a     meetings       for two     shareholders
                                on site
              Reporting                             (times)              proxy        (times)   consecutive       (times)
                                (times)
                Period                                                  (times)                     times
                (times)
  Fang
                     9             1                  8                  0             0             No              4
 Hongbo
    He
                     9             1                  8                  0             0             No              0
 Jianfeng

Fu Yongjun           9             1                  8                  0             0             No              0

Gu Yanmin            9             1                  8                  0             0             No              0
  Wang
                     9             1                  8                  0             0             No              0
 Jianguo

 Yu Gang             9             1                  8                  0             0             No              0

Xue Yunkui           9             1                  8                  0             0             No              0
  Guan
                     9             1                  8                  0             0             No              1
 Qingyou


                                                                135
                                 The 2023 Annual Report of Midea Group Co., Ltd.



 Han Jian        9           1                  8                 0             0             No             0


6.3 Objections from directors on related issues of the Company


Were there any objections on related issues of the Company from directors

□Yes √No

No such cases in the Reporting Period.


6.4 Other information about the activities of directors


Were there any suggestions from directors adopted by the Company

√Yes □No

During the Reporting Period, in line with the Company Law, the Securities Law, the Rules for Stock

Listing of Shenzhen Stock Exchange, and other relevant laws and regulations, as well as the Articles of

Association, and the Rules of Procedure of the Board of Directors, directors of the Company actively

paid attention to the Company's production, operation, financial position, and the effects resulting from

the changes in the economic status on the Company, vetted miscellaneous information reports

provided by the Company in a timely manner, and voiced opinions and exercised their power at the

Board of Directors. In addition, they supervised and checked the information disclosure of the

Company and fulfilled the duties of directors faithfully and conscientiously. Based on the Company's

reality, they put forward relevant opinions and suggestions about corporate governance and operating

decisions, as well as supervised and promoted the execution and implementation of the resolutions of

the Board of Directors to ensure scientific, timely, and efficient decision-making and safeguard the

legitimate rights and interests of the Company and all shareholders.


7. Activities of Special Committees under the Board of Directors during the
Reporting Period

                                                                                               Substantial
                          Number
                                                                                                 opinion      Other
                            of        Convened
 Committee    Members                                                 Topics                      and        inform
                         meetings       date
                                                                                               recommen       ation
                         convened
                                                                                                 dations
                Xue                                 The following proposals were approved:
              Yunkui,                               The 2022 Annual Report and Its
   Audit
               Guan          4        2023-4-27     Summary, The Interim Report for the             -            -
 Committee
              Qingyou,                              First Quarter 2023, and The Proposal on
                Han                                 Re-appointment of CPA Firm.


                                                         136
                                The 2023 Annual Report of Midea Group Co., Ltd.


                Jian, and                         The 2023 Semi-Annual Report and Its
                Yu Gang              2023-8-30                                                 -   -
                                                  Summary was approved.
                                                  The Proposal on the Engagement of
                                     2023-9-18    Independent Auditor for the Issuance and     -   -
                                                  Listing of the H-stock was approved.

                                      2023-10-    The Interim Report for the Third Quarter
                                                                                               -   -
                                         30       2023 was approved.

                 Guan                             The Proposal on Addition of Non-
                                     2023-4-27                                                 -   -
                Qingyou,                          Independent Director was approved.
                   Yu
                                                  The Proposal on Addition of Independent
 Nomination      Gang,
                            3        2023-9-18    Director for the Fourth Board of Directors   -   -
 Committee        Xue
                                                  was approved.
                Yunkui,
                and Han               2023-12-    The Proposal on Appointment of Vice
                  Jian                                                                         -   -
                                         26       President was approved.

                                                  The following proposals were approved:
                                                  The Remuneration Payment Standards
                                                  for Directors, Supervisors and Senior
                                                  Management for 2022, The Proposal on
                                     2023-4-27                                                 -   -
                                                  the 2023 Restricted Share Incentive
                                                  Scheme (Draft) and Its Summary, and
                                                  The 2023 Stock Ownership Scheme
                                                  (Draft) of Midea Group Co., Ltd.

                                                  The following proposals were approved:
                                                  The Proposal on Matters Related to the
                                                  Stock Option Exercise for the Fourth
                                                  Exercise Period for the First Grant under
                                                  the Fifth Stock Option Incentive Scheme,
                                                  The Proposal on Matters Related to the
                                                  Stock Option Exercise for the Third
                                                  Exercise Period for Reserved Stock
                                                  Options of the Fifth Stock Option
                                                  Incentive Scheme, The Proposal on
                  Han                             Matters Related to the Stock Option
                Jian, Yu                          Exercise for the Third Exercise Period of
                 Gang,                            the Sixth Stock Option Incentive Scheme,
Remuneration
                  Xue                             The Proposal on Matters Related to the
and Appraisal               2
                Yunkui,                           Stock Option Exercise for the Third
 Committee
                  and                             Exercise Period of the Seventh Stock
                 Guan                             Option Incentive Scheme, The Proposal
                Qingyou                           on the Satisfaction of Unlocking
                                     2023-6-20                                                 -   -
                                                  Conditions for the Fourth Unlocking
                                                  Period for the First Grant under the 2018
                                                  Restricted Share Incentive Scheme, The
                                                  Proposal on the Satisfaction of Unlocking
                                                  Conditions for the Third Unlocking Period
                                                  for Reserved Restricted Shares under
                                                  the 2018 Restricted Share Incentive
                                                  Scheme, The Proposal on the
                                                  Satisfaction of Unlocking Conditions for
                                                  the Third Unlocking Period of the 2019
                                                  Restricted Share Incentive Scheme, The
                                                  Proposal on the Satisfaction of Unlocking
                                                  Conditions for the Third Unlocking Period
                                                  of the 2020 Restricted Share Incentive
                                                  Scheme, and The Proposal on Unmet
                                                  Unlocking Conditions for the First
                                                  Unlocking Period of the 2021 Restricted
                                                  Share Incentive Scheme.

   ESG            Li                              The 2022 ESG Report of Midea Group
                Guolin,     1        2023-4-27                                                 -   -
 Committee                                        was approved.
                Zhong

                                                        137
                                  The 2023 Annual Report of Midea Group Co., Ltd.


                 Zheng,
                  Zhao
                 Wenxin,
                  Jiang
                  Peng,
                 and Zhi
                  Shuai




8. Activities of the Supervisory Committee

Were there any risks to the Company identified by the Supervisory Committee when performing its

duties during the Reporting Period

□Yes √No

The Supervisory Committee of the Company had no objection to the matters of supervision during the

Reporting Period.


9. Employees

9.1 Number, functions and educational backgrounds of employees

Number of in-service employees of the Company at the period-end                                           961

Number of in-service employees of main subsidiaries at the period-end                               197,652

Total number of in-service employees at the period-end                                              198,613

Total number of paid employees in the period                                                        198,613
Number of retirees to whom the Company or its main subsidiaries need to pay
                                                                                                      2,353
retirement pension
                                                         Functions

                                     Function                                       Number of employees

                                    Production                                                      154,046

                                       Sales                                                         14,063

                                     Technical                                                       23,242

                                     Financial                                                        2,762

                                   Administrative                                                     4,500

                                       Total                                                        198,613

                                                 Educational backgrounds

                              Educational background                                Number of employees

                           Master’s and doctoral degrees                                             7,252

                                 Bachelor’s degree                                                  31,265



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                              The 2023 Annual Report of Midea Group Co., Ltd.


                                  Other                                                          160,096

                                  Total                                                          198,613

Note: “Other” under “Educational backgrounds” in the table above includes personnel under privacy

protection.


9.2 Remuneration policy


Remunerations for employees are paid on time according to the remuneration system of the Company.

The Company decides the regular salaries of the employees according to the position’s value and

evaluation performances and decides the variable salary according to the Company's and employee’s

performance. The remuneration distribution shows more consideration for strategic talent and ensures

the market competitiveness in the salary of core talent. The Company shall make dynamic adjustments

to the staff remuneration policy according to regional differences, number of employees, staff turnover,

environment changes in the industry and paying ability of the Company.


9.3 Employee training


Focused on building the “Employee Growth Platform + Strategy Facilitation Platform + Knowledge

Management Platform”, Midea Academy consists of the Leadership Empowerment Center, the

Professionalism Empowerment Center, the Globalization Empowerment Center, and the Newcomer

Empowerment Center, in addition to a professional online learning platform—M-Learning, which

motivates employees to learn on their own through special learning courses and practical learning

functions. Meanwhile, Midea is building an offline three-tier empowerment system, linking the Group-

business units-departments, to comprehensively develop the job knowledge and skills required by

employees at each stage, taking into account personal development and corporate needs, and

supporting the learning and growth of all Midea employees.


Newcomer Empowerment Center: It provides new employees with onboarding training and

specialized position skill training or coaching. Through projects such as campus recruitment graduate

training camps, Jumei, Huimei, Chuangmei, etc., it helps new employees become familiar with

corporate culture and values, and accelerates their integration into a new environment. During the

Reporting Period, a total of 308 projects were carried out, with a total of 41,537 participations by


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                              The 2023 Annual Report of Midea Group Co., Ltd.



employees and a cumulative training time of 112,149.9 person-hours.


Leadership Empowerment Center: Around the management cadres talent training system, it

establishes a mature cadre training model, including the Sailor Project, the Voyager Project, the

Explorer Project and the Pilot Project, which are aimed at training talents in the middle and senior

management echelons. During the Reporting Period, a total of 55 cadre training projects were

promoted, with a total of 131,458 participations by employees and a cumulative training time of

199,595.30 person-hours.


Globalization Empowerment Center, Intelligent Manufacturing Empowerment Center, and Digital

Professional Empowerment Center: Based on Midea's strategy and business characteristics,

promote the diversified development of global talents and help industrial skill workers and R&D,

manufacturing, information technology, and other professional talents improve their skills. During the

Reporting Period, a total of 27 special empowerment projects were carried out by Media based on

actual business needs.


We encourage employees to learn autonomously and establish the M-Learning platform to

comprehensively help employees improve their professional capabilities. The M-Learning platform has

now formed a comprehensive integration of online learning, online exams, online live broadcasts,

learning journeys, and offline face-to-face teaching, realizing integrated management functions for

knowledge management, student management, lecturer management, and certificate management. At

the same time, we fully integrate training content on anti-corruption and integrity, environmental health

and safety into the M-Learning platform, require all new employees to carry out comprehensive

learning, and adopt an "online-based, offline-assisted" training mode to strengthen employees'

compliance, health, and safety concepts. (For more detailed content of employee training and

development, please refer to the Company's ESG report 2023).


9.4 Labor outsourcing


□Applicable √N/A




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10. Profit Distribution and Converting Capital Surplus into Share Capital

The Company has strictly implemented the Shareholder Return Plan for 2022-2024, which specifies the

decision-making process for dividend standards, dividend ratios and profit distribution policies, ensures

a continual and consistent profit distribution policy from the mechanism perspective, and fully protects

the legitimate rights and interests of minority investors.




Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, in the

Reporting Period

√Applicable □N/A
                                     Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and
                                                                                              Yes
resolution of meeting of shareholders
Specific and clear dividend standards and ratios                                              Yes
Complete decision-making process and mechanism                                                Yes
Independent directors faithfully performed their duties and
                                                                                              Yes
played their due role
Minority shareholders are able to fully express their opinion and
                                                                                              Yes
desire and their legitimate rights and interests are fully protected
In case of adjusting or altering the cash dividend policy, the
conditions and process involved are in compliance with                 No adjustment was made to the cash dividend policy.
applicable regulations and transparent

The Company made a profit in the Reporting Period and the profit distributable to shareholders of the

Company (without subsidiaries) was positive, but it did not put forward a preliminary plan for cash

dividend distribution

□Applicable √N/A

Preliminary plan for profit distribution and converting capital surplus into share capital for the Reporting

Period

√ Applicable □ N/A
Bonus shares for every 10 shares (share)                                                                                 0
Dividend for every 10 shares (RMB) (tax
                                                                                                                        30
included)
Additional shares converted from capital surplus
                                                                                                                         0
for every 10 shares (share)
Total shares as the basis for the preliminary
                                                                                                            6,920,391,836
plan for profit distribution (share)
Cash dividends (RMB) (tax inclusive)                                                                       20,761,175,508
Cash dividends in other forms (such as share
                                                                                                                         0
repurchase) (RMB)


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                                       The 2023 Annual Report of Midea Group Co., Ltd.


Total cash dividends (inclusive of those in other
                                                                                                               20,761,175,508
forms) (RMB) (tax inclusive)
Distributable profits (RMB)                                                                                    27,901,530,000
Percentage of total cash dividends (inclusive of
those in other forms) in the total distributed profit                                                                     100%
(%)
                                                 Cash dividend policy adopted
Where the Company is at a mature stage of development and has significant expenditure arrangements, cash
dividends shall account for at least 40% of the total distributed profit when carrying out profit distribution.
           Details about the preliminary plan for profit distribution and converting capital surplus into share capital
According to the Auditor’s Report PwC ZT Shen Zi (2024) No. 10017 issued by PricewaterhouseCoopers Zhong Tian
LLP, the parent company realized a net profit of RMB17,326,161,000 for 2023. Plus undistributed profits at the
beginning of the year of RMB27,719,633,000 and minus the profit distributed in the year of RMB17,144,264,000, the
actual distributable profit would be RMB27,901,530,000.


11. Implementation of any Equity Incentive Scheme, Employee Stock Ownership
Scheme or Other Incentive Measures for Employees

√Applicable □N/A


11.1 Equity incentive schemes


Overview of the Fifth Stock Option Incentive Scheme


a. The Proposal for the Retirement of Unexercised Stock Options in the First Grant under the Fifth

Stock Option Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of

Directors. As such, 79,180 stock options of 21 awardees that had been unexercised upon expiry were

retired.


b. At the above-mentioned meeting, the Proposal for the Retirement of Unexercised Reserved Stock

Options under the Fifth Stock Option Incentive Scheme upon Expiry was approved. As such, 38,500

stock options of four awardees that had been unexercised upon expiry were retired.


c. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the

Stock Option Incentive Scheme was approved. As the 2022 Annual Profit Distribution Plan had been

carried out, the exercise price for the first grant under the Fifth Stock Option Incentive Scheme was

revised from RMB50.21 to RMB47.71 per share, and the exercise price for the reserved stock options

under the said scheme was revised from RMB41.04 to RMB38.54 per share.




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                              The 2023 Annual Report of Midea Group Co., Ltd.



d. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their

Exercisable Stock Options for the First Grant under the Fifth Stock Option Incentive Scheme was

approved. It was agreed to adjust the awardees and their exercisable stock options for the first grant

under the Fifth Stock Option Incentive Scheme due to the resignation, substandard business unit

performance, substandard individual performance, reassignment, violation of the Company’s “Red

Lines” or other factors of some awardees. Upon the adjustments, the number of locked-up stock

options for the first grant under the Fifth Stock Option Incentive Scheme was reduced from 9,195,000

to 7,325,333.


e. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for

the Fourth Exercise Period for the First Grant under the Fifth Stock Option Incentive Scheme was

approved. A total of 801 awardees who are eligible for the Fifth Stock Option Incentive Scheme have

been allowed to exercise 7,325,333 stock options in the fourth exercise period (ended 6 May 2024).


f. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their

Exercisable Stock Options for the Reserved Stock Options under the Fifth Stock Option Incentive

Scheme was approved. It was agreed to adjust the awardee list and their exercisable stock options for

the first grant under the Fifth Stock Option Incentive Scheme due to the resignation, substandard

individual performance, or other factors of some awardees. Upon the adjustments, the number of

locked-up stock options granted to them for the first grant under the Fifth Stock Option Incentive

Scheme was reduced from 9,195,000 to 7,325,333.


g. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for

the Third Exercise Period for the Reserved Stock Options under the Fifth Stock Option Incentive

Scheme was approved. A total of 61 awardees who are eligible for the Fifth Stock Option Incentive

Scheme have been allowed to exercise 860,000 stock options in the third exercise period (ended 8

March 2024).


h. The Proposal for the Retirement of Unexercised Reserved Stock Options under the Fifth Stock

Option Incentive Scheme upon Expiry was approved at the 17th Meeting of the Fourth Board of

Directors. As such, 115,000 stock options of 11 awardees that had been unexercised upon expiry were


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                              The 2023 Annual Report of Midea Group Co., Ltd.



retired.


During the Reporting Period, 9,554,233 shares were exercised with respect to the first grant under the

Fifth Stock Option Incentive Scheme.


During the Reporting Period, 927,950 shares were exercised with respect to the reserved stock options

under the Fifth Stock Option Incentive Scheme.


Overview of the Sixth Stock Option Incentive Scheme


a. The Proposal for the Retirement of Unexercised Stock Options under the Sixth Stock Option

Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of Directors. As

such, 40,591 stock options of seven awardees that had been unexercised upon expiry were retired.


b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the

Stock Option Incentive Scheme was approved. According to the arrangements in the 2022 Annual

Profit Distribution, the exercise price for the Sixth Stock Option Incentive Scheme was revised from

RMB48.04 to RMB45.54 per share.


c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their

Exercisable Stock Options for the Sixth Stock Option Incentive Scheme was approved. It was agreed to

adjust the awardees and their exercisable stock options under the Sixth Stock Option Incentive

Scheme due to the resignation, substandard business unit performance, substandard individual

performance, reassignment or other factors of some awardees. Upon the adjustments, the number of

locked-up stock options granted to them under the Sixth Stock Option Incentive Scheme was reduced

from 18,570,000 to 15,830,667.


d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for

the Third Exercise Period for the Sixth Stock Option Incentive Scheme was approved. A total of 762

awardees who are eligible for the Sixth Stock Option Incentive Scheme have been allowed to exercise

7,339,417 stock options in the third exercise period (ended 29 May 2024).




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                              The 2023 Annual Report of Midea Group Co., Ltd.



During the Reporting Period, 9,231,056 shares were exercised under the Sixth Stock Option Incentive

Scheme.


Overview of the Seventh Stock Option Incentive Scheme


a. The Proposal for the Retirement of Unexercised Stock Options under the Seventh Stock Option

Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of Directors. As

such, 55,200 stock options of three awardees that had been unexercised upon expiry were retired.


b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the

Stock Option Incentive Scheme was approved. According to the arrangements of the 2022 Annual

Profit Distribution, the exercise price for the Seventh Stock Option Incentive Scheme was revised from

RMB47.19 to RMB44.69 per share.


c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their

Exercisable Stock Options for the Seventh Stock Option Incentive Scheme was approved. It was

agreed to adjust the awardees and their exercisable stock options under the Seventh Stock Option

Incentive Scheme due to the resignation, substandard business unit performance, substandard

individual performance, reassignment or other factors of some awardees. Upon the adjustments, the

number of locked-up stock options granted to them under the Seventh Stock Option Incentive Scheme

was reduced from 28,680,000 to 20,867,916.


d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for

the Third Exercise Period for the Seventh Stock Option Incentive Scheme was approved. A total of

1,047 awardees who are eligible for the Seventh Stock Option Incentive Scheme have been allowed to

exercise 20,867,916 stock options in the third exercise period (ended 4 June 2024).


During the Reporting Period, 18,776,931 shares were exercised under the Seventh Stock Option

Incentive Scheme.


Overview of the Eighth Stock Option Incentive Scheme




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                               The 2023 Annual Report of Midea Group Co., Ltd.



a. The Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes

was approved at the 16th Meeting of the Fourth Board of Directors. According to the arrangements in

the 2022 Annual Profit Distribution, the exercise price for the Eighth Stock Option Incentive Scheme

was revised from RMB79.74 to RMB77.24 per share.


b. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their

Exercisable Stock Options for the Eighth Stock Option Incentive Scheme was approved. It was agreed

to adjust the awardee list and their exercisable stock options under the Eighth Stock Option Incentive

Scheme due to the resignation, unmet exercise conditions, violation of the Company’s “Red Lines” or

other factors of some awardees. Upon the adjustments, the number of locked-up stock options granted

to them under the Eighth Stock Option Incentive Scheme was reduced from 81,740,000 to 45,785,250.


Overview of the Ninth Stock Option Incentive Scheme


a. The Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes

was approved at the 16th Meeting of the Fourth Board of Directors. According to the arrangements in

the 2022 Annual Profit Distribution, the exercise price for the Ninth Stock Option Incentive Scheme was

revised from RMB54.61 to RMB52.11 per share.


Overview of the 2018 Restricted Share Incentive Scheme


a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018

Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors

and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it

was agreed to repurchase and retire 218,958 restricted shares that had been granted to 14 awardees

but were still in lockup due to the resignation, reassignment, violation of the Company’s “Red Lines” or

other factors of these awardees. The retirement of the said restricted shares was completed on 18 April

2023.


b. The Proposal for the Adjustments to the Repurchase and Grant Prices and for the Restricted Share

Incentive Schemes was approved at the 16th Meeting of the Fourth Board of Directors. According to

the 2022 Annual Profit Distribution Plan, the repurchase prices for the first grant under the 2018

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                              The 2023 Annual Report of Midea Group Co., Ltd.



Restricted Share Incentive Scheme was revised from RMB21.44 to RMB18.94 per share, and the

repurchase price for the reserved restricted shares under the said scheme from RMB17.46 to

RMB14.96 per share.


c. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Fourth

Unlocking Period for the First Grant under the 2018 Restricted Share Incentive Scheme was approved.

A total of 172 awardees were eligible for this unlocking, with 2,566,396 restricted shares (0.0365% of

the Company’s total existing share capital) unlocked for public trading, of which 25,000 shares, 25,000

shares, 25,000 shares, and 20,000 shares were unlocked for senior management Guan Jinwei, Zhang

Xiaoyi, Hu Ziqiang, and Zhong Zheng, respectively.


d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third

Unlocking Period for the Reserved Restricted Shares under the 2018 Restricted Share Incentive

Scheme was approved. A total of 18 awardees were eligible for this unlocking, with 324,167 restricted

shares (0.0046% of the Company’s total existing share capital) unlocked for public trading, of which

25,000 shares were unlocked for senior management Zhao Wenxin.


e. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain

Incentive Shares under the 2018 Restricted Share Incentive Scheme was approved. As such, it was

agreed to repurchase and retire 233,146 restricted shares that had been granted to 29 awardees but

were still in lockup due to the resignation, reassignment, substandard 2022 individual/business unit

performance or other factors of these awardees. The retirement of the said restricted shares was

completed on 10 November 2023.


Overview of the 2019 Restricted Share Incentive Scheme


a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2019

Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors

and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it

was agreed to repurchase and retire 431,250 restricted shares that had been granted to 14 awardees

but were still in lockup due to the resignation, reassignment or other factors of these awardees. The


                                                      147
                               The 2023 Annual Report of Midea Group Co., Ltd.



retirement of the said restricted shares was completed on 18 April 2023.


b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive

Schemes was approved at the 16th Meeting of the Fourth Board of Directors. According to the 2022

Annual Profit Distribution Plan, the repurchase price for the granted restricted shares under the 2019

Restricted Share Incentive Scheme was revised from RMB20.96 to RMB18.46 per share.


c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain

Incentive Shares under the 2019 Restricted Share Incentive Scheme was approved. As such, it was

agreed to repurchase and retire 694,532 restricted shares that had been granted to 62 awardees but

were still in lockup due to the resignation, reassignment, substandard 2022 individual or business unit

performance or other factors of these awardees. The retirement of the said restricted shares was

completed on 10 November 2023.


d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third

Unlocking Period for the 2019 Restricted Share Incentive Scheme was approved. A total of 308

awardees were eligible for this unlocking, with 4,897,510 restricted shares unlocked for public trading,

of which 30,000 shares, 25,000 shares and 25,000 shares were unlocked for senior management

Wang Jinliang, Zhao Wenxin, and Guan Jinwei, respectively.


Overview of the 2020 Restricted Share Incentive Scheme


a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2020

Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors

and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it

was agreed to repurchase and retire 753,209 restricted shares that had been granted to 25 awardees

but were still in lockup due to the resignation, reassignment, violation of the Company’s “Red Lines” or

other factors of these awardees. The retirement of the said restricted shares was completed on 18 April

2023.


b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive

Schemes was approved at the 16th Meeting of the Fourth Board of Directors. As the 2022 Annual Profit

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                              The 2023 Annual Report of Midea Group Co., Ltd.



Distribution Plan had been carried out, the repurchase price for the restricted shares granted under the

2020 Restricted Share Incentive Scheme was revised from RMB21.18 to RMB18.68 per share.


c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain

Incentive Shares under the 2020 Restricted Share Incentive Scheme was approved. As such, it was

agreed to repurchase and retire 2,939,626 restricted shares that had been granted to 316 awardees

but were still in lockup due to the resignation, reassignment, substandard 2022 individual/business unit

performance and other factors of these awardees. The retirement of the said restricted shares was

completed on 10 November 2023.


d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third

Unlocking Period for the 2020 Restricted Share Incentive Scheme was approved. A total of 394

awardees were eligible for this unlocking, with 10,851,082 restricted shares unlocked for public trading,

of which 48,000 shares, 48,000 shares and 40,000 shares were unlocked for senior management

Wang Jinliang, Zhao Wenxin, and Li Guolin, respectively.


Overview of the 2021 Restricted Share Incentive Scheme


a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2021

Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors

and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it

was agreed to repurchase and retire 824,500 restricted shares that had been granted to 18 awardees

but were still in lockup due to the resignation, reassignment or other factors of these awardees. The

retirement of the said restricted shares was completed on 18 April 2023.


b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive

Schemes was approved at the 16th Meeting of the Fourth Board of Directors. As the 2022 Annual Profit

Distribution Plan had been carried out, the repurchase price for the 2021 Restricted Share Incentive

Scheme was revised from RMB38.25 to RMB35.75 per share.


c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain

Incentive Shares under the 2021 Restricted Share Incentive Scheme was approved. As such, it was

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                              The 2023 Annual Report of Midea Group Co., Ltd.



agreed to repurchase and retire 2,576,500 restricted shares that had been granted to 112 awardees

but were still in lockup due to the resignation, reassignment, substandard company performance or

other factors of these awardees. The retirement of the said restricted shares was completed on 10

November 2023.


Overview of the 2022 Restricted Share Incentive Scheme


a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2022

Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors

and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it

was agreed to repurchase and retire 270,000 restricted shares that had been granted to 10 awardees

but were still in lockup due to the resignation, reassignment or other factors of these awardees. The

retirement of the said restricted shares was completed on 18 April 2023.


b. The Proposal for the Adjustments to the Repurchase and Grant Prices for the Restricted Share

Incentive Schemes was approved at the 16th Meeting of the Fourth Board of Directors. As the 2022

Annual Profit Distribution Plan had been carried out, the repurchase price for the 2022 Restricted

Share Incentive Scheme was revised from RMB26.47 to RMB23.97 per share.


c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain

Incentive Shares under the 2022 Restricted Share Incentive Scheme was approved. As such, it was

agreed to repurchase and retire 1,052,500 restricted shares that had been granted to 24 awardees but

were still in lockup due to the resignation, reassignment or other factors of these awardees. The

retirement of the said restricted shares was completed on 10 November 2023.


Overview of the 2023 Restricted Share Incentive Scheme


a. The 2023 Restricted Share Incentive Scheme (Draft) and its Abstract was approved at the 15th

Meeting of the Fourth Board of Directors. And the awardee list for the 2023 Restricted Share Incentive

Scheme (Draft) was reviewed at the Ninth Meeting of the Fourth Supervisory Committee.


b. The Proposal on the Adjustments to the Repurchase and Grant Prices for the Restricted Share


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                                  The 2023 Annual Report of Midea Group Co., Ltd.



Incentive Schemes, the Proposal on the Determination of the Grant Date for the 2023 Restricted Share

Incentive Scheme, and the Proposal on Grant-related Matters for the 2023 Restricted Share Incentive

Scheme were approved at the 16th Meeting of the Fourth Board of Directors. According to the 2022

Annual Profit Distribution Plan, the grant price was revised from RMB28.39 to RMB25.89 per share.


c. On 20 June 2023, the Company granted 18,325,000 restricted shares to 415 awardees with the

grant price being RMB25.89 per share.




Equity incentives for directors and senior management

√Applicable □N/A

                                                                                                          Unit: share
                               Restricted
                                                              Restricted                   Restricted
                              shares held    Unlocked                       Grant price
                                                               shares                     shares held
                                 at the      shares in                         of the
                                                              granted in                  at the end of    Retired
   Name        Office title   beginning of      the                          restricted
                                                                 the                           the         shares
                                  the        Reporting                        shares
                                                              Reporting                    Reporting
                               Reporting      Period                       (RMB/share)
                                                                Period                        Period
                                Period
Zhang         Vice
                                   25,000        25,000                                              0
Xiaoyi        President
              Vice
Hu Ziqiang                         25,000        25,000                                              0
              President
Wang          Vice
                                  300,000        78,000                                       180,000         42,000
Jinliang      President
              Vice
Li Guolin                         230,000        40,000                                       150,000         40,000
              President
              Vice
Guan Jinwei                        75,000        50,000                                        25,000
              President
              Vice
              President,
Zhong
              CFO and              20,000        20,000                                              0
Zheng
              Director of
              Finance
              Chief
Zhao
              People              320,000        98,000                                       186,000         36,000
Wenxin
              Officer
              Board
Jiang Peng                        160,000                0                                    136,000         24,000
              Secretary
              Vice
Zhao Lei                           90,000        60,000                                        20,000         10,000
              President
Total               --          1,245,000       396,000                0        --            697,000        152,000




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                                  The 2023 Annual Report of Midea Group Co., Ltd.


                              1. A total of 2,566,396 shares were allowed for public trading in the Fourth Unlocking
                              Period for the First Grant of the 2018 Restricted Share Incentive Scheme on 3 July 2023,
                              of which senior management Guan Jinwei, Zhang Xiaoyi, Zhong Zheng and Hu Ziqiang
                              unlocked 25,000 shares, 25,000 shares, 20,000 shares and 25,000 shares, respectively.
                              2. A total of 324,167 shares were allowed for public trading in the Third Unlocking Period
                              for the Reserved Restricted Shares of the 2018 Restricted Share Incentive Scheme on 7
                              July 2023, of which senior management Zhao Wenxin unlocked 25,000 shares.
Remark (if any)               3. A total of 4,897,510 shares were allowed for public trading in the Third Unlocking
                              Period of the 2019 Restricted Share Incentive Scheme on 13 July 2023, of which senior
                              management Zhao Wenxin, Wang Jinliang and Guan Jinwei unlocked 25,000 shares,
                              30,000 shares and 25,000 shares, respectively.
                              4. A total of 10,851,082 shares were allowed for public trading in the Third Unlocking
                              Period of the 2020 Restricted Share Incentive Scheme on 18 July 2023, of which senior
                              management Zhao Wenxin, Li Guolin and Wang Jinliang unlocked 48,000 shares, 40,000
                              shares and 48,000 shares, respectively.

Appraisal mechanism and incentives for senior management

With respect to remunerations for directors and supervisors, the Remuneration and Appraisal

Committee under the Board of Directors formulates the relevant plan, which is submitted to the Board

of Directors for approval and then to the meeting of shareholders for final approval. As for

remunerations for senior management, the Remuneration and Appraisal Committee formulates the

relevant plan, which is submitted to the Board of Directors for final approval.


11.2 Employee stock ownership schemes


√Applicable □N/A

Outstanding employee stock ownership schemes during the Reporting Period
                                                                           As a percentage
     Scope of        Number of        Total shares held
                                                             Change       of the Company’s          Funding source
    employees        employees             (share)
                                                                          total share capital

Employees under
the Sixth Global
                                                                                                Special fund for the
Partner Stock            17              3,537,663             N/A              0.05%
                                                                                                scheme
Ownership
Scheme

Employees under
                                                                                                Special fund for the
the Third Business
                                                                                                scheme and part of the
Partner Stock            46              1,873,559             N/A              0.03%
                                                                                                performance bonuses for
Ownership
                                                                                                senior management
Scheme

Employees under
the Seventh Global
                                                                                                Special fund for the
Partner Stock            15              2,436,518             N/A              0.03%
                                                                                                scheme
Ownership
Scheme

Employees under
                                                                                                Special fund for the
the Fourth
                                                                                                scheme and part of the
Business Partner         44              1,985,611             N/A              0.03%
                                                                                                performance bonuses for
Stock Ownership
                                                                                                senior management
Scheme

Employees under          15              3,770,433             N/A              0.05%           Special fund for the


                                                            152
                                  The 2023 Annual Report of Midea Group Co., Ltd.


the Eighth Global                                                                            scheme
Partner Stock
Ownership
Scheme

Employees under
                                                                                             Special fund for the
the Fifth Business
                                                                                             scheme and part of the
Partner Stock           55                  2,826,759           N/A             0.04%
                                                                                             performance bonuses for
Ownership
                                                                                             senior management
Scheme

Employees under                                                                              Employees’ legal income,
the 2023 Stock                                                                               performance bonuses, or
                       147                  9,946,276           N/A             0.14%
Ownership                                                                                    other sources allowed by
Scheme                                                                                       laws and regulations

Shares held by directors, supervisors and senior management under employee stock ownership

schemes during the Reporting Period

                                                   Shares held at the
                                                                        Shares held at the end As a percentage of the
                                                    beginning of the
        Name                 Office title                               of the Reporting Period Company’s total share
                                                   Reporting Period
                                                                                (share)                capital
                                                        (share)

                     Chairman of the Board
    Fang Hongbo
                           and CEO

                       Director and Vice
     Gu Yanmin
                           President

                       Director and Vice
    Wang Jianguo
                           President

                       Director and Vice
     Fu Yongjun
                           President

     Zhang Xiaoyi       Vice President

       Zhao Lei         Vice President
                                                        4,770,564             4,941,346                0.07%
    Wang Jinliang       Vice President

       Li Guolin        Vice President

     Guan Jinwei        Vice President

        Bai Lin         Vice President

                     Vice President, CFO
    Zhong Zheng         and Director of
                           Finance

    Zhao Wenxin       Chief People Officer

     Jiang Peng        Board Secretary

Change of asset management organizations during the Reporting Period

□Applicable √N/A

Equity changes incurred by disposal of shares by holders, etc. during the Reporting Period

□Applicable √N/A

Exercise of shareholder rights during the Reporting Period


                                                             153
                              The 2023 Annual Report of Midea Group Co., Ltd.



During the Reporting Period, holders under employee stock ownership schemes exercised the

shareholder rights to receive the cash dividends for 2022. Other than that, they did not exercise other

shareholder rights such as voting in a meeting of shareholders.

Other information about employee stock ownership schemes during the Reporting Period

□Applicable √N/A

Changes in members of the management committees for employee stock ownership schemes

□Applicable √N/A

Financial impact of employee stock ownership schemes on the Company during the Reporting Period

and the relevant accounting treatments

√Applicable □N/A

As per the Accounting Standard No. 11 for Business Enterprises—Share-based Payments, for equity-

settled share-based payments in exchange for services from employee that are exercisable when

services in the vesting period are completed or specified performance conditions are met, at every

balance sheet date during the vesting period, the services obtained in the current period are included in

the relevant costs/expenses and capital surplus at the fair value of the equity instruments at the grant

date based on the best estimate of the number of exercisable equity instruments. The expense

amortization of the Company’s share-based payment incentive schemes stood at RMB279,864

thousand for 2023, which was included in the relevant expense items and capital surplus.

Termination of employee stock ownership schemes during the Reporting Period

□Applicable √N/A


11.3 Other incentive measures for employees


□Applicable √N/A


12. Establishment and Implementation of the Internal Control System during the
Reporting Period

12.1 Establishment and implementation of the internal control system


During the Reporting Period, in line with the Basic Code for Internal Control of Enterprises and other

related regulations, the Company updated and improved the internal control system timely and


                                                      154
                                      The 2023 Annual Report of Midea Group Co., Ltd.



established a set of internal control systems which was designed scientifically and operated effectively.

Besides, an organization system for internal risk control and management comprising the Audit

Committee and the internal audit department was set up to supervise and assess the Company's

internal control management. Through the operation, analysis, and assessment of the internal control

system, the Company effectively prevented the risks in operations management and promoted the

realization of internal control objectives.


12.2 Serious internal control defects found in the Reporting Period

□Yes √No

13. The Company’s Management and Control of Subsidiaries during the Reporting
Period

                                                                                                 Solution
Company Consolidation Consolidation Problems arising in                                                           Subsequent
                                                                        Solutions taken       implementation
 name      plan         progress       consolidation                                                               solutions
                                                                                                 progress
   N/A            N/A           N/A                 N/A                       N/A                   N/A                N/A


14. Evaluation Report and Auditor’s Report on Internal Control

14.1 Evaluation report on internal control

Disclosure date of the internal control self-evaluation report         28 March 2024
                                                                       For details, please refer to the 2023 Self-Evaluation
Index to the disclosed internal control self-evaluation report         Report on Internal Control, which has been disclosed
                                                                       on www.cninfo.com.cn
Ratio of the total assets of the appraised entities to the
                                                                       70%
consolidated total assets
Ratio of the operating revenue of the appraised entities to the
                                                                       70%
consolidated operating revenue
                                              Defect identification standards
              Type                           Financial-report related                      Non-financial-report related
                                   For details, please refer to “(c) Basis for    For details, please refer to “(c) Basis for
                                   internal control evaluation and                 internal control evaluation and
                                   identification standards for internal control   identification standards for internal control
Nature standard                    defects” under Section III of The 2023         defects” under Section III of The 2023
                                   Self-Evaluation Report on Internal Control      Self-Evaluation Report on Internal Control
                                   disclosed on www.cninfo.com.cn dated 28         disclosed on www.cninfo.com.cn dated 28
                                   March 2024.                                     March 2024.
                                   For details, please refer to “(c) Basis for    For details, please refer to “(c) Basis for
                                   internal control evaluation and                 internal control evaluation and
                                   identification standards for internal control   identification standards for internal control
Quantitative standard              defects” under Section III of The 2023         defects” under Section III of The 2023
                                   Self-Evaluation Report on Internal Control      Self-Evaluation Report on Internal Control
                                   disclosed on www.cninfo.com.cn dated 28         disclosed on www.cninfo.com.cn dated 28
                                   March 2024.                                     March 2024.
Number of serious financial-
                                                                                   0
report-related defects


                                                                 155
                                     The 2023 Annual Report of Midea Group Co., Ltd.


Number of serious non-financial-
                                                                                0
report-related defects
Number of important financial-
                                                                                0
report-related defects
Number of important non-
                                                                                0
financial-report-related defects


14.2 Auditor’s report on internal control

√Applicable □N/A
                                  Opinion paragraph in the auditor’s report on internal control
The internal control auditor holds the view that on 31 December 2023, Midea Group maintained an effective internal
control of a financial report in all significant aspects based on the General Specifications of Company Internal Control
and relevant specifications.
Auditor’s report on internal
                                      Disclosed on www.cninfo.com.cn
control disclosed or not
Date of disclosing the full text of
the auditor’s report on internal 28 March 2024
control
Index to the disclosed full text of
                                      For details, please refer to the 2023 Auditor’s Report on Internal Control, which has
the auditor’s report on internal
                                      been disclosed on www.cninfo.com.cn
control
Type of the auditor’s opinion        Standard & unqualified
Serious non-financial-report-
                                      No
related defects

Whether any modified opinions are expressed by the accounting firm in its auditor’s report on the

Company’s internal control

□ Yes √ No

Whether the auditor’s report on the Company’s internal control issued by the accounting firm is

consistent with the self-evaluation report of the Board

√ Yes □ No


15. Remediation of Problems Identified by Self-inspection in the Special Action on
the Governance of Listed Companies

In accordance with the requirements of regulatory authorities, the Company launched a special self-

inspection of the governance of listed companies that would last four months on 17 December 2020,

which would review the corporate governance comprehensively from seven perspectives, namely the

basic information of the listed companies, the operation and decision-making of the organization,

controlling shareholder/Actual Controller and related parties, the establishment of the system for

standardizing the internal control, information disclosure and transparency, and institutional/overseas

investors. In addition, it identified problems and deficiencies by referring to regulations, Articles of

Association, and other normative documents, and saw the special self-inspection as an opportunity to

                                                                156
                               The 2023 Annual Report of Midea Group Co., Ltd.



improve the governance and protect the gains of investors.


This self-inspection found that the Company had no matters that had violated the national and CSRC

regulations, and the corporate governance was in compliance with the laws and regulations, such as

the Company Law, the Securities Law, the Guidelines on Standardized Operation of Listed Companies

on Shenzhen Stock Exchange, and the Guidelines for Articles of Association of Listed Companies.

Besides, the structure of the corporate governance was well-developed, and the operation was

standard. The Company will inspect and update the internal control system it has released in a timely

manner in accordance with the existing laws and regulations and continuously establish and improve

the internal control systems so that the systems can function effectively.




                                                       157
                                                        The 2023 Annual Report of Midea Group Co., Ltd.



                                   Section V Environmental and Social Responsibility

1. Major Environmental Issues

Whether the Company or any of its subsidiaries is declared a heavily polluting business by the environmental protection authorities

 Yes □ No


Policies and industry standards for environmental protection


The Company has attached great importance to environmental protection. It has been strictly abiding by the Law of the People's Republic of China

on Environmental Protection, the Law of the People's Republic of China on Water Pollution Prevention and Control, the Law of the People's Republic

of China on Air Pollution Prevention and Control, the Law of the People's Republic of China on Noise Pollution Prevention and Control, the Law of

the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes, the Law of the People's Republic of China

on Environmental Impact Assessment, the Regulations on Administration of Discharge Permits as well as other applicable laws, administrative rules

and regulatory documents. The Company has been taking practical and effective environmental protection measures to protect the ecological

environment and fulfill its corporate responsibility.


In terms of pollutant management, the Company has been in compliance with the existing pollutant discharge standards and limits, which are

specified as follows:


With respect to wastewater management, the Company is subject to the Integrated Wastewater Discharge Standard (GB8978-1996), the Discharge


                                                                                158
                                                     The 2023 Annual Report of Midea Group Co., Ltd.


Limits of Water Pollutants (DB44/26-2001), the Discharge Standard of Water Pollutants for Electroplating (DB 44/1597-2015), and the Discharge

Limits of Water Pollutants of Guangdong Province (DB44/26-2001), among other standards.


With respect to waste gas management, the Company is subject to the Integrated Emission Standard of Air Pollutants (GB16297-1996), the

Emission Standard of Air Pollutants for Boiler (GB13271-2014), the Emission Control Standard of Volatile Organic Compounds for Industrial

Enterprises (DB13/2322-2016), the Emission Standard of Pollutants for Synthetic Resin Industry (GB31572-2015), the Emission Limits of Air

Pollutants (DB44/27-2001), the Emission Standard of Volatile Organic Compounds for Furniture Manufacturing Operations (DB44/814-2010), and

the Emission Standard of Air Pollutants for Industrial Kiln and Furnace (GB 9078-1996), among other standards.


With respect to noise management, the Company is subject to the Emission Standard for Industrial Enterprises Noise at Boundary (GB12348-2008).


With respect to treatments of solid and hazardous waste, the Company has been in strict compliance with the Law on the Prevention and Control of

the Environmental Pollution of Solid Waste, disposing of solid and hazardous waste in a compliant manner.


Administrative permits in relation to environmental protection


According to the requirements of the applicable environmental protection laws and regulations, all construction projects of the Company fulfill the

procedures of environmental impact assessment and other administrative licensing procedures for environmental protection, strictly abide by the

environmental requirements for construction projects, and implement environmental treatment. After the completion of the project construction,

according to the requirements of the environmental impact assessment documents, the Company commissions a third-party monitoring organisation

to test the project's wastewater, waste gas, noise and other indicators, and applies for a discharge permit in accordance with the Regulations on the


                                                                             159
                                                                      The 2023 Annual Report of Midea Group Co., Ltd.


          Administration of Discharge Permits and other regulations and standards.


          During the Reporting Period, the existing discharge permits of the Company's subsidiaries were all within the validity period. During the validity

          period of the discharge permits, if there are matters such as changes in the basic information of the discharge permits, implementation of revisions in

          pollutant discharge standards, changes in the total pollutant discharge limits, etc., the subsidiaries of the Company shall, in accordance with the

          relevant requirements, submit an application for change of the discharge permits to the local competent environmental protection authorities within a

          specified period of time.


          Industry standards for discharges and discharges of pollutants in production and operation activities
                                                                      Num
Name
                                                                       ber
 of the                                                                                                                                                      Approve
           Type of     Name of                                          of                               Concentration                              Total
Compa                                                                        Distribution of discharge                    Pollutant discharge                 d total    Excess
            major       major             Discharge method            disch                                 of the                               discharge
 ny or                                                                                 outlets                                 standards                     discharg   discharge
           pollutant   pollutant                                      arge                                discharge                                 (ton)
subsidi                                                                                                                                                       e (ton)
                                                                      outlet
  ary
                                                                        s
          Physical
            and
        comprehens       COD                                                                               130mg/L                                58.97      70.898        No
 Wuhu
             ive
Midea
         indicators
Kitchen
& Bath Inorganic       Ammonia-                                                                                          Integrated Wastewater
Applian pollutants      nitrogen   Discharge after being treated by                                        3.1mg/L         Discharge Standard      1.41       2.496        No
                                                                            Western gate of the Wuhu
  ces                   (NH3-N)    wastewater treatment system and      1                                                    (GB8978-1996)
                                                                                     plant
 Mfg.                                   reaching the standard
          Physical
 Co.,       and
  Ltd. comprehens      Five-day
                                                                                                          27.35mg/L                                12.4         /          No
                         BOD
              ive
          indicators
              Oil      Petroleum                                                                          <0.06mg/L                               0.027         /          No




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                                                                     The 2023 Annual Report of Midea Group Co., Ltd.

                        Total
        Inorganic
                      phosphor                                                                         0.43mg/m                                      0.2     /   No
        pollutants
                      us (by P)
        Inorganic     Fluoride
                                                                                                       0.73mg/m                                      0.32    /   No
        pollutants     (by F-)
         Particles      Soot                                                                           4.6mg/m                                       9.27    /   No
         Gaseous
                        Sulfur
         inorganic                                                                                      <3mg/m         Emission Standard of Air      1.9     /   No
                       dioxide
        substances                  15m high altitude discharge                                                          Pollutants for Boiler
                                                                                                                          (GB13271-2014)
         Gaseous
         inorganic Oxynitride                                                                          6.3mg/m                                       1.9     /   No
        substances
         Particles      Dust                                                                           4.3mg/m            Integrated Emission        3.76    /   No
                                                                      45    Plants at each workshop                    Standard of Air Pollutants
         Aromatic
                       Xylene                                                                         <0.01 mg/m            (GB16297-1996)          0.0002   /   No
        compounds
           Fatty             High altitude discharge after being
       hydrocarbon Overall treated by waste gas treatment station
                                                                                                                 Emission Control Standard
          s and     volatile
                                                                                                                  for Industrial Enterprises
       halogenated organic                                                                             5.77mg/m                                      8.08    /   No
                                                                                                                Volatile Organic Compounds
           fatty   compound
                                                                                                                     (DB13-2322- 2016)
       hydrocarbon s (VOCs)
             s


         Physical                                                                                                                                            /
           and
       comprehens       COD                                                                             130mg/L                                     24.34        No
Wuhu        ive
Midea   indicators
Smart                                                                      Western gate of the Wuhu
Kitchen Inorganic     Ammonia-                                                                                                                               /
                       nitrogen   Discharge after being treated by                  plant               3.1mg/L         Integrated Wastewater        0.59        No
Applian pollutants
                       (NH3-N)    wastewater treatment system and      1     (Shared kitchen and                          Discharge Standard
ces
                                       reaching the standard                bathroom wastewater                             (GB8978-1996)
Manufa Physical
cturing                                                                        treatment plant)
            and
Co.,                  Five-day
        comprehens                                                                                     27.35mg/L                                     5.11    /   No
Ltd.                    BOD
             ive
         indicators
            Oil       Petroleum                                                                        <0.06mg/L                                     0.01    /   No



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                                                                      The 2023 Annual Report of Midea Group Co., Ltd.

                        Total
        Inorganic
                      phosphor                                                                          0.43mg/m                                        0.08     /   No
        pollutants
                      us (by P)
        Inorganic     Fluoride
                                                                                                        0.73mg/m                                        0.14     /   No
        pollutants     (by F-)
         Particles      Soot                                           10                               4.9mg/m                                         5.52     /   No
         Gaseous
                        Sulfur
         inorganic                                                      6                                <3mg/m          Emission Standard of Air       0.89     /   No
                       dioxide
        substances                  15m high altitude discharge                                                            Pollutants for Boiler
                                                                                                                            (GB13271-2014)
         Gaseous
         inorganic Oxynitride                                           6                               13.3 mg/m                                       1.48     /   No
        substances
         Particles      Dust                                            6                               4.9mg/m             Integrated Emission          1.7     /   No
                                                                             Plants at each workshop                     Standard of Air Pollutants
         Aromatic                                                                                        <0.0015
                       Xylene                                           2                                                     (GB16297-1996)           0.00035   /   No
        compounds                                                                                         mg/m
           Fatty
       hydrocarbon Overall     High altitude discharge after being
                             treated by waste gas treatment station                                                      Emission Control Standard
          s and     volatile
                                                                                                                          for Industrial Enterprises
       halogenated organic                                             13                               6.4mg/m                                         8.18     /   No
                                                                                                                        Volatile Organic Compounds
           fatty   compound
                                                                                                                             (DB13-2322- 2016)
       hydrocarbon s (VOCs)
             s


          Physical
            and
        comprehens      COD                                                                             67.25mg/L                                       8.119
 Hefei       ive
Midea indicators                                                                                                          Takeover Standards for
Heatin                Ammonia-                                                                                          Sewage Treatment Plants in
  g&     Inorganic
                       nitrogen                                                                         1.18mg/L         Western Clusters of Hefei      1.047
Ventilat pollutants    (NH3-N)    Discharge after being treated by                                                                  City
                                                                              The eastern side of 1#
  ing                             wastewater treatment system and       1                                                                                        /   No
                                                                                      plant                                Integrated Wastewater
Equipm Physical                        reaching the standard
            and                                                                                                              Discharge Standard
  ent                 Five-day                                                                                            (GB8978-1996), Level 3
 Co., comprehens        BOD
                                                                                                        16.76mg/L                                       2.688
 Ltd.        ive
         indicators
                        Total
        Inorganic
                      nitrogen                                                                          17.2mg/L                                        1.929
        pollutants
                       (by N)

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                                                                       The 2023 Annual Report of Midea Group Co., Ltd.

                        Total
         Inorganic    phosphor
                                                                                                            0.07mg/L                                   0.138495
         pollutants   us (by P)
                       (by P)
           Other       Anionic
                                                                                                            0.17mg/L                                   0.053443
         indicators   surfactant
         Physical
           and
                   Suspende
       comprehens                                                                                           17.08mg/L                                   2.692
                   d matters
            ive
        indicators
            Oil       Petroleum                                                                             0.06mg/L                                    0.0444
         Physical
           and
       comprehens pH value                                                                                    5.64                                        /
            ive
        indicators
           Fatty                                                         2   1 set in 3# plant and 1 unit
                                            RO equipment                                                    1.91mg/m                                   0.08895
       hydrocarbon                                                                    in 4# plant
          s and      Non-                                                3     2 sets at 1# plant and 1
       halogenated methane         Water spray and activated carbon                                         14.91mg/m                                  0.57868
                                                                                    set at 2# plant                                                                 /      No
           fatty   hydrocarb                                                                                                 Integrated Emission
       hydrocarbon    ons                                                9   3 at 1# plant, 2 at 2# plant,
                                     Two-stage activated carbon                                                           Standard of Air Pollutants
             s                                                               1 at 3# plant, 2 at 4# plant 7.394mg/m                                    1.67152
                                            equipment                                                                      GB16279-1996 Level 2
                                                                                 and 1 cyclopentane

                                                                             2 at 1# plant, 3 at 2# plant,
         Particles      Soot         Filter cartridge dust collector     8    2 at 3# plant and 1 at 4#    4.908mg/m                                     3.3        /      No
                                                                                        plant


 Hefei    Physical
            and                                                                 The eastern side of                        Takeover Standards for
 Midea                                                                                                                   Sewage Treatment Plants in
Laundr  comprehens    COD                                                      wastewater treatment          48 mg/L                                    6.154     58.150   No
             ive                                                                     station                              Western Clusters of Hefei
   y                         Discharge after being treated by                                                                       City
                                                                         1
Applian indicators           wastewater treatment station
                                                                                                                           Integrated Wastewater
ce Co., Inorganic Ammonia-                                                      The eastern side of
                    nitrogen                                                   wastewater treatment         0.692mg/L        Discharge Standard         0.089       /      No
  Ltd.   pollutants
                    (NH3-N)                                                          station                              (GB8978-1996), Level 3
(monito




                                                                                                163
                                                                              The 2023 Annual Report of Midea Group Co., Ltd.

red by                    Total
  the                  suspende
munici                      d
  pal                  particulate   High altitude discharge after being
govern                   matter      treated by cyclone + filter cartridge
ment)                    (TSP)       dust collector/High altitude discharge
          Particles                                                                  Plants at each workshop    0.8mg/m                                        1.47     /     No
                       (aerodyna     after being treated by water spraying
                           mic       + demister + activated carbon +                                                              Table 5 of the Emission
                                     activated carbon                                                                            Standard of Pollutants for
                        diameter
                                                                               15                                               Synthetic Resin Industry (GB
                         below                                                                                                     31572-2015): Special
                        100μm)                                                                                                 Emission Limit Requirements
             Fatty
                               High altitude discharge after being
         hydrocarbon
                       Non-    treated by water spraying + demister +
            s and
                      methane activated carbon + activated
         halogenated                                                                 Plants at each workshop    1.73mg/m                                       1.96     /     No
                     hydrocarb carbon/High altitude discharge after
             fatty
                        ons    being treated by the two-stage
         hydrocarbon
                               activated carbon
               s


           Physical
             and
         comprehens      COD                                                                                     48 mg/L                                       2.92    9.59   No
              ive
          indicators
                       Ammonia-
  GD    Inorganic
                        nitrogen        Discharge after being treated by             The southeastern side of   1.082mg/L        Discharge Limits of Water     0.023    /     No
Midea pollutants                                                                1
  Air-                  (NH3-N)          wastewater treatment station                       4# plant                             Pollutants (DB44/26-2001)
Conditi Physical
 oning     and
                       Suspende
Equipm comprehens                                                                                                14mg/L                                        0.451    /     No
                       d matters
  ent       ive
  Co.,  indicators
  Ltd.      Oil        Petroleum                                                                                0.32mg/L                                       0.005    /     No
           Physical
             and
                                        Discharge after being treated by              The eastern side of 2#                     Discharge Limits of Water
         comprehens      COD                                                    1                                108mg/L                                       3.66    9.59   No
                                         wastewater treatment station                         plant                              Pollutants (DB44/26-2001)
              ive
          indicators




                                                                                                      164
                                                                    The 2023 Annual Report of Midea Group Co., Ltd.

        Physical
          and
                  Suspende
      comprehens                                                                                       47mg/L                                      0.46     /    No
                  d matters
           ive
       indicators
                    Ammonia-
       Inorganic
                     nitrogen                                                                         1.832mg/L                                    0.013    /    No
       pollutants
                     (NH3-N)
          Oil       Petroleum                                                                          1.99mg/L                                    0.003    /    No
                   Total
                                                                                                                   Emission Standard of
                 volatile
         Other                  15m high altitude discharge after                                               Volatile Organic Compounds
                 organic
        organic                  being treated by spray tower +       3            4# plant           15.94mg/m for Furniture Manufacturing        0.77    14    No
                compound
      compounds                         activated carbon                                                        (DB44/814-2010) the second
                 s (spray
                                                                                                                         time period
                 powder)
                   Overal
                  volatile                                                                                        Emission Standard of
         Other                  15m high altitude discharge after
                  organic                                                                                      Volatile Organic Compounds
        organic                  being treated by environmental       4        1# and 9# plants       3.81mg/m                                     0.56     /    No
                compound                                                                                           for Printing Industry
      compounds                       protection equipment
                 s (screen                                                                                           (DB44/815-2010)
                  printing)
                  Overall
                  volatile
                                                                                                                         Emission Standard of
         Other    organic       15m high altitude discharge after
                                                                                                                      Volatile Organic Compounds
        organic compound         being treated by environmental       2           10# plants          1.65mg/m                                     4.11     /    No
                                                                                                                          for Printing Industry
      compounds      s                protection equipment
                                                                                                                            (DB44/815-2010)
                (electronic
                     s)
          Fatty
      hydrocarbon
                    Non-
         s and                  15m high altitude discharge after                                                        Emission Limits of Air
                   methane
      halogenated                being treated by environmental       5         2#, 5# plants         2.52mg/m        Pollutants (DB44/27- 2001)   1.88     /    No
                  hydrocarb
          fatty                       protection equipment                                                              the second time period
                     ons
      hydrocarbon
            s


Wuhu    Physical
                                                                                                                         Integrated Wastewater
 Maty     and                    Discharge after treatment by the
                                                                           The northern side of the                        Discharge Standard
 Air- comprehens      COD       sewage and wastewater station to      1
                                                                                    park
                                                                                                      77.65mg/L
                                                                                                                        (GB8978-1996) Table 4,
                                                                                                                                                   3.99    7.5   No
Conditi   ive                          meet the standards
                                                                                                                                 Level 3
oning indicators
                                                                                               165
                                                                     The 2023 Annual Report of Midea Group Co., Ltd.

Equipm Physical
  ent     and
 Co., comprehens Suspende                                                                               42.35mg/L                                       2.166      /     No
 Ltd.             d matters
           ive
       indicators
         Physical
           and
                   Five-day
       comprehens                                                                                       11.755mg/L                                      1.86       /     No
                     BOD
            ive
        indicators
                     Ammonia-
        Inorganic
                      nitrogen                                                                          20.923mg/L                                      0.598    0.675   No
        pollutants
                      (NH3-N)
           Oil       Petroleum                                                                           1.46mg/L                                       0.075      /     No
                                                                                                                           Integrated Emission
        Particles      Soot                                           11     1#、2#、3#、4# plants          ND          Standard of Air Pollutants      6.03       /     No
                                                                                                                             (GB16297-1996)
           Fatty
       hydrocarbon
                     Non-                                                                                           Emission Control Standard
          s and
                    methane                                                                                          for Industrial Enterprises
       halogenated                                                    10     1#、2#、3#、4# plants      5.642mg/m3                                      7.327      /     No
                   hydrocarb     15m high altitude discharge after                                                 Volatile Organic Compounds
           fatty
                      ons         being treated by environmental                                                        (DB13-2322- 2016)
       hydrocarbon
                                       protection equipment
             s
        Gaseous
        inorganic Oxynitride                                           3            3# plant            5.485mg/m3                                      1.348    2.209   No
                                                                                                                           Integrated Emission
        pollutants
                                                                                                                        Standard of Air Pollutants
        Gaseous
                     Sulfur                                                                                                  (GB16297-1996)
        inorganic                                                      3            3# plant             3mg/m3                                         0.468      /     No
                    dioxide
        pollutants


         Physical
Guang      and
 dong comprehens     COD                                                                                 32.5mg/L                                      12.0708   16.28   No
Meizhi      ive
Precisi indicators                                                         Near     the    wastewater                  Discharge Standard of Water
                                 Discharge after being treated by
  on-                                                                  1   treatment station in the                    Pollutants for Electroplating
                                  wastewater treatment station
Manufa Physical                                                            north side of the plant                          DB 44/1597-2015                              No
cturing    and
                   Suspende
 Co., comprehens d matters                                                                                20mg/L                                       7.7064      /
  Ltd.      ive
        indicators

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                                                                The 2023 Annual Report of Midea Group Co., Ltd.

    Oil       Petroleum                                                                           0.48mg/L                                         0.161384      /     No
                Total                                                                                                                                                  No
 Inorganic
              phosphor                                                                            0.15mg/L                                          0.10913      /
 pollutants
              us (by P)
Metals and                                                                                                                                                             No
  metal    Total zinc                                                                                ND                                             0.01296      /
compounds
  Physical                                                                                                                                                             No
    and
comprehens pH value                                                                               7.06mg/L                                             /         /
     ive
 indicators
 Inorganic       Total                                                                                                                                                 No
                                                                                                  2.85mg/L                                          0.88044      /
 pollutants    nitrogen
              Ammonia-                                                                                                                                                 No
 Inorganic
               nitrogen                                                                           0.799mg/L                                        0.2754872   2.034
 pollutants
               (NH3-N)
                                                                                                                   Discharge Limits of Water                           No
                                                                                                                   Pollutants in Guangdong
 Inorganic     Fluoride                                                                                                 DB44/26-2001
                                                                                                  0.15mg/L                                         0.050388      /
 pollutants     (by F-)



                 Total                                                                                                                                                 No
              suspende
                   d
              particulate                                                                                            Emission Limits of Air
                matter                                                                                            Pollutants (DB44/27-2001) /
                            15m high altitude discharge after
 Particles      (TSP)        being treated by environmental       7        Roof of the plant                       Emission Standard of Air         8.69166      /
              (aerodyna           protection equipment                                            14.4mg/m        Pollutants for Industrial Kiln
                  mic                                                                                              and Furnace (GB 9078-
               diameter                                                                                                       1996)
                below
               100μm)
 Gaseous                    15m high altitude discharge after                                                                                                          No
                Sulfur
 inorganic                   being treated by environmental       4        Roof of the plant      3.5mg/m                                             0        0.436
               dioxide                                                                                             Emission Standard of Air
 pollutants                       protection equipment
                                                                                                                     Pollutants for Boiler
 Gaseous                    15m high altitude discharge after                                                         (DB44/765-2019)                                  No
 inorganic    Oxynitride     being treated by environmental       4        Roof of the plant       15mg/m                                            1.946     2.039
 pollutants                       protection equipment
                                                                                        167
                                                                      The 2023 Annual Report of Midea Group Co., Ltd.

                    Overall                                                                                                                                              No
           Other    volatile      15m high altitude discharge after
          organic   organic        being treated by environmental      10        Roof of the plant       5.005mg/m                                      3.6412   4.553
        compounds compound              protection equipment
                   s (VOCs)                                                                                          Emission Standard of
                                                                                                                  Volatile Organic Compounds
                                  15m high altitude discharge after                                                                                                      No
         Aromatic                                                                                                    for Surface Coating of
                  Benzene          being treated by environmental                Roof of the plant       0.05mg/m                                       0.1056     /
        compounds                                                                                                  Automobile Manufacturing
                                        protection equipment
                                                                                                                   Industry (DB44/816-2010)
                         Total                                          2                                                                                                No
                                  15m high altitude discharge after
         Aromatic      toluene
                                   being treated by environmental                Roof of the plant       0.46mg/m                                       0.205      /
        compounds        and
                                        protection equipment
                        xylene


Guang
          Physical
 dong
            and
Meizhi
        comprehens      COD                                                                               42 mg/L                                        3.6     6.046   No
Compr
             ive
 essor
         indicators
Limited
          Physical
            and
                    Suspende
        comprehens                                                                                        13 mg/L                                        5.25      /     No
                    d matters
             ive
         indicators
                                                                                                                        Discharge Standard of Water
            Oil       Petroleum                                                 Near the wastewater      0.43 mg/L      Pollutants for Electroplating   0.104      /     No
                                  Discharge after being treated by      1
                        Total                                                 treatment station in the                  of Guangdong Province DB-
         Inorganic                 wastewater treatment station
                      phosphor                                                 north side of the plant   0.18mg/L          441597-2015, before 1        0.041      /     No
         pollutants
                      us (by P)                                                                                               September 2012
  Oil   Metals and
          metal    Total zinc                                                                            0.05mg/L                                       0.008      /     No
        compounds
          Physical
            and
        comprehens pH value                                                                               7.2mg/L                                                  /     No
             ive
         indicators                                                                                                                                       /
         Inorganic      Total
                                                                                                         3.03mg/L                                        0.94      /     No
         pollutants   nitrogen



                                                                                               168
                                                               The 2023 Annual Report of Midea Group Co., Ltd.

             Ammonia-
Inorganic
              nitrogen                                                                           0.856mg/L                                       0.168    0.756   No
pollutants
              (NH3-N)
Inorganic     Fluoride
                                                                                                 0.071 mg/L                                      0.032      /     No
pollutants     (by F-)
Metals and
               Total
  metal                                                                                              ND                                            0      0.024   No
               nickel
compounds
                Total
             suspende
                  d                                                                                1Lmg/m
             particulate                                                                                          Discharge Limits of Air
                                                                                                (calculated as Pollutants (DB44/27-2001)/
               matter      15m high altitude discharge after                                        half the
               (TSP)                                                   Roof of main plant and                    Emission Standard of Air
 Particles                  being treated by environmental      17                              detection limit                                  1.2348   8.705   No
             (aerodyna                                                 metal plate workshop                     Pollutants for Industrial Kiln
                                 protection equipment                                             when below
                 mic                                                                             the detection    and Furnace (GB9078-
              diameter                                                                               limit)                1996)
               below
              100μm)
                                                                                                   3Lmg/m
                                                                                                (calculated as
Gaseous                    15m high altitude discharge after                                        half the
               Sulfur                                                  Roof of main plant and
inorganic                   being treated by environmental      11                              detection limit                                  0.588    0.799   No
              dioxide                                                  metal plate workshop                       Emission Standard of Air
pollutants                       protection equipment                                             when below
                                                                                                 the detection      Pollutants for Boiler
                                                                                                     limit)          (DB44/765-2019)
Gaseous                    15m high altitude discharge after
                                                                       Roof of main plant and
inorganic    Oxynitride     being treated by environmental      11                               11.6mg/m                                         7.4     7.814   No
                                                                       metal plate workshop
pollutants                       protection equipment
                           15m high altitude discharge after
 Aromatic                                                              Roof of main plant and
          Benzene           being treated by environmental       2                               0.21mg/m     Emission Standard of               0.1056     /     No
compounds                                                              metal plate workshop
                                 protection equipment                                                      Volatile Organic Compounds
                Total                                                                                         for Surface Coating of
                           15m high altitude discharge after                                                Automobile Manufacturing
 Aromatic     toluene                                                  Roof of main plant and
                            being treated by environmental       2                               0.695mg/m Industry (DB44/816-2010)              0.172      /     No
compounds       and                                                    metal plate workshop
                                 protection equipment
               xylene




                                                                                       169
                                                                           The 2023 Annual Report of Midea Group Co., Ltd.

                       Overall
              Other    volatile      15m high altitude discharge after
                                                                                   Roof of main plant and
             organic   organic        being treated by environmental         7                                  3.5205mg/m                                    2.93    5.718   No
                                                                                   metal plate workshop
           compounds compound              protection equipment
                      s (VOCs)
             Physical
               and
           comprehens     COD                                                                                     40.75                                      5.721    16.87   No
                ive                  Discharge after being treated by                                                        Discharge Standard of Water
            indicators               wastewater treatment system and         1    Sewage treatment station                   Pollutants for Electroplating
                                          reaching the standard                                                                   (DB44/1597-2015)
               Oil     Petroleum                                                                                   0.29                                      0.040      /     No
                       Ammonia-
            Inorganic
                        nitrogen                                                                                   5.5                                       1.913    2.11    No
            pollutants
                        (NH3-N)
                           Total
                                                                                 Waste gas sprayers 1 and                      Table 1 of the Emission
            Aromatic     toluene    High altitude discharge after being
                                                                                 2 at 3# plant, outlets 1, 2      0.165      Standard of Volatile Organic    0.522      /     No
Foshan     compounds       and    treated by waste gas treatment station
                                                                                 and 3 for waste gas from                     Compounds for Furniture
Shund                     xylene
                                                                            14   wave-soldering, painting                     Manufacturing (DB44/814-
   e                     Overall                                                  and drying at 6# plant,                    2010): Discharge Limits for
 Midea        Other      volatile
                                    High altitude discharge after being          outlets 1 and 2 for waste                     VOCs through Exhaust
Electric     organic     organic                                                                                 (May 20)                                    20.655   36.43   No
                                  treated by waste gas treatment station         gas from reflow soldering                    Funnel/for Time Period II
   al      compounds compound                                                            at 6# plant
Heatin                  s (VOCs)
   g
               Fatty
Applian                                                                          Outlet of injection molding
           hydrocarbon                                                                                                         Table 4 of the Emission
  ces                      Non-                                                     waste gas in the south
              s and                                                                                                           Standard of Pollutants for
Manufa                  methane     High altitude discharge after being           side of 1# plant, outlet of
           halogenated                                                       3                                    1.335      Synthetic Resin Industry (GB    0.877      /     No
cturing                hydrocarb treated by waste gas treatment station            injection molding waste
               fatty                                                                                                           31572- 2015): Emission
  Co.,                      ons                                                  gas in the south side of 9#
           hydrocarbon                                                                                                          Limits of Air Pollutants
  Ltd.                                                                                       plant
                 s
                       Inhalable
                       particles
                       (aerodyna                                                 Outlets 1 and 2 of sanding
                       mic                                                         waste gas at 3# plant,                       Table 2 of the Emission
             Particles                   Pulse bag dust collecting          10                                    21.15         Limits of Air Pollutants     23.94            No
                       diameter                                                  outlets 1 and 2 of polishing
                       10                                                          waste gas at 3# plant                      (DB44/27-2001): Emission
                       below                                                                                                   Limits of Industrial Waste
                       100μm)                                                                                               Gas (Time Period 2), Level 2
            Gaseous                 High altitude discharge after being           Oxidation wire roof of 3#
                          Sulfur                                             7
            inorganic             treated by waste gas treatment station         plant, Drying furnace of 3#       5.31                                      0.108    0.78    No
                         dioxide
            pollutants                                                                       plant


                                                                                                    170
                                                                        The 2023 Annual Report of Midea Group Co., Ltd.

          Gaseous
          inorganic    Oxynitride                                                                           19.91                                            0.942     10.17   No
          pollutants
                                                                                                                            Emission Standard of
                                     Discharge after being treated by          South and north section
          Particles      Fume                                             2                                 0.213          Cooking Fume (Trial) (GB          0.132       /     No
                                       waste gas treatment station                    canteens
                                                                                                                                 18483-2001)



           Physical
             and                                                                                                            Takeover Standards for
         comprehens      COD                                                                                28mg/L        Sewage Treatment Plants in        5.02809      /     No
                                                                                The western side of the                    Western Clusters of Hefei
              ive                    Discharge after being treated by
                                                                                   comprehensive                                      City
          indicators                 wastewater treatment system and      1
                                                                                 wastewater treatment
                                          reaching the standard                                                              Integrated Wastewater
                       Ammonia-                                                        station
          Inorganic                                                                                                            Discharge Standard
                        nitrogen                                                                           2.56 mg/L        (GB8978-1996), Level 3          1.173665     /     No
          pollutants
                        (NH3-N)
                                                                               No. 1 workshop welding
                                                                               soot discharge outlet for   1.2mg/m
                                                                                      waste gas                               Integrated Emission
                                                                                                                           Standard of Air Pollutants
                                                                               No.3 workshop discharge                          (GB16297-1996)
                                                                                 outlet for the welding    1.2mg/m
Anhui                                                                                  waste gas
Meizhi                                                                          Waste gas outlet of 1#
Compr                     Total                                                 heat-treating furnace at   3.1mg/m
essor                  suspende                                                    No. 2 workshop                           Emission Standard of Air
Co.,                        d                                                                                              Pollutants for Industrial Kiln
                       particulate                                              Waste gas outlet of 2#                    and Furnace (GB9078-1996)
Ltd.
                         matter                                                 heat-treating furnace at   9.3mg/m
                         (TSP)       Collected by gas trap hood + 15m              No. 2 workshop
          Particles                                                      10                                                                                 9.625365   65.45   No
                       (aerodyna           high exhaust cylinder
                                                                                                                              Integrated Emission
                           mic                                                 Waste gas outlet for die
                                                                                                           3.4mg/m         Standard of Air Pollutants
                                                                              casting at No. 2 workshop
                        diameter                                                                                                (GB16297-1996)
                         below                                                 Waste gas outlet for die                        Integrated Emission
                        100μm)                                                                            5.1mg/m
                                                                              casting at No. 4 workshop                     Standard of Air Pollutants
                                                                                Waste gas outlet of 1#                           (GB16297-1996)
                                                                                heat-treating furnace at   4.5mg/m          Emission Standard of Air
                                                                                   No. 4 workshop                          Pollutants for Industrial Kiln
                                                                                                                          and Furnace (GB9078-1996)
                                                                                Waste gas outlet of 2#                      Emission Standard of Air
                                                                                heat-treating furnace at   1.8mg/m         Pollutants for Industrial Kiln
                                                                                   No. 4 workshop                         and Furnace (GB9078-1996)

                                                                                                 171
                                                                 The 2023 Annual Report of Midea Group Co., Ltd.

                                                                          Waste gas outlet for                        Integrated Emission
                                                                       electrophoresis and drying   4.5mg/m        Standard of Air Pollutants
                                                                           at No. 1 workshop                            (GB16297-1996)
                                                                          Waste gas outlet for                        Integrated Emission
                                                                       electrophoresis and drying   3.7mg/m        Standard of Air Pollutants
                                                                           at No.3 workshop                             (GB16297-1996)
                                                                       Outlet of 1# heat-treating
                                                                                                     23mg/m
                                                                       furnace at No.2 workshop

                                                                       Outlet of 2# heat-treating
                                                                                                     43mg/m
                                                                       furnace at No.2 workshop

                                                                       Waste gas outlet for die                        Integrated Emission
Gaseous                                                                                              10mg/m
               Sulfur     Collected by gas trap hood + 15m             casting at No. 2 workshop                    Standard of Air Pollutants
inorganic                                                          6                                                                             31.780093   112.2   No
              dioxide           high exhaust cylinder                                                              (GB16297-1996) Standard
pollutants                                                             Outlet of 1# heat-treating
                                                                                                     50mg/m                  Level 2
                                                                       furnace at No.4 workshop
                                                                       Outlet of 2# heat-treating
                                                                                                     12mg/m
                                                                       furnace at No.4 workshop
                                                                       Waste gas outlet for die
                                                                                                     <3mg/m
                                                                       casting at No.4 workshop
                                                                       Outlet of 1# heat-treating
                                                                                                     6mg/m
                                                                       furnace at No.2 workshop
                                                                       Outlet of 2# heat-treating
                                                                                                     6mg/m
                                                                       furnace at No.2 workshop
                                                                       Waste gas outlet for die                        Integrated Emission
Gaseous                                                                                              6mg/m
                          Collected by gas trap hood + 15m             casting at No. 2 workshop                    Standard of Air Pollutants
inorganic    Oxynitride                                            6                                                                             10.429364   33.24   No
                                high exhaust cylinder                  Outlet of 1# heat-treating                  (GB16297-1996) Standard
pollutants                                                                                           10mg/m
                                                                       furnace at No.4 workshop                              Level 2
                                                                       Outlet of 2# heat-treating
                                                                                                     22mg/m
                                                                       furnace at No.4 workshop
                                                                       Waste gas outlet for die
                                                                                                     5mg/m
                                                                       casting at No.4 workshop
                                                                       Waste gas outlet of the
            Overall       Collected by gas trap hood + 15m             drying furnace at No. 1      5.97mg/m   Emission Control Standard
   Other    volatile             high exhaust cylinder                 workshop                                 for Industrial Enterprises
  organic   organic                                                4                                                                              1.27347    21.6    No
                          Direct-fired waste gas incinerator +         Waste gas outlet of 1#                 Volatile Organic Compounds
compounds compound
                              15m high exhaust cylinder                drying furnace at No. 3      1.80 mg/m       (DB12/ 524-2020)
           s (VOCs)
                                                                       workshop

                                                                                         172
                                                                       The 2023 Annual Report of Midea Group Co., Ltd.

                                                                             Die casting     at   No.   2
                                                                                                            1.24mg/m
                                                                             workshop
                                                                             Die casting     at   No.   4
                                                                                                            0.87mg/m
                                                                             workshop



                                                                                                                             Emission Standard of
                                                                                                                         Volatile Organic Compounds
         Aromatic                                                             Waste gas outlet around
                  Benzene                Zeolite drum + RO               1                                   0mg/m        for Furniture Manufacturing   0.00      /      No
        compounds                                                                    plant C
                                                                                                                         (DB44/814-2010) the second
Guang                                                                                                                             time period
dong
                                                                                                                             Emission Standard of
Welling               Total
                                                                                                                         Volatile Organic Compounds
Motor    Aromatic   toluene                                                   Waste gas outlet around
                                         Zeolite drum + RO               1                                   0 mg/m       for Furniture Manufacturing   0.00      /      No
Manufa compounds      and                                                            plant C
                                                                                                                         (DB44/814-2010) the second
cturing              xylene
                                                                                                                                  time period
Co.,
Ltd.                Overall                                                                                                  Emission Standard of
           Other    volatile                                                                                             Volatile Organic Compounds
                                                                              Waste gas outlet around
          organic   organic              Zeolite drum + RO               1                                  14mg/m        for Furniture Manufacturing   3.972   17.09    No
                                                                                     plant C
        compounds compound                                                                                               (DB44/814-2010) the second
                   s (VOCs)                                                                                                       time period



         Physical                                                                                                      Discharge Limits of Water
           and                                                                                                       Pollutants in Guangdong DB-
       comprehens      COD                                                                                    32mg/L          44/26-2001                13.05   22.77    No
            ive                  Discharge to the municipal sewage               The eastern side of
                                                                                                                         Emission Standard of
        indicators                  system after being treated by        1     wastewater treatment
Guang                                                                                                                Volatile Organic Compounds
                                    wastewater treatment system                station in Malong base
 dong                Ammonia-                                                                                         for Furniture Manufacturing
        Inorganic                                                                                                    (DB44/814-2010)/ Emission
Midea pollutants      nitrogen                                                                               1.2mg/L                                    0.258   4.554    No
Kitchen               (NH3-N)                                                                                        Standard of Volatile Organic
Applian Particles                                                                                                       Compounds for Surface
                       Soot                                                                                 0.34mg/m     Coating of Automobile           0.7      /      No
  ces
                                                                             26 outlets at A1 plant, 47                 Manufacturing Industry
Manufa Gaseous         Sulfur                                                 outlets at A2 plant, 21                (DB44/816-2010)/ Emission
cturing inorganic     dioxide
                                                                                                             3mg/m                                      0.87    1.055    No
        pollutants                                                             outlets at B2 plant, 9                  Standard of Pollutants for
 Co.,                             20m high altitude discharge after
                                                                               outlets at C2 plant, 2                Synthetic Resin Industry (GB
  Ltd.  Gaseous                 being treated by waste gas treatment    112
                                                                            outlets at C3 plant, 1 outlet              31572-2015)/ Guangdong
        inorganic    Oxynitride equipment and reaching the standard          at wastewater treatment         4mg/m                                      5.44    10.314   No
                                                                                                                      Province Emission Limits of
        pollutants                                                            station and 6 outlets at                  Air Pollutants (DB44/27-
         Aromatic                                                                     canteen                        2001)/ Emission Standard of
                  Benzene                                                                                   0.06mg/m                                    0.21      /      No
        compounds                                                                                                    Volatile Organic Compounds
                                                                                                  173
                                                                          The 2023 Annual Report of Midea Group Co., Ltd.

                        Total                                                                                                      for Printing Industry
        Aromatic      toluene                                                                                                 (DB44/815-2010)/ Emission
                                                                                                                 4.65mg/m     Standard of Cooking Fume      1.34      /      No
       compounds        and
                       xylene                                                                                                  (on Trial) (GB 18483-2001)
                   Overall
          Other    volatile
         organic   organic                                                                                       10.48mg/m                                  10.2    35.051   No
       compounds compound
                  s (VOCs)
           Fatty
       hydrocarbon
                     Non-
          s and
                    methane
       halogenated                                                                                               2.73mg/m                                   0.82      /      No
                   hydrocarb
           fatty
                      ons
       hydrocarbon
             s
        Aromatic Ethylbenz
                                                                                                                 0.09mg/m                                   0.342     /      No
       compounds    ene
                                  15m high altitude discharge after
        Particles     Fume       being treated by oil fume purification                                          0.4mg/m                                    0.198     /      No
                                  facility and reaching the standard



         Physical
           and
       comprehens      COD                                                                                       106.66mg/L                                 104.8   175.5    No
            ive
        indicators
Anhui                Ammonia-
Meizhi Inorganic      nitrogen                                                                                    9.04mg/L                                  8.49     9.3     No
Precisi pollutants    (NH3-N)                                                   The south side of Building                      Integrated Wastewater
   on                             Discharge after being treated by              6 for night shift at the north                    Discharge Standard
Manufa Physical                   wastewater treatment system and           2
           and                                                                     side of the plant area                      (GB8978-1996) Table 4,
cturing              Five-day          reaching the standard
 Co., comprehens                                                                      (General outlet)           147.3mg/L              Level 3             89.5      /      No
                       BOD
  Ltd.      ive
        indicators
         Physical
           and
                   Suspende
       comprehens                                                                                                 30.5mg/L                                  23.95     /      No
                   d matters
            ive
        indicators

                                                                                                    174
                                                            The 2023 Annual Report of Midea Group Co., Ltd.

    Oil      Petroleum                                                                           3.285mg/L                                    1.5      /     No
                                                                                                                 Integrated Wastewater
Metals and
              Total                                                                                                Discharge Standard
  metal                                                                                          0.115mg/L                                   0.07     0.1    No
              nickel                                                                                            (GB8978-1996), the first
compounds                                                            Outlet in the sewage                       class pollutant standard
                                                                             station
Metals and                                                                                                      Integrated Wastewater
  metal    Total zinc                                                                            0.565mg/L        Discharge Standard         0.122    1.25   No
compounds                                                                                                           (GB8978-1996)
                                                                   Outlet for molybdenum-
                                                                                                29.15mg/m3
                                                                   containing waste gas 1
                         Collected by gas trap hood + 21m          Outlet for molybdenum-
                                                              3                                  16.95                                                       No
                               high exhaust cylinder               containing waste gas 2
                                                                   Outlet for molybdenum-
                                                                                                 9.89mg/m3
                                                                   containing waste gas 3
                                                                    1# Outlet for waste gas
                                                                                                19.875mg/m3
                                                                       from machining
                                                                    2# Outlet for waste gas
                                                                                                14.55mg/m3
                                                                       from machining
                                                                    3# Outlet for waste gas
                                                                                                 9.54mg/m3
    Fatty                                                              from machining
hydrocarbon                                                         4# Outlet for waste gas                      Relevant standard limit
   s and      Non-                                            7                                 20.97mg/m3
                                                                       from machining                          requirements in Table 1 of
halogenated  methane
                                                                                                                  Shanghai Integrated       31.1014
            hydrocarb                                               5# Outlet for waste gas                                                            /
    fatty                                                                                       10.36mg/m3      Emission Standard of Air
               ons                                                     from machining
hydrocarbon                                                                                                   Pollutants (DB31/933-2015)
      s                  Collected by gas trap hood + 25m           6# Outlet for waste gas
                                                                                                 6.3mg/m3                                                    No
                               high exhaust cylinder                   from machining
                                                                    7# Outlet for waste gas
                                                                                                13.18mg/m3
                                                                       from machining
                                                                   Outlet for waste gas from
                                                                                                20.28mg/m3
                                                                            coating 1
                                                                   Outlet for waste gas from
                                                                                             14.015mg/m3
                                                                            coating 2
                                                              4
                                                                   Outlet for waste gas from
                                                                                             10.135mg/m3
                                                                            coating 3
                                                                   Outlet for waste gas from
                                                                                                23.04mg/m3
                                                                            coating 4
 Particles     Total     Collected by gas trap hood + 25m    22   Outlet for heat treatment 1    12.5mg/m3    Comprehensive Control Plan    25.2677    /     No
                                                                                    175
                                      The 2023 Annual Report of Midea Group Co., Ltd.

suspende      high exhaust cylinder         Outlet for heat treatment 2 11.45mg/m3      for Air Pollution of Industrial
      d                                                                                 Furnaces (H.D.Q. [2019] No.
particulate                                 Outlet for heat treatment 3   11.3mg/m3                   56)
  matter                                    Outlet for heat treatment 4   11.5mg/m3
  (TSP)
                                            Outlet for heat treatment 5   9.65mg/m3
(aerodyna
    mic                                     Outlet for heat treatment 6   10.4mg/m3
 diameter                                   Outlet for heat treatment 7   9.45mg/m3
below 100                                   Outlet for heat treatment 8   8.4mg/m3
    μm)
                                            Outlet for heat treatment 9   4.65mg/m3
                                             Outlet for heat treatment
                                                                          5.45mg/m3
                                                         10
                                             Outlet for heat treatment
                                                                          11.6mg/m3
                                                         11
                                             Outlet for heat treatment
                                                                          9.9mg/m3
                                                         12
                                             Outlet for heat treatment
                                                                          9.35mg/m3
                                                         13
                                             Outlet for heat treatment
                                                                          11.3mg/m3
                                                         14
                                             Outlet for heat treatment
                                                                          11.5mg/m3
                                                         15
                                              1# outlet for waste gas
                                            from pre-coating treatment    10.5 mg/m3
                                                      and kiln
                                              2# outlet for waste gas
                                            from pre-coating treatment    9.45mg/m3
                                                      and kiln
                                              3# outlet for waste gas
                                            from pre-coating treatment    4.55mg/m3
                                                      and kiln
                                            3rd stage sintering furnace
                                                                          4.5mg/m3
                                                       outlet
                                            5th stage coating sintering
                                                                          9.65mg/m3
                                                   furnace outlet
                                             Outlet for waste gas from
                                                                          7.95mg/m3
                                               aluminum melting 1


                                                              176
                                                          The 2023 Annual Report of Midea Group Co., Ltd.

                                                                 Outlet for waste gas from
                                                                                              7.1mg/m3
                                                                   aluminum melting 2
                                                                   Outlet for the welding
                                                                                              8.8mg/m3
                                                                       waste gas 1
                                                                   Outlet for the welding
                                                                                               8mg/m3
                                                                       waste gas 2
                                                                   Outlet for the welding
                                                                                              6.5mg/m
                                                                       waste gas 3
                                                                   Outlet for the welding
                                                                                              4.55mg/m3
                       Collected by gas trap hood + 21m                waste gas 4
                                                            8
                             high exhaust cylinder                 Outlet for the welding
                                                                                              3.6mg/m3
                                                                       waste gas 5
                                                                   Outlet for the welding
                                                                                              9.6mg/m3
                                                                       waste gas 6
                                                                   Outlet for the welding
                                                                                              9.1mg/m3
                                                                       waste gas 7
                                                                   Outlet for the welding
                                                                                              3.95mg/m3
                                                                       waste gas 8
                                                                Outlet for heat treatment 1   <3mg/m
                                                                Outlet for heat treatment 2   <3mg/m
                                                                Outlet for heat treatment 3   <3mg/m
                                                                Outlet for heat treatment 4   <3mg/m
                                                                Outlet for heat treatment 5    7mg/m3
                                                                Outlet for heat treatment 6    6mg/m3
                                                                Outlet for heat treatment 7   3.5mg/m3
                                                                                                            Comprehensive Control Plan
Gaseous
              Sulfur   Collected by gas trap hood + 25m         Outlet for heat treatment 8   64mg/m3       for Air Pollution of Industrial
inorganic                                                  22                                                                                 11.7129   /   No
             dioxide         high exhaust cylinder              Outlet for heat treatment 9   67mg/m3       Furnaces (H.D.Q. [2019] No.
pollutants
                                                                                                                          56)
                                                                 Outlet for heat treatment
                                                                                              73.5mg/m3
                                                                             10
                                                                 Outlet for heat treatment
                                                                                              39mg/m3
                                                                             11
                                                                 Outlet for heat treatment
                                                                                               6mg/m3
                                                                             12
                                                                 Outlet for heat treatment
                                                                                              <3mg/m
                                                                             13

                                                                                   177
                                                             The 2023 Annual Report of Midea Group Co., Ltd.

                                                                    Outlet for heat treatment
                                                                                                 <3mg/m
                                                                                14
                                                                    Outlet for heat treatment
                                                                                                 <3mg/m
                                                                                15
                                                                     1# outlet for waste gas
                                                                   from pre-coating treatment    3.5mg/m3
                                                                             and kiln
                                                                     2# outlet for waste gas
                                                                   from pre-coating treatment    9.5mg/m3
                                                                             and kiln
                                                                     3# outlet for waste gas
                                                                   from pre-coating treatment     5mg/m3
                                                                             and kiln
                                                                   3rd stage sintering furnace
                                                                                                 4.5mg/m3
                                                                              outlet
                                                                   5th stage coating sintering
                                                                                                 7.5mg/m3
                                                                          furnace outlet
                                                                    Outlet for waste gas from
                                                                                                 55mg/m3
                                                                      aluminum melting 1
                                                                    Outlet for waste gas from
                                                                                                 <3mg/m
                                                                      aluminum melting 2
                                                                   Outlet for heat treatment 1   8.5mg/m3
                                                                   Outlet for heat treatment 2   14.5mg/m3
                                                                   Outlet for heat treatment 3   14mg/m3
                                                                   Outlet for heat treatment 4   17mg/m3
                                                                   Outlet for heat treatment 5   14mg/m3
                                                                   Outlet for heat treatment 6   14mg/m3
                                                                                                               Comprehensive Control Plan
Gaseous                                                            Outlet for heat treatment 7    5mg/m3
                          Collected by gas trap hood + 25m                                                     for Air Pollution of Industrial
inorganic    Oxynitride                                       22                                                                                 10.6089   /   No
                                high exhaust cylinder              Outlet for heat treatment 8   11mg/m3       Furnaces (H.D.Q. [2019] No.
pollutants
                                                                                                                             56)
                                                                   Outlet for heat treatment 9   10mg/m3
                                                                    Outlet for heat treatment
                                                                                                 17.5mg/m3
                                                                                10
                                                                    Outlet for heat treatment
                                                                                                 10mg/m3
                                                                                11
                                                                    Outlet for heat treatment
                                                                                                 20.5mg/m3
                                                                                12
                                                                                     178
                                                                   The 2023 Annual Report of Midea Group Co., Ltd.

                                                                          Outlet for heat treatment
                                                                                                       7.5 mg/m3
                                                                                      13
                                                                          Outlet for heat treatment
                                                                                                        5mg/m3
                                                                                      14
                                                                          Outlet for heat treatment
                                                                                                        7mg/m3
                                                                                      15
                                                                           1# outlet for waste gas
                                                                         from pre-coating treatment    <3mg/m3
                                                                                   and kiln
                                                                           2# outlet for waste gas
                                                                         from pre-coating treatment     6mg/m3
                                                                                   and kiln
                                                                           3# outlet for waste gas
                                                                         from pre-coating treatment     4mg/m3
                                                                                   and kiln
                                                                         3rd stage sintering furnace
                                                                                                        18mg/m
                                                                                    outlet
                                                                         5th stage coating sintering
                                                                                                        16mg/m3
                                                                                furnace outlet
                                                                          Outlet for waste gas from
                                                                                                        6mg/m3
                                                                            aluminum melting 1
                                                                          Outlet for waste gas from
                                                                                                       8.5mg/m3
                                                                            aluminum melting 2



  GD                                                                                                               Emission Standard of
           Other            Gas trap hood + dry filtering + UV +
Midea                                                                    During the screen printing             Volatile Organic Compounds
          organic   Overall activated carbon + 15m high altitude     1                                 15.3mg/m                               1.15619   /   No
Environ compounds volatile                                               process of the south plant                 for Printing Industry
                                         discharge
 ment                                                                                                                 (DB44/815-2010)
                    organic
Applian           compound Gas trap hood + dry filtering + UV +                                                     Emission Standard of
 ces       Other
                   s (VOCs) activated carbon + 15m high altitude         During the screen printing              Volatile Organic Compounds
 Mfg.     organic                                                    1                                 12.63mg/m                              3.33580   /   No
                                                                         process of the north plant                  for Printing Industry
 Co.,   compounds                        discharge
                                                                                                                       (DB44/815-2010)




                                                                                           179
                                                                       The 2023 Annual Report of Midea Group Co., Ltd.

Ltd.       Fatty
       hydrocarbon
                                                                              Exhaust funnel for waste                     Emission Standard of
          s and                 Gas trap hood + dry filtering + UV +
                                                                              gas from the baking and                     Pollutants for Synthetic
       halogenated              activated carbon + 15m high altitude     6                                5.28mg/m                                   13.59469   /   No
                                                                                 injection molding                       Resin Industry (BG 31572-
           fatty                             discharge
                                                                                     processes                                     2015)
       hydrocarbon
             s
           Fatty
       hydrocarbon
                                                                              Exhaust funnel for waste                     Emission Standard of
          s and                 Gas trap hood + dry filtering + UV +
                                                                              gas from the baking and                     Pollutants for Synthetic
       halogenated              activated carbon + 15m high altitude     2                                5.60mg/m                                   2.03391        No
                                                                                 injection molding                       Resin Industry (BG 31572-
           fatty                             discharge
                                                                                     processes                                     2015)
       hydrocarbon
             s
           Fatty
       hydrocarbon
                                                                                                                           Emission Standard of
          s and                 Gas trap hood + dry filtering + UV +
                                                                              Metal plate dusting waste                   Pollutants for Synthetic
       halogenated              activated carbon + 15m high altitude     3                                7.54mg/m                                   3.78561    /   No
                                                                               gas exhaust cylinder                      Resin Industry (BG 31572-
           fatty                             discharge
                                                                                                                                   2015)
       hydrocarbon   Non-
             s      methane
           Fatty   hydrocarb
       hydrocarbon    ons
                                                                             Outlet for waste gas from
          s and                Dry filtering + direct combustion of
                                                                             dip coating, drying and                       Emission Limits of Air
       halogenated             natural gas + 15m high altitude           1                                4.98mg/m                                   0.91463    /   No
                                                                             hardening of the north                      Pollutants (DB44/27-2001)
           fatty               discharge
                                                                             plant
       hydrocarbon
             s
           Fatty
       hydrocarbon
                                                                              Outlet for waste gas from
          s and
                                  Dry filtering + RCO + 15m high               dip coating, drying and                     Emission Limits of Air
       halogenated                                                       1                                13.6mg/m                                    0.2272    /   No
                                          altitude discharge                   hardening of the south                    Pollutants (DB44/27-2001)
           fatty
                                                                                         plant
       hydrocarbon
             s
           Fatty
       hydrocarbon
          s and                                                                 Metal spray painting,                 Emission Limits of Air
                                  Water spray + dry separation +
       halogenated                                                       1    outlet for waste gas from   8.165mg/m Pollutants (DB44/27-2001):       2.32220        No
                                    activated carbon device
           fatty                                                                         drying                       Time Period 2, Level 2
       hydrocarbon
             s

                                                                                               180
                                                                     The 2023 Annual Report of Midea Group Co., Ltd.

    Fatty                                                                                                                Emission Limits of Air
hydrocarbon                                                                                                            Pollutants (DB44/27-2001):
                                                                            Outlet for waste gas from
   s and                                                                                                                 Time Period 2, Level 2
                               Water spray + dry separation +               ceramic spraying, drying,
halogenated                                                            1                                 11.4mg/m                                    0.754        No
                                 activated carbon device                      sandblasting, powder
    fatty
                                                                             spraying and hardening
hydrocarbon
      s
                            Gas trap hood + water spraying + dry                                                         Emission Limits of Air
                                                                           Metal plate dusting, waster
 Particles                   filtering + UV + activated carbon +       1                                 5.25mg/m      Pollutants (DB44/27-2001):   0.53984   /   No
                                                                                 gas hardening
                                  15m high altitude discharge                                                            Time Period 2, Level 2
                                                                            Outlet for waste gas from                    Emission Limits of Air
                             Gas trap hood + Water wash spray
 Particles                                                             1   aluminum casting machine      10mg/m        Pollutants (DB44/27-2001):   1.46311   /   No
                                    +15m high exhaust
                 Total                                                       polishing and grinding                      Time Period 2, Level 2
              suspende
                                                                                                                         Emission Standard of Air
                    d       Gas trap hood + Water wash spray +              Outlet for waste gas from
 Particles                                                             1                                 3.7mg/m          Pollutants for Casting    0.62215   /   No
              particulate   Oil fume purifie + 15m high exhaust                     die casting
                                                                                                                        Industry (GB 39726-2020)
                matter
                (TSP)       Gas collection hood + Energy-saving
                                                                              Outlet for furnace at                      Emission Standard of Air
              (aerodyna     cooling device + Cyclone plate tower
 Particles                                                             1    machine side and natural     3.55mg/m         Pollutants for Casting    0.2239    /   No
                  mic       + Wet electrostatic precipitator + 15m
                                                                              gas and waste gas                         Industry (GB 39726-2020)
               diameter                 high exhaust
              below 100        Water spray + dry separation +          1      Metal spray painting,      3.55mg/m        Emission Limits of Air
 Particles        μm)           activated carbon device                    outlet for waste gas from                  Pollutants (DB44/27-2001):   0.75546       No
                                                                                       drying                            Time Period 2, Level 2
                               Water spray + dry separation +          1    Outlet for waste gas from    10mg/m          Emission Limits of Air
                                 activated carbon device                    ceramic spraying, drying,                  Pollutants (DB44/27-2001):
 Particles                                                                                                                                          0.6614        No
                                                                              sandblasting, powder                       Time Period 2, Level 2
                                                                             spraying and hardening
                                                                                                                         Emission Standard of
                            Fume hood + electrostatic range hood             Cooking fume outlet at
 Particles      Fume                                                   7                                 0.13mg/m       Cooking Fume GB18483-       0.0338    /   No
                               + 15m high altitude discharge                       canteen
                                                                                                                                 2001
  Physical
    and
            Suspende
comprehens                                                                                               2.75mg/L        Discharge Standard of      0.1354        No
            d matters
     ive                                                                                                                Pollutants for Municipal
 indicators                    Oil separation and slagging -                                                           Wastewater Treatment Plant
                                                                             Domestic wastewater
                            hydrolysis and acidification - contact     1                                                    GB18918-2002
  Physical                                                                     treatment station
                                      oxidation - MBR
    and                                                                                                                    Emission standard
comprehens      COD                                                                                      12.58mg/L          GB18918-2002            0.7246    /   No
     ive
 indicators

                                                                                             181
                                                                The 2023 Annual Report of Midea Group Co., Ltd.

               Animal
                and
    Oil                                                                                           0.41mg/L                                          0.0264       /      No
              vegetable
                 oil
              Ammonia-
 Inorganic
               nitrogen                                                                          0.08755mg/L                                       0.003494      /      No
 pollutants
               (NH3-N)
  Physical
    and
comprehens pH value                                                                                  6.6                                              /          /      No
     ive
 indicators
  Physical
    and
            Five-day
comprehens                                                                                         5.4mg/L                                          0.2703       /      No
              BOD
     ive
 indicators
Metals and
  metal    Total zinc                                                                            0.0045 mg/L                                      0.00066921    0.08    No
compounds
  Physical
    and
comprehens      COD                                                                               6.28mg/L                                         1.007231    3.9191   No
     ive
 indicators
  Physical
    and                 Coagulation and sedimentation +                                                           Discharge Standard of Water
            Suspende                                                    Production wastewater
comprehens            hydrolysis and acidification + aeration     1                                5.5mg/L        Pollutants for Electroplating    1.420196      /      No
            d matters                                                      treatment station
     ive              + biological tank + MBR + water reuse                                                            DB 44/1597-2015
 indicators
  Physical
    and
comprehens pH value                                                                                  7.5                                              /          /      No
     ive
 indicators
                Total
 Inorganic
              phosphor                                                                            0.02mg/L                                        0.0023563      /      No
 pollutants
              us (by P)




                                                                                        182
                                                                       The 2023 Annual Report of Midea Group Co., Ltd.

                      Ammonia-                                                                             0.82mg/L                                                    No
         Inorganic
                       nitrogen                                                                                                                  0.0164762    0.6279
         pollutants
                       (NH3-N)
            Oil       Petroleum                                                                           0.064mg/L                              0.0211041      /      No
        Metals and                                                                                         0.11mg/L
          metal    Aluminum                                                                                                                      0.0139012      /      No
        compounds
         Metals and                                                                                       0.0725mg/L                             0.0102071
           metal    Total iron                                                                                                                                  /      No
        compounds
          Physical
            and
        comprehens     COD                                                                                 68mg/L                                11.6071062    15      No
             ive
         indicators
                    Ammonia-
         Inorganic
                     nitrogen                                                                              12.3mg/L                              2.21459096    2.5     No
         pollutants
                     (NH3-N)
          Physical
            and
                     Five-day                                                                                            Integrated Wastewater
        comprehens                Discharge to municipal domestic               Outlets for domestic       27.5mg/L                              7.28871048     /      No
                       COD                                               1                                                 Discharge Standard
             ive                         sewage network                         sewage at the plant
                                                                                                                             (GB8978-1996)
Hubei indicators
Midea     Physical
Refrige     and
                    Suspende
 rator comprehens                                                                                          12.3mg/L                              2.0792318      /      No
                    d matters
 Co.,        ive
  Ltd.   indicators
                      Animal
                        and
             Oil                                                                                           1.03mg/L                              0.23554422     /      No
                    vegetable
                         oil
          Physical
            and
        comprehens     COD        After deep treatment by industrial                                       96mg/L                                 3.106086     15      No
                                                                                                                         Integrated Wastewater
             ive                   waste water treatment station,
                                                                         1   Freezer waste water outlet                    Discharge Standard
         indicators               discharge to municipal industrial
                                                                                                                             (GB8978-1996)
                    Ammonia-              sewage network
         Inorganic
                     nitrogen                                                                             0.185mg/L                              0.01278339    2.5     No
         pollutants
                     (NH3-N)



                                                                                               183
                                                                The 2023 Annual Report of Midea Group Co., Ltd.

  Physical
    and
              Five-day
comprehens                                                                                          23.2mg/L                              1.3381255    /   No
                COD
     ive
 indicators
  Physical
    and
              Suspende
comprehens                                                                                           35mg/L                                0.424141    /   No
              d matters
     ive
 indicators
     Oil      Petroleum                                                                             3.25mg/L                              0.10638157   /   No
               Animal
                and
    Oil                                                                                             1.03mg/L                              0.08450638   /   No
              vegetable
                 oil
                                                                      First installation branch
                                                                  1                                 0.91mg/m                                           /   No
                                                                      waste gas outlets
                           After photo-catalytic oxidation +      1   Second installation branch
                                                                                                    1.28mg/m                                           /   No
                          activated carbon, 15m high altitude         waste gas outlets
                                       discharge                  1   Waste gas outlets at the
                                                                      injection molding             0.99mg/m                                           /   No
                                                                      workshop
                        After dry filtering + photo-catalytic
                                                                      Waste gas outlets at the
                        oxidation + activated carbon, 15m         1                                 1.03mg/m                                           /   No
                                                                      extrusion workshop
                               high altitude discharge
    Fatty             V photocatalysis + activated carbon,        1   New injection      molding
                                                                                                    0.98mg/m                                           /   No
hydrocarbon                 15m high altitude discharge               outlet
              Non-
   s and               Cooling and dehumidification + UV          1                                          Integrated       Emission                 /   No
             methane
halogenated            photocatalysis + activated carbon,             Foam outlet                   0.94mg/m Standard of Air Pollutants    16.23147
            hydrocarb
    fatty                   15m high altitude discharge                                                      (GB16297-1996)
               ons
hydrocarbon                Dry filter + two-stage activated       1   Two-door       gallbladder                                                       /   No
                                                                                                    0.94mg/m
      s               carbon, 15m high altitude discharge             molding outlet
                      After wet scrubber + rotating-stream-       1                                                                                    /   No
                                                                      Waste gas outlets at the
                      tray scrubber + demister + activated                                          0.54mg/m
                                                                      freezer branch
                      carbon, 15m high altitude discharge
                           Dry filter + two-stage activated       1   One-box        gallbladder                                                       /   No
                                                                                                    0.88mg/m
                      carbon, 15m high altitude discharge             molding outlet
                           Dry filter + two-stage activated       1   Two-box        gallbladder                                                       /   No
                                                                                                    0.73mg/m
                      carbon, 15m high altitude discharge             molding outlet
                       Rotating-stream-tray scrubbe + dry         1                                                                                    /   No
                       filter + two-stage activated carbon,           Freezer No.2 # plant outlet   0.53mg/m
                            15m high altitude discharge


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                                                                         The 2023 Annual Report of Midea Group Co., Ltd.

                                      Dry filter + two-stage activated     1                                                                                    /       No
                                 carbon, 15m high altitude discharge           Injection molding machine
                                  Rotating-stream-tray scrubbe + dry       1   and injection granulation      0.56mg/m                                          /       No
                                   filter + activated carbon, 15m high         outlet
                                              altitude discharge
                                  Rotating-stream-tray scrubbe + dry       1                                                                                    /       No
                                   filter + activated carbon, 15m high         Extruder outlet                0.81mg/m
                                              altitude discharge
                                      Dry filter + two-stage activated     1                                                                                    /       No
                                                                               Molding machine outlet         0.66mg/m
                                 carbon, 15m high altitude discharge
                                  Rotating-stream-tray scrubbe + dry       1                                                                                    /       No
                                                                               Molding and extrusion
                                   filter + activated carbon, 15m high                                        0.98mg/m
                                                                               granulation outlet
                                              altitude discharge
                                      Dry filter + two-stage activated     1                                                                                    /       No
                                                                               Door foam outlet               0.95mg/m
                                 carbon, 15m high altitude discharge
                                      Dry filter + two-stage activated     1                                                                                    /       No
                                                                               Box foam outlet                0.95mg/m
                                 carbon, 15m high altitude discharge
                        Total      Cartridge dust removal, 15m high        1   Molding and        extrusion                                                     /       No
                                                                                                              10mg/m
                     suspende                 altitude discharge               crushing outlet
                           d       Cartridge dust removal, 15m high        1                                                                                    /       No
                                                                               Injection crushing outlet      10mg/m
                     particulate              altitude discharge
                       matter    After wet scrubber + rotating-stream-     1    Waste gas outlets at the
         Particles     (TSP)     tray scrubber + demister + activated               freezer branch                                                 1.32314
                     (aerodyna carbon, 15m high altitude discharge
                         mic                                                                                  4.1mg/m                                           /       No
                      diameter
                     below 100
                         μm)



          Physical
            and
 Wuxi comprehens      COD                                                                                     125mg/L                              50.848    123.9074   No
 Little      ive
                                                                                                                           Integrated Wastewater
 Swan indicators              Discharge to municipal sewage                     Exit at the middle gate of
                                                                           1                                                 Discharge Standard
Electric Physical             network                                                    the plant
                                                                                                                               (GB8978-1996)
 Co.,       and
                    Suspende
  Ltd. comprehens                                                                                             43.5mg/L                             15.352    87.2553    No
                    d matters
             ive
         indicators




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                                                                        The 2023 Annual Report of Midea Group Co., Ltd.

                Animal
                   and
    Oil                                                                                                    1.54mg/L                                0.752    10.7034   No
              vegetable
                     oil
                  Total
 Inorganic
               phosphor                                                                                    2.17mg/L                                0.765    1.0701    No
 pollutants
               us (by P)
 Inorganic        Total
                                                                                                           25.13mg/L                               8.579    11.2612   No
 pollutants     nitrogen
              Ammonia-
 Inorganic
               nitrogen                                                                                    20.2mg/L                                6.267    6.6906    No
 pollutants
               (NH3-N)
                  Total
              suspende
                     d      Water spraying + UV photocatalysis +
              particulate   activated carbon + filter cartridge dust
                 matter             collection + high altitude
 Particles       (TSP)      discharge/Two-stage activated carbon               Plants at each workshop     3.05mg/m                                0.3076   2.0696    No
              (aerodyna         + high altitude discharge/Filter                                                        Integrated Emission
                   mic      cartridge dust collection + high altitude                                                Standard of Air Pollutants
               diameter       discharge/High altitude discharge                                                           (GB16297-1996)/
              below 100                                                                                               Tianjin Emission Control
                   μm)                                                                                                Standard for Industrial
                                                                                                                    Enterprises Volatile Organic
                      Water spraying + UV photocatalysis +
    Fatty                                                                                                             Compounds (DB12/524-
                      activated carbon + filter cartridge dust           11
hydrocarbon                                                                                                                     2014)/
              Non-           collection + high altitude
   s and                                                                                                               Emission Standard of
             methane discharge/Zeolite + CO + high altitude
halogenated                                                                    Plants at each workshop     5.62mg/m   Pollutants for Synthetic     1.1984   1.2199    No
            hydrocarb discharge/Dry filtering + electrostatic
    fatty                                                                                                            Resin Industry (GB 31572-
               ons          oil removal + high altitude
hydrocarbon                                                                                                         2015)/ Emission Standard of
                      discharge/Two-stage activated carbon
      s                                                                                                                Air Pollutants for Boiler
                             + high altitude discharge
                                                                                                                          (GB13271-2014)
 Gaseous                                                                                                                                                              No
                Sulfur                                                         Natural gas for the metal
 inorganic                         Hight altitude discharge                                                2.07mg/m                                0.0695    0.624
               dioxide                                                              plate process
 pollutants
 Gaseous
                                                                               Natural gas for the metal
 inorganic    Oxynitride           Hight altitude discharge                                                5.12mg/m                                0.1655    3.38     No
                                                                                    plate process
 pollutants




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                                                                                                                                 Integrated Emission
                                 Bag + activated carbon + high altitude                                        0.32           Standard of Air Pollutants
          Particles  Soot         discharge/Activated carbon + high                 Buildings A and B                                                         0.173   0.2859   No
                                                                                                              mg/m          (GB16297-1996) for particles
 Wuxi                                      altitude discharge
                                                                                                                              and chemical compounds
 Filin
Electro    Fatty
        hydrocarbon                                                         4                                                Subject to Tianjin Emission
 nics                Non-
 Co.,      s and                    Activated carbon + high altitude                                          0.975             Control Standard for
                    methane
 Ltd. halogenated hydrocarb       discharge/Bag + activated carbon +                Buildings A and B
                                                                                                              mg/m
                                                                                                                            Industrial Enterprises Volatile   1.358   2.6389   No
            fatty                        high altitude discharge                                                                Organic Compounds
                      ons
        hydrocarbon                                                                                                               (DB12/524-2014)
              s



                         Total
                      suspende
                            d
                      particulate
                        matter                                                                                                  Integrated Emission
                        (TSP)      1#: Two-stage activated carbon;                 DA007, DA008, and
            Particles                                                                                       2.4 7mg/m        Standard of Air Pollutants       0.55    2.697    No
                      (aerodyna 5#: Grade 3 filtering + honeycomb                       DA009
                                                                                                                                  (GB16297-1996)
Huaian                    mic                 zeolite + CO;
Welling                diameter 6#: Electrostatic demisting + grade 2
Motor                 below 100      filtering + activated carbon;
Manufa                    μm)                                              7
                                      7#: Spray tower + plasma;
cturing
 Co.,         Fatty               8#: Grade 2 filtering + two-stage
  Ltd.    hydrocarbon                       activated carbon;
                         Non-                                                       DA001、DA005、
             s and                          9#: Bag filtering;                                                                  Integrated Emission
                       methane
          halogenated             10#: Two-stage activated carbon.                  DA006、DA008、          2.12mg/m        Standard of Air Pollutants       1.13    1.3853   No
                      hydrocarb
              fatty                                                                  DA010、DA003                                 (GB16297-1996)
                          ons
          hydrocarbon
                s
           Aromatic                                                                                                         Emission Standards for Odor
                       Styrene                                                   DA005、DA008、DA003        7.11mg/m                                          1.25      /      No
          compounds                                                                                                          Pollutants (GB14554-93)



Midea   Physical
                                                                                                                               Integrated Wastewater
Group     and                                                                   Main sewage outlet on the
                                    Discharge after treatment at the                                                             Discharge Standard
Wuhan comprehens pH value               sewage treatment plant
                                                                            1    west side of the factory      7.5
                                                                                                                                   (GB8978-1996)
                                                                                                                                                                /       /      No
Refrige    ive                                                                            area
ration indicators


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                                                                     The 2023 Annual Report of Midea Group Co., Ltd.

Equipm Physical
  ent     and
 Co., comprehens       COD                                                                              38mg/L                                      1.722    9.951   No
 Ltd.      ive
       indicators
                     Ammonia-
        Inorganic
                      nitrogen                                                                         0.543mg/L                                    0.0314   1.002   No
        pollutants
                      (NH3-N)
        Physical
          and
                  Suspende
      comprehens                                                                                          ND                                        0.373      /     No
                  d matters
           ive
       indicators
           Oil       Petroleum                                                                         0.97mg/L                                     0.023      /     No
                       Total
        Inorganic
                     phosphor                                                                             ND                                        0.003      /     No
        pollutants
                     us (by P)
        Inorganic    Fluoride
                                                                                                       7.82mg/L                                     0.172      /     No
        pollutants    (by F-)
       Metals and
         metal    Total zinc                                                                           2.94mg/L                                     0.087      /     No
       compounds
        Physical
          and
                  Five-day
      comprehens                                                                                        9.7mg/L                                     0.384      /     No
                    BOD
           ive
       indicators
                                                                              1# plant, 3# plant, 4#
        Particles      Soot                                           20                               6.6mg/m                                      0.178      /     No
                                                                                 plant, 5# plant
        Gaseous
                       Sulfur
        inorganic                                                     16                                3mg/m                                        1.63      /     No
                      dioxide
        pollutants                                                                                                        Integrated Emission
        Gaseous                  Discharge after being treated by                                                      Standard of Air Pollutants
        inorganic    Oxynitride environmental protection equipment    16                                3mg/m               (GB16297-1996)          1.847      /     No
        pollutants
          Metal   Tin and its
        elements compound
                                                                       3            3# plant           0.004mg/m                                    0.4215     /     No
        and their      s
       compounds


                                                                                               188
                                                                      The 2023 Annual Report of Midea Group Co., Ltd.

           Other  Acrylonitril
          organic     e                                                 1            5# plant              0.0002mg/m                                    0.044      /     No
        compounds
         Aromatic     Styrene
                                                                        1                                  0.145 mg/m                                    0.0324     /     No
        compounds
                    Overall
           Other    volatile
          organic   organic                                             7   1# plant, 3# plant, 4# plant   8.12mg/m                                      0.054      /     No
        compounds compound
                   s (VOCs)



            Fatty                                                                                                              1) Non-methane
        hydrocarbon                                                                                                             hydrocarbons:
                       Non-
           s and                                                                                                            Implementation of the
                     methane
        halogenated                                                     9          1#, 2# plants           10.21mg/m    emission concentration limits    11.347     /     No
                    hydrocarb
            fatty                                                                                                          on organic chemicals in
                        ons
        hydrocarbon                                                                                                      Table 1 of Emission Control
              s                                                                                                             Standard for Industrial
          Particles    Soot                                             2            1# plant              2.58mg/m     Enterprises Volatile Organic     1.526    7.135   No
         Gaseous                                                                                                          Compounds (DB13/2322-
         inorganic Oxynitride                                           2            1# plant               6.0mg/m                  2016)               2.773    9.369   No
Handa pollutants
                                                                                                                          2) Sulfur dioxide/ nitrogen
   n     Gaseous                  15m high altitude discharge after
                       Sulfur                                                                                                  oxides/ particles:
Midea inorganic                    being treated by environmental       2            1# plant              2.92mg/m                                      1.425    9.408   No
                      dioxide                                                                                            Implementation of the new
  Air-   pollutants                     protection equipment
                                                                                                                        furnace standards in Table 1
Conditi
                                                                                                                           and Table 2 of Emission
 oning
                                                                                                                        Standard of Air Pollutants for
Equipm
                                                                                                                         Industrial Kiln and Furnace
  ent
           Metal                                                                                                              (DB13/1640-2012)
  Co.,              Tin and its
         elements                                                                                                         3) Tin and its compounds:
  Ltd.              compound                                            4            2# plant              0.01mg/m                                      0.0043     /     No
          and their                                                                                                         Implementation of the
                         s                                                                                                requirements of Level 2 in
        compounds
                                                                                                                           the Integrated Emission
                                                                                                                          Standard of Air Pollutants
                                                                                                                               (GB16297-1996)
          Physical                                                                                                         Requirements for inflow
            and                   Discharge after being treated by                                                      water quality of wastewater
                                                                              North side of the power
        comprehens     COD        wastewater treatment system and       1                                  128.33mg/L    treatment plant in Handan        2.94    9.42    No
                                                                                       house
             ive                       reaching the standard                                                            Economic and Technological
         indicators                                                                                                          Development Zone


                                                                                                189
                                                                       The 2023 Annual Report of Midea Group Co., Ltd.

                      Ammonia-
         Inorganic
                       nitrogen                                                                          3.07mg/ L                                0.076    0.7   No
         pollutants
                       (NH3-N)
          Physical
            and
        comprehens       pH                                                                                 7.17                                    /       /    No
             ive
         indicators
          Physical
            and
                      Suspende
        comprehens                                                                                        36mg/L                                  0.876     /    No
                      d matters
             ive
         indicators
             Oil      Petroleum                                                                          0.47mg/L                                 0.011     /    No
         Inorganic     Fluoride
                                                                                                         5.45mg/L                                 0.129     /    No
         pollutants     (by F-)



          Physical
            and
        comprehens pH value                                                                                6.933                                    /       /    No
             ive
         indicators
          Physical
            and
                    Suspende
Chong comprehens d matters                                                                                 13mg/l                                 0.9719    /    No
  qing       ive
Midea indicators
Genera Physical
                                                                                                                          Integrated Wastewater
    l       and                 Discharge to municipal wastewater
                                                                             General sewage discharge                       Discharge Standard
Refrige comprehens     COD    treatment plant after being treated by     1                                109mg/l                                 8.1490    /    No
                                                                                exit of plant areas                      (GB8978-1996) Table 4,
 ration      ive                 the wastewater treatment system
                                                                                                                                  Level 3
Equipm indicators
  ent
  Co.,              Ammonia-
         Inorganic
  Ltd.               nitrogen                                                                            6.817mg/l                                0.5096    /    No
         pollutants
                     (NH3-N)
            Oil       Petroleum                                                                          1.364mg/l                                0.1384    /    No
          Physical
            and
                    Five-day
        comprehens                                                                                       34.667mg/l                               2.5917    /    No
                      BOD
             ive
         indicators
                                                                                               190
                                                                   The 2023 Annual Report of Midea Group Co., Ltd.

   Other       Anionic
                                                                                                        0.217mg/l                                 0.0162   /   No
 indicators   surfactant
 Inorganic    Phosphat
                                                                                                        0.117mg/l                                 0.0087   /   No
 pollutants      e
 Inorganic     Fluoride
                                                                                                       2.265 mg/L                                 0.1693   /   No
 pollutants     (by F-)
Metals and
                Total
  metal                                                                                                 0.013mg/l                                 0.0010   /   No
               copper
compounds
                  Total
              suspende
                    d
              particulate
                matter
 Particles       (TSP)                                                                                 10.226mg/m                                 2.5886   /   No
              (aerodyna
                   mic
               diameter                                                                                                 Integrated Emission
              below 100 High altitude discharge after being          5
                                                                          2 sets for paint waste gas                 Standard of Air Pollutants
                  μm)    treated by waste gas treatment station          of 1# and 4# plants each                   DB 50/418-2016 Table 1
                                                                                                                         Central Downtown
    Fatty
hydrocarbon
   s and      Non-
halogenated methane
    fatty                                                                                              2.817mg/m                                  0.8687   /   No
            hydrocarb
hydrocarbon    ons
      s

               Sulfuric
 Particles                 Lye spray towers (one is out of                                             1.080mg/m        Integrated Emission       0.0024       No
              acid mist                                                    Acid pickling waste gas                                                         /
                        service, and the other one is used for                                                       Standard of Air Pollutants
 Gaseous                                                             2      outlets for 1# and 4#
              Hydrogen occasional emergency cleaning of                                                              DB 50/418-2016 Table 1
 inorganic                                                                          plants             8.053mg/m                                  0.0098       No
               chloride          abnormal materials)                                                                     Central Downtown
 pollutants                                                                                                                                                /




                                                                                            191
                                                                  The 2023 Annual Report of Midea Group Co., Ltd.

                         Total
                     suspende
                           d
                     particulate
                       matter
         Particles      (TSP)                                                                        5.943mg/m                                   0.5886           No
                     (aerodyna
                          mic
                      diameter
                     below 100
                         μm)                                                                                       Integrated Emission                     /
        Gaseous                                                                                                  Standard of Air Pollutants
                     Sulfur                                                                                      DB 50/418-2016 Table 1
        inorganic                                                                                     4.443mg/m                                  0.4282           No
                    dioxide                                                                                          Central Downtown
        pollutants                                                       Volatile oil drying waste                                                          /
                                         1 set of RO                1
        Gaseous                                                                  gas outlet                      Emission Standard of Air
        inorganic Oxynitride                                                                         12.223mg/m Pollutants for Industrial Kiln   1.2018           No
        pollutants                                                                                               and Furnace DB 50/659-                     /
           Fatty                                                                                                       2016 Table 1/2
       hydrocarbon
          s and      Non-
       halogenated methane
           fatty                                                                                     2.853mg/m                                   0.2638           No
                   hydrocarb
       hydrocarbon    ons
             s
                                                                                                                                                            /
                     Ringelma
         Physical
                        nn                                                                                                                         /              No
         indicator
                     emittance                                                                           <1                                                 /



         Physical
Chong      and
 qing comprehens pH value                                                                                7.6                                       /        /     No
            ive
Midea
        indicators
  Air-                                                                                                                Integrated Wastewater
Conditi Physical             Treatment by waste water treatment                                                         Discharge Standard
                                                                    1           West gate
 oning     and                station and reaching the standard                                                      (GB8978-1996) Table 4,
Equipm comprehens    COD                                                                               165mg/L                Level 3            6.241    76.63   No
  ent       ive
  Co.,  indicators
  Ltd.
         Physical Suspende                                                                             38mg/L                                    1.362      /     No
           and     d matters
                                                                                            192
                                                                 The 2023 Annual Report of Midea Group Co., Ltd.

comprehens
     ive
 indicators
              Ammonia-
 Inorganic
               nitrogen                                                                              23.6mg/L                                   0.865    5.32   No
 pollutants
               (NH3-N)
    Oil       Petroleum                                                                              0.16mg/L                                   0.008     /     No
 Inorganic    Fluoride
                                                                                                      1mg/L                                     0.1914    /     No
 pollutants    (by F-)
  Physical
    and
            Five-day
comprehens                                                                                           50.9mg/L                                   1.767     /     No
              BOD
     ive
 indicators
   Other       Anionic
                                                                                                     0.104mg/L                                  0.007     /     No
 indicators   surfactant
Metals and
  metal    Total zinc                                                                                0.024mg/L                                  0.005     /     No
compounds
                Animal
                 and
    Oil                                                                                              0.24mg/L                                   0.056     /     No
              vegetable
                  oil
  Particles    Particles                                                                             9.5mg/m                                    10.492    /     No
 Gaseous
                Sulfur
 inorganic                                                                                            4mg/m                                     1.052     /     No
               dioxide
 pollutants
 Gaseous
 inorganic    Oxynitride                                                                              8mg/m                                     1.521     /     No
 pollutants
                         After treatment by environmental                                                             Integrated Emission
   Metal               protection and treatment facilities and           East, west, south and                     Standard of Air Pollutants
           Tin and its                                            10
 elements                reaching the standard, 25m high                north corners of the plant                 DB 50/418-2016 Table 1
           compound                                                                                  9.47mg/m                                   2.048     /     No
 and their                        altitude discharge                                                                   Central Downtown
                s
compounds
    Fatty
hydrocarbon   Non-
   s and     methane
                                                                                                     11.1mg/m                                   4.7447    /     No
halogenated hydrocarb
    fatty      ons
hydrocarbon
                                                                                          193
                                                                       The 2023 Annual Report of Midea Group Co., Ltd.

              s
                       Waste
                      mineral
                    oil, waste
                          oil-
                    containing
                       liquid,
Guang
                       waste
 zhou
                    packaging
Hualing
                      , waste
Refrige
                     activated    Treatment entrusted to third-party
 rating      N/A                                                        N/A             N/A                 N/A          N/A            175.158      /              No
                      carbon,           qualified enterprises
Equipm
                       waste
  ent
                         lead
  Co.,
                      battery,
  Ltd.
                       waste
                         filter
                      cotton,
                       waste
                       circuit
                    board, etc


          Treatment of pollutants


          During the Reporting Period, all subsidiaries have strictly abided by the laws and regulations related to environment protection, and no major

          environmental pollution incidents occurred. All subsidiaries have set up reliable waste water and gas treatment systems. Through regular monitoring,

          supervision and inspection mechanisms, as well as third-party testing, it is ensured that the discharge of waste water, waste gas and solid waste

          during the production and operation process meets the national and local laws and regulations. There is no excessive discharge by any subsidiary,

          which is in compliance with the relevant requirements of the environment administrations.


          Environment self-monitoring plans


          All the subsidiaries have formulated their own environment self-monitoring plans according to China’s relevant laws and regulations, which include: 1)
                                                                                               194
                                                     The 2023 Annual Report of Midea Group Co., Ltd.


Waste gas pollution source monitoring: Sampling points are set at various discharge ports of waste gas for monitoring on a quarterly basis. Major

discharge points are equipped with an online pollution discharge monitoring system for stationary pollution sources to produce and upload real-time

data to Midea Environmental Protection Online Monitoring Platform; 2) Waste water pollution source monitoring: Samples are fetched at intake and

outlet ports of waste water treatment stations to monitor changes of pollution source of waste water and up-to-standard emission of waste water

after being treated at the waste water treatment stations. Monitoring items include CODcr, SS and petroleum, etc. The data is uploaded to the

governmental monitoring authority online and the government authority conducts real-time monitoring; 3) Noise monitoring: Noise monitoring points

are set at noise sensitive points and on the border of factories. Noise is monitored once in spring and summer respectively and at daytime and at

nighttime respectively each time; 4) Solid waste pollution source monitoring: Hazardous waste produced from the subsidiaries is handed over to the

units with qualifications for treatment, monitoring systems are established, and related management forms and accounts are set up.


Contingency plans for environmental accidents


All subsidiaries have finished the compilation and approval of their contingency plans for environmental accidents. Emergency mechanisms for

environmental pollution accidents have been established and improved, and the subsidiaries’ ability to deal with environmental pollution accidents

has been enhanced, so as to maintain social stability, protect the lives, health and properties of the public, protect the environment, and promote a

comprehensive, coordinated and sustainable development of the society.


According to the accident levels, subsidiaries have formulated rules covering working principles, contingency plans, risk prevention measures,

commanding departments, responsibilities and labor division, and have filed these contingency plans with the government.


Spending on environmental management and protection and payment of environmental protection tax

                                                                             195
                                                        The 2023 Annual Report of Midea Group Co., Ltd.


All subsidiaries strictly observe the laws and regulations governing environmental protection, and all construction projects are in compliance with the

environmental effect requirements and other rules, with no misdeeds during the Reporting Period. Once a construction project is finished, a third-

party testing institution is hired to examine indexes including waste water, waste gas and noise, and the compilation and approval of the

environmental effect evaluation report is finished in time.


Measures taken to reduce carbon emissions during the Reporting Period and the results


√ Applicable □ N/A


a. The Group Carbon Management Measures has been published to further clarify the processes and requirements for organizational carbon

management, product carbon management, and carbon asset management.


b. Energy-saving projects were carried out, with over 1,300 energy-saving projects undertaken in the year 2023. Among them, the distributed

photovoltaic green electricity generation reached 230 million kWh, representing a 9.52% increase compared to 2022.


c. The green development of manufacturing bases was furthered in an orderly manner in accordance with the medium- and long-term plans. Based

on the green manufacturing plan, continuously improve the green manufacturing system and promote the enhancement of green manufacturing

capabilities. In 2023, Midea's residential air conditioner factory in Thailand was awarded the national-level title of Green Factory by the Thai

government. The Laundry Appliance Division’s factory in Hefei achieved a green electricity usage ratio of 31% and obtained certifications as a

national-level green factory and Anhui province-level green factory. As of the end of the Reporting Period, Midea has a total of 28 national-level

green factories.


                                                                                196
                                                     The 2023 Annual Report of Midea Group Co., Ltd.


d. Further promote carbon reduction across the entire value chain, including green design, green procurement, green logistics, and green recycling.

In 2023, Midea's R290 technology for air conditioners achieved new breakthroughs, with the Efficlima new product having energy efficiency far

exceeding the highest A+++ level. The Laundry Appliance Division established a closed-loop recycling system for the product lifecycle, significantly

reducing carbon emissions. The unit also completed research on washing detergent box components containing 50% recycled materials, obtaining

certification from the Global Recycling Standard (GRS). Utilizing automation and other technologies to create an intelligent production logistics

system, achieving standardization, intelligence, and unmanned operation in various logistics processes. Midea Group innovated in packaging

materials for residential air conditioners, developing high-density polyethylene (HDPE) and expanded polypropylene (EPP) packaging materials that

can be conveniently recycled. In regions where there is no recycling and reuse capability, Midea developed compostable and degradable packaging

materials based on polybutylene adipate terephthalate (PBAT). Midea achieved its annual target of recycling 2.6 million discarded home appliances

ahead of schedule, representing a 151% increase compared to 2022. These achievements lay a solid foundation for exploring broader pathways for

carbon reduction across the value chain.


Administrative penalties received during the Reporting Period due to environmental issues


□Applicable √N/A


No such cases during the Reporting Period.


Other environment-related information that should be made public


None


                                                                             197
                                                      The 2023 Annual Report of Midea Group Co., Ltd.


Other environment-related information


None


2. Corporate Social Responsibility (CSR)

The Company has voluntarily disclosed its CSR activities. Attaching great importance to protecting the legal rights and interests of its shareholders,

employees, consumers and business partners, as well as the government, the community and other stakeholders, the Company sticks to

harmonious common growth with them, honors its commitments, abides by law and moral principles, and continue to contribute to the sustainable

development of the society and the environment. For further information, see the Company’s ESG Report 2023 released on www.cninfo.com.cn.


3. Efforts in Poverty Alleviation and Rural Revitalization

3.1 Exploring new models for rural revitalisation


In this May, Midea Group organised a staff visit to the First Primary School of Guansuo Street, Guanling Buyi and Miao Autonomous County, Anshun

City, Guizhou Province, to carry out public welfare activities under the theme of "Build Dreams together with Midea through Technology". At the event,

Midea Group donated funds to assist in the construction of a science laboratory at the school and provided 600 science experiment kits to the local

community.


In addition, Midea Group continued to implement the East China and West China coordination mechanism. It spent RMB1 million in Qiandongnan

Prefecture, Guizhou Province as awards for teachers and students, motivating them to bear in mind the original mission of education, and driving

high-quality development in the local education.
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3.2 Keeping to the plan of “Talent First, Education First”


In this April, Midea Group donated RMB70 million to support the introduction of the Second Affiliated Midea High School of the East China Normal

University into Beijiao, Shunde. As such, Midea has established cooperation with the East China Normal University on high-quality education from

primary school, middle school, to high school. When the school is put into use, it will provide more than 6,000 places in the primary, middle, and high

schools to meet the local demand for quality education resources and make a greater contribution to the local economic and scientific and

technological development.


On October 21, Midea Group organized a public welfare event with the theme "Join Midea to Make Dreams Come True with Technology" at Midea

Global Innovation Center. More than 40 middle school students from Shunde District engaged in discussions on technology-related topics with three

Midea technology celebrities, experiencing the charm of science together. During the event, Midea's technology stars answered questions from the

children and imparted scientific knowledge through practical examples. After the event, the organizers also provided the children with "Midea

Science Experiment Kits", planting a seed of technology in their hearts through this event.


3.3 Subsequent plans


It is Midea Group’s vision to “Bring Great Innovations to Life”. The Company hopes to deliver the power of science and technology through public

welfare activities, keep to the plan of “Talent First, Education First”, adhere to the sustainable long-termism, as well as promote both rural

revitalisation and talent development, so as to play its part in creating more value for society.




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                                                             Section VI Significant Events

1. Performance of Undertakings

1.1 Undertakings of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other
commitment makers fulfilled in the Reporting Period or ongoing at the period-end


√ Applicable □ N/A
            Underta Type of
Undertaki                                                                                          Undertaking
             king undertaki                          Details of undertaking                                          Term                 Particulars on the performance
   ng                                                                                                 date
             giver    ng
                               1. Midea Holding and He Xiangjian have undertaken as
                               follows: He Xiangjian, Midea Holding and their controlled
            Controll           enterprises will remain independent from Midea Group in
            ing                respect of personnel, finance, assets, business and institutions,
                     Maintena
            shareho            in accordance with relevant laws and regulations and
                     nce of                                                                          28 March                    1. There has been no violation of this
            lder and           regulatory documents. They will faithfully fulfill the above                      Long-standing
                     independ                                                                        2013                        undertaking.
            actual             undertaking, and assume the corresponding legal liability. If
                     ence
Undertaki controll             they fail to fulfill their obligations and responsibilities conferred
ng made er                     by the undertaking, they will bear the corresponding legal
in offering                    liabilities according to relevant laws, rules, regulations and
document                       regulatory documents.
s or
sharehold                      2. In order to avoid possible competition within the industry
ing                            between Midea Group and Midea Holding and its controlled
alternatio                     enterprises as well as He Xiangjian, his immediate family and
            Controll           his controlled companies, Midea Holding and He Xiangjian
n
            ing      Avoiding have undertaken as follows:
document
            shareho competiti
s                                                                                                    28 March                    2. There has been no violation of this
            lder and on within (1) None of the entities or individuals mentioned above is or will                Long-standing
            actual the         be engaged in the same or similar business as the existing 2013                                   undertaking.
            controll industry main business of Midea Group and its controlled companies.
            er                 They are not or will not be engaged or participate in such
                               business that is competitive to the existing main business of
                               Midea Group and its controlled companies by controlling other
                               economic entities, institutions or economic organizations;

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                                                      The 2023 Annual Report of Midea Group Co., Ltd.

                     (2) If Midea Group and its controlled companies expand their
                     business on the basis of the existing ones to those where the
                     above mentioned related entities or individuals are already
                     performing such production and operations, as long as He
                     Xiangjian is still the actual controller of Midea Group, and
                     Midea Holding the controlling shareholder, they will agree on
                     solving the problem of competition within the industry arising
                     therefrom within a reasonable period;

                     (3) If Midea Group and its controlled companies expand their
                     business scope on the basis of the existing ones to those
                     where the above mentioned related subjects have not gone
                     into production or operation, as long as He Xiangjian is still the
                     actual controller of Midea Group, and Midea Holding the
                     controlling shareholder, they would undertake as not to engage
                     in competitive business to the new ones of Midea Group and
                     its controlled companies;

                     (4) In accordance with effective laws, regulations or other
                     regulatory documents of People's Republic of China, as long
                     as Midea Holding is identified as the controlling shareholder of
                     Midea Group, and He Xiangjian the actual controller, they will
                     not change or terminate this undertaking.

                     (5) Midea Holding and He Xiangjian shall faithfully fulfill the
                     above undertaking, and assume the corresponding legal
                     responsibilities. If they fail to fulfill their obligations and
                     responsibilities conferred by the undertaking, they would bear
                     the corresponding legal responsibilities according to relevant
                     laws, rules, regulations and regulatory documents.

                      3. In order to regulate matters of related transactions that may
                      occur in the future between Midea Group and Midea Holding
                      and its controlled companies as well as He Xiangjian, his
Controll              immediate family and his controlled companies, Midea Holding
ing        Regulatio and He Xiangjian have undertaken as follows:
shareho    n of
lder and   related    (1) They will regulate any related transactions with Midea 28 March        Long-standing
                                                                                                                 3. There has been no violation of this
                                                                                       2013                      undertaking.
actual     transactio Group and its controlled companies using their utmost efforts
controll   ns         to reduce them. For unavoidable related transactions with
er                    Midea Group and its controlled companies, including but not
                      limited to commodity trading, providing services to each other
                      or as agent, they will sign legal normative agreements with
                      Midea Group, and go through approval procedures in
                      accordance with related laws, regulations, rules, other
                                                                                 201
                                                        The 2023 Annual Report of Midea Group Co., Ltd.

                        regulatory documents, and relevant provisions of the Articles of
                        Association of Midea Group. They guarantee to offer fair prices
                        for related transactions, and fulfill the information disclosure
                        obligations in respect of the related transactions according to
                        related laws, regulations, rules, other regulatory documents,
                        and relevant provisions of the Articles of Association of Midea
                        Group. They also guarantee not to illegally transfer the funds or
                        profits from Midea Group, or damage the interests of its
                        shareholders at their advantages during the related
                        transactions.

                        (2) They shall fulfill the obligation of withdrawing from voting
                        that involves the above mentioned related transactions at the
                        general meeting of Midea Group;

                        (3) The related subject mentioned above shall not require
                        Midea Group to offer more favorable conditions than those to
                        any independent third party in any fair market transactions.

                        (4) In accordance with effective laws, regulations or other
                        regulatory documents of People's Republic of China, as long
                        as Midea Holding is identified as the controlling shareholder of
                        Midea Group, and He Xiangjian the actual controller, they shall
                        not change or terminate this undertaking.

                        (5) Midea Holding and He Xiangjian will faithfully fulfill the
                        above undertaking and assume the corresponding legal
                        liabilities. If they fail to fulfill their obligations and
                        responsibilities conferred by the undertaking, they will bear the
                        corresponding legal responsibilities according to relevant laws,
                        rules, regulations and regulatory documents.

                        4. On 4 January 2001, the Midea Trade Union Committee
           On Midea
                        signed the "Equity Transfer Contract" with five people, namely
           Trade
                        He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning
Controll   Union
                        and Liang Jieyin, where it transferred all its limited equity of
ing        Committe
                        Midea Group (22. 85%) respectively to those five people.                                 4. So far, this shareholding transfer has not
shareho    e
                        According to the confirmation letter issued by members of the 28 March                   brought about any loss caused by any dispute
lder and   transferri                                                                              Long-standing
                        Midea Trade Union Committee at that time, the equity transfer 2013                       or potential disputes. There has been no
actual     ng its
                        price was determined after mutual discussion on the basis of                             violation of this undertaking.
controll   limited
                        their true opinions, therefore there was no dispute or potential
er         equity of
                        dispute.
           Midea
           Group        On 28 June 2013, Foshan Shunde Beijiao General Union,
                        superior department of Midea Trade Union Committee, issued

                                                                                   202
                                                          The 2023 Annual Report of Midea Group Co., Ltd.

                         a confirmation letter to the fact that the Midea Trade Union
                         Committee funded the establishment of Midea Group Co., Ltd.
                         In addition the letter also confirmed that the council of Midea
                         Trade Union Committee is entitled to dispose any property of
                         the committee, and such property disposal does not need any
                         agreement from all staff committee members.

                         Midea Holding and He Xiangjian, respectively the controlling
                         shareholder and actual controller of Midea Group Co., Ltd.
                         have undertaken as follows: For any loss to Midea Group
                         caused by any dispute or potential dispute arising from the
                         matters of equity transfer mentioned above, they are willing to
                         assume full liability for such loss.

           Issues
           about
           Payment       5. Midea Holding and He Xiangjian have undertaken to be
           of the        liable for (1) paying such expenses and related expenses on
           Staff         time based on the requirements of relevant state departments
Controll
           Social        if Midea Group is required to be liable for the payment of staff
ing                                                                                                                5. So far, the payment of the staff social
           Insurance     social insurance, housing provident fund and the payment
shareho                                                                                                            insurance and the housing provident fund has
           and the       required by relevant state authorities prior to this merger, (2) 28 March
lder and                                                                                             Long-standing not brought about any controversy or potential
           Housing       paying corresponding compensation for all direct and indirect 2013
actual                                                                                                             disputes. There has been no violation of this
           Provident     losses incurred by Midea Group and its subsidiaries due to this
controll                                                                                                           undertaking.
           Fund          merger, (3) indemnifying and holding harmless Midea Group
er
           involved      and its subsidiaries in time from such expenses when Midea
           in Midea      Group and its subsidiaries are required to pay them in
           Group's       advance.
           Overall
           Listing

           Issues        6. Undertakings on issues about asset alteration, asset flaw
           about         and house leasing of Midea Group and its subsidiaries
           asset
                         Midea Holding and He Xiangjian have undertaken as follows:
Controll   alteration,                                                                                             6. So far, the issues about asset alteration,
ing        asset         (1) Midea Holding will do its utmost to assist and urge Midea                             asset flaw and house leasing of Midea Group
shareho    flaw and      Group (including its subsidiaries) to complete renaming 28 March                          and its subsidiaries have not brought about
lder and   house         procedures of related assets, such as land, housing, 2013                   Long-standing any controversy or potential disputes. There
actual     leasing of    trademarks, patents and stock rights, declared in the related                             has been no violation of this undertaking. And
controll   Midea         files of this merger. Midea Holding will be liable for all                                Midea Holding shall honor this undertaking
er         Group         compensations of losses caused by issues about renaming                                   before its expiration.
           and its       procedures of related assets mentioned above to Midea Group.
           subsidiari
           es            (2) Midea Holding shall do its utmost to assist Midea Group
                         (including its subsidiaries) to apply for ownership certificates of
                                                                                      203
                                 The 2023 Annual Report of Midea Group Co., Ltd.

land and housing or property declared in related files of this
merger.

(3) Midea Holding shall assist Midea Group (including its
subsidiaries) to re-apply for corresponding construction
procedures and apply for their ownership certificates for
houses without complete procedures, as happened in the past,
to apply for the ownership certificate. If the competent
authorities requires Midea Group to dismantle buildings that
cannot acquire the re-application for real estate registration
procedures, Midea Holding shall do its utmost to provide
assistance and be liable for any related expenses used in
dismantling such buildings by Midea Group (including its
subsidiaries).

(4) Under any circumstances that Midea Group suffers from
losses incurred from no longer using these properties or
presently using the land or house above due to failing to obtain
or collect in time the ownership certificates of the land or house
above or any losses caused by any other reasons, Midea
Holding shall compensate any loss for these reasons in time
and in full. Midea Holding shall compensate the actual loss
Midea Group suffers from any circumstances above resulting in
penalties subjected to from competent authorities or through
claims from any other third party.

(5) Based on issues of defective house leasing declared in
related files of this merger, Midea Holding shall provide
sufficient compensations for all economic losses incurred by
Midea Group (including its subsidiaries) where the leasehold
relations above become invalid or other disputes occur, which
are caused by rights claims from a third party or by means of
an administrative authority exercising a right and therefore
results in any economic losses due to eviction from rental
houses, or any penalties subjected to by competent
government departments or any recourse from related parties.

(6) Based on the issues of defective land leasing declared in
related files of this merger, when leasehold relations become
invalid caused by defects of land leasing or when other
disputes occur, resulting in any economic losses to Midea
Group (including its subsidiaries) or through any penalties
administered by competent government departments. Likewise
if the lessor cannot compensate for losses caused by such
defective leasing, Midea Holding shall compensate Midea

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                                                     The 2023 Annual Report of Midea Group Co., Ltd.

                      Group for losses caused by such defective land leasing.

                      Midea Holding has further undertaken that where a violation of
                      guarantees and undertakings referred to previously occurs or
                      such guarantees and undertakings are not consistent with the
                      reality and Midea Group has suffered any loss therefrom,
                      Midea Holding shall compensate in cash or make up for Midea
                      Group’s loss upon Midea Group’s notice in writing within 30
                      days when the loss occurs and the loss amount is definite.

Whether
the
undertaki
          Yes
ng is
fulfilled
on time
Specific
reasons
for failing
to fulfill
any
            N/A
undertaki
ng and
plan for
the next
step


1.2 Where any earnings forecast was made for any of the Company’s assets or projects and the Reporting Period is still within the
forecast period, the Company shall explain whether the performance of the asset or project reaches the earnings forecast and why

□Applicable √N/A




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                              The 2023 Annual Report of Midea Group Co., Ltd.




2. Occupation of the Company’s Capital by the Controlling Shareholder or Its
Related Parties for Non-Operating Purposes

□Applicable √N/A

No such cases in the Reporting Period.

3. Illegal Provision of Guarantees for External Parties

□ Applicable √ N/A

No such cases in the Reporting Period.


4. Explanation of the Board of Directors Regarding the Last "Non-standard Audit
Opinion"

□ Applicable √ N/A


5. Explanation of the Board of Directors, the Supervisory Committee and
Independent Directors (If Any) Regarding the "Non-standard Audit Opinion" for the
Reporting Period

□Applicable √N/A


6. Changes in Accounting Policies and Accounting Estimates as Compared to the
Financial Report for the Prior Year, as well as Correction of Material Accounting
Errors

□Applicable √N/A


7. Reason for Changes in Scope of the Consolidated Financial Statements as
Compared to the Financial Report for the Prior Year

√ Applicable □ N/A

The detailed information of major subsidiaries included in the consolidation scope in the current period

is set out in Note 6 to the Financial Statements. Entities newly included in the consolidation scope in

the current period mainly include CLOU Electronics (please refer to Note 5(1) and Note 5(2)(a)). The

detailed information of subsidiaries no longer included in the consolidation scope in the current period

is set out in Note 5(2)(b).



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                                  The 2023 Annual Report of Midea Group Co., Ltd.


8. Engagement and Disengagement of CPA Firm

CPA firm at present
 Name of the domestic CPA firm                             PricewaterhouseCoopers Zhong Tian LLP
 The Company’s payment to the domestic CPA firm           RMB8.925 million
 Consecutive years of the audit service provided by the
                                                           Nine years
 domestic CPA firm
 Names of the certified public accountants from the
                                                           Yao Wenping and Wu Fangfang
 domestic CPA firm
 Consecutive years of the audit service provided by the
                                                           Four years and three years respectively
 certified public accountants from the domestic CPA firm

Whether the CPA firm was changed in the current period

□Yes √No

Engagement of any CPA firm for internal control audit, financial advisor or sponsor

√ Applicable □ N/A

During the year, the Company engaged PricewaterhouseCoopers Zhong Tian LLP as the auditor of the

Company's internal control and financial statements for the year 2023.


9. Possibility of Delisting after Disclosure of this Report

□Applicable √N/A


10. Bankruptcy and Reorganization

□Applicable √N/A

No such cases in the Reporting Period.


11. Material Litigation and Arbitration

□Applicable √N/A

No such cases in the Reporting Period.


12. Punishments and Rectifications

□Applicable √N/A

No such cases in the Reporting Period.




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                                   The 2023 Annual Report of Midea Group Co., Ltd.


13. Credit Conditions of the Company as well as Its Controlling Shareholder and
Actual Controller

□Applicable √N/A


14. Significant Related Transactions

14.1 Continuing related transactions


√Applicable □N/A
                                                        Proporti
                                                          on in                                   Obtaina
                                                            the                                       ble
                                                           total        Approv                    market            Index
                                               Transact
Related         Type of Content                         amount             ed              Mode     price           to the
                                Pricing Transa    ion                              Over                    Disclos
transac Relatio    the s of the                            s of         transac              of    for the         disclo
                                principl ction amount                             approv                     ure
   tion   n     transac transac                         transac         tion line         settlem transac            sed
                                   e     price (RMB’00                           ed line                   date
  party           tion    tion                           tion of        (RMB’0             ent    tion of         inform
                                                   0)
                                                            the            00)                       the             ation
                                                         same                                       same
                                                           kind                                      kind
                                                            (%)
         Controll
         ed by
Orinko family
Advanc membe                                                                                                        www.
                          Procure                                                        Payme
ed       r of     Procure         Market             1,419,68           1,900,0                            29 April cninfo
                          ment of              -                0.55%           No       nt after     -
Plastics Compa ment               price                     0               00                             2023     .com.
                          goods                                                          delivery
Co.,     ny’s                                                                                                      cn
Ltd.     actual
         controll
         er
          Controll
Midea     ed by
                                                                                                                    www.
Real      Compa                                                                          Payme
                           Sale of Market                             720,53                               29 April cninfo
Estate    ny’s    Sale                        -     300,900    0.08%        No          nt after     -
                           goods price                                     0                               2023     .com.
Holding   actual                                                                         delivery
                                                                                                                    cn
Limited   controll
          er
Details of any sales return of a
                                   Zero
large amount
Give the actual situation in the
Reporting Period (if any) where a
                                   The line for continuing related transactions between the Company and the related
forecast had been made for the
                                   parties and their subsidiaries did not exceed the total amount of continuing related
total amounts of continuing
                                   transactions estimated by the Company by type.
related-party transactions by type
to occur in the current period
Reason for any significant
difference between the
                                   N/A
transaction price and the market
reference price (if applicable)




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                              The 2023 Annual Report of Midea Group Co., Ltd.


14.2 Related transactions regarding purchase or sales of assets or equity interests


□Applicable √N/A

No such cases in the Reporting Period.


14.3 Related transactions arising from joint investments in external parties


□Applicable √N/A

No such cases in the Reporting Period.


14.4 Credits and liabilities with related parties


□Applicable √N/A

No such cases in the Reporting Period.


14.5 Transactions with related finance companies


□Applicable √N/A

The Company did not make deposits in, receive loans or credit from and was not involved in any other

finance business with any related finance company.


14.6 Transactions between finance companies controlled by the Company and related parties


□Applicable √N/A

No related parties made deposits in, received loans or credit from or was involved in any other finance

business with any finance company controlled by the Company.


14.7 Other significant related transactions


□Applicable √N/A

No such cases in the Reporting Period.




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                                      The 2023 Annual Report of Midea Group Co., Ltd.


   15. Significant Contracts and Their Execution

   15.1 Trusteeship, contracting and leasing

   15.1.1 Trusteeship


   □Applicable √N/A

   No such cases in the Reporting Period.


   15.1.2 Contracting


   □Applicable √N/A

   No such cases in the Reporting Period.


   15.1.3 Leasing


   □Applicable √N/A

   No such cases in the Reporting Period.


   15.2 Major guarantees


   √Applicable □N/A

                                                                                                            Unit: RMB'000

     Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
                                                                                                                    Guar
                                         Disclosure             Actual
                                                                                                                    antee
                                         date of the          occurrence                               Term
                                                      Line of             Actual                                     for a
                                         guarantee            date (date                 Type of         of   Due
           Guaranteed party                          guarante            guarante                                   relate
                                            line                  of                    guarantee      guara or not
                                                         e               e amount                                      d
                                         announce             agreement                                 ntee
                                                                                                                    party
                                            ment               signing)
                                                                                                                    or not
                                                       No such cases
                                                                           Total actual external
Total external guarantee line approved during the
                                                                         0 guarantee amount during                      0
Reporting Period (A1)
                                                                           the Reporting Period (A2)
                                                                           Total actual external
Total approved external guarantee line at the end of                       guarantee balance at the
                                                                         0                                              0
the Reporting Period (A3)                                                  end of the Reporting
                                                                           Period (A4)
                                 Guarantees provided by the Company for its subsidiaries
                                                                                                                    Guar
                                         Disclosure             Actual
                                                                                                                    antee
                                         date of the          occurrence                               Term
                                                      Line of             Actual                                     for a
                                         guarantee            date (date                 Type of         of   Due
           Guaranteed party                          guarante            guarante                                   relate
                                            line                  of                    guarantee      guara or not
                                                         e               e amount                                      d
                                         announce             agreement                                 ntee
                                                                                                                    party
                                            ment               signing)
                                                                                                                    or not

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                                        The 2023 Annual Report of Midea Group Co., Ltd.


                                                      2,000,00                                          One
Midea Group Finance Co., Ltd.             2023/4/29            2023/1/30            - Joint liability          No   No
                                                             0                                          year
GD Midea Air-Conditioning Equipment                   12,400,0              3,871,27                    One
                                          2023/4/29            2023/1/6              Joint liability           No   No
Co., Ltd.                                                   00                     0                    year
Guangzhou Hualing Refrigerating                       2,400,00                                          One
                                          2023/4/29            2023/1/6       50,380 Joint liability           No   No
Equipment Co., Ltd.                                          0                                          year
Foshan Midea Carrier Air-Conditioning                                                                   One
                                          2023/4/29    350,000 2023/1/6             - Joint liability          No   No
Equipment Co., Ltd.                                                                                     year
GD Midea Group Wuhu Air-                              4,100,00                                          One
                                          2023/4/29                                 - Joint liability          No   No
Conditioning Equipment Co., Ltd.                             0                                          year
Wuhu Maty Air-Conditioning Equipment                                                                    One
                                     2023/4/29         600,000 2023/1/6       58,490 Joint liability           No   No
Co., Ltd.                                                                                               year
Midea Group Wuhan Refrigeration                                                                         One
                                          2023/4/29    550,000                      - Joint liability          No   No
Equipment Co., Ltd.                                                                                     year
Guangdong Midea Precision Molding                                                                       One
                                          2023/4/29     50,000                      - Joint liability          No   No
Technology Co., Ltd.                                                                                    year
Handan Midea Air-Conditioning                                                                           One
                                          2023/4/29    500,000                      - Joint liability          No   No
Equipment Co., Ltd.                                                                                     year
Chongqing Midea Air-Conditioning                                                                        One
                                          2023/4/29    850,000 2023/4/25         650 Joint liability           No   No
Equipment Co., Ltd.                                                                                     year
Midea Group Wuhan Heating &                                                                             One
                                          2023/4/29    150,000                      - Joint liability          No   No
Ventilating Equipment Co., Ltd.                                                                         year
Foshan Welling Washer Motor                                                                             One
                                          2023/4/29    170,000 2023/4/21            - Joint liability          No   No
Manufacturing Co., Ltd.                                                                                 year
Guangdong Welling Motor                               1,070,00                                          One
                                          2023/4/29            2023/1/17          70 Joint liability           No   No
Manufacturing Co., Ltd.                                      0                                          year
Welling (Wuhu) Motor Manufacturing                                                                      One
                                          2023/4/29    130,000                      - Joint liability          No   No
Co., Ltd.                                                                                               year
Huaian Welling Motor Manufacturing                                                                      One
                                          2023/4/29    110,000                      - Joint liability          No   No
Co., Ltd.                                                                                               year
                                                      1,900,00                                          One
Wuhu Welling Motor Sales Co., Ltd.        2023/4/29            2023/2/27            - Joint liability          No   No
                                                             0                                          year
                                                                                                        One
Hainan Welling Motor Sales Co., Ltd.      2023/4/29    500,000                      - Joint liability          No   No
                                                                                                        year
                                                                                                        One
Anhui Welling Auto Parts Co., Ltd.        2023/4/29    150,000                      - Joint liability          No   No
                                                                                                        year
                                                                                                        One
Anqing Welling Auto Parts Co., Ltd.       2023/4/29    200,000                      - Joint liability          No   No
                                                                                                        year
                                                      1,130,00                                          One
Guangdong Meizhi Compressor Limited 2023/4/29                  2023/1/17      12,300 Joint liability           No   No
                                                             0                                          year
Guangdong Meizhi Precision-                                                                             One
                                          2023/4/29    515,000 2023/4/18            - Joint liability          No   No
Manufacturing Co., Ltd.                                                                                 year
                                                                                                        One
Anhui Meizhi Compressor Co., Ltd.         2023/4/29    420,000 2023/1/30            - Joint liability          No   No
                                                                                                        year
Anhui Meizhi Precision Manufacturing                                                                    One
                                          2023/4/29     50,000                      - Joint liability          No   No
Co., Ltd.                                                                                               year
                                                      4,500,00                                          One
Zhejiang Meizhi Compressor Co., Ltd.      2023/4/29            2023/2/23            - Joint liability          No   No
                                                             0                                          year
Guangdong Midea Environmental                                                                           One
                                          2023/4/29     20,000                      - Joint liability          No   No
Technologies Co., Ltd.                                                                                  year
Guangdong Midea Intelligent                                                                             One
                                          2023/4/29    150,000                      - Joint liability          No   No
Technologies Co., Ltd.                                                                                  year
                                                                                                        One
Dorna Technology Co., Ltd.                2023/4/29     50,000                      - Joint liability          No   No
                                                                                                        year
Guangdong Midea Electromechanical         2023/4/29    150,000                      - Joint liability   One    No   No


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                                       The 2023 Annual Report of Midea Group Co., Ltd.


Technology Co., Ltd.                                                                                   year
Guangdong Jiya Precision Machinery                                                                     One
                                         2023/4/29    150,000                      - Joint liability          No   No
Technology Co., Ltd.                                                                                   year
MiSiliconn SemiConductor                                                                               One
                                         2023/4/29     60,000                      - Joint liability          No   No
Technologies Co., Ltd.                                                                                 year
Servotronix Motion Technology                                                                          One
                                         2023/4/29     50,000                      - Joint liability          No   No
Development (Shenzhen) Ltd.                                                                            year
Guangdong Midea Kitchen Appliances                   6,417,97                                          One
                                         2023/4/29            2023/1/4     521,560 Joint liability            No   No
Manufacturing Co., Ltd.                                     0                                          year
Guangdong Witol Vacuum Electronic                                                                      One
                                         2023/4/29     85,000 2023/2/24          20 Joint liability           No   No
Manufacture Co., Ltd.                                                                                  year
Jiangsu Midea Cleaning Appliances                                                                      One
                                         2023/4/29    760,000 2023/1/9             - Joint liability          No   No
Co., Ltd                                                                                               year
Wuhu Midea Kitchen Appliances                        2,000,00                                          One
                                         2023/4/29                                 - Joint liability          No   No
Manufacturing Co., Ltd.                                     0                                          year
GD Midea Heating & Ventilating                       4,370,00                                          One
                                         2023/4/29            2023/1/12    125,680 Joint liability            No   No
Equipment Co., Ltd.                                         0                                          year
Hefei Midea Heating & Ventilating                                                                      One
                                         2023/4/29     45,000                      - Joint liability          No   No
Equipment Co., Ltd.                                                                                    year
Chongqing Midea General Refrigeration                                                                  One
                                      2023/4/29       160,000 2023/2/20      14,260 Joint liability           No   No
Equipment Co., Ltd.                                                                                    year
Meitong Energy Technology                                                                              One
                                         2023/4/29    120,000 2023/9/18         660 Joint liability           No   No
(Chongqing) Co., Ltd.                                                                                  year
Guangdong MeiKong Intelligent                                                                          One
                                         2023/4/29     80,000                      - Joint liability          No   No
Building Co., Ltd.                                                                                     year
Shanghai M-BMS Intelligent                                                                             One
                                         2023/4/29     80,000                      - Joint liability          No   No
Construction Co., Ltd.                                                                                 year
                                                                                                       One
Winone Elevator Company Limited          2023/4/29    790,000 2023/1/12      50,760 Joint liability           No   No
                                                                                                       year
Hubei Midea Building Technology Co.,                                                                   One
                                         2023/4/29     30,000                      - Joint liability          No   No
Ltd.                                                                                                   year
Ningbo Midea United Materials Supply                 5,040,00                                          One
                                         2023/4/29            2023/1/10      69,910 Joint liability           No   No
Co. Ltd.                                                    0                                          year
Guangzhou Kaizhao Commercial and                                                                       One
                                         2023/4/29     20,000                      - Joint liability          No   No
Trading Co., Ltd                                                                                       year
Guangdong Midea Consumer Electric                                                                      One
                                      2023/4/29       200,000 2023/1/9             - Joint liability          No   No
Manufacturing Co., Ltd.                                                                                year
Foshan Shunde Midea Electrical
                                                     1,670,00                                          One
Heating Appliances Manufacturing Co., 2023/4/29               2023/1/9           30 Joint liability           No   No
                                                            0                                          year
Ltd.
GD Midea Environment Appliances Mfg.                 1,400,00                                          One
                                      2023/4/29               2023/1/9       16,930 Joint liability           No   No
Co., Ltd.                                                   0                                          year
Wuhu Midea Life Appliances Mfg Co.,                  2,200,00                                          One
                                         2023/4/29            2023/2/23    609,300 Joint liability            No   No
Ltd.                                                        0                                          year
Foshan Midea Chungho Water                                                                             One
                                         2023/4/29    130,000                      - Joint liability          No   No
Purification Equipment. Co., Ltd.                                                                      year
Foshan Shunde Midea Washing                          2,500,00                                          One
                                         2023/4/29            2023/1/30      81,360 Joint liability           No   No
Appliances Manufacturing Co., Ltd.                          0                                          year
Wuhu Midea Kitchen & Bath Appliances                 2,400,00                                          One
                                     2023/4/29                2023/1/13    387,400 Joint liability            No   No
Mfg. Co., Ltd.                                              0                                          year
Wuhu Midea Smart Kitchen Appliance                                                                     One
                                         2023/4/29     66,000 2023/2/21            - Joint liability          No   No
Manufacturing Co., Ltd.                                                                                year
Foshan Shunde Midea Water Dispenser                                                                    One
                                    2023/4/29         310,000 2023/3/8       10,160 Joint liability           No   No
Manufacturing Company Limited                                                                          year
Hubei Midea Laundry Appliance Co.,
                                    2023/4/29          50,000                      - Joint liability   One    No   No
Ltd.

                                                                212
                                         The 2023 Annual Report of Midea Group Co., Ltd.


                                                                                                         year
Hefei Midea Laundry Appliance Co.,                     1,930,00                                          One
                                           2023/4/29            2023/1/16    490,000 Joint liability            No   No
Ltd.                                                          0                                          year
                                                                                                         One
Wuxi Filin Electronics Co., Ltd.           2023/4/29    200,000                      - Joint liability          No   No
                                                                                                         year
                                                       4,345,00                                          One
Wuxi Little Swan Electric Co., Ltd.        2023/4/29            2023/1/10    146,750 Joint liability            No   No
                                                              0                                          year
                                                       3,000,00                                          One
Hefei Midea Refrigerator Co., Ltd.         2023/4/29            2023/1/13    582,980 Joint liability            No   No
                                                              0                                          year
                                                                                                         One
Hefei Hualing Co., Ltd.                    2023/4/29    700,000 2023/1/30      82,310 Joint liability           No   No
                                                                                                         year
                                                                                                         One
Hubei Midea Refrigerator Co., Ltd.         2023/4/29    520,000 2023/12/25     65,700 Joint liability           No   No
                                                                                                         year
Guangzhou Midea Hualing Refrigerator                                                                     One
                                     2023/4/29          700,000 2023/3/22      92,700 Joint liability           No   No
Co., Ltd.                                                                                                year
Little Swan (Jing Zhou) Sanjin                                                                           One
                                           2023/4/29     50,000                      - Joint liability          No   No
Electronic Appliances Limited                                                                            year
Toshiba Home Appliances                                                                                  One
                                           2023/4/29    100,000                      - Joint liability          No   No
Manufacturing (Nanhai) Co., Ltd                                                                          year
                                                                                                         One
Midea Group E-Commerce Co., Ltd.           2023/4/29    160,000                      - Joint liability          No   No
                                                                                                         year
Guangdong Midea Smart Link                                                                               One
                                           2023/4/29    390,000 2023/1/1             - Joint liability          No   No
Technologies Co., Ltd.                                                                                   year
                                                                                                         One
Reis Robotics (Kunshan) Co., Ltd.          2023/4/29    200,000 2023/1/16      19,380 Joint liability           No   No
                                                                                                         year
                                                                                                         One
KUKA Systems (China) CO., Ltd.             2023/4/29    400,000 2023/1/5     188,920 Joint liability            No   No
                                                                                                         year
KUKA Robotics Manufacturing China                                                                        One
                                           2023/4/29    100,000                      - Joint liability          No   No
Co., Ltd.                                                                                                year
                                                                                                         One
KUKA Robotics Guangdong Co., Ltd           2023/4/29    200,000                      - Joint liability          No   No
                                                                                                         year
                                                                                                         One
KUKA Robotics (Shanghai) Co.,Ltd.          2023/4/29    300,000 2023/1/1        2,050 Joint liability           No   No
                                                                                                         year
                                                                                                         One
Shanghai Swisslog Healthcare Co., Ltd. 2023/4/29         65,000 2023/2/22         820 Joint liability           No   No
                                                                                                         year
Guangdong Swisslog Technology Co.,                                                                       One
                                           2023/4/29     40,000                      - Joint liability          No   No
Ltd.                                                                                                     year
                                                                                                         One
Swisslog (Shanghai) Co., Ltd.              2023/4/29     80,000 2023/1/1             - Joint liability          No   No
                                                                                                         year
Shanghai Swisslog Technology Co.,                                                                        One
                                           2023/4/29    200,000 2023/1/6       67,140 Joint liability           No   No
Ltd.                                                                                                     year
Guangdong Midea Intelligent Robotics                                                                     One
                                           2023/4/29    100,000                      - Joint liability          No   No
Co., Ltd.                                                                                                year
Guangdong Midea-SIIX Electronics Co.,                                                                    One
                                      2023/4/29         100,000 2023/1/1          370 Joint liability           No   No
Ltd.                                                                                                     year
                                                                                                         One
Hefei Midea-SIIX Electronics Co., Ltd.     2023/4/29    150,000                      - Joint liability          No   No
                                                                                                         year
Guangdong Meichuangxi Technology                                                                         One
                                           2023/4/29    500,000                      - Joint liability          No   No
Co., Ltd.                                                                                                year
Guangdong Meicloud Technology Co.,                                                                       One
                                           2023/4/29    120,000                      - Joint liability          No   No
Ltd.                                                                                                     year
                                                                                                         One
Foshan Meicloud Technology Co., Ltd. 2023/4/29           30,000                      - Joint liability          No   No
                                                                                                         year
Guangdong Yueyun Industrial Internet                                                                     One
                                           2023/4/29     10,000                      - Joint liability          No   No
Innovative Technology Co., Ltd.                                                                          year


                                                                  213
                                        The 2023 Annual Report of Midea Group Co., Ltd.


Midea International Corporation                         15,705,0              11,735,5                    One
                                          2023/4/29              2023/1/1              Joint liability           No    No
Company Limited                                               00                    20                    year
Midea Investment Development                            8,100,00              3,187,22                    One
                                          2023/4/29              2023/1/1              Joint liability           No    No
Company Limited                                                0                     0                    year
                                                                                                          One
Welling International (Hong Kong) Ltd     2023/4/29     250,000                       - Joint liability          No    No
                                                                                                          year
Midea International Trading Company                                                                       One
                                          2023/4/29     650,000                       - Joint liability          No    No
Limited                                                                                                   year
Midea Electric Trading (Singapore)                      6,375,00                                          One
                                          2023/4/29                                   - Joint liability          No    No
Co.,Pte. Ltd.                                                  0                                          year
Toshiba Lifestyle Products & Services                   1,154,40                                          One
                                          2023/4/29              2023/1/1     289,590 Joint liability            No    No
Corporation                                                    0                                          year
                                                                                                          One
Toshiba Thailand Co., Ltd                 2023/4/29     152,400                       - Joint liability          No    No
                                                                                                          year
Toshiba Vietnam Consumer Products                                                                         One
                                          2023/4/29      66,190 2023/2/23             - Joint liability          No    No
Co., Ltd                                                                                                  year
Toshiba Lifestyle Electronics Trading                                                                     One
                                          2023/4/29      10,090 2023/1/1           790 Joint liability           No    No
Co., Ltd                                                                                                  year
Toshiba consumer products (Thailand)                                                                      One
                                          2023/4/29     243,310 2023/1/1         7,940 Joint liability           No    No
Co.,ltd                                                                                                   year
                                                                                                          One
Thai Toshiba Electric Industries Co., Ltd 2023/4/29      17,760 2023/1/1        14,960 Joint liability           No    No
                                                                                                          year
                                                                                                          One
Control Component Co., Ltd                2023/4/29      14,310 2023/1/1           250 Joint liability           No    No
                                                                                                          year
                                                                                                          One
Clivet S.p.A.                             2023/4/29     100,000                       - Joint liability          No    No
                                                                                                          year
Midea (Egypt) Kitchen & water heater                                                                      One
                                          2023/4/29      70,000                       - Joint liability          No    No
appliances Co., Ltd                                                                                       year
                                                        25,000,0              23,631,3                    One
Midea Electric Netherlands (I) B.V.       2023/4/29              2023/1/1              Joint liability           No    No
                                                              00                    00                    year
                                                                            Total actual guarantee
Total guarantee line for subsidiaries approved                              amount for subsidiaries
                                                                138,947,430                                       63,628,640
during the Reporting Period (B1)                                            during the Reporting
                                                                            Period (B2)
                                                                            Total actual guarantee
Total approved guarantee line for subsidiaries at the                       balance for subsidiaries
                                                                138,947,430                                       46,487,880
end of the Reporting Period (B3)                                            at the end of the
                                                                            Reporting Period (B4)
                                             Guarantees between subsidiaries
                                                                                                                       Guar
                                          Disclosure             Actual
                                                                                                                       antee
                                          date of the          occurrence                                 Term
                                                       Line of             Actual                                       for a
                                          guarantee            date (date                   Type of         of   Due
           Guaranteed party                           guarante            guarante                                     relate
                                             line                  of                      guarantee      guara or not
                                                          e               e amount                                        d
                                          announce             agreement                                   ntee
                                                                                                                       party
                                             ment               signing)
                                                                                                                       or not
                                                                                                          One
Toshiba Sales & Services Sdn. Bhd.        2023/4/29     202,500 2023/1/5            20 Joint liability           No    No
                                                                                                          year
                                                                                                          One
Toshiba Home Technology Corporation 2023/4/29             7,630 2023/1/1         1,130 Joint liability           No    No
                                                                                                          year
                                                        400,000.                                          One
Midea America Corp.                       2023/4/29                                     Joint liability          No    No
                                                              00                                          year
                                                                                                          One
Midea America (Canada) Corp               2023/4/29      67,500                         Joint liability          No    No
                                                                                                          year
                                                                                                          One
Midea Mexico, S. DE R.L. DE C.V.          2023/4/29     168,750 2023/2/28       31,210 Joint liability           No    No
                                                                                                          year


                                                                   214
                                         The 2023 Annual Report of Midea Group Co., Ltd.


                                                                                                         One
Midea Consumer Appliances DMCC             2023/4/29     33,750                        Joint liability          No    No
                                                                                                         year
Orient Household Appliances                                                                              One
                                           2023/4/29    202,500                        Joint liability          No    No
Ltd.(Orient)                                                                                             year
                                                                                                         One
Midea Italia S.r.l.                        2023/4/29     13,500                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea Europe GmbH                          2023/4/29     67,500                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea Electrics France                     2023/4/29     13,500                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea Home Appliances UK Ltd               2023/4/29     13,500                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea Electrics Egypt                      2023/4/29    175,500                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea Electric Espana S.R.L.               2023/4/29     13,500                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Concepcion Midea Inc.                      2023/4/29     50,000                        Joint liability          No    No
                                                                                                         year
Midea Scott & English Electronics Sdn.                                                                   One
                                       2023/4/29        120,000                        Joint liability          No    No
Bhd                                                                                                      year
                                                                                                         One
Pt. Midea Planet Indonesia                 2023/4/29    102,900                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea (Japan) Co., Ltd.                    2023/4/29     20,250                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
MC Innovation Center Co., Ltd.             2023/4/29     20,250                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea Electronics Australia Co Pty Ltd     2023/4/29     13,500                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Meco Innovations Technology, LLC           2023/4/29      6,700                        Joint liability          No    No
                                                                                                         year
                                                                                                         One
Midea India Private Limited                2023/4/29     33,750                        Joint liability          No    No
                                                                                                         year
GMCC and Welling Appliance                                                                               One
                                           2023/4/29     40,000                        Joint liability          No    No
Component (Thailand) Co., Ltd.                                                                           year
                                                                                                         One
Wuhu Midea Annto Logistics Co., Ltd.       2023/4/29    800,000 2023/1/5       11,300 Joint liability           No    No
                                                                                                         year
                                                                                                         One
Ningbo Annto Logistics Co., Ltd.           2023/4/29    300,000                        Joint liability          No    No
                                                                                                         year
Hainan Annto Logistics Supply Chain                                                                      One
                                           2023/4/29    200,000                        Joint liability          No    No
Management Co., Ltd.                                                                                     year
                                                                            Total actual guarantee
Total line for guarantees between subsidiaries                              amount between
                                                                  3,086,980                                          283,640
approved during the Reporting Period (C1)                                   subsidiaries during the
                                                                            Reporting Period (C2)
                                                                            Total actual guarantee
Total approved line for guarantees between                                  balance between
                                                                  3,086,980                                           43,660
subsidiaries at the end of the Reporting Period (C3)                        subsidiaries at the end of
                                                                            the Reporting Period (C4)
                                     Guarantees provided with the Company’s asset pool
                                                                                                                      Guar
                                           Disclosure             Actual
                                                                                                                      antee
                                           date of the          occurrence                               Term
                                                        Line of             Actual                                     for a
                                           guarantee            date (date                  Type of        of   Due
            Guaranteed party                           guarante            guarante                                   relate
                                              line                  of                     guarantee     guara or not
                                                           e               e amount                                      d
                                           announce             agreement                                 ntee
                                                                                                                      party
                                              ment               signing)
                                                                                                                      or not
Hefei Midea Refrigerator Co., Ltd.         2023/10/31 1,906,00 2023/7/21     1,167,00 Joint liability    One No       No


                                                                  215
                                       The 2023 Annual Report of Midea Group Co., Ltd.


                                                            0                      0                     year
Ningbo Midea United Materials Supply                1,200,00                                             One
                                         2023/10/31          2023/6/29     773,490 Joint liability              No   No
Co. Ltd.                                                   0                                             year
Foshan Shunde Midea Washing                                                                              One
                                         2023/4/29    665,000 2023/4/26    474,830 Joint liability              No   No
Appliances Manufacturing Co., Ltd.                                                                       year
Wuhu Midea Kitchen & Bath Appliances                                                                     One
                                     2023/10/31       635,000 2023/8/1     332,400 Joint liability              No   No
Mfg. Co., Ltd.                                                                                           year
                                                                                                         One
Midea Group E-Commerce Co., Ltd.         2023/4/29     53,000                          Joint liability          No   No
                                                                                                         year
Guangdong Midea Smart Link                                                                               One
                                         2023/4/29    268,000 2023/11/2      40,000 Joint liability             No   No
Technologies Co., Ltd.                                                                                   year
MiSiliconn SemiConductor                                                                                 One
                                         2023/4/29     30,240                          Joint liability          No   No
Technologies Co., Ltd.                                                                                   year
                                                                                                         One
Anqing Welling Auto Parts Co., Ltd.      2023/4/29     30,240                          Joint liability          No   No
                                                                                                         year
Guangdong Jiya Precision Machinery                                                                       One
                                         2023/4/29     75,600                          Joint liability          No   No
Technology Co., Ltd.                                                                                     year
                                                                                                         One
Dorna Technology Co., Ltd.               2023/4/29     30,240                          Joint liability          No   No
                                                                                                         year
                                                      1,088,24                                           One
Zhejiang Meizhi Compressor Co., Ltd.     2023/10/31            2023/4/27   998,000 Joint liability              No   No
                                                             0                                           year
                                                                                                         One
Wuhu Welling Motor Sales Co., Ltd.       2023/4/29    756,020 2023/5/23    750,000 Joint liability              No   No
                                                                                                         year
                                                                                                         One
Anhui Welling Auto Parts Co., Ltd.       2023/4/29     30,240 2023/12/27      5,920 Joint liability             No   No
                                                                                                         year
Wuhu Maty Air-Conditioning Equipment                                                                     One
                                     2023/10/31       418,000                          Joint liability          No   No
Co., Ltd                                                                                                 year
Midea Group Wuhan Refrigeration                       1,000,00                                           One
                                         2023/10/31            2023/9/21   739,160 Joint liability              No   No
Equipment Co.,Ltd.                                           0                                           year
GD Midea Air-Conditioning Equipment                   4,188,00             3,108,62                      One
                                         2023/10/31            2023/2/15            Joint liability             No   No
Co.,Ltd.                                                     0                    0                      year
GD Midea Group Wuhu Air-                              1,000,00                                           One
                                         2023/10/31                                    Joint liability          No   No
Conditioning Equipment Co.,Ltd.                              0                                           year
Guangdong Midea Intelligent Robotics                                                                     One
                                         2023/4/29     30,000                          Joint liability          No   No
Co., Ltd.                                                                                                year
                                                                                                         One
Shanghai Swisslog Healthcare Co., Ltd. 2023/4/29       20,000 2023/8/30      16,750 Joint liability             No   No
                                                                                                         year
                                                                                                         One
Reis Robotics (Kunshan) Co., Ltd.        2023/10/31    50,000 2023/11/24     30,520 Joint liability             No   No
                                                                                                         year
GD Midea Heating & Ventilating                                                                           One
                                      2023/10/31      100,000                          Joint liability          No   No
Equipment Co., Ltd.                                                                                      year
Foshan Shunde Midea Electrical
                                                                                                         One
Heating Appliances Manufacturing Co., 2023/10/31      600,000 2023/11/27   270,230 Joint liability              No   No
                                                                                                         year
Ltd.
GD Midea Environment Appliances Mfg.                                                                     One
                                      2023/10/31      600,000 2023/4/27    295,480 Joint liability              No   No
Co.,Ltd.                                                                                                 year
Wuhu Midea Life Appliances Mfg Co.,                                                                      One
                                         2023/10/31   596,180 2023/10/25   200,000 Joint liability              No   No
Ltd.                                                                                                     year
Guangdong Midea Kitchen Appliances                    1,664,00             1,219,76                      One
                                         2023/10/31            2023/4/12            Joint liability             No   No
Manufacturing Co., Ltd.                                      0                    0                      year
Jiangsu Midea Cleaning Appliances                                                                        One
                                         2023/4/29    454,000 2023/4/25    245,920 Joint liability              No   No
Co., Ltd                                                                                                 year
Wuhu Midea Kitchen Appliances                                                                            One
                                         2023/10/31   151,000 2023/11/20     32,820 Joint liability             No   No
Manufacturing Co., Ltd.                                                                                  year
Hefei Midea Laundry Appliance Co.,                    1,000,00
                                         2023/10/31                                    Joint liability   One    No   No
Ltd.                                                         0

                                                                 216
                                        The 2023 Annual Report of Midea Group Co., Ltd.


                                                                                                          year
                                                      1,361,00                                            One
Wuxi Little Swan Electric Co., Ltd.       2023/4/29            2023/5/15      738,800 Joint liability            No    No
                                                             0                                            year
Hainan Annto Logistics Supply Chain                                                                       One
                                          2023/4/29    150,000                          Joint liability          No    No
Management Co., Ltd.                                                                                      year
                                                                                                          One
Ningbo Annto Logistics Co., Ltd.          2023/4/29    100,000 2023/2/2                 Joint liability          No    No
                                                                                                          year
Shenyang Annto Logistics Technology                                                                       One
                                          2023/4/29     20,000                          Joint liability          No    No
Co., Ltd.                                                                                                 year
Guiyang Annto Logistics Technology                                                                        One
                                          2023/4/29     20,000                          Joint liability          No    No
Co., Ltd.                                                                                                 year
Wuhan Annto Logistics Technology Co.,                                                                     One
                                      2023/4/29         20,000                          Joint liability          No    No
Ltd.                                                                                                      year
                                                                                                          One
Nanjing Meian Logistics Co., Ltd.         2023/4/29     20,000                          Joint liability          No    No
                                                                                                          year
Shanghai Annto Logistics Supply Chain                                                                     One
                                      2023/4/29         20,000 2023/4/25           220 Joint liability           No    No
Technology Co., Ltd.                                                                                      year
Jingzhou Meian Warehousing and                                                                            One
                                          2023/4/29     20,000                          Joint liability          No    No
Transportation Co., Ltd.                                                                                  year
Qihe Annto Logistics Technology Co.,                                                                      One
                                          2023/4/29     20,000                          Joint liability          No    No
Ltd.                                                                                                      year
Hefei Annto Logistics Technology Co.,                                                                     One
                                          2023/4/29     20,000                          Joint liability          No    No
Ltd.                                                                                                      year
Tianjin Annto Logistics Technology Co.,                                                                   One
                                        2023/4/29       20,000                          Joint liability          No    No
Ltd.                                                                                                      year
Xuzhou Annto Logistics Technology                                                                         One
                                          2023/4/29     20,000                          Joint liability          No    No
Co., Ltd.                                                                                                 year
Zhengzhou Annto Logistics Technology                                                                      One
                                     2023/4/29          20,000                          Joint liability          No    No
Co., Ltd.                                                                                                 year
Chongqing Annto Logistics Technology                                                                      One
                                     2023/4/29          20,000                          Joint liability          No    No
Co., Ltd.                                                                                                 year
                                                                                                          One
Wuhu Midea Annto Logistics Co., Ltd.      2023/4/29    160,000 2023/1/13        92,750 Joint liability           No    No
                                                                                                          year
                                                                              Total actual guarantee
Total line for guarantees provided with the                                   amount provided with the
Company’s asset pool approved during the                          20,650,000 Company’s asset pool               15,696,320
Reporting Period (D1)                                                         during the Reporting
                                                                              Period (D2)
                                                                              Total actual guarantee
Total approved line for guarantees provided with the                          balance provided with the
Company’s asset pool at the end of the Reporting                  20,650,000 Company’s asset pool at            11,532,670
Period (D3)                                                                   the end of the Reporting
                                                                              Period (D4)
                         Total guarantee amount (total of the above-mentioned four kinds of guarantees)
                                                                              Total actual guarantee
Total guarantee line approved during the Reporting                            amount during the
                                                                  162,684,410                                     79,608,600
Period (A1+B1+C1+D1)                                                          Reporting Period
                                                                              (A2+B2+C2+D2)
                                                                              Total actual guarantee
Total approved guarantee line at the end of the                               balance at the end of the
                                                                  162,684,410                                     58,064,210
Reporting Period (A3+B3+C3+D3)                                                Reporting Period
                                                                              (A4+B4+C4+D4)
Proportion of the total actual guarantee amount (A4+B4+C4+D4) in net
                                                                                                                      35.65%
assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and
                                                                                                                            0
their related parties (D)
Amount of debt guarantees provided directly or indirectly for entities with a
                                                                                                                  54,267,530
liability-to-asset ratio over 70% (E)


                                                                 217
                                       The 2023 Annual Report of Midea Group Co., Ltd.


Portion of the total guarantee amount in excess of 50% of net assets (F)                              0
Total amount of the three kinds of guarantees above (D+E+F)                                  54,267,530
Joint responsibilities possibly borne for undue guarantees (if any)                                 N/A
Provision of external guarantees in breach of the prescribed procedures (if
                                                                                                   N/A
any)


   15.3 Entrusted cash management

   15.3.1 Entrusted asset management


   □ Applicable √ N/A

   No such cases in the Reporting Period.


   15.3.2 Entrusted loans


   □ Applicable √ N/A

   No such cases in the Reporting Period.


   15.4 Other significant contracts


   □ Applicable √ N/A

   No such cases in the Reporting Period.


   16. Other Significant Events

   √Applicable □ N/A

   The 21st meeting of the 4th Board of Directors and the 13th meeting of the 4th Supervisory Committee

   of the Company reviewed and approved the proposal and related proposals on the issuance of H

   shares and listing on the Hong Kong Stock Exchange. The above proposal was also approved by the

   Company's 2024 third extraordinary general meeting of shareholders.

   The Company has submitted an application for listing to the Hong Kong Stock Exchange (see the

   announcement on the issuance and listing of H shares submitted to the Hong Kong Stock Exchange

   and the publication of application materials on the Juchao Information Network on 25 October 2023

   (Announcement No. 2023-083)), and has submitted the filing materials for this issuance to the China

   Securities Regulatory Commission (CSRC). The relevant materials for this issuance have been filed

   and reviewed by the CSRC and the Hong Kong Stock Exchange, and the Company is actively

   promoting related filing and review matters.


                                                                218
                         The 2023 Annual Report of Midea Group Co., Ltd.


17. Significant Events of Subsidiaries

□ Applicable √ N/A




                                                 219
                                  The 2023 Annual Report of Midea Group Co., Ltd.




         Section VII Changes in Shares and Information about

                                              Shareholders

1. Changes in Shares

1.1 Changes in shares

                                                                                                             Unit: share
                                                   Increase/decrease in the Reporting Period
                                Before                                                                  After
                                                                     (+/-)
                                          Percen                                                                 Percen
                            Shares         tage    New issue         Others        Subtotal         Shares        tage
                                            (%)                                                                    (%)
1. Restricted shares       143,615,016      2.05                    -10,051,926 -10,051,926        133,563,090     1.90
1.1 Shares held by the
state
1.2 Shares held by
state-owned
corporations
1.3 Shares held by
other domestic             141,131,474      2.02                     -9,208,384    -9,208,384      131,923,090     1.88
investors
Among which: Shares
held by domestic             2,363,601      0.03                                               0     2,363,601     0.03
corporations
     Shares held by
                           138,767,873      1.98                     -9,208,384    -9,208,384      129,559,489     1.84
domestic individuals
1.4 Shares held by
                             2,483,542      0.04                       -843,542     -843,542         1,640,000     0.02
foreign investors
Among which: Shares
held by foreign
corporations
       Shares held by
                             2,483,542      0.04                       -843,542     -843,542         1,640,000     0.02
foreign individuals
2. Non-restricted shares 6,853,658,060     97.95     38,490,170          57,705   38,547,875 6,892,205,935        98.10
2.1 RMB common
                          6,853,658,060    97.95     38,490,170          57,705   38,547,875 6,892,205,935        98.10
shares
2.2 Domestically listed
foreign shares
2.3 Overseas listed
foreign shares
2.4 Other
3. Total shares           6,997,273,076 100.00       38,490,170      -9,994,221   28,495,949 7,025,769,025 100.00

Reasons for the changes in shares


                                                            220
                              The 2023 Annual Report of Midea Group Co., Ltd.



√Applicable □N/A


a. The 2,566,396 restricted shares of a total of 172 eligible awardees for the fourth unlocking period of

the first grant under the 2018 Restricted Share Incentive Scheme were unlocked on 3 July 2023,

including 169,750 restricted shares of foreign employees.


b. The 324,167 restricted shares of a total of 18 eligible awardees for the third unlocking period of the

reserved restricted shares under the 2018 Restricted Share Incentive Scheme were unlocked on 7 July

2023.


c. The 4,897,510 restricted shares of a total of 308 eligible awardees (inclusive of 132,250 such shares

of foreign awardees) for the third unlocking period of the 2019 Restricted Share Incentive Scheme were

unlocked on 13 July 2023.


d. The 10,851,082 restricted shares of a total of 394 eligible awardees (inclusive of 557,500 such

shares of foreign awardees) for the third unlocking period of the 2020 Restricted Share Incentive

Scheme were unlocked on 18 July 2023.


e. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being

reassigned or other factors, on 18 April 2023, the Company retired a total of 2,497,917 restricted

shares (inclusive of 72,500 such shares of foreign awardees) under the 2018 Restricted Share

Incentive Scheme, the 2019 Restricted Share Incentive Scheme, the 2020 Restricted Share Incentive

Scheme, the 2021 Restricted Share Incentive Scheme, and the 2022 Restricted Share Incentive

Scheme.


f. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being

reassigned or other factors, on 10 November 2023, the Company retired a total of 7,496,304 restricted

shares (inclusive of 266,542 such shares of foreign awardees) under the 2018 Restricted Share

Incentive Scheme, the 2019 Restricted Share Incentive Scheme, the 2020 Restricted Share Incentive

Scheme, the 2021 Restricted Share Incentive Scheme, and the 2022 Restricted Share Incentive

Scheme.



                                                      221
                                      The 2023 Annual Report of Midea Group Co., Ltd.



  g. In the Reporting Period, the awardees of stock options chose to exercise 38,490,170 shares, which

  have been registered into the Company’s share capital.


  h. In the Reporting Period, locked-up shares held by senior management increased by 256,450 shares.


  Approval of share changes

  □ Applicable √ N/A

  Transfer of share ownership

  □ Applicable √ N/A

  Effects of changes in shares on basic EPS, diluted EPS, net assets per share attributable to common

  shareholders of the Company and other financial indexes over the last year and the last Reporting

  Period

  □Applicable √N/A

  Other contents that the Company considers necessary or is required by the securities regulatory

  authorities to disclose

  □Applicable √N/A


  1.2 Changes in restricted shares


  √ Applicable □ N/A

                                                                                                             Unit: share

                      Opening      Unlocked in Increased in               Closing
    Name of                                                 Repurchased
                      restricted     current      current                restricted Reason for change Date of unlocking
   shareholder                                               and retired
                       shares        period       period                  shares
Awardees of the
first grant of 2018                                                                    Locked up
Restricted Share       2,947,667     2,566,396                   381,271             0 according to the   3 July 2023
Incentive                                                                              Scheme
Scheme
Awardees of
reserved
                                                                                      Locked up
restricted shares
                         715,000       324,167                      70,833    320,000 according to the    7 July 2023
under 2018
                                                                                      Scheme
Restricted Share
Incentive Scheme
Awardees of 2019                                                                       Locked up
Restricted Share      11,301,167     4,897,510                 1,125,782     5,277,875 according to the   13 July 2023
Incentive Scheme                                                                       Scheme
Awardees of 2020                                                                       Locked up
Restricted Share      14,543,917    10,851,082                 3,692,835             0 according to the   18 July 2023
Incentive Scheme                                                                       Scheme


                                                              222
                                   The 2023 Annual Report of Midea Group Co., Ltd.


Awardees of 2021                                                                   Locked up
Restricted Share    8,550,000                               3,401,000    5,149,000 according to the   -
Incentive Scheme                                                                   Scheme
Awardees of 2022                                                                 Locked up
Restricted Share   12,152,500                               1,322,500 10,830,000 according to the     -
Incentive Scheme                                                                 Scheme
Awardees of 2023                                                                   Locked up
Restricted Share            0                 18,325,000                18,325,000 according to the   -
Incentive Scheme                                                                   Scheme
                                                                                   Locked up for
Zhong Zheng            187,114                    20,000                   207,114 senior             -
                                                                                   management
                                                                                   Locked up for
Zhao Wenxin             60,000                    78,000                   138,000 senior             -
                                                                                   management
                                                                                   Locked up for
Zhang Xiaoyi           362,431                    25,000                   387,431 senior             -
                                                                                   management
                                                                                   Locked up for
Wang Jinliang           35,000                    58,000                    93,000 senior             -
                                                                                   management
                                                                                   Locked up for
Li Guolin                   0                     20,000                    20,000 senior             -
                                                                                   management
                                                                                   Locked up for
Jiang Peng             248,950      20,000                                 228,950 senior             -
                                                                                   management
                                                                                   Locked up for
Guan Jinwei            326,250                    50,000                   376,250 senior             -
                                                                                   management
                                                                                   Locked up for
Hu Ziqiang             275,000                    25,000                   300,000 senior             -
                                                                                   management
                                                                                   Locked up for
Yin Bitong          1,582,241                        450                 1,582,691 former senior      -
                                                                                   management
Total              53,287,237    18,659,155   18,601,450    9,994,221 43,235,311            --        --


  2. Issuance and Listing of Securities

  2.1 Securities (excluding preference shares) issued in the Reporting Period


  □Applicable √N/A


  2.2 Changes in total shares of the Company and the shareholder structure, as well as the asset
  and liability structures


  □Applicable √N/A




                                                           223
                                    The 2023 Annual Report of Midea Group Co., Ltd.


2.3 Existing staff-held shares

□Applicable √N/A

3. Shareholders and Actual Controller

3.1 Total number of shareholders and their shareholdings

                                                                                                              Unit: share

Total number of common                              Total number of common shareholders at
shareholders at the period-                 318,676 the prior month-end before the disclosure                   282,456
end                                                 date of the annual report
                         5% or greater common shareholders or top 10 common shareholders
                                 Shareh     Total     Increase/d              Number of            Shares in pledge or
                                                                 Number of
                                  olding  common       ecrease                   non-                    frozen
     Name of          Nature of                                   restricted
                                 percent shares held during the               restricted
    shareholder      shareholder                                  common
                                   age at the period- Reporting                common              Status     Shares
                                                                 shares held
                                   (%)      end         Period               shares held
                   Domestic
Midea Holding Co., non-state-         2,169,178,71                                  2,169,178,71
                               30.87%                               -           0
Ltd.               owned                         3                                             3
                   corporation
Hong Kong
                    Foreign            1,338,736,02          -                      1,338,736,02
Securities Clearing             19.05%                                          0
                    corporation                   3 93,978,553                                 3
Company Limited
                     Domestic
China Securities     non-state-
                                    2.82% 198,145,134               -           0 198,145,134
Finance Co., Ltd.    owned
                     corporation
                     Domestic
Fang Hongbo                         1.67% 116,990,492               - 87,742,869     29,247,623
                     individual
                     State-
Central Huijin Asset
                     owned          1.26%     88,260,460            -           0    88,260,460
Management Ltd.
                     corporation
                     Domestic
Huang Jian                          1.23%     86,170,000      30,000            0    86,170,000
                     individual
Canada Pension
Plan Investment   Foreign                                           -
                                    0.70%     48,842,446                        0    48,842,446
Board- own funds corporation                              13,071,457
(stock exchange)
                     Foreign
Li Jianwei                          0.65%     45,591,545     -673,000           0    45,591,545
                     individual
                     Domestic
Yuan Liqun                          0.52%     36,792,400 -2,422,519             0    36,792,400
                     individual
Industrial and
Commercial Bank
of China Limited-
Huatai-PineBridge Foreign           0.52%     36,737,633 16,692,560             0    36,737,633
CSI 300 Traded     corporation
Open-ended Index
Securities
Investment Fund
Strategic investors or general
corporations becoming top-ten
                                   N/A
common shareholders due to
placing of new shares

                                                              224
                                      The 2023 Annual Report of Midea Group Co., Ltd.


Related-parties or acting-in-
concert parties among the            N/A
shareholders above
Explain if any of the
shareholders above was
involved in entrusting/being         N/A
entrusted with voting rights or
waiving voting rights
Special account for repurchased 118,366,752 shares (or 1.68% of the Company’s total share capital) were held in the
shares among the top 10         special account for repurchased shares of Midea Group Co., Ltd. at the end of the
shareholders                    Reporting Period.
                                        Top 10 non-restricted common shareholders
                                     Number of non-restricted common shares held at              Type of shares
      Name of shareholder
                                                     the period-end                            Type            Shares
                                                                                                              2,169,178,7
Midea Holding Co., Ltd.                                                  2,169,178,713 RMB common stock
                                                                                                                      13
Hong Kong Securities Clearing                                                                                 1,338,736,0
                                                                         1,338,736,023 RMB common stock
Company Limited                                                                                                       23
China Securities Finance Co.,
                                                                          198,145,134 RMB common stock 198,145,134
Ltd.
Central Huijin Asset
                                                                            88,260,460 RMB common stock       88,260,460
Management Ltd.
Huang Jian                                                                  86,170,000 RMB common stock       86,170,000
Canada Pension Plan
Investment Board-own funds                                                 48,842,446 RMB common stock       48,842,446
(stock exchange)
Li Jianwei                                                                  45,591,545 RMB common stock       45,591,545
Yuan Liqun                                                                  36,792,400 RMB common stock       36,792,400
Industrial and Commercial Bank
of China Limited-Huatai-
PineBridge CSI 300 Traded                                                   36,737,633 RMB common stock       36,737,633
Open-ended Index Securities
Investment Fund
Temasek Fullerton Alpha Pte Ltd                                             36,142,685 RMB common stock       36,142,685
Related-parties or acting-in-
concert parties among the top
ten non-restricted common
shareholders and between the         N/A
top ten non-restricted common
shareholders and the top ten
common shareholders

Explanation on the top 10            The Company’s shareholder Yuan Liqun holds 6,002,100 shares in the Company
common shareholders                  through her common securities account and 30,790,300 shares in the Company
participating in securities margin   through her account of collateral securities for margin trading, representing a total
trading                              holding of 36,792,400 shares in the Company.


Top 10 shareholders involved in refinancing shares lending

√Applicable □N/A
                               Top 10 shareholders involved in refinancing shares lending
                  Shares in the common          Shares lent in        Shares in the common              Shares lent in
                   account and credit      refinancing and not yet       account and credit        refinancing and not yet
Full name of      account at the period-   returned at the period-     account at the period-      returned at the period-
shareholder               begin                     begin                       end                          end
                  Total shares    As %     Total shares      As %     Total shares     As %        Total shares      As %


                                                               225
                                   The 2023 Annual Report of Midea Group Co., Ltd.


                                 of total                    of total                  of total                  of total
                                 share                       share                     share                     share
                                 capital                     capital                   capital                   capital
Industrial and
Commercial
Bank of
China Limited
-Huatai-
PineBridge
                   20,045,073     0.29%             10,000   0.00%        36,737,633   0.52%            10,100    0.00%
CSI 300
Traded Open-
ended Index
Securities
Investment
Fund

Changes in shares that the top 10 shareholders lend in refinancing compared with the prior period

√Applicable □N/A
       Changes in shares that the top 10 shareholders lend in refinancing compared with the end of the prior period
                                                                                  Shares in the common account and
                                            Shares lent in refinancing and not      credit account plus shares lent in
                       Newly added to or
                                              yet returned at the period-end     refinancing and not yet returned at the
                        exiting the top 10
    Full name of                                                                                period-end
                       such shareholders
     shareholder                                                       As % of                                   As % of
                         in the Reporting
                                                                         total                                     total
                              Period             Total shares                            Total shares
                                                                        share                                     share
                                                                       capital                                    capital
Industrial and
Commercial Bank of
China Limited-
Huatai-PineBridge      Newly added                          10,100       0.00%                    36,737,633       0.52%
CSI 300 Traded
Open-ended Index
Securities
Investment Fund
Merrill Lynch
                       Exiting                                     0         0%                     9,155,286      0.13%
International


Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the

Company conduct any promissory repurchase during the Reporting Period

□Yes √No


3.2 Controlling shareholder


Nature of the controlling shareholder: Controlled by individual

Type of the controlling shareholder: Corporation
                              Legal
                                        Date of
  Name of controlling    representativ
                                       establishm     Organization code                Main business scope
    shareholder           e / company
                                           ent
                            principal
                                                                       Manufacture and commerce investment;
                                                                       domestic commerce and materials supply
                                        5 August
Midea Holding Co., Ltd. He Xiangjian                914406067429989733 and marketing industry (excluding state-
                                          2002
                                                                       designated monopoly); CP software and
                                                                       hardware development; industrial product

                                                             226
                                   The 2023 Annual Report of Midea Group Co., Ltd.


                                                                          design; information technology consulting
                                                                          services, providing investment consultant
                                                                          and consulting services; installation,
                                                                          maintenance and after-sales service of
                                                                          electric appliances; real estate intermediary
                                                                          service and forwarding agent service.
Shareholdings of the
controlling shareholder
in other controlled or
                        Apart from a direct control over the Company, Midea Holding does not directly control or have
non-controlled listed
                        shares in other listed companies at home or abroad.
companies at home or
abroad during the
Reporting Period

Change of the controlling shareholder during the Reporting Period

□Applicable √N/A


3.3 Actual controller and acting-in-concert parties thereof


Nature of the actual controller: Domestic individual

Type of the actual controller: Individual
                                    Relationship with                        Right of residence in other countries or
  Name of the actual controller                            Nationality
                                  the actual controller                                      regions
                                   Actual controller    The People's
          He Xiangjian                                                                    No
                                        himself       Republic of China
Main occupation and duty         Incumbent board chairman of Midea Holding Co., Ltd.
                                 Midea Group (000333.SZ), Hiconics (300048.SZ), WDM (600055.SH), CLOU
Domestically and overseas listed
                                 Electronics (002121.SZ), Midea Real Estate (3990.HK), KUKA (KU2.DE) (delisted in
companies controlled in the last
                                 2022), Little Swan (A: 000418.SZ; B: 200418) (delisted in 2019), and Welling
10 years
                                 Holding (00382.HK) (delisted in 2018)

Change of the actual controller during the Reporting Period

□Applicable √N/A

Ownership and control relations between the actual controller and the Company

                                                    He Xiangjian

                                            94.55%

                                                                                  0.45%
                                       Midea Holding Co., Ltd.

                                             30.87%


                                              Midea Group Co., Ltd.



The actual controller controls the Company via trust or other ways of asset management

□Applicable √N/A


                                                            227
                                    The 2023 Annual Report of Midea Group Co., Ltd.


3.4 Indicate whether the cumulative shares of the controlling shareholder or the largest
shareholder and their acting-in-concert parties that are in pledge account for 80% or greater of
their shareholdings in the Company


□Applicable √N/A


3.5 Other corporate shareholders with a shareholding percentage above 10%


□Applicable √N/A


3.6 Limits on the Company’s shares held by its controlling shareholder, actual controller,
reorganizer and other commitment subjects


□Applicable √N/A


4. Share Repurchases during the Reporting Period

Progress of any share repurchase

√ Applicable □ N/A
                                                                                                          Shares
                                                                                                       repurchase
                                                                                                           d as a
                Number of           As a                                                               percentage
                                                                                          Number of
  Disclosure     shares to      percentage                                                             of the total
                                                 Amount to     Repurchase                   shares
  date of the       be          of the total                                  Purpose                      target
                                                  be used        period                   repurchase
   scheme       repurchase         share                                                                number of
                                                                                               d
                     d            capital                                                               the equity
                                                                                                         incentive
                                                                                                        scheme (if
                                                                                                            any)
                No more
                                No more
                than
                                than
                71,428,571
                                1.0208%
                shares and                                                   For use in
                                and no less
                no less than                    No more                      equity
                                than
                35,714,285                      than RMB5                    incentive
                                0.5104%
                shares                          billion and    2022.03.10-   and/or
 2022.03.12                     based on                                                  48,558,888        -
                based on                        no less than   2023.03.10    employee
                                the
                the                             RMB2.5                       stock
                                repurchase
                repurchase                      billion                      ownership
                                price ceiling
                price ceiling                                                schemes
                                of
                of
                                RMB70/sha
                RMB70/sha
                                re
                re



Progress of any repurchased share reduction through centralized price bidding

□ Applicable √ N/A




                                                               228
                             The 2023 Annual Report of Midea Group Co., Ltd.




                         Section VIII Preference Shares

□ Applicable √ N/A

No such cases in the Reporting Period.




                                                     229
                                      The 2023 Annual Report of Midea Group Co., Ltd.




                                              Section IX Bonds

√ Applicable □ N/A


1. Enterprise Bonds

□ Applicable √ N/A

No such cases in the Reporting Period.


2. Corporate Bonds

√ Applicable □ N/A


2.1 General information on corporate bonds

                                                                                                     Way of
                                                                                                    principal
                                                                            Outstandi
   Bond                      Bond        Date of                                        Interest   repaymen       Place of
                Abbr.                              Value date    Maturity      ng
   name                      code       issuance                                          rate         t and      trading
                                                                             balance
                                                                                                     interest
                                                                                                    payment
 Midea                                                                                             Interest
 Investmen                                                                                         payable
 t                                                                                                 on a half-
 Developm                                                                                          year
             MIDEAZ                                                                                              The Stock
 ent                   ISIN                                                                        basis, with
             2.88%              2022-02-           2022-02-     2027-02-    USD450                               Exchange
 Company               XS243213                                                         2.88%      the
             02/24/202          16                 24           24          million                              of Hong
 Limited               0453                                                                        principal
             7                                                                                                   Kong
 2.88%                                                                                             repayable
 Secured                                                                                           in full
 Notes                                                                                             upon
 2027                                                                                              maturity
 Investor eligibility arrangements (if
                                       N/A
 any)
 Trading system applicable              N/A
 Risk of termination of listing and
 trading (if any) and                   No such risk
 countermeasures

Overdue bonds

□ Applicable √ N/A




                                                                230
                                    The 2023 Annual Report of Midea Group Co., Ltd.


2.2 Triggering and execution of issuer or investor option clauses and investor protection
clauses


□ Applicable √ N/A


2.3 Intermediary agencies

                                                                      Accountant
                         Intermediary
   Bond name                                Office address              writing    Contact person        Tel.
                            agency
                                                                      signatures
                                             55/F, Cheung
                                            Kong Centre, 2
                       Bank of America
                                            Queen’s Road                 -            Lin Yin      +852 3508 7994
                         Securities
                                            Central, Hong
                                                 Kong
                                               15/F, Two
                                             International
                         Standard
                                           Finance Centre,                -         Chen Junda      +852 3983 0769
                       Chartered Bank
                                            Central, Hong
                                                 Kong
                                           30/F, Two Pacific
                        Crédit Agricole
                                               Place, 88
                        Corporate and                                     -           Fang Lei      +852 2826 7396
                                             Queensway,
                       Investment Bank
                                             Hong Kong
                                             22/F, Bank of
                                            China Tower, 4
                        Bank of China                                     -            He Fan       +65 6412 9815
                                            Battery Road,
                                              Singapore
       Midea
                                             28/F, China
    Investment
                                            Construction
   Development             China
                                           Bank Building, 3
     Company             Construction                                     -          Huang Hai      +852 3918 6312
                                           Connaught Road
  Limited 2.88%          Bank (Asia)
                                            Central, Hong
  Secured Notes
                                                Kong
       2027
                                           10/F, The Center,
                        Development
                                              99 Queen’s
                          Bank of                                         -           Lin Huixin    +852 3668 9137
                                            Road Central,
                         Singapore
                                              Hong Kong
                        Industrial and       28/F, ICBC
                         Commercial        Tower, 3 Garden
                                                                          -          Chen Jiaqi     +852 3510 3522
                        Bank of China       Road, Central,
                            (Asia)           Hong Kong
                                           11/F, Alexandra
                                           House, Chater
                        Linklaters LLP                                    -         Liu Kecheng     +852 2901 5257
                                            Road, Hong
                                                 Kong
                                             27/F, Beijing
                                             Kerry Center
                                            North Tower, 1                                           +86 10 5769
                       Fangda Partners                                    -        Jiang Xueyan
                                           Guanghua Road,                                               5627
                                              Chaoyang
                                           District, Beijing,


                                                                231
                                   The 2023 Annual Report of Midea Group Co., Ltd.


                                                 China
                                             27/F, Jardine
                                               House, 1
                       Clifford Chance
                                              Connaught               -                   Wang Yanlin           +852 2826 2457
                              LLP
                                            Place, Central,
                                              Hong Kong
                                             34/F, Office
                                            Building No. 3,
                         Jingtian &        Huamao Center,                                                        +86 10 5809
                                                                      -                    Ling Tezhi
                       Gongcheng LLP          77 Jianguo                                                            1279
                                           Road, Chaoyang
                                            District, Beijing
                                             11/F, Central
                                              Tower, 28
                       OBC Law Firm         Queen’s Road             -                   Huang Ying            +852 3656 6073
                                            Central, Hong
                                                 Kong
                                             19/F, Man Yee
                                            Building, 68 Des
                                                                                     Guo Shu/Wang
                        Fitch Ratings         Voeux Road              -                                         +852 2263 9608
                                                                                          Sai
                                             Central, Hong
                                                  Kong
                                             3/F and 4/F,
                        S&P Global         Three Exchange
                                                                                      Shen Xi/Xie
                        Ratings Hong          Square, 8                                                         +852 2263 9992
                                                                      -
                                              Connaught                                     Manqi
                        Kong Limited
                                            Place, Central,
                                              Hong Kong

Change of the agencies in the table above during the Reporting Period

□ Yes √ No


2.4 Use of raised funds

                                                                                                                      Unit: RMB
                                                                                                                  In compliance
                                                                                              Rectification
                                                                          Status of the                               with the
                                                                                                 for any
                                                                             special                               purpose, use
                 Total amount                             Amount                             irregularity (if
  Bond name                          Amount used                           account for                            plan and other
                    raised                                unused                               any) in the
                                                                          raised funds                              information
                                                                                             use of raised
                                                                             (if any)                              stated in the
                                                                                                  funds
                                                                                                                    prospectus
                                                                        The raised
 Midea
                                                                      funds account
 Investment
                                                                         has been
 Development
                   USD450                USD450                       established to               No
 Company                                                        0                                                      Yes
                    million               million                       ensure the            irregularities
 Limited 2.88%
                                                                       funds will be
 Secured
                                                                          used as
 Notes 2027
                                                                          stated.

Use of raised funds in construction projects

□ Applicable √ N/A

                                                                232
                             The 2023 Annual Report of Midea Group Co., Ltd.



Indicate whether the raised funds were re-purposed during the Reporting Period

□ Applicable √ N/A


2.5 Changes in credit ratings in the Reporting Period


□ Applicable √ N/A


2.6 Execution and changes with respect to guarantees, repayment plans and other repayment-
ensuring measures in the Reporting Period, as well as the impact on the interests of debt
instrument holders


□ Applicable √ N/A


3. Debt Instruments as a Non-financial Enterprise

□ Applicable √ N/A

No such cases in the Reporting Period.


4. Convertible Corporate Bonds

□ Applicable √ N/A

No such cases in the Reporting Period.


5. Consolidated Loss of the Reporting Period Over 10% of Net Assets as at the End
of Last Year

□ Applicable √ N/A


6. Interest-bearing Liabilities Other than Bonds that Were Overdue at the End of the
 Reporting Period

□ Applicable √ N/A


7. Irregularities during the Reporting Period

□ Yes √ No


8. Key Financial Information of the Company in the Past Two Years

                                                                                 Unit: RMB’000

                                                     233
                             The 2023 Annual Report of Midea Group Co., Ltd.


              Item           31 December 2023                31 December 2022         Change
Current ratio                               111.97%                        126.54%             -14.57%
Debt/asset ratio                             64.14%                         64.05%              0.09%
Quick ratio                                  87.95%                         98.38%             -10.43%
                                   2023                           2022                Change
Net profit before non-
                                          33,122,326                     28,801,052            15.00%
recurring gains and losses
EBITDA/debt ratio                            52.32%                         46.38%              5.94%
Interest cover (times)                         15.34                          20.09            -23.64%
Cash-to-interest cover
                                               30.88                          23.06            33.91%
(times)
EBITDA-to-interest cover
                                               17.96                          23.65            -24.06%
(times)
Loan repayment ratio (%)                    100.00%                        100.00%              0.00%
Interest payment ratio (%)                  100.00%                        100.00%              0.00%




                                                       234
                                        Section X Financial Report

1. Auditor’s report

Type of the auditor’s opinion                      Unqualified opinion
Signing date of the auditor’s report               26 March 2024
Name of the auditor                                 PricewaterhouseCoopers Zhong Tian LLP
No. of the auditor’s report                        PwC ZT Shen Zi (2024) No. 10017
Names of certified public accountants               Yao Wenping and Wu Fangfang




                                                    - 235 -
                                [English Translation for Reference Only]


                                           Auditor’s Report


                                                                      PwC ZT Shen Zi (2024) No. 10017
                                                                                         (Page 1 of 6)

To the Shareholders of Midea Group Co., Ltd.,

Opinion

What we have audited

We have audited the accompanying financial statements of Midea Group Co., Ltd. (hereinafter “the
Group”), which comprise:

        the consolidated and company balance sheets as at 31 December 2023;
        the consolidated and company income statements for the year then ended;
        the consolidated and company cash flow statements for the year then ended;
        the consolidated and company statements of changes in shareholders’ equity for the year then
        ended; and
        notes to the financial statements.

Our opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated and company’s financial position of the Group as at 31 December 2023, and their financial
performance and cash flows for the year then ended in accordance with the requirements of the
Accounting Standards for Business Enterprises (“CASs”).

Basis for Opinion

We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

We are independent of the Group in accordance with the Code of Ethics for Professional Accountants
of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other
ethical responsibilities in accordance with the CICPA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

Key audit matters identified in our audit are summarised as follows:
     Revenue recognition of heating & ventilation and as well as air-conditioner (hereinafter
       referred to as “HVAC”) and consumer appliances
     Impairment assessment of goodwill
                                                                      PwC ZT Shen Zi (2024) No. 10017
                                                                                         (Page 2 of 6)

Key Audit Matters (Cont’d)

Key Audit Matters                                 How our audit addressed the Key Audit Matters

Revenue recognition of HVAC and                   We have performed the following procedures to
consumer appliances                               address this key audit matter:

Refer to Note 2(26)(a) of accounting policy of    1. Interviewed management to understand the
“Revenue - sales of goods” and Note 4(48)          necessary details of sales processes of all
“Operating revenue and cost of sales” to the       distribution channels and evaluate the internal
financial statements.                                control of processes relating to the revenue from
                                                     sales of HVAC and consumer appliances designed
The Group recognises relevant revenue at the         by management and tested the operating
amount of the consideration which the Group          effectiveness of key controls;
is expected to receive when the customer
obtains control over relevant goods or            2. Reviewed household appliance sales contract
services. In 2023, the Group’s consolidated         template entered into by and between the Group
operating revenue was approximately RMB              and the clients from all distribution channels, and
372,037,280,000 and the revenue from                 analysed and evaluated the appropriateness of the
HVAC and consumer appliances was                     Group’s accounting policies on the revenue from
approximately RMB 323,430,039,000.                   sales of HVAC and consumer appliances based on
                                                     our interview with management, understanding of
We identified this as a key audit matter due to      the Group’s business operation and audit
the large size of both domestic and overseas         experience;
customer base and high volume of sales
through various distribution channels, the        3. Performed fluctuation analysis of monthly sales
amount of revenue recognised from HVAC               and gross margin by product;
and consumer appliances is material to the
financial    statements,     completing    the    4. Reviewed the consistency between book records of
necessary audit procedures required our              product sales revenue and supporting documents
focuses and substantial audit resources.             relevant to revenue recognition on a sample basis,
                                                     including sales contracts, orders, rebate agreement,
                                                     sales invoices, shipping orders, acknowledgement
                                                     of goods receipts signed by customers and billing
                                                     agreements with customers;

                                                  5. Validated the revenue from sales of products by
                                                     external confirmation on a sampling basis;

                                                  6. Evaluated whether or not the sales of products
                                                     occurred near year end was recorded in the proper
                                                     period by reconciling the book records of product
                                                     sales revenue to the supporting documents which
                                                     include records of revenue from sales of products,
                                                     acknowledgement of goods receipts signed by
                                                     customers, billing agreements with customers or
                                                     other supporting documents.

                                                  Based on the work performed, the Group’s revenue
                                                  recognition of HVAC and consumer appliances were
                                                  supported by the available evidence.




                                                   -2-
                                                                        PwC ZT Shen Zi (2024) No. 10017
                                                                                           (Page 3 of 6)

Key Audit Matters (Cont’d)

Key Audit Matters                                   How our audit addressed the Key Audit Matters

Impairment assessment of goodwill                   We have performed the following procedures to
                                                    address this key audit matter:
Refer to Note 2(19) of accounting policy of
“Impairment of long-term assets”, Note            1. Understood the internal controls and evaluation
2(31)(i) “Critical accounting estimates and           process relating to goodwill impairment
judgements - Provision for impairment of               assessment, and assessed the inherent risks of
goodwill” and Note 4(21) “Goodwill” to the          material misstatement by considering the degree of
financial statements.                                  estimation uncertainty and the level of other
                                                       inherent risk factors, such as complexity,
As at 31 December 2023, the carrying amount            subjectivity, changes and susceptibility to
of goodwill of the Group amounted to                   management’s bias and fraud;
approximately          RMB30,858,237,000,
including goodwill of RMB22,364,486,000             2. Evaluated and tested the operating effectiveness of
and RMB2,338,037,000 arising from                      key controls relevant to the goodwill impairment
business      acquisition     of      KUKA             assessment, including review and approval of key
Aktiengesellschaft and its subsidiaries                assumptions applied and internal control over
(“KUKA Group”) and Toshiba Lifestyle                 calculating recoverable amounts of the cash
Products & Services Corporation (“TLSC”),            generating unit and cash generating units;
respectively.
                                                    3. Assessed the reasonableness of the identification of
Management         performs      the    goodwill       the cash generating unit and cash generating units;
impairment assessment in accordance with
the accounting policy stated in Note 2(19) to       4. Compared the historical actual results to prior year
the financial statements. The recoverable              budgets and forecasts to assess whether there are
amount of the goodwill is determined based             management      bias   in    the    process     and
on fair value less costs of disposal or value-in-      reasonableness;
use calculations (whichever is the higher).
The assessment result indicated that the            5. Evaluated the key assumptions used in the
recoverable amount of the cash generating              impairment assessment, including forecast period
unit and cash generating units, to which the           revenue annual growth rate, gross profit margin,
goodwill was allocated, exceeded its carrying          perpetual annual growth rate and pre-tax discount
value and therefore no impairment was                  rate by considering the Company’s historical
recorded. The recoverable amount of cash               operating performance, future operation plan and
generating unit and cash generating units was          market developments;
determined based on value-in-use using cash
flow projections. The key assumptions used          6. Tested the mathematical accuracy of the calculation
in the goodwill impairment assessment                  process of the impairment assessment;
included forecast period revenue annual
growth rate, gross profit margin, perpetual         7. Evaluated the appropriateness of the goodwill
annual growth rate and pre-tax discount rate.          impairment assessment model and pre-tax
                                                       discount rate by involving our internal valuation
We identified this as a key audit matter due to        experts.
the significance of the goodwill balance
arising from the business acquisition of            Based on the work performed, the management’s
KUKA Group and TLSC, and the significant            judgements as adopted in the goodwill impairment
accounting estimates and judgements in key          assessment of KUKA Group and TLSC were supported
assumptions used in the impairment                  by the available evidence.
assessment.




                                                     -3-
                                                                      PwC ZT Shen Zi (2024) No. 10017
                                                                                         (Page 4 of 6)

Other Information

Management of the Group is responsible for the other information. The other information comprises
all of the information included in 2023 annual report of the Group other than the financial statements
and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial
Statements

Management of the Group is responsible for the preparation and fair presentation of these financial
statements in accordance with the CASs, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.

In preparing these financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.




                                                  -4-
                                                                      PwC ZT Shen Zi (2024) No. 10017
                                                                                         (Page 5 of 6)

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether these financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that
an audit conducted in accordance with CSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.

As part of an audit in accordance with CSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:

        Identify and assess the risks of material misstatement of the financial statements, whether due
        to fraud or error, design and perform audit procedures responsive to those risks, and obtain
        audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
        not detecting a material misstatement resulting from fraud is higher than for one resulting from
        error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
        the override of internal control.

        Obtain an understanding of internal control relevant to the audit in order to design audit
        procedures that are appropriate in the circumstances.

        Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
        estimates and related disclosures made by management.

        Conclude on the appropriateness of management’s use of the going concern basis of accounting
        and, based on the audit evidence obtained, whether a material uncertainty exists related to
        events or conditions that may cast significant doubt on the Group’s ability to continue as a
        going concern. If we conclude that a material uncertainty exists, we are required to draw
        attention in our auditor’s report to the related disclosures in these financial statements or, if
        such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
        evidence obtained up to the date of our auditor’s report. However, future events or conditions
        may cause the Group to cease to continue as a going concern.

        Evaluate the overall presentation, (including the disclosures), structure and content of the
        financial statements, and whether the financial statements represent the underlying
        transactions and events in a manner that achieves fair presentation.

        Obtain sufficient appropriate audit evidence regarding the financial information of the entities
        or business activities within the Group to express an opinion on the financial statements. We
        are responsible for the direction, supervision and performance of the group audit. We remain
        solely responsible for our audit opinion.




                                                   -5-
                                                                      PwC ZT Shen Zi (2024) No. 10017
                                                                                         (Page 6 of 6)

Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.




PricewaterhouseCoopers Zhong Tian LLP               Signing CPA
                                                                            —————————
                                                                                 Yao Wenping
                                                                             (Engagement Partner)


Shanghai, the People’s Republic of China           Signing CPA
26 March 2024                                                               —————————
                                                                                  Wu Fangfang




                                                   -6-
MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

                                               31 December 31 December 31 December 31 December
           ASSETS                    Note              2023         2022      2023        2022
                                               Consolidated Consolidated  Company     Company

Current assets
   Cash at bank and on
      hand                     4(1)                81,673,846    55,270,099    30,260,602    28,492,401
   Financial assets held
      for trading              4(2)                 1,790,588     3,284,593      299,001       274,120
   Derivative financial
      assets                                        1,278,161       665,484             -             -
   Notes receivable            4(3)                 5,521,960     4,758,129             -             -
   Accounts receivable         4(4)                32,884,739    28,237,973             -             -
   Receivables financing       4(6)                13,330,008    13,526,540             -             -
   Advances to suppliers       4(7)                 3,316,194     4,367,211        81,244        34,724
   Contract assets             4(8)                 4,045,925     4,498,956             -             -
   Loan receivables            4(9)                14,296,958    14,138,756             -             -
   Other receivables       4(5), 18(1)              2,181,878     2,211,177    19,614,359    26,175,101
   Inventories                4(10)                47,339,255    46,044,897             -             -
   Current portion of non-
      current assets          4(11)               10,760,577     37,553,078     9,363,826    33,168,421
   Other current assets       4(12)               62,900,891     46,542,378    43,712,760    33,476,601
Total current assets                             281,320,980    261,099,271   103,331,792   121,621,368

Non-current assets
   Other debt investments    4(13)       6,319,047               11,094,259     3,334,059     7,215,301
   Long-term receivables     4(14)         250,519                  614,598             -             -
   Loan receivables           4(9)         975,272                  693,294             -             -
   Long-term equity
       investments        4(15), 18(2)   4,976,109                5,188,817    75,957,844    73,103,569
   Investments in other
       equity instruments                   37,874                  41,359              -             -
   Other non-current
       financial assets      4(16)       7,769,938               10,625,244      285,170       347,698
   Investment properties                 1,293,629                  809,936      393,988       386,435
   Property, plant and
       equipment             4(17)      30,937,963               26,082,992     1,300,998     1,223,553
   Construction in
       progress              4(18)       4,681,220                3,843,777      749,934       504,757
   Right-of-use assets       4(19)       3,048,785                2,339,878        1,683         8,040
   Intangible assets         4(20)      18,457,736               16,908,915      583,714       653,320
   Goodwill                  4(21)      30,858,237               28,548,653            -             -
   Long-term prepaid
       expenses              4(22)       1,736,199                1,579,899       72,745        85,109
   Deferred tax assets       4(23)      12,771,150               10,244,296      289,426       327,251
   Other non-current
       assets                4(24)      80,603,526               42,840,079    71,132,070    35,423,939
Total non-current assets               204,717,204              161,455,996   154,101,631   119,278,972

TOTAL ASSETS                                     486,038,184    422,555,267   257,433,423   240,900,340




                                                          -1-
MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY BALANCE SHEETS (CONT’D)
AS AT 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

   LIABILITIES AND         31 December 31 December                           31 December 31 December
SHAREHOLDERS’ EQUITY Note         2023         2022                                2023        2022
                           Consolidated Consolidated                            Company     Company
Current liabilities
   Short-term borrowings            4(27)        8,819,176      5,169,480        400,000                -
   Customer deposits and
      deposits from banks
      and other financial
      institutions                                   88,960       77,469                -               -
   Financial liabilities held
      for trading                   4(28)        1,346,674      1,580,771               -               -
   Derivative financial
      liabilities                                 257,668         234,606               -               -
   Notes payable                    4(29)      21,707,608      25,572,421               -               -
   Accounts payable                 4(30)      72,530,465      64,233,225               -               -
   Contract liabilities             4(31)      41,765,475      27,960,038               -               -
   Employee benefits
      payable                       4(32)        9,076,027      7,152,217         169,349        173,824
   Taxes payable                    4(33)        5,455,102      4,955,335         411,715        718,181
   Other payables                   4(34)        4,442,928      4,322,025     170,693,950    159,953,351
   Current portion of non-
      current liabilities           4(35)      14,457,710       7,240,626       6,621,910      5,896,701
   Other current liabilities        4(36)      71,297,928      57,843,528         147,552         77,066
Total current liabilities                     251,245,721     206,341,741     178,444,476    166,819,123

Non-current liabilities
   Long-term borrowings             4(37)      46,138,736      50,685,948      16,600,000     15,619,900
   Debentures payable               4(38)       3,217,969       3,163,616               -              -
   Lease liabilities                4(39)       2,047,319       1,507,480               -          2,350
   Provisions                                     782,539         394,977               -              -
   Deferred income                  4(40)       1,734,932       1,721,092         157,917        152,548
   Long-term employee
        benefits payable            4(41)        1,433,874      1,488,456               -               -
   Deferred tax liabilities         4(23)        5,098,280      4,647,673               -               -
   Other non-current
        liabilities                                  39,165      680,482                -               -
Total non-current
liabilities                                    60,492,814      64,289,724      16,757,917     15,774,798

Total liabilities                             311,738,535     270,631,465     195,202,393    182,593,921

Shareholders’ equity
   Share capital                    4(42)       7,025,769       6,997,273       7,025,769      6,997,273
   Capital surplus                  4(44)      21,243,156      19,693,139      29,479,180     27,826,208
   Less: Treasury stock             4(43)     (12,871,738)    (14,933,944)    (12,871,738)   (14,933,944)
   Other comprehensive
      income                        4(45)        (164,202)        108,289          (6,639)        (5,679)
   General risk reserve                           642,525         671,999                -              -
   Special reserve                                 16,040          16,350                -              -
   Surplus reserve                  4(46)      10,702,928      10,702,928      10,702,928     10,702,928
   Undistributed profits            4(47)     136,284,347     119,679,202      27,901,530     27,719,633
   Total equity attributable to
      shareholders of the
      Company                                 162,878,825     142,935,236      62,231,030     58,306,419
   Minority interests                          11,420,824       8,988,566               -              -
Total shareholders’ equity                   174,299,649     151,923,802      62,231,030     58,306,419

TOTAL LIABILITIES AND
  SHAREHOLDERS’
  EQUITY                                      486,038,184     422,555,267     257,433,423    240,900,340

The accompanying notes form an integral part of these financial statements.

Legal representative:           Principal in charge of accounting:     Head of accounting department:
                                                      -2-
MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

               Item                      Note                2023             2022       2023          2022
                                                     Consolidated     Consolidated    Company       Company

Total revenue                                         373,709,804      345,708,706     1,028,572     1,385,528
   Including: Operating revenue       4(48), 18(3)    372,037,280      343,917,531     1,028,572     1,385,528
               Interest income           4(49)          1,671,908        1,790,454             -             -
               Fee and commission
                  income                                       616             721             -             -
   Less: Cost of sales                   4(48)       (273, 481,373)   (260,538,701)      (40,060)      (42,071)
          Interest costs                 4(49)             (31,660)        (49,461)            -             -
          Fee and commission
              expenses                                      (3,572)         (7,681)            -             -
          Taxes and surcharges           4(50)          (1,816,502)     (1,565,884)      (41,009)      (32,814)
          Selling and distribution
              expenses                   4(51)        (34,880,875)     (28,716,121)            -             -
          General and
              administrative
              expenses                   4(52)        (13, 476,908)    (11,582,664)   (1,465,397)   (1,125,438)
          Research and
              development
              expenses                   4(53)        (14,583,311)     (12,618,506)            -             -
          Financial income               4(54)          3, 261,656       3,387,491     1,864,380     2,204,154
          Including: Interest
                        expenses                          2,808,104      1,830,915     2,994,928     2,645,223
                      Interest
                        income                            6,951,446      5,837,713     4,870,697     4,859,955
   Add: Other income                     4(60)            2,082,382      1,896,113        37,934        26,642
          Investment income           4(58), 18(4)          463,561        208,054    15,968,890    10,917,956
          Including: share of profit
                        of associates
                        and joint
                        ventures                           680,759         608,278      157,844       260,651
          (Losses)/Gains on
              changes in fair value      4(57)            (226,492)       (251,171)       78,018      (512,502)
          (Losses on)/Reversal of
              credit impairment          4(56)            (198,624)       (513,686)        1,175         9,884
          Asset impairment losses        4(55)            (439,777)       (533,363)            -             -
          (Losses)/Gains on
              disposal of assets         4(59)             (60,868)        (59,854)        1,269          (276)

Operating profit                                       40,317,441       34,763,272    17,433,772    12,831,063
  Add: Non-operating income                               453,397          395,406        57,573        34,465
  Less: Non-operating expenses                           (493,675)        (202,747)         (553)      (10,490)

Total profit                                           40,277,163       34,955,931    17,490,792    12,855,038
   Less: Income tax expenses             4(61)         (6,531,811)      (5,145,700)     (164,631)     (324,773)

Net profit                                             33,745,352       29,810,231    17,326,161    12,530,265

   (1) Classified by continuity of
         operations
         Net profit from continuing
            operations                                 33,745,352       29,810,231    17,326,161    12,530,265
         Net profit from
            discontinued
            operations                                            -              -             -             -

   (2) Classified by ownership of
         the equity
         Attributable to
            shareholders of the
            Company                                    33,719,935       29,553,507    17,326,161    12,530,265
         Minority interests                                25,417          256,724             -             -




                                                            -3-
MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONT'D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

                   Item                      Note            2023             2022         2023              2022
                                                     Consolidated     Consolidated      Company           Company

Other comprehensive income, net of
  tax                                                     (249,457)      1,892,922           (960)             1,616
  Other comprehensive income
    attributable to shareholders of the
    Company, net of tax                                   (272,491)      1,865,886           (960)             1,616
    (1) Other comprehensive income
            items which will not be
            reclassified subsequently to
            profit or loss                                 (85,764)        207,457                -                 -
         1) Changes arising from
               remeasurement of defined
               benefit plan                                (87,280)        208,349                -                 -
         2) Changes in fair value of
               investments in other equity
               instruments                                   1,516           (892)                -                 -
    (2) Other comprehensive income
            items which will be
            reclassified subsequently to
            profit or loss                                (186,727)      1,658,429           (960)             1,616
         1) Other comprehensive income
               that will be transferred
               subsequently to profit or
               loss under the equity
               method                                         7,751         17,391             (960)           1,616
         2) Cash flow hedging reserve                     (135,204)        395,617                -                -
         3) Differences on translation of
               foreign currency financial
               statements                                  (84,307)      1,175,539                -                 -
         4) Others                                           25,033         69,882                -                 -
  Other comprehensive income
    attributable to minority
    shareholders, net of tax                                23,034          27,036                -                 -

Total comprehensive income                             33,495,895       31,703,153     17,325,201        12,531,881

   Attributable to shareholders of the
     Company                                           33,447,444       31,419,393     17,325,201        12,531,881
   Minority interests                                      48,451          283,760              -                 -

Earnings per share
  Basic earnings per share (in RMB
    Yuan)                                    4(62)            4.93            4.34   Not applicable    Not applicable
  Diluted earnings per share (in RMB
    Yuan)                                    4(62)            4.92            4.33   Not applicable    Not applicable

The accompanying notes form an integral part of these financial statements.

Legal representative:             Principal in charge of accounting:       Head of accounting department:




                                                           -4-
MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

                                                                                2023             2022          2023           2022
                           Item                               Note      Consolidated     Consolidated       Company        Company

1. Cash flows from operating activities
   Cash received from sales of goods or rendering of
     services                                                            356,076,005      316,997,825                -              -
   Net decrease in loan receivables                                                -        6,660,035                -              -
   Net increase in customer deposits and deposits from
     banks and other financial institutions                                   11,491                -               -              -
   Net decrease in deposits with the Central Bank                                  -           91,309               -              -
   Cash received from interest, fee and commission                         1,691,771        1,788,062               -              -
   Refund of taxes and surcharges                                          7,332,726       10,934,799               -              -
   Cash received relating to other operating activities      4(63)(a)      7,721,752        7,295,957      19,249,193     18,834,797
     Sub-total of cash inflows                                           372,833,745      343,767,987      19,249,193     18,834,797
   Cash paid for goods and services                                     (216,446,770)    (221,345,706)              -              -
   Net increase in loan receivables                                         (333,557)               -               -              -
   Net decrease in customer deposits and deposits from
     banks and other financial institutions                                        -             (711)              -              -
   Net increase in deposits with the Central Bank                            (86,661)               -               -              -
   Net decrease in borrowings from the Central Bank                                -         (178,878)              -              -
   Cash paid for interest, fee and commission                                (35,232)         (57,141)              -              -
   Cash paid to and on behalf of employees                               (38,605,604)     (35,674,963)       (436,207)      (549,897)
   Payments of taxes and surcharges                                      (18,488,931)     (17,387,253)       (545,928)      (379,098)
   Cash paid relating to other operating activities          4(63)(b)    (40,934,379)     (34,465,507)       (750,616)    (2,959,364)
     Sub-total of cash outflows                                         (314,931,134)    (309,110,159)     (1,732,751)    (3,888,359)
   Net cash flows from operating activities                  4(63)(h)     57,902,611       34,657,828      17,516,442     14,946,438

2. Cash flows used in investing activities
   Cash received from disposal of investments               4(63)(c)     116,074,693       98,564,716      81,562,000     58,600,000
   Cash received from returns on investments                               5,336,233        3,800,095      20,097,443     13,491,657
   Net cash received from disposal of property, plant and
     equipment, intangible assets and other long-term
     assets                                                                  391,359          239,226            5,281            53
   Net cash received from disposal of subsidiaries and
     other business units                                                     27,134           14,829          18,000        422,024
   Cash received relating to other investing activities                      373,816          335,082               -              -
     Sub-total of cash inflows                                           122,203,235      102,953,948     101,682,724     72,513,734
   Cash paid to acquire property, plant and equipment,
     intangible assets and other long-term assets                         (6,314,051)       (7,352,115)       (872,027)      (518,305)
   Cash paid to acquire investments                         4(63)(d)    (146,998,174)    (108,149,195)    (101,234,356)   (73,645,090)
   Net cash paid to acquire subsidiaries and other business
     units                                                                      (712)        (962,148)               -              -
   Cash paid relating to other investing activities                         (110,153)               -                -              -
     Sub-total of cash outflows                                         (153,423,090)    (116,463,458)    (102,106,383)   (74,163,395)
   Net cash flows used in investing activities                           (31,219,855)     (13,509,510)        (423,659)    (1,649,661)

3. Cash flows used in financing activities
   Cash received from capital contributions                                2,357,841        1,348,283       2,312,260      1,321,468
   Including: Cash received from capital contributions by
      minority shareholders of subsidiaries                                   45,581           26,815               -              -
   Cash received from borrowings                                          33,888,703       46,476,320       8,000,000      9,000,000
   Cash received from issuance of debentures                                       -        2,845,196               -              -
   Cash received from issuance of short-term financing
      bonds                                                                         -       3,999,500               -      3,999,500
   Cash received relating to other financing activities                       865,591          70,163         312,438              -
      Sub-total of cash inflows                                            37,112,135      54,739,462      10,624,698     14,320,968
   Cash repayments of borrowings                                          (33,114,644)    (40,920,787)     (5,890,000)       (90,000)
   Cash payments for redemption of short-term financing
      bonds                                                                         -      (4,000,000)               -     (4,000,000)
   Cash payments for interest expenses and distribution of
      dividends or profits                                               (19,643,828)     (13,740,037)     (20,155,665)   (14,753,066)
   Including: Cash payments for dividends or profit to
      minority shareholders of subsidiaries                                 (333,316)        (279,216)               -              -
   Cash payments relating to other financing activities      4(63)(e)     (2,263,876)      (6,933,519)        (292,887)    (2,827,492)
      Sub-total of cash outflows                                         (55,022,348)     (65,594,343)     (26,338,552)   (21,670,558)
   Net cash flows used in financing activities                           (17,910,213)     (10,854,881)     (15,713,854)    (7,349,590)

4. Effect of foreign exchange rate changes on cash
      and cash equivalents                                                    (17,251)        288,492                -              -

5. Net increase in cash and cash equivalents                 4(63)(h)      8,755,292       10,581,929       1,378,929      5,947,187
   Add: Cash and cash equivalents at the beginning of the
           year                                                           51,131,968       40,550,039      27,904,229     21,957,042

6. Cash and cash equivalents at the end of the year          4(63)(i)     59,887,260       51,131,968      29,283,158     27,904,229


The accompanying notes form an integral part of these financial statements.

Legal representative:                Principal in charge of accounting:                  Head of accounting department:
                                                          -5-
MIDEA GROUP CO., LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

             Item                                                      Attributable to shareholders of the Company
                                                                       Less:            Other                                                                             Total
                                       Share          Capital       Treasury comprehensiv       General risk     Special     Surplus Undistributed       Minority shareholders’
                                      capital        surplus           stock        e income         reserve     reserve     reserve        profits     interests       equity
                                   (Note 4(42))    (Note 4(44))    (Note 4(43))    (Note 4(45))                            (Note 4(46)) (Note 4(47))

Balance at 1 January 2022           6,986,564     20,516,930      (14,044,550)    (1,758,948)      719,922       15,542     9,449,901   102,982,763    9,956,952     134,825,076

Movements for the year
   ended 31 December 2022
Total comprehensive income
  Net profit                                 -              -               -              -              -            -            -    29,553,507      256,724      29,810,231
  Other comprehensive
      income, net of tax                     -              -               -     1,865,886               -            -            -             -       27,036       1,892,922
Total comprehensive income                   -              -               -     1,865,886               -            -            -    29,553,507      283,760      31,703,153
Capital contribution and
   withdrawal by shareholders
  Ordinary shares invested by
      shareholders                     18,602       1,123,649               -              -              -            -            -             -       26,815       1,169,066
  Business combinations                     -               -               -              -              -            -            -             -       89,520          89,520
  Share-based payment
      included in shareholders’
      equity                                -         765,914              -               -              -            -            -             -        45,583        811,497
  Others                               (7,893)     (1,209,146)      (889,394)              -              -            -            -             -    (1,131,616)    (3,238,049)
Profit distribution
  Reversal of general risk
      reserve                                -              -               -              -        (47,923)           -            -       47,923              -              -
  Appropriation to surplus
      reserve                                -              -               -              -              -            -    1,253,027    (1,253,027)            -              -
  Profit distribution to
      shareholders                           -              -               -              -              -            -            -   (11,652,025)    (291,638)    (11,943,663)
Special reserve
  Appropriation in the current
      period                                -              -                -             -              -        3,313             -             -          828           4,141
  Use in the current period                 -              -                -             -              -       (2,505)            -             -         (626)         (3,131)
Others                                      -     (1,504,208)               -         1,351              -            -             -            61        8,988      (1,493,808)
Balance at 31 December 2022         6,997,273     19,693,139      (14,933,944)      108,289        671,999       16,350    10,702,928   119,679,202    8,988,566     151,923,802




                                                                                          -6-
MIDEA GROUP CO., LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

             Item                                                      Attributable to shareholders of the Company
                                                                       Less:            Other                                                                              Total
                                       Share          Capital       Treasury comprehensiv       General risk     Special      Surplus Undistributed       Minority shareholders’
                                      capital        surplus           stock        e income         reserve     reserve      reserve        profits     interests       equity
                                   (Note 4(42))    (Note 4(44))    (Note 4(43))    (Note 4(45))                             (Note 4(46)) (Note 4(47))

Balance at 1 January 2023           6,997,273     19,693,139      (14,933,944)      108,289        671,999       16,350     10,702,928   119,679,202     8,988,566    151,923,802

Movements for the year
   ended 31 December 2023
Total comprehensive income
  Net profit                                 -              -               -              -              -            -             -    33,719,935       25,417      33,745,352
  Other comprehensive
      income, net of tax                     -              -               -      (272,491)              -            -             -             -       23,034        (249,457)
Total comprehensive income                   -              -               -      (272,491)              -            -             -    33,719,935       48,451      33,495,895
Capital contribution and
   withdrawal by shareholders
  Ordinary shares invested by
      shareholders                     38,490       2,317,783               -              -              -            -             -             -        45,581      2,401,854
  Business combinations                     -               -               -              -              -            -             -             -     2,563,374      2,563,374
  Share-based payment
      included in shareholders’
      equity                                -         671,456              -               -              -            -             -             -       37,361        708,817
  Others                               (9,994)     (1,373,096)     2,062,206               -              -            -             -             -       12,666        691,782
Profit distribution
  Appropriation to general risk
      reserve                                -              -               -              -        19,678             -             -       (19,678)            -              -
  Reversal of general risk
      reserve                                -              -               -              -        (49,152)           -             -       49,152              -              -
  Profit distribution to
      shareholders                           -              -               -              -              -            -             -   (17,144,264)     (349,745)   (17,494,009)
Special reserve
  Appropriation in the current
      period                                -              -                -             -              -        7,227              -             -        11,500         18,727
  Use in the current period                 -              -                -             -              -       (7,537)             -             -       (11,464)       (19,001)
Others                                      -        (66,126)               -             -              -            -              -             -        74,534          8,408
Balance at 31 December 2023         7,025,769     21,243,156      (12,871,738)     (164,202)       642,525       16,040     10,702,928   136,284,347    11,420,824    174,299,649

The accompanying notes form an integral part of these financial statements.

Legal representative:                                      Principal in charge of accounting:                              Head of accounting department:



                                                                                         -7-
MIDEA GROUP CO., LTD.

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

                                                                                                                  Other                                          Total
                                                             Share        Capital     Less: Treasury      comprehensive      Surplus    Undistributed    shareholders’
                 Item                                       capital      surplus               stock            income       reserve           profits         equity

Balance at 1 January 2022                                 6,986,564    27,105,153          (14,044,550)          (7,295)    9,449,901      28,094,420       57,584,193

Movements for the year ended 31
   December 2022
Total comprehensive income
   Net profit                                                     -             -                    -                -             -      12,530,265       12,530,265
   Other comprehensive income, net of
      tax                                                         -             -                    -            1,616             -               -            1,616
Total comprehensive income                                        -             -                    -            1,616             -      12,530,265       12,531,881
Capital contribution and withdrawal by
   shareholders
   Ordinary shares invested by
      shareholders                                          18,602      1,123,649                    -                -             -                -       1,142,251
   Share-based payment included in
      shareholders’ equity                                       -       789,849                   -                 -             -                -         789,849
   Others                                                    (7,893)   (1,209,146)           (889,394)                -             -                -      (2,106,433)
Profit distribution
   Appropriation to surplus reserve                               -             -                    -                -     1,253,027      (1,253,027)               -
   Profit distribution to shareholders                            -             -                    -                -             -     (11,652,025)     (11,652,025)
Others                                                            -        16,703                    -                -             -               -           16,703
Balance at 31 December 2022                               6,997,273    27,826,208          (14,933,944)          (5,679)   10,702,928      27,719,633       58,306,419




                                                                                     -8-
MIDEA GROUP CO., LTD.

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]

                                                                                                                    Other                                          Total
                                                             Share           Capital    Less: Treasury      comprehensive      Surplus    Undistributed    shareholders’
                 Item                                       capital         surplus              stock            income       reserve           profits         equity

Balance at 1 January 2023                                 6,997,273      27,826,208          (14,933,944)          (5,679)   10,702,928      27,719,633       58,306,419

Movements for the year ended 31
   December 2023
Total comprehensive income
   Net profit                                                     -                -                   -                -             -      17,326,161       17,326,161
   Other comprehensive income, net of
      tax                                                         -                -                   -             (960)            -               -             (960)
Total comprehensive income                                        -                -                   -             (960)            -      17,326,161       17,325,201
Capital contribution and withdrawal by
   shareholders
   Ordinary shares invested by
      shareholders                                          38,490        2,317,783                    -                -             -                -       2,356,273
   Share-based payment included in
      shareholders’ equity                                       -         708,290                   -                 -             -                -         708,290
   Others                                                    (9,994)     (1,375,573)          2,062,206                 -             -                -         676,639
Profit distribution
   Profit distribution to shareholders                            -               -                    -                -             -     (17,144,264)     (17,144,264)
Others                                                            -           2,472                    -                -             -               -            2,472
Balance at 31 December 2023                               7,025,769      29,479,180          (12,871,738)          (6,639)   10,702,928      27,901,530       62,231,030

The accompanying notes form an integral part of these financial statements.

Legal representative:                                     Principal in charge of accounting:                                 Head of accounting department:




                                                                                       -9-
    MIDEA GROUP CO., LTD.

    NOTES TO THE FINANCIAL STATEMENTS
    FOR THE YEAR ENDED 31 DECEMBER 2023
    (All amounts in RMB ’000 Yuan unless otherwise stated)
    [English translation for reference only]

1   General information

    The principal business activities of Midea Group Co., Ltd. (hereinafter referred to as “the
    Company”) and its subsidiaries (hereinafter collectively referred to as “the Group”) include
    residential air-conditioner, central air-conditioner, heating and ventilation systems, kitchen
    appliances, refrigerators, washing machines, various small appliances, elevators, variable
    frequency drives, medical imaging products and robotics and automation system. Other
    services include the smart supply chain; sales, wholesale and processing of raw materials
    of household electrical appliances, and financial business involving customer deposits,
    interbank lendings and borrowings, consumption credits, buyer’s credits and finance leases.

    The Company was set up by the Council of Trade Unions of GD Midea Group Co., Ltd. and
    was registered in Market Safety Supervision Bureau of Shunde District, Foshan on 7 April
    2000, with its headquarters located in Foshan, Guangdong. On 30 August 2012, the
    Company was transformed into a limited liability company. On 29 July 2013, the Company
    was approved to merge and acquire Guangdong Midea Electric Co., Ltd., which was listed
    on Shenzhen Stock Exchange. On 18 September 2013, the Company’s shares were listed
    on Shenzhen Stock Exchange.

    As at 31 December 2023, the Company’s share capital was RMB 7,025,769,025, and the
    total number of shares in issue was 7,025,769,025, of which 133,563,090 shares were
    restricted tradable A shares and 6,892,205,935 shares were unrestricted tradable A shares.

    The detailed information of principal subsidiaries included in the consolidation scope in the
    current year is set out in Note 6. Subsidiaries newly included in the consolidation scope in
    the current year mainly include Shenzhen CLOU Electronics Co., Ltd. (hereafter “CLOU
    Electronics”)and etc, and are detailed in Note 5(1) and Note 5(2)(a); subsidiaries no longer
    included in the consolidation scope in the current year are detailed in Note 5(2)(b).

    These financial statements were authorised for issue by the Company’s Board of Directors
    on 26 March 2024.

2   Summary of significant accounting policies and accounting estimates

    The Group determines specific accounting policies and accounting estimates based on the
    features of production and operation, mainly including the measurement of expected credit
    loss (“ECL”) on receivables and contract assets (Note 2(10)(a)), valuation method of
    inventory (Note 2(11)), depreciation of property, plant and equipment, amortisation of
    intangible assets and right-of-use assets (Note 2(14), (17), (29)), impairment of long-term
    assets (Note 2(19)), and recognition and measurement of revenue (Note 2(26)).

    Key judgements and critical accounting estimates and key assumptions applied by the
    Group on the determination of significant accounting policies are set out in Note 2(31).




                                                   - 10 -
      MIDEA GROUP CO., LTD.

      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2023
      (All amounts in RMB ’000 Yuan unless otherwise stated)
      [English translation for reference only]

2     Summary of significant accounting policies and accounting estimates (Cont’d)

(1)   Basis of preparation

      The financial statements are prepared in accordance with the Accounting Standard for
      Business Enterprises - Basic Standard, and the specific accounting standards and other
      relevant regulations issued by the Ministry of Finance on 15 February 2006 and in
      subsequent periods (hereinafter collectively referred to as the “Accounting Standards for
      Business Enterprises” or “CASs”) and the disclosure requirements in the Preparation
      Convention of Information Disclosure by Companies Offering Securities to the Public No. 15
      - General Rules on Financial Reporting issued by the China Securities Regulatory
      Commission (“CSRC”).

      The financial statements are prepared on a going concern basis.

(2)   Statement of compliance with the Accounting Standards for Business Enterprises

      The financial statements of the Company for the year ended 31 December 2023 are in
      compliance with the Accounting Standards for Business Enterprises, and truly and
      completely present the consolidated and company’s financial position of the Company as at
      31 December 2023 and their financial performance, cash flows and other information for the
      year ended.

(3)   Accounting period

      The Company’s accounting year starts on 1 January and ends on 31 December.

(4)   Functional currency

      The functional currency of the Company is Renminbi (“RMB”). The subsidiaries determine
      their functional currency based on the primary economic environment in which the business
      is operated, mainly including EUR, JPY, USD and HKD, etc. The financial statements are
      presented in RMB.

(5)   The determination method and selection basis of materiality criteria

      The Group determined the materiality of financial information in terms of the nature and
      amount of a item in accordance with the specific environment in which it operates. In
      determining the significance of the nature of a item, the Group mainly considers whether the
      item is a routine business operations in nature and whether it significantly affects the Group's
      financial position, financial performance and cash flows. In determining the significance of
      the amount of a item, the Group considers the proportion of the amount to the amount of
      directly related items such as total assets, total liabilities, total shareholders' equity,
      operating revenue, costs of sales, net profit and total comprehensive income, or the
      proportion of the amount of the financial statement line item separately.




                                                     - 11 -
      MIDEA GROUP CO., LTD.

      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2023
      (All amounts in RMB ’000 Yuan unless otherwise stated)
      [English translation for reference only]

2     Summary of significant accounting policies and accounting estimates (Cont’d)

(6)   Business combinations

(a)   Business combinations involving enterprises under common control

      The consideration paid and net assets obtained by the Group in a business combination are
      measured at the carrying amount. If the absorbed party was bought by the ultimate controller
      from a third party in prior years, the value of its assets and liabilities (including goodwill
      generated due to the combination) are based on the carrying amount in the ultimate
      controller’s consolidated financial statements. The difference between the carrying amount
      of the net assets obtained by the Group and the carrying amount of the consideration paid
      for the combination is treated as an adjustment to capital surplus (share premium). If the
      capital surplus (share premium) is not sufficient to absorb the difference, the remaining
      balance is adjusted against retained earnings. Costs directly attributable to the combination
      are included in profit or loss in the period in which they are incurred. Transaction costs
      associated with the issue of equity or debt securities for the business combination are
      included in the initially recognised amounts of the equity or debt securities.

(b)   Business combinations involving enterprises not under common control

      The cost of combination and identifiable net assets obtained by the Group in a business
      combination are measured at fair value at the acquisition date. Where the cost of the
      combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
      assets, the difference is recognised as goodwill; where the cost of combination is lower than
      the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference
      is recognised in profit or loss for the current period. Costs directly attributable to the
      combination are included in profit or loss in the period in which they are incurred. Transaction
      costs associated with the issue of equity or debt securities for the business combination are
      included in the initially recognised amounts of the equity or debt securities.

      For business combinations achieved by stages involving enterprises not under common
      control, previously-held equity in the acquiree is remeasured at its fair value at the
      acquisition dates. For the equity interest held in the acquiree before the acquisition date
      under equity method, the difference between its fair value and carrying amount is recognised
      as investment income for the current period; for the other comprehensive income under the
      equity method and shareholders’ equity changes other than those arising from the net profit
      or loss, other comprehensive income and profit distribution, the related other comprehensive
      income and other shareholders' equity changes are transferred into profit or loss for the
      current period to which the acquisition dates belong, excluding those arising from changes
      in the investee's remeasurements of net liability or net asset related to the defined benefit
      plan, and those arising from accumulative changes in fair value of investments in equity
      instruments not held for trading that are held by investees and designated as at fair value
      through other comprehensive income. For previously-held equity in the acquiree
      categorised as financial assets at fair value through profit or loss, the difference between its
      fair value and carrying amount is transferred to investment income under the cost method;
      for previously-held equity in the acquiree categorised as investments in equity instruments
      not held for trading at fair value through other comprehensive income, its accumulative
      changes in fair value that are originally recognised in other comprehensive income are
      directly reclassified to retained earnings. The excess of the sum of fair value of the
      previously-held equity and fair value of the consideration paid at the acquisition date over
      share of fair value of identifiable net assets acquired from the subsidiary is recognised as
      goodwill.




                                                     - 12 -
      MIDEA GROUP CO., LTD.

      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2023
      (All amounts in RMB ’000 Yuan unless otherwise stated)
      [English translation for reference only]

2     Summary of significant accounting policies and accounting estimates (Cont’d)

(7)   Preparation of consolidated financial statements

      The consolidated financial statements comprise the financial statements of the Company
      and all of its subsidiaries.

      Subsidiaries are consolidated from the date on which the Group obtains control and are de-
      consolidated from the date that such control ceases. For a subsidiary that is acquired in a
      business combination involving enterprises under common control, it is included in the
      consolidated financial statements from the date when it, together with the Company, comes
      under common control of the ultimate controlling party. The portion of the net profits realised
      before the combination date is presented separately in the consolidated income statement.

      In preparing the consolidated financial statements, where the accounting policies and the
      accounting periods of the Company and subsidiaries are inconsistent, the financial
      statements of the subsidiaries are adjusted in accordance with the accounting policies and
      the accounting period of the Company. For subsidiaries acquired from business
      combinations involving enterprises not under common control, the individual financial
      statements of the subsidiaries are adjusted based on the fair value of the identifiable net
      assets at the acquisition date.

      All significant intra-group balances, transactions and unrealised profits are eliminated in the
      consolidated financial statements. The portion of subsidiaries’ shareholders’ equity and the
      portion of subsidiaries’ net profits and losses and comprehensive incomes for the period not
      attributable to the Company are recognised as minority interests, net profit attributed to
      minority interests and total comprehensive income attributed to minority interests and
      presented separately in the consolidated financial statements under shareholders’ equity,
      net profit and total comprehensive income respectively. Where the loss for the current period
      attributable to the minority shareholders of the subsidiaries exceeds the share of the minority
      interests in the opening balance of owners’ equity, the excess is deducted against minority
      interests. Unrealised profits and losses resulting from the sales of assets by the Company
      to its subsidiaries are fully eliminated against net profit attributable to shareholders of the
      parent company. Unrealised profits and losses resulting from the sales of assets by a
      subsidiary to the Company are eliminated and allocated between net profit attributable to
      shareholders of the parent company and net profit attributable to minority interests in
      accordance with the allocation proportion of the parent company in the subsidiary.
      Unrealised profits and losses resulting from the sales of assets by one subsidiary to another
      are eliminated and allocated between net profit attributable to shareholders of the parent
      company and net profit attributable to minority interests in accordance with the allocation
      proportion of the parent company in the subsidiary.

      If the accounting treatment of a transaction is inconsistent in the financial statements at the
      Group level and at the Company or its subsidiary level, adjustment will be made from the
      perspective of the Group.

(8)   Cash and cash equivalents

      Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on
      demand, and short-term and highly liquid investments that are readily convertible to known
      amounts of cash and which are subject to an insignificant risk of changes in value.




                                                     - 13 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(9)    Foreign currency translation

(a)    Foreign currency transactions

       Foreign currency transactions are translated into functional currency using the exchange
       rates prevailing at the dates of the transactions.

       At the balance sheet date, monetary items denominated in foreign currencies are translated
       into functional currency using the spot exchange rates on the balance sheet date. Exchange
       differences arising from these translations are recognised in profit or loss for the current
       period, except for those attributable to foreign currency borrowings that have been taken
       out specifically for acquisition or construction of qualifying assets, which are capitalised as
       part of the cost of those assets. Non-monetary items denominated in foreign currencies that
       are measured at historical costs are translated at the balance sheet date using the spot
       exchange rates at the date of the transactions. The effect of exchange rate changes on cash
       is presented separately in the cash flow statement.

(b)    Translation of foreign currency financial statements

       The asset and liability items in the balance sheets for overseas operations are translated at
       the spot exchange rates on the balance sheet date. Among the equity items, the items other
       than undistributed profits are translated at the spot exchange rates of the transaction dates.
       The income and expense items in the income statements of overseas operations are
       translated at the spot exchange rates of the transaction dates. The differences arising from
       the above translation are recognised in other comprehensive income. The cash flows of
       overseas operations are translated at the spot exchange rates on the dates of the cash
       flows. The effect of exchange rate changes on cash is presented separately in the cash flow
       statement.

(10)   Financial instruments

       A financial instrument is any contract that gives rise to a financial asset of one entity and a
       financial liability or equity instrument of another entity. A financial asset, a financial liability
       or an equity instrument is recognised when the Group becomes a party to the contractual
       provisions of the instrument.

(a)    Financial assets

(i)    Classification and measurement

       Based on the Group’s business model for managing the financial assets and the contractual
       cash flow characteristics of the financial assets, financial assets are classified as: (1)
       financial assets at amortised cost; (2) financial assets at fair value through other
       comprehensive income; (3) financial assets at fair value through profit or loss.

       The financial assets are measured at fair value at initial recognition. Related transaction
       costs that are attributable to the acquisition of the financial assets are included in the initially
       recognised amounts, except for the financial assets at fair value through profit or loss, the
       related transaction costs of which are recognised directly in profit or loss for the current
       period. Accounts receivable or notes receivable arising from sales of products or rendering
       of services (excluding or without regard to significant financing components) are initially
       recognised at the consideration that is entitled to be charged by the Group as expected.




                                                      - 14 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

2       Summary of significant accounting policies and accounting estimates (Cont’d)

(10)    Financial instruments (Cont’d)

(a)     Financial assets (Cont’d)

(i)     Classification and measurement (Cont’d)

(i-1)   Debt instruments

        The debt instruments held by the Group refer to the instruments that meet the definition of
        financial liabilities from the perspective of the issuer, and are measured in the following three
        ways:

        Measured at amortised cost:

        The objective of the Group’s business model is to hold the financial assets to collect the
        contractual cash flows, and the contractual cash flow characteristics are consistent with a
        basic lending arrangement, which gives rise on specified dates to the contractual cash flows
        that are solely payments of principal and interest on the principal amount outstanding. The
        interest income of such financial assets is recognised using the effective interest rate
        method. Such financial assets mainly comprise cash at bank and on hand, loan receivables,
        notes receivable, accounts receivable, other receivables, other current assets, debt
        investments, long-term receivables and other non-current assets. Debt investments and
        long-term receivables that are due within one year (inclusive) as from the balance sheet
        date are included in the current portion of non-current assets; debt investments with
        maturities of no more than one year (inclusive) at the time of acquisition are included in other
        current assets.

        Measured at fair value through other comprehensive income:

        The objective of the Group’s business model is to hold the financial assets to both collect
        the contractual cash flows and sell such financial assets, and the contractual cash flow
        characteristics are consistent with a basic lending arrangement. Such financial assets are
        measured at fair value through other comprehensive income, except for the impairment
        gains or losses, foreign exchange gains and losses, and interest income calculated using
        the effective interest rate method which are recognised in profit or loss for the current period.
        Such financial assets mainly include receivables financing and other debt investments.
        Other debt investments of the Group that are due within one year (inclusive) as from the
        balance sheet date are included in the current portion of non-current assets; other debt
        investments with maturities no more than one year (inclusive) at the time of acquisition are
        included in other current assets.

        Measured at fair value through profit or loss:

        Debt instruments held by the Group that are not divided into those at amortised cost, or
        those measured at fair value through other comprehensive income, are classified as
        financial assets at fair value through profit or loss. At initial recognition, the Group designates
        a portion of financial assets as at fair value through profit or loss to eliminate or significantly
        reduce an accounting mismatch. Financial assets that are due over one year as from the
        balance sheet date and are expected to be held over one year are included in other non-
        current financial assets. Others are included in financial assets held for trading.




                                                       - 15 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

2       Summary of significant accounting policies and accounting estimates (Cont’d)

(10)    Financial instruments (Cont’d)

(a)     Financial assets (Cont’d)

(i)     Classification and measurement (Cont’d)

(i-2)   Equity instruments

        Investments in equity instruments, over which the Group has no control, joint control or
        significant influence, are measured at fair value through profit or loss under financial assets
        held for trading; investments in equity instruments expected to be held over one year as
        from the balance sheet date are included in other non-current financial assets.

        In addition, at initial recognition, a portion of certain investments in equity instruments not
        held for trading are designated as financial assets at fair value through other comprehensive
        income under investments in other equity instruments. The relevant dividend income of such
        financial assets is recognised in profit or loss for the current period.

(i-3)   Derivative financial instruments

        The derivative financial instruments held by the Group are mainly used in controlling risk
        exposures. Derivative financial instruments are initially recognised at fair value on the day
        when derivatives transaction contract was signed, and subsequently measured at fair value.
        The derivative financial instruments are recorded as assets when they have a positive fair
        value and as liabilities when they have a negative fair value.

        The method for recognising changes in fair value of the derivative financial instrument
        depends on whether the derivative financial instrument is designated as a hedging
        instrument and meets the requirement for it, and if so, the nature of the item being hedged.
        For derivative financial instruments that are not designated as hedging instruments and fail
        to meet requirements on hedging instruments, including those held for the purpose of
        providing hedging against specific risks in interest rate and foreign exchange but not
        conforming with requirements of hedge accounting, the changes in fair value are recorded
        in gains or losses on changes in fair value in the consolidated income statement.

        Cash flow hedge

        At the inception of the hedge, the Group has completed relevant hedge documents,
        including the relationship between hedged items and hedging instruments, and risk
        management objectives and strategies corresponding to various hedging transactions. At
        the inception of the hedge and in subsequent periods, the Group continuously records
        whether the hedge is effectively evaluated, that is, whether the hedging instruments can
        largely offset the changes in the fair value or cash flows of hedged items.




                                                       - 16 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

2       Summary of significant accounting policies and accounting estimates (Cont’d)

(10)    Financial instruments (Cont’d)

(a)     Financial assets (Cont’d)

(i)     Classification and measurement (Cont’d)

(i-3)   Derivative financial instruments (Cont’d)

        Cash flow hedge (Cont’d)

        The effective portion of changes in fair value on hedging instruments is recognised in other
        comprehensive income as cash flow hedging reserve, while the gains or losses related to
        the ineffective portion of the hedge are recognised in profit or loss for the current period.
        Where the hedge is a forecast transaction which subsequently results in the recognition of
        a non-financial asset or liability, the amount originally recognised in other comprehensive
        income is transferred and included in the initially recognised amount of the asset or liability.
        For cash flow hedge beyond the foregoing scope, the amount originally recognised in other
        comprehensive income is transferred and included in profit or loss for the current period
        during the same time in which the profit or loss is influenced by the hedged expected cash
        flow. However, if all or part of net loss recognised directly in other comprehensive income
        will not be recovered in future accounting periods, the amount not expected to be recovered
        should be transferred to profit or loss for the current period. When the Group revokes the
        designation of a hedge, a hedging instrument expires or is sold, terminated or exercised, or
        the hedge no longer meets the criteria for hedge accounting, the Group will discontinue the
        hedge accounting treatments prospectively. Where the Group discontinues the hedge
        accounting treatment for cash flow hedging, for hedged future cash flows that will still
        happen, the accumulated gains or losses that have been recognised in other comprehensive
        income are retained and subject to accounting treatment under the subsequent treatment
        method of aforesaid cash flow hedging reserve; for hedged future cash flows that the
        forecast transaction will never happen, the accumulated gains or losses that have been
        recognised in other comprehensive income are transferred immediately and included in
        profit or loss for the current period.

(ii)    Impairment

        Loss provision for financial assets at amortised cost, investments in debt instruments at fair
        value through other comprehensive income, as well as contract assets and lease
        receivables is recognised on the basis of ECL.

        Giving consideration to reasonable and supportable information on past events, current
        conditions, forecasts of future economic conditions that is available without undue cost or
        effort at the balance sheet date, and weighted by the risk of default, the Group recognises
        the ECL as the probability-weighted amount of the present value of the difference between
        the cash flows receivable from the contract and the cash flows expected to collect.




                                                       - 17 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(10)   Financial instruments (Cont’d)

(a)    Financial assets (Cont’d)

(ii)   Impairment (Cont’d)

       For notes receivable, accounts receivable, receivables financing, lease receivables and
       contract assets arising from sales of goods and rendering of services in the ordinary course
       of operating activities, the Group recognises the lifetime ECL provision regardless of
       whether there exists a significant financing component. Since contract assets are mainly
       related to work on the stage of completion without invoice, essentially, their credit risk
       characteristics are similar to the accounts receivable for the same kind of contracts.
       Therefore, the ECL rate of the contract assets is an approximation to that of accounts
       receivable.

       Except for the above notes receivable, accounts receivable, receivables financing, lease
       receivables and contract assets, at each balance sheet date, the ECL of financial
       instruments at different stages are measured respectively. 12-month ECL provision is
       recognised for financial instruments in Stage 1 that have not had a significant increase in
       credit risk since initial recognition; lifetime ECL provision is recognised for financial
       instruments in Stage 2 that have had a significant increase in credit risk yet without credit
       impairment since initial recognition; and lifetime ECL provision is recognised for financial
       instruments in Stage 3 that have had credit impairment since initial recognition.

       For the financial instruments with lower credit risk on the balance sheet date, the Group
       assumes there is no significant increase in credit risk since initial recognition. The Group
       treats them as financial instruments in Stage 1 and recognises a 12-month ECL.

       For the financial instruments in Stage 1 and Stage 2, the Group calculates the interest
       income by applying the effective interest rate to the book balance (before deduction of the
       impairment provision). For the financial instruments in Stage 3, the interest income is
       calculated by applying the effective interest rate to the amortised cost (after deduction of the
       impairment provision from the book balance).

       In case the ECL of an individually assessed financial asset cannot be evaluated with
       reasonable cost, the Group divides the receivables and contract assets into certain
       groupings based on credit risk characteristics, then pursuant to which, calculates the ECL.
       Basis and provision method for determining groupings are as follows:




                                                      - 18 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(10)   Financial instruments (Cont’d)

(a)    Financial assets (Cont’d)

(ii)   Impairment (Cont’d)

       Grouping of notes receivable 1                                   Bank acceptance notes grouping
       Grouping of notes receivable 2                                  Trade acceptance notes grouping
       Grouping of accounts receivable 1                                   Overseas business grouping
       Grouping of accounts receivable 2                                    Domestic business grouping
       Grouping of contract assets 1                                       Overseas business grouping
       Grouping of contract assets 2                                        Domestic business grouping
       Grouping of other receivables 1              Security deposit and guarantee receivables grouping
       Grouping of other receivables 2                         Receivables from related parties grouping
       Grouping of other receivables 3                                       Other receivables grouping
       Grouping of long-term receivables                             Finance lease receivables grouping
       Grouping of loan receivables                                            Loans business grouping

       The Group, on the basis of the exposure at default and the lifetime ECL rate, calculates the
       ECL of notes receivable and receivables financing that are classified into groupings with
       consideration to historical credit losses experience, current conditions and forecasts of
       future economic conditions.

       With consideration to historical credit loss experience, current conditions and forecasts of
       future economic conditions, the Group prepares the cross-reference between the number
       of overdue days of accounts receivable and the lifetime ECL rate, and calculates the ECL
       of accounts receivable that are classified into groupings.

       The Group, on the basis of the exposure at default and the 12-month or lifetime ECL rate,
       calculates the ECL of other receivables, loan receivables that are classified into groupings
       with consideration to historical credit losses experience, the current conditions and forecasts
       of future economic conditions.

       The Group recognises the loss provision made or reversed into profit or loss for the current
       period. For debt instruments held at fair value through other comprehensive income, the
       Group adjusts other comprehensive income while the impairment loss or gain is recognised
       in profit or loss for the current period.




                                                      - 19 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

2       Summary of significant accounting policies and accounting estimates (Cont’d)

(10)    Financial instruments (Cont’d)

(a)     Financial assets (Cont’d)

(iii)   Derecognition of financial assets

        A financial asset is derecognised when: (1) the contractual rights to the cash flows from the
        financial asset expire, (2) the financial asset has been transferred and the Group transfers
        substantially all the risks and rewards of ownership of the financial asset to the transferee,
        or (3) the financial asset has been transferred and the Group has not retained control of the
        financial asset, although the Group neither transfers nor retains substantially all the risks
        and rewards of ownership of the financial asset.

        When a financial asset is derecognised, the difference between the carrying amount and
        the sum of the consideration received and the cumulative changes in fair value that are
        previously recognised directly in other comprehensive income is recognised in profit or loss
        for the current period, except for those as investments in other equity instruments, the
        difference aforementioned is recognised in retained earnings instead.

(b)     Financial liabilities

        Financial liabilities are classified as financial liabilities at amortised cost and financial
        liabilities at fair value through profit or loss at initial recognition.

        Financial liabilities of the Group mainly comprise financial liabilities at amortised cost,
        including notes payable, accounts payable, other payables, borrowings, debentures payable
        and short-term financing bonds payable in other current liabilities, customer deposits and
        deposits from banks and other financial institutions, borrowings from the Central Bank, and
        long-term payables. Such financial liabilities are initially recognised at fair value, net of
        transaction costs incurred, and subsequently measured using the effective interest rate
        method. Financial liabilities that are due within one year (inclusive) are classified as current
        liabilities; those with maturities over one year but are due within one year (inclusive) as from
        the balance sheet date are classified as current portion of non-current liabilities. Others are
        classified as non-current liabilities.

        A financial liability is derecognised or partly derecognised when the underlying present
        obligation is discharged or partly discharged. The difference between the carrying amount
        of the derecognised part of the financial liability and the consideration paid is recognised in
        profit or loss for the current period.




                                                       - 20 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(10)   Financial instruments (Cont’d)

(c)    Determination of fair value of financial instruments

       The fair value of a financial instrument that is traded in an active market is determined at
       the quoted price in the active market. The fair value of a financial instrument that is not
       traded in an active market is determined by using a valuation technique. In valuation, the
       Group adopts valuation techniques applicable in the current situation and supported by
       adequate available data and other information, selects inputs with the same characteristics
       as those of assets or liabilities considered in relevant transactions of assets or liabilities by
       market participants, and gives priority to the use of relevant observable inputs. When
       relevant observable inputs are not available or feasible, unobservable inputs are adopted.

(11)    Inventories

(a)    Classification of inventories

       Inventories, including finished goods, raw materials, work in progress, consigned processing
       materials and low value consumables, are measured at the lower of cost and net realisable
       value.

(b)    Costing of inventories

       Cost is determined using the first-in, first-out method when issued. The cost of finished
       goods and work in progress comprises raw materials, direct labour and systematically
       allocated production overhead based on the normal production capacity.

(c)    Basis for determining net realisable values of inventories and method for making provision
       for decline in the value of inventories

       Inventories are initially measured at cost. The cost of inventories comprises purchase cost,
       processing cost and other expenditures to bring the inventories to current site and condition.

       On the balance sheet date, inventories are measured at the lower of cost and net realisable
       value.

       Net realisable value is determined based on the estimated selling price in the ordinary
       course of business, less the estimated costs to completion and estimated contract fulfilment
       costs and costs necessary to make the sale and related taxes.

       Provision for decline in the value of inventories is determined at the excess amount of the
       cost as calculated based on the classification of inventories over their net realisable value,
       and are recognised in profit or loss for the current period.




                                                      - 21 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(11)   Inventories (Cont'd)

(d)    Inventory system

       The Group adopts the perpetual inventory system.

(e)    Amortisation methods of low value consumables and packaging materials

       Low value consumables are expensed in full when issued and recognised in cost of related
       assets or in profit or loss for the current period.

(12)   Long-term equity investments

       Long-term equity investments comprise the Company’s long-term equity investments in its
       subsidiaries, and the Group’s long-term equity investments in its associates and joint
       ventures.

       Subsidiaries are the investees over which the Company is able to exercise control. A joint
       venture is a joint arrangement which is structured through a separate vehicle over which the
       Group has joint control together with other parties and only has rights to the net assets of
       the arrangement based on legal forms, contractual terms and other facts and circumstances.
       An associate is an investee that the Group has significant influence on their financial and
       operating policies.

       Investments in subsidiaries are presented in the Company’s financial statements using the
       cost method, and are adjusted to the equity method when preparing the consolidated
       financial statements. Investments in associates and joint ventures are accounted for using
       the equity method.

(a)    Determination of investment cost

       For long-term equity investments acquired through a business combination involving
       enterprises under common control, the investment cost shall be the absorbing party’s share
       of the carrying amount of owners’ equity of the party being absorbed at the combination
       date; for long-term equity investment acquired through a business combination involving
       enterprises not under common control, the investment cost shall be the combination cost.

       For business combinations achieved by stages involving enterprises not under common
       control, the initial investment cost accounted for using the cost method is the sum of carrying
       amount of previously-held equity investment and additional investment cost. For previously-
       held equity investments accounted for using the equity method, the accounting treatment of
       related other comprehensive income from disposal of the equity is carried out on a same
       basis with the investee’s direct disposal of related assets or liabilities. Owners’ equity, which
       is recognised due to changes in investee’s owners’ equity other than those arising from the
       net profit or loss, other comprehensive income and profit distribution, is accordingly
       transferred into profit or loss for the period in which the investment is disposed.




                                                      - 22 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(12)   Long-term equity investments (Cont’d)

(a)    Determination of investment cost (Cont’d)

       For the investments in previously-held equity without significant influence or common control
       that previously recognised as financial assets at fair value through profit or loss, the
       difference between the fair value and carrying amount is transferred to investment income
       for the current period under cost method; for the investments previously recognised as
       investments in equity instruments not held for trading at fair value through other
       comprehensive income, the difference between the fair value and carrying amount and
       accumulated changes in fair value previously recognised in other comprehensive income
       are directly transferred to retained earnings.

       For long-term equity investments acquired not through a business combination, the long-
       term equity investments acquired by payment in cash, the initial investment cost shall be
       the purchase price actually paid; for long-term equity investments acquired by issuing equity
       securities, the initial investment cost shall be the fair value of the equity securities issued.

(b)    Subsequent measurement and recognition methods of gains and losses

       For long-term equity investments accounted for using the cost method, they are measured
       at the initial investment costs, and cash dividends or profit distribution declared by the
       investees are recognised as investment income in profit or loss for the current period.

       For long-term equity investments accounted for using the equity method, where the initial
       investment cost of a long-term equity investment exceeds the Group’s share of the fair value
       of the investee’s identifiable net assets at the acquisition date, the long-term equity
       investment is measured at the initial investment cost; where the initial investment cost is
       less than the Group’s share of the fair value of the investee’s identifiable net assets at the
       acquisition date, the difference is included in profit or loss and the cost of the long-term
       equity investment is adjusted upwards accordingly.

       For long-term equity investments accounted for using the equity method, the Group
       recognises the investment income according to its share of net profit or loss of the investee.
       The Group discontinues recognising its share of the net losses of an investee after the
       carrying amount of the long-term equity investment together with any long-term interests
       that in substance form part of the investor’s net investment in the investee are reduced to
       zero. However, if the Group has obligations for additional losses and the criteria with respect
       to recognition of provisions are satisfied, the Group continues recognising the investment
       losses and the provisions at the amount it expects to undertake. The changes of the Group’s
       share in investee’s owners’ equity other than those arising from the net profit or loss, other
       comprehensive income and profit distribution are recognised in capital surplus with a
       corresponding adjustment to the carrying amount of the long-term equity investment. The
       carrying amount of the investment is reduced by the Group’s share of the profit distribution
       or cash dividends declared by the investees.




                                                      - 23 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(12)   Long-term equity investments (Cont’d)

(b)    Subsequent measurement and recognition methods of gains and losses (Cont’d)

       The unrealised profits or losses arising from the transactions between the Group and its
       investees are eliminated in proportion to the Group’s equity interest in the investees, based
       on which the investment gains or losses of the Company’s financial statements are
       recognised. When preparing consolidated financial statements, for the portion of unrealised
       profits or losses of internal transactions attributable to the Group arising from downstream
       transactions in which the Group invests in or sells assets to the investees, the Group shall,
       on the basis of offsetting the Company's financial statements, offset the portion of unrealised
       income and costs or asset disposal gains or losses attributable to the Group, and adjust
       investment income accordingly; for the unrealised profits or losses of internal transactions
       attributable to the Group arising from the upstream transactions in which the investees
       invest in or sell assets to the Group, the Group shall, on the basis of offsetting the Company's
       financial statements, offset the portion of unrealised profits or losses of internal transactions
       attributable to the Group included in the carrying amount of the relevant assets, and adjust
       the carrying amount of long-term equity investments accordingly. Any losses resulting from
       transactions between the Group and its investees attributable to asset impairment losses
       are not eliminated.

(c)    Basis for determining existence of control, joint control, significant influence over investees

       Control is the power to govern an investee and obtain variable returns from participating the
       investee’s activities, and the ability to utilise the power of an investee to affect its returns.

       Joint control is the contractually agreed sharing of control over an arrangement, and relevant
       economic activity can be arranged upon the unanimous approval of the Group and other
       participants sharing of control rights.

       Significant influence is the power to participate in the financial and operating policy decisions
       of the investee, but is not control or joint control over those policies.

(d)    Impairment of long-term equity investments

       The carrying amounts of long-term equity investments in subsidiaries, associates and joint
       ventures are reduced to the recoverable amounts when the recoverable amounts are below
       their carrying amounts (Note 2(19)).

(13)   Investment properties

       Investment properties, including land use rights that have already been leased out, buildings
       that are held for the purpose of leasing and buildings that are being constructed or
       developed for future use for leasing, are measured initially at cost. Subsequent expenditures
       incurred in relation to an investment property are included in the cost of the investment
       property when it is probable that the associated economic benefits will flow to the Group
       and their costs can be reliably measured; otherwise, the expenditures are recognised in
       profit or loss for the period in which they are incurred.




                                                      - 24 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(13)   Investment properties (Cont’d)

       The Group adopts the cost model for subsequent measurement of investment properties.
       Buildings and land use rights are depreciated or amortised to their estimated net residual
       values over their estimated useful lives. The estimated useful lives, the estimated net
       residual values that are expressed as a percentage of cost and the annual depreciation
       (amortisation) rates of investment properties are as follows:

                                         Estimated useful         Estimated net    Annual depreciation
                                                    lives        residual values   (amortisation) rates

       Buildings                            20 to 40 years                  5%         2.38% to 4.75%
       Land use rights                      30 to 50 years                    -           2% to 3.33%

       When an investment property is transferred to owner-occupied properties, it is reclassified
       as property, plant and equipment or intangible asset at the date of the transfer. When an
       owner-occupied property is transferred out for earning rentals or for capital appreciation, the
       property, plant and equipment or intangible asset is reclassified as investment properties at
       the date of the transfer. At the time of transfer, the property is recognised based on the
       carrying amount before transfer.

       The investment properties’ estimated useful lives, the estimated net residual values and the
       depreciation (amortisation) methods applied are reviewed and adjusted as appropriate at
       each year-end.

       An investment property is derecognised on disposal or when the investment property is
       permanently withdrawn from use and no future economic benefits are expected from its
       disposal. The net amount of proceeds from sale, transfer, retirement or damage of an
       investment property after its carrying amount and related taxes and expenses is recognised
       in profit or loss for the current period.

       The carrying amount of an investment property is reduced to the recoverable amount if the
       recoverable amount is below the carrying amount.

(14)   Property, plant and equipment

(a)    Recognition and initial measurement of property, plant and equipment

       Property, plant and equipment comprise buildings, overseas land, machinery and
       equipment, motor vehicles, electronic equipment and others.

       Property, plant and equipment are recognised when it is probable that the related economic
       benefits will flow to the Group and the cost can be reliably measured. The initial cost of
       purchased property, plant and equipment include purchase price, related taxes and
       expenditures that are attributable to the assets incurred before the assets are ready for their
       intended use. The initial cost of self-constructed property, plant and equipment is determined
       based on Note 2(15).

       Subsequent expenditures incurred for a property, plant and equipment are included in the
       cost of the property, plant and equipment when it is probable that the associated economic
       benefits will flow to the Group and the related cost can be reliably measured. The carrying
       amount of the replaced part is derecognised. All the other subsequent expenditures are
       recognised in profit or loss for the period in which they are incurred.




                                                      - 25 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(14)   Property, plant and equipment (Cont’d)

(b)    Depreciation method of property, plant and equipment

       Property, plant and equipment are depreciated using the straight-line method to allocate the
       cost of the assets to their estimated net residual values over their estimated useful lives. For
       the property, plant and equipment that have been provided for impairment loss, the related
       depreciation charge is prospectively determined based upon the adjusted carrying amounts
       over their remaining useful lives.

       The estimated useful lives, the estimated net residual values expressed as a percentage of
       cost and the annual depreciation rates of the Group’s property, plant and equipment are as
       follows:

                                         Estimated useful         Estimated net    Annual depreciation
       Categories                                   lives        residual values                 rates

       Buildings                            15 to 50 years           0% to 10%           6.7% to 1.8%
       Machinery and
          equipment                          2 to 25 years           0% to 10%           50% to 3.6%
       Motor vehicles                        2 to 20 years           0% to 10%           50% to 4.5%
       Electronic equipment
          and others                         2 to 20 years          0% to 10%            50% to 4.5%
       Overseas land                           Permanent         Not applicable         Not applicable

       The estimated useful lives and the estimated net residual values of the Group’s property,
       plant and equipment and the depreciation methods applied to the assets are reviewed, and
       adjusted as appropriate at each year-end.

(c)    The carrying amount of a property, plant and equipment is reduced to the recoverable
       amount when the recoverable amount is below the carrying amount (Note 2(19)).

(d)    Disposal of property, plant and equipment

       Property, plant and equipment are derecognised on disposal or when no future economic
       benefits are expected from its use or disposal. The amount of proceeds from disposals on
       sale, transfer, retirement or damage of property, plant and equipment net of their carrying
       amount and related taxes and expenses is recognised in profit or loss for the current period.

(15)   Construction in progress

       Construction in progress is measured at actual cost. Actual cost comprises construction
       costs, installation costs, borrowing costs that are eligible for capitalisation and other costs
       necessary to bring the construction in progress ready for their intended use. Construction in
       progress is transferred to property, plant and equipment when the assets are ready for their
       intended use, and depreciation begins from the following month. The carrying amount of
       construction in progress is reduced to the recoverable amount when the recoverable amount
       is below its carrying amount (Note 2(19)).




                                                      - 26 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(16)   Borrowing costs

       The borrowing costs that are directly attributable to acquisition and construction of a
       property, plant and equipment that needs a substantially long period of time for its intended
       use commence to be capitalised and recorded as part of the cost of the asset when
       expenditures for the asset and borrowing costs have been incurred, and the activities
       relating to the acquisition and construction that are necessary to prepare the asset for its
       intended use have commenced. The capitalisation of borrowing costs ceases when the
       asset under acquisition or construction becomes ready for its intended use and the
       borrowing costs incurred thereafter are recognised in profit or loss for the current period.
       Capitalisation of borrowing costs is suspended during periods in which the acquisition or
       construction of an asset is interrupted abnormally and the interruption lasts for more than 3
       months, until the acquisition or construction is resumed.

       For the specific borrowings obtained for the acquisition or construction of a property, plant
       and equipment qualifying for capitalisation, the amount of borrowing costs eligible for
       capitalisation is determined by actual interest expenses deducting any interest income
       earned from depositing the unused specific borrowings in the banks or any investment
       income arising on the temporary investment of those borrowings during the capitalisation
       period.

       For the general borrowings obtained for the acquisition or construction of a property, plant
       and equipment qualifying for capitalisation, the amount of general borrowing costs eligible
       for capital property, plant and equipmentisation is determined by applying the weighted
       average effective interest rate of general borrowings, to the weighted average of the excess
       amount of cumulative expenditures on the asset over the amount of specific borrowings.
       The effective interest rate is the rate at which the future cash flows during the period of
       expected duration of the borrowings or applicable shorter period are discounted to the initial
       amount of the borrowings.

(17)   Intangible assets

       Intangible assets include land use rights, patents and non-patent technologies, trademark
       rights, trademark use rights and others, are measured at cost.

(a)    Land use rights

       Land use rights are amortised on the straight-line basis over their approved use period of
       30 to 50 years. If the acquisition costs of the land use rights and the buildings located
       thereon cannot be reasonably allocated between the land use rights and the buildings, all
       of the acquisition costs are recognised as property, plant and equipment.

(b)    Patents and non-patent technologies

       Patents are amortised on a straight-line basis over the statutory period of validity, the period
       as stipulated by contracts or the beneficial period of 2 to 20 years.




                                                      - 27 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(17)   Intangible assets (Cont’d)

(c)    Trademark rights

       The trademark rights are measured at cost when acquired and are amortised over the
       estimated useful life of 4 to 30 years. The cost of trademark rights obtained in the business
       combinations involving enterprises not under common control is measured at fair value. As
       some of the trademarks are expected to attract net cash inflows injected into the Group,
       management considers that these trademarks have an indefinite useful life and are
       presented based upon the carrying amount after deducting the provision for impairment
       (Note 4(20)).

(d)    Trademark use rights

       The trademark use rights are measured at cost when acquired. The cost of trademark use
       rights obtained in the business combinations involving enterprises not under common
       control is measured at fair value, and is amortised over the estimated useful life of 40 years.

(e)    Other intangible assets

       Other tangible assets mainly are customers relationships, franchises and software,
       measured at cost when acquired or at fair value, and amortized over the estimated useful
       life of 2 to 25 years.

(f)    Periodical review of useful life and amortisation method

       For an intangible asset with a finite useful life, review of its useful life and amortisation
       method is performed at each year-end, with adjustment made as appropriate.

(g)    Research and development (R&D)

       The Group's R&D expenditure mainly includes the expenditure on materials consumed in
       conducting the Group's R&D activities, employee benefits in the R&D department,
       depreciation and amortisation of assets such as equipment and software used in R&D, R&D
       testing expenses, R&D technical service expenses and licensing expenses.

       Expenditure on the planned investigation, evaluation and selection for the research of
       production processes or products is categorised as expenditure on the research phase, and
       it is recognised in profit or loss when it is incurred. Expenditure on design and test for the
       final application of the development of production processes or products before mass
       production is categorised as expenditure on the development phase, which is capitalised
       only if all of the following conditions are satisfied:

           The development of production processes or products has been fully justified by
           technical team;
           The budget on the development of production processes or products has been
           approved by management;
           There is market research analysis that demonstrates the product produced by the
           production process or product has the ability of marketing;
           There are sufficient technical and financial resources to support the development of
           production processes or products and subsequent mass production; and
           Expenditure attributable to the development of production processes or products can
           be reliably measured.




                                                      - 28 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(17)   Intangible assets (Cont’d)

(g)    R&D (Cont’d)

       Other development expenditures that do not meet the conditions above are recognised in
       profit or loss in the period in which they are incurred. Development costs previously
       recognised as expenses are not recognised as an asset in a subsequent period. Capitalised
       expenditure on the development phase is presented as development costs in the balance
       sheet and transferred to intangible assets at the date that the asset is ready for its intended
       use.

(h)    Impairment of intangible assets

       The carrying amount of intangible assets is reduced to the recoverable amount when the
       recoverable amount is below the carrying amount (Note 2(19)).

(18)   Long-term prepaid expenses

       Long-term prepaid expenses include the expenditure for improvements to right-of-use
       assets, and other expenditures that have been incurred but should be recognised as
       expenses over more than one year in the current and subsequent periods. Long- term
       prepaid expenses are amortised on the straight-line basis over the expected beneficial
       period and are presented at actual expenditure net of accumulated amortisation.

(19)   Impairment of long-term assets

       Property, plant and equipment, construction in progress, right-of-use assets, intangible
       assets with finite useful lives, investment properties measured using the cost model and
       long-term equity investments in subsidiaries, associates and joint ventures are tested for
       impairment if there is any indication that the assets may be impaired at the balance sheet
       date. Intangible assets not ready for their intended use, intangible assets with infinite useful
       lives and overseas land are tested at least annually for impairment, irrespective of whether
       there is any indication that it may be impaired. If the result of the impairment test indicates
       that the recoverable amount of an asset is less than its carrying amount, a provision for
       impairment and an impairment loss are recognised for the amount by which the asset’s
       carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
       an asset’s fair value less costs to sell and the present value of the future cash flows expected
       to be derived from the asset. Provision for asset impairment is determined and recognised
       on the individual asset basis. If it is not possible to estimate the recoverable amount of an
       individual asset, the recoverable amount of a group of assets to which the asset belongs is
       determined. A group of assets is the smallest group of assets that is able to generate
       independent cash inflows.

       Goodwill that is separately presented in the financial statements is tested at least annually
       for impairment, irrespective of whether there is any indication that it may be impaired. In
       conducting the test, the carrying value of goodwill is allocated to the related asset group or
       groups of asset groups which are expected to benefit from the synergies of the business
       combination. If the result of the test indicates that the recoverable amount of an asset group
       or a group of asset groups, including the allocated goodwill, is lower than its carrying
       amount, the corresponding impairment loss is recognised. The impairment loss is first
       deducted from the carrying amount of goodwill that is allocated to the asset group or group
       of asset groups, and then deducted from the carrying amounts of other assets within the
       asset group or group of asset groups in proportion to the carrying amounts of assets other
       than goodwill.

       Once the above asset impairment loss is recognised, it will not be reversed for the value
       recovered in the subsequent periods.



                                                      - 29 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(20)   Employee benefits

       Employee benefits refer to all forms of consideration or compensation given by the Group
       in exchange for service rendered by employees or for termination of employment
       relationship, which include short-term employee benefits, post-employment benefits,
       termination benefits and other long-term employee benefits.

(a)    Short-term employee benefits

       Short-term employee benefits include wages and salaries, bonus, allowances and
       subsidies, staff welfare, premiums or contributions on medical insurance, work injury
       insurance, maternity insurance, housing funds, labour union funds and employee education
       funds, and short-term paid absences. The short-term employee benefits actually occurred
       are recognised as a liability in the accounting period in which the service is rendered by the
       employees, with a corresponding charge to the profit or loss for the current period or the
       cost of relevant assets. Non-monetary benefits are measured at fair value.

(b)    Post-employment benefits

       The Group classifies post-employment benefit plans as either defined contribution plans or
       defined benefit plans. Defined contribution plans are post-employment benefit plans under
       which the Group pays fixed contributions into a separate fund and will have no obligation to
       pay further contributions; and defined benefit plans are post-employment benefit plans other
       than defined contribution plans. During the reporting period, the Group’s defined contribution
       plans mainly include basic pensions and unemployment insurance, while the defined benefit
       plans are Toshiba Lifestyle Products & Services Corporation (“TLSC”) and its subsidiaries
       (“TLSC Group”) and KUKA Aktiengesellschaft (“KUKA”) and its subsidiaries (“KUKA Group”)
       provide supplemental retirement benefits beyond the national regulatory insurance system.

       Basic pensions

       The Group’s employees participate in the basic pension plan set up and administered by
       local authorities of Ministry of Human Resource and Social Security. Monthly payments of
       premiums on the basic pensions are calculated according to prescribed bases and
       percentage by the relevant local authorities. When employees retire, the relevant local
       authorities are obliged to pay the basic pensions to them. The amounts based on the above
       calculations are recognised as liabilities in the accounting period in which the service has
       been rendered by the employees, with a corresponding charge to the profit or loss for the
       current period or the cost of relevant assets.

       Supplementary retirement benefits

       The liability recognised in the balance sheet in respect of defined benefit pension plans is
       the present value of the defined benefit obligations less the fair value of the plan assets.
       The defined benefit obligation is calculated annually by independent actuaries using the
       projected unit credit method at the interest rate of treasury bonds with similar obligation term
       and currency. The charges related to supplementary retirement benefits (including current
       service costs, historical service costs and gains or losses on settlement) and net interest
       are recognised in profit or loss for the current period or included in the cost of an asset, and
       the changes arising from remeasurement in net liabilities or net assets of defined benefit
       plans are recognised in other comprehensive income.




                                                      - 30 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(20)   Employee benefits (Cont’d)

(c)    Termination benefits

       The Group provides compensation for terminating the employment relationship with
       employees before the end of the employment contracts or as an offer to encourage
       employees to accept voluntary redundancy before the end of the employment contracts.
       The Group recognises a liability arising from compensation for termination of the
       employment relationship with employees, with a corresponding charge to profit or loss for
       the current period at the earlier of the following dates: 1) when the Group cannot unilaterally
       withdraw an employment termination plan or a curtailment proposal; 2) when the Group
       recognises costs or expenses related to a restructuring that involves the payment of
       termination benefits.

       Early retirement benefits

       The Group offers early retirement benefits to those employees who accept early retirement
       arrangements. The early retirement benefits refer to the salaries and social security
       contributions to be paid to and for the employees who accept voluntary retirement before
       the normal retirement date prescribed by the State, as approved by management. The
       Group pays early retirement benefits to those early retired employees from the early
       retirement date until the normal retirement date. The Group accounts for the early retirement
       benefits in accordance with the treatment for termination benefits, in which the salaries and
       social security contributions to be paid to and for the early retired employees from the off-
       duty date to the normal retirement date are recognised as liabilities with a corresponding
       charge to the profit or loss for the current period. The differences arising from the changes
       in the respective actuarial assumptions of the early retirement benefits and the adjustments
       of benefit standards are recognised in profit or loss in the period in which they occur.

       The termination benefits expected to be settled within one year since the balance sheet date
       are classified as current liabilities.

(21)   General risk reserve

       General risk reserve is the reserve appropriated from undistributed profits to cover part of
       unidentified potential losses, on the basis of the estimated potential risk value of risk assets
       assessed by the standardised approach, which is deducted from recognised provision for
       impairment losses on loans. Risk assets include loan receivables, long-term equity
       investments, deposits with banks and other financial institutions and other receivables of
       subsidiaries engaged in financial business.

(22)   Dividend distribution

       Cash dividend is recognised as a liability for the period in which the dividend is approved by
       the shareholders’ meeting.




                                                      - 31 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(23)   Provisions

       Provisions for product warranties, onerous contracts, etc. are recognised when the Group
       has a present obligation, it is probable that an outflow of economic benefits will be required
       to settle the obligation, and the amount of the obligation can be measured reliably.

       A provision is initially measured at the best estimate of the expenditure required to settle the
       related present obligation. Factors surrounding a contingency, such as the risks,
       uncertainties and the time value of money, are taken into account as a whole in reaching
       the best estimate of a provision. Where the effect of the time value of money is material, the
       best estimate is determined by discounting the related future cash outflows. The increase in
       the discounted amount of the provision arising from passage of time is recognised as
       interest expenses.

       The carrying amount of provisions is reviewed at each balance sheet date and adjusted to
       reflect the current best estimate.

       The provisions expected to be settled within one year since the balance sheet date are
       classified as current liabilities.

(24)   Share-based payment

(a)    Type of share-based payment

       Share-based payment is a transaction in which the entity acquires services from employees
       as consideration for equity instruments of the entity or by incurring liabilities for amounts
       based on the equity instruments. Equity instruments include equity instruments of the
       Company, its parent company or other accounting entities of the Group. Share-based
       payments are divided into equity-settled and cash-settled payments. The Group’s share-
       based payments are equity-settled payments.

       Equity-settled share-based payment

       The Group’s equity-settled share-based payment contains stock option incentive plan,
       restricted share incentive schemes and stock ownership schemes. These plans are
       measured at the fair value of the equity instruments at grant date and the equity instruments
       are tradable or exercisable when services in vesting period are completed or specified
       performance conditions are met. In the vesting period, the services obtained in the current
       period are included in relevant cost and expenses at the fair value of the equity instruments
       at grant date based on the best estimate of the number of tradable or exercisable equity
       instruments, and capital surplus is increased accordingly. If the subsequent information
       indicates the number of tradable or exercisable equity instruments differs from the previous
       estimate, an adjustment is made and, on the exercise date, the estimate is revised to equal
       to the number of actual vested equity instruments.




                                                      - 32 -
         MIDEA GROUP CO., LTD.

         NOTES TO THE FINANCIAL STATEMENTS
         FOR THE YEAR ENDED 31 DECEMBER 2023
         (All amounts in RMB ’000 Yuan unless otherwise stated)
         [English translation for reference only]

  2      Summary of significant accounting policies and accounting estimates (Cont’d)

  (24)   Share-based payment (Cont'd)

  (b)    Determination of fair value of equity instruments

         The Group determines the fair value of stock options using option pricing model, which is
         Black-Scholes option pricing model.

         The fair value of other equity instruments is based on the share prices, which exclude the
         price that incentive objects pay, and the number of the shares on the grant date, taking into
         account the effects of clause of the Group’s relevant plans.

  (c)    Basis for determining best estimate of tradable or exercisable equity instruments

         As at each balance sheet date in the vesting period, the Group would make best estimate
         in accordance with the newly acquired information such as changes in the number of
         employees entitled with exercisable or tradable equity instruments, and amend the
         estimated number of exercisable or tradable equity instruments. On the exercise or
         desterilisation date, the final number of estimated exercisable or tradable equity instruments
         is consistent with the actual number of exercisable or tradable equity instruments.

  (25)   Treasury stock

         The Group’s treasury stock mainly comes from the repurchase of equity instruments and
         the issuance of restricted shares, etc.

         Consideration and transaction costs paid by the Group for repurchasing equity instruments
         are deducted from owners’ equity and not recognised as financial assets. The
         considerations paid by the Group for repurchasing equity instruments are presented as
         treasury stock, and the related transaction costs are recognised in owners’ equity.

         On the deregistration day of shares, relevant share capital and treasury stock are reversed
         with the difference included in capital surplus (share premium) based on actual
         deregistration results.

         On the grant day of restricted shares, the Group recognises bank deposits when receiving
         subscription from the employees and measures the repurchase obligation as liability. On the
         day of release of restricted shares, relevant treasury stocks, liabilities and capital surplus
         recognised in the vesting period are reversed based on the actual vesting results.

(26)     Revenue

         The Group recognises revenue at the amount of the consideration which the Group is
         expected to receive when the customer obtains control over relevant goods or services.
         Revenue is stated net of discounts, rebates and returns.




                                                        - 33 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(26)   Revenue (Cont’d)

       When any of the following conditions is met, the Group is subject to performance obligations
       within a period of time; otherwise, at a point in time:

       (1)      Customers obtain and consume economic benefits coming from the Group’s
                performance of contract while the Group performs the contract.
       (2)      Customers can control goods under construction during the Group’s performance
                of contract.
       (3)      Goods produced during the Group’s performance of contract are irreplaceable.
                During the whole contract period, the Group is entitled to collect payments for those
                which have been accumulated up to now.

       For a contract obligation within a period of time, the Group recognises the revenue based
       on the progress of the obligation fulfilment within that period of time, except where the
       progress of the obligation fulfilment cannot be determined reasonably.

       Where the status of completion cannot be reasonably determined, revenue is recognised at
       the amount of cost incurred if it is predicted that the cost can be compensated till the
       progress of the obligation fulfilment can be reasonably determined.

       For a contract obligation at a point in time, the Group recognises the revenue when a
       customer is in control of the underlying goods.

(a)    Sales of goods

       The Group are principally engaged in the designing, manufacturing and selling residential
       air conditioner, central air-conditioner, heating and ventilation systems, kitchen appliances,
       refrigerators, washing machines, various small appliances, elevators, variable frequency
       drives, robotics, medical imaging equipment, automation system and sales of products and
       materials to buyers.

       Revenue from domestic sales of goods is recognised when the Group has delivered
       products to the location specified in the sales contract and the buyer has confirmed the
       acceptance of the products, and the delivery order is signed by both parties. Upon
       confirming the acceptance, the buyer has the right to sell the products at its discretion and
       takes the risks of any price fluctuations and obsolescence and loss of the products.

       Revenue from overseas goods sale is recognised when the products have been declared
       to the customs and shipped out of the port in accordance with the sales contract.




                                                      - 34 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(26)   Revenue (Cont’d)

(a)    Sales of goods (Cont’d)

       The credit period granted to distributors by the Group is determined based on their credit
       risk characteristics, which is consistent with industry practice, and there is no significant
       financing component. The Group makes estimates based on past sales returns and takes
       into account the type of customer, type of transaction and characteristics of each
       arrangement.

       The Group provides distributors with sales discount, and the relevant revenue is recognised
       at contract consideration net of the discount amount estimated.

       The periods and terms of product quality warranty are provided in accordance with the laws
       and regulations related to the products. The Group has not provided any additional services
       or product quality warranty, so the product quality warranty does not constitute a separate
       performance obligation.

       The rights to receive considerations for transferring goods to the customer (and such rights
       depend on factors other than the passage of time) are recognised as contract assets. The
       Group’s obligation to transfer products to customers for consideration received or receivable
       is presented as contract liabilities.

(b)    Rendering of services

       The Group provides robotics and automation system construction service, intelligent
       logistics integration solution, storage services, delivery services, installation services and
       transportation service, which are recognised in a certain period of time based on the stage
       of completion. On the balance sheet date, the Group re-estimates the stage of completion
       to reflect the actual status of contract performance.

       When the Group recognises revenue based on the stage of completion, the amount with
       unconditional collection right obtained by the Group is recognised as accounts receivable,
       and the rest is recognised as contract assets. Meanwhile, loss provision for accounts
       receivable and contract assets are recognised on the basis of ECL (Note 2(10)). If the
       contract price received or receivable exceeds the amount for the completed service, the
       excess portion will be recognised as contract liabilities. Contract assets and contract
       liabilities under the same contract are presented on a net basis.




                                                      - 35 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(26)   Revenue (Cont’d)

(b)    Rendering of services (Cont’d)

       Contract costs include contract performance costs and contract acquisition costs. The costs
       incurred by the Group for the provision of services are recognised as contract performance
       costs. The recognised revenue is carried forward to the cost of sales from main operations
       based on the stage of completion. Incremental costs incurred by the Group for the
       acquisition of contract are recognised as the costs to obtain a contract. For the costs to
       obtain a contract with the amortisation period within one year, the costs are charged to profit
       or loss when incurred. For the costs to obtain a contract with the amortisation period beyond
       one year, the costs are charged in the current profit or loss on the same basis as aforesaid
       revenue of rendering of services recognised under the relevant contract. If the carrying
       amount of the contract costs is higher than the remaining consideration expected to be
       obtained by rendering of the service net of the estimated cost to be incurred, the Group
       makes provision for impairment on the excess portion and recognises it as asset impairment
       losses. As at the balance sheet date, based on whether the amortisation period of the costs
       to fulfil a contract is more than one year when initially recognised, the amount of the Group’s
       costs to fulfil a contract net of related provision for asset impairment is presented as
       inventories or other non-current assets. For costs to obtain a contract with amortisation
       period beyond one year at the initial recognition, the amount net of related provision for
       asset impairment is presented as other non-current assets.

(c)    Interest income

       Interest income from financial instruments is calculated by effective interest rate method and
       recognised in profit or loss for the current period. Interest income comprises premiums or
       discounts, or the amortisation based on effective rates of other difference between the initial
       carrying amount and the due amount of interest-earning assets.

       The effective interest rate method is a method of calculating the amortised cost of a financial
       asset or liability and the interest income or interest costs based on effective rates. The
       effective interest rate is the rate at which the estimated future cash flows during the period
       of expected duration of the financial instruments or applicable shorter period are discounted
       to the current carrying amount of the financial instruments. When calculating the effective
       interest rate, the Group estimates cash flows by considering all contractual terms of the
       financial instrument (e.g., early repayment options, similar options, etc.), but without
       considering future credit losses. The calculation includes all fees and interest paid or
       received that are an integral part of the effective interest rate, transaction costs, and all other
       premiums or discounts.

       Interest income from impaired financial assets is calculated at the interest rate that is used
       for discounting estimated future cash flow when measuring the impairment loss.

(d)    Dividend income

       Dividend income is recognised when the right to receive dividend payment is established.

(e)    Rental income

       Rental income from investment prosperities is recognised in the income statement on a
       straight-line basis over the lease period.




                                                      - 36 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(26)   Revenue (Cont’d)

(f)    Fee and commission income

       Fee and commission income is recognised in profit or loss for the current period when the
       service is provided. The Group defers the initial charge income or commitment fee income
       arising from the forming or acquisition of financial assets as the adjustment to effective
       interest rate. If the loans are not lent when the loan commitment period is expired, related
       charges are recognised as fee and commission income.

(27)   Government grants

       Government grants are transfers of monetary or non-monetary assets from the government
       to the Group at nil consideration, including refund of taxes and financial subsidies.

       A government grant is recognised when the conditions attached to it can be complied with
       and the government grant can be received. For a government grant in the form of transfer
       of monetary assets, the grant is measured at the amount received or receivable. For a
       government grant in the form of transfer of non-monetary assets, it is measured at fair value;
       if the fair value is not reliably determinable, the grant is measured at nominal amount.

       Government grants related to assets are grants that are acquired by the Group and used
       for acquisition, construction or forming long-term assets in other ways. Government grants
       related to income refer to the government grants other than those related to assets.

       Government grants related to assets are either deducted against the carrying amount of the
       assets, or recorded as deferred income and recognised in profit or loss on a systemic basis
       over the useful lives of the assets.

       For government grants related to income, where the grant is a compensation for related
       expenses or losses to be incurred by the Group in the subsequent periods, the grant is
       recognised as deferred income, and included in profit or loss over the periods in which the
       related costs are recognised; where the grant is a compensation for related expenses or
       losses already incurred by the Group, the grant is recognised directly in profit or loss for the
       current period.

       The same kind of government grants are presented with the same method.

       Those related to ordinary activities are recorded into operating profit while the other in non-
       operating income and expenses.

       Loans to the Group at political preferential rate are recorded at the actual amount received,
       and the related loan expenses are calculated based on the principal and the political
       preferential rate. Finance discounts directly received offset related loans expenses.




                                                      - 37 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(28)   Deferred tax assets and deferred tax liabilities

       Deferred tax assets and deferred tax liabilities are calculated and recognised based on the
       differences arising between the tax bases of assets and liabilities and their carrying amounts
       (temporary differences). Deferred tax asset is recognised for the deductible losses that can
       be carried forward to subsequent years for deduction of the taxable profit in accordance with
       the tax laws. No deferred tax liability is recognised for a temporary difference arising from
       the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised
       for the temporary differences resulting from the initial recognition of assets or liabilities due
       to a transaction other than a business combination, which affects neither accounting profit
       nor taxable profit (or deductible losses) and whose initially recognised assets and liabilities
       do not result in equal taxable temporary differences and deductible temporary differences.
       At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at
       the tax rates that are expected to apply to the period when the asset is realised or the liability
       is settled.

       Deferred tax assets are only recognised for deductible temporary differences, deductible
       losses and tax credits to the extent that it is probable that taxable profit will be available in
       the future against which the deductible temporary differences, deductible losses and tax
       credits can be utilised.

       Deferred tax liabilities are recognised for temporary differences arising from investments in
       subsidiaries, associates and joint ventures, except where the Group is able to control the
       timing of reversal of the temporary difference, and it is probable that the temporary difference
       will not reverse in the foreseeable future. When it is probable that the temporary differences
       arising from investments in subsidiaries, associates and joint ventures will be reversed in
       the foreseeable future and that the taxable profit will be available in the future against which
       the temporary differences can be utilised, the corresponding deferred tax assets are
       recognised.

       Deferred tax assets and deferred tax liabilities are offset when:

            the deferred tax assets and deferred tax liabilities are related to the same tax payer
            within the Group and the same taxation authority; and,
            that tax payer within the Group has a legally enforceable right to offset current tax assets
            against current tax liabilities.

(29)   Leases

       A contract is, or contains, a lease if the contract conveys the right to control the use of an
       identified asset for a period of time in exchange for consideration.




                                                      - 38 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(29)   Leases (Cont’d)

       The Group as the lessee

       At the lease commencement date, the Group recognises the right-of-use asset and
       measures the lease liability at the present value of the lease payments that are not paid at
       that date. Lease payments include fixed payments, the exercise price of a purchase option
       if the lessee is reasonably certain to exercise that option, and payments of penalties for
       terminating the lease if the lessee exercises an option to terminate the lease. Variable lease
       payments in proportion to sales are excluded from lease payments and recognised in profit
       or loss as incurred. Lease liabilities that are due within one year (inclusive) as from the
       balance sheet date are included in the current portion of non-current liabilities.

       Right-of-use assets of the Group comprise leased buildings, machinery and equipment,
       motor vehicles, etc. Right-of-use assets are measured initially at cost which comprises the
       amount of the initial measurement of lease liabilities, any lease payments made at or before
       the commencement date and any initial direct costs, less any lease incentives received. If
       there is reasonable certainty that the Group will obtain ownership of the underlying asset
       by the end of the lease term, the asset is depreciated over its remaining useful life; otherwise
       the asset is depreciated over the shorter of the lease term and its remaining useful life. The
       carrying amount of the right-of-use asset is reduced to the recoverable amount when the
       recoverable amount is below the carrying amount.

       For short-term leases with a term of 12 months or less and leases of an individual asset
       (when new) of low value, the Group chooses to include the lease payments in the cost of
       the underlying assets or in the profit or loss for the current period on a straight-line basis
       over the lease term, instead of recognising right-of-use assets and lease liabilities.

       The Group accounts for a lease modification as a separate lease if both: (1) the modification
       increases the scope of the lease by adding the right to use one or more underlying assets;
       (2) the consideration for the lease increases by an amount commensurate with the stand-
       alone price for the increase in scope and any appropriate adjustments to that stand-alone
       price to reflect the circumstances of the contract.

       For a lease modification that is not accounted for as a separate lease, the Group
       redetermines the lease term at the effective date of the lease modification, and remeasures
       the lease liability by discounting the revised lease payments using a revised discount rate,
       except the contract changes that may apply the practical expedient as specified by the
       Ministry of Finance. For a lease modification which decreases the scope of the lease or
       shortens the lease term, the Group correspondingly decreases the carrying amount of the
       right-of-use asset, and recognises in profit or loss any gain or loss relating to the partial or
       full termination of the lease. For other lease modifications which lead to the remeasurement
       of lease liabilities, the Group correspondingly adjusts the carrying amount of the right-of-
       use asset.

       For the qualified rent concessions agreed on existing lease contracts, the Group applies
       the practical expedient and records the undiscounted concessions in profit or loss when the
       agreement is reached to discharge the original payment obligation with corresponding
       adjustment of lease liabilities.




                                                      - 39 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(29)   Leases (Cont’d)

       The Group as the lessor

       A lease is classified as a finance lease if it transfers substantially all the risks and rewards
       incidental to ownership of an underlying asset. An operating lease is a lease other than a
       finance lease.

(a)    Operating leases

       Where the Group leases out self-owned buildings, machinery and equipment, and motor
       vehicles under operating leases, rental income therefrom is recognised on a straight-line
       basis over the lease term. Variable rental that is linked to a certain percentage of sales is
       recognised in rental income as incurred.

       For the qualified rent concessions agreed on existing lease contracts, the Group applies the
       practical expedient to account for the concessions as variable lease payments and record
       the concessions in profit or loss during the waiving period.

       Except the above qualified contract changes that are accounted for by applying the practical
       expedient, for a lease modification, the Group accounts for it as a new lease from the
       effective date of the modification, and considers any lease payments received in advance
       and receivable relating to the lease before modification as receivables of the new lease.

(b)    Finance leases

       At the commencement date, the Group recognises the lease payments receivable under a
       finance lease and derecognises relevant assets. The lease payments receivable under a
       finance lease are presented as long-term receivables; the lease payments receivable under
       a finance lease due within one year (inclusive) as from the balance sheet date are included
       in the current portion of non-current assets.

(30)   Segment information

       The Group identifies operating segments based on the internal organisation structure,
       management requirements and internal reporting system, and discloses segment
       information of reportable segments which is determined on the basis of operating segments.

       An operating segment is a component of the Group that satisfies all of the following
       conditions: (1) the component is able to earn revenue and incur expenses from its ordinary
       activities; (2) whose operating results are regularly reviewed by the Group’s management
       to make decisions about resources to be allocated to the segment and to assess its
       performance, and (3) for which the information on financial position, operating results and
       cash flows is available to the Group. Two or more operating segments that have similar
       economic characteristics and satisfy certain conditions can be aggregated into one single
       operating segment.




                                                      - 40 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(31)   Critical accounting estimates and judgements

       The Group continually evaluates the critical accounting estimates and key judgements
       applied based on historical experience and other factors, including expectations of future
       events that are believed to be reasonable.

       The critical accounting estimates and key assumptions that have a significant risk of causing
       a material adjustment to the carrying amounts of assets and liabilities within the next
       accounting year are outlined below:

(i)    Provision for impairment of goodwill

       The Group tests at least annually whether goodwill has suffered any impairment. The
       recoverable amount of the asset group or group of asset groups that contain the apportioned
       goodwill is determined by the higher value between the present value of the future cash
       flows and the net value that is calculated by the fair value less the disposal costs. Accounting
       estimate is required for the calculation of the recoverable amount. The impairment testing
       is performed by assessing the recoverable amount of the asset group or group of asset
       groups containing the relevant goodwill, based on the present value of cash flows forecasts.
       Key assumptions adopted in the impairment testing of goodwill included forecast period
       revenue annual growth rate, gross margin, perpetual annual growth rate and pre-tax
       discount rate, etc. which involved critical accounting estimates and judgement.

       If management revises the forecast period revenue annual growth rate and perpetual annual
       growth rate that are used in the calculation of the future cash flows of asset groups or groups
       of asset groups, and the revised rates are lower than the current rates, the Group will need
       to recognise further impairment against goodwill.

       If management revises the gross margin that is used in the calculation of the future cash
       flows of asset groups or groups of asset groups, and the revised gross margin is lower than
       the current one, the Group will need to recognise further impairment against goodwill.

       If management revises the pre-tax discount rate applied to the discounted cash flows, and
       the revised pre-tax discount rate is higher than the one currently applied, the Group will
       need to recognise further impairment against goodwill.

       If the actual revenue annual growth rate, perpetual annual growth rate and gross margin are
       higher or the actual pre-tax discount rate is lower than management’s estimates, the
       impairment loss of goodwill previously provided for is not allowed to be reversed by the
       Group.




                                                      - 41 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

2       Summary of significant accounting policies and accounting estimates (Cont’d)

(31)    Critical accounting estimates and judgements (Cont’d)

(ii)    Income tax and deferred income tax

        The Group is subject to enterprise income tax in numerous jurisdictions. There are many
        transactions and events for which the ultimate tax determination is uncertain during the
        ordinary course of business. Significant judgement is required from the Group in determining
        the provision for income taxes in each of these jurisdictions. Where the final tax outcome of
        these matters is different from the amounts that were initially recorded, such differences will
        impact the income tax and deferred tax provisions in the period in which such determination
        is made.

        As stated in Note 3(1), some subsidiaries of the Group are high-tech enterprises. The “High-
        Tech Enterprise Certificate” is effective for three years. Upon expiration, application for high-
        tech enterprise assessment should be submitted again to the relevant government
        authorities. Based on the past experience of reassessment for high-tech enterprise upon
        expiration and the actual condition of the subsidiaries, the Group considers that the
        subsidiaries are able to obtain the qualification for high-tech enterprises in future years, and
        therefore a preferential tax rate of 15% is used to calculate the corresponding deferred
        income tax. If some subsidiaries cannot obtain the qualification for high-tech enterprise upon
        expiration, then the subsidiaries are subject to a statutory tax rate of 25% for the calculation
        of the income tax, which further influences the recognised deferred tax assets, deferred tax
        liabilities and income tax expenses.

        Deferred tax assets are recognised for the deductible tax losses that can be carried forward
        to subsequent years to the extent that it is probable that taxable profit will be available in the
        future against which the deductible tax losses can be utilised. Taxable profit that will be
        available in the future includes the taxable profit that will be realised through normal
        operations and the taxable profit that will be increased upon the reversal of taxable
        temporary differences incurred in prior periods. Judgements and estimates are required to
        determine the time and amounts of taxable profit in the future. Any difference between the
        reality and the estimate may result in adjustment to the carrying amount of deferred tax
        assets.

(iii)   Fair value assessment of financial instruments at level 3 fair value hierarchy

        Financial instruments subject to Level 3 fair value hierarchy include unlisted equity
        investments at fair value of other non-current financial assets, investments in other equity
        instruments and trading financial liabilities. The fair value of these financial instruments is
        determined using valuation techniques, and the assumptions of valuation model is based
        on unobservable inputs, where changes in assumptions and estimates may have an impact
        on the fair value of these investments. These valuation techniques, unobservable inputs
        and related assumptions are detailed in Note16(1).




                                                       - 42 -
       MIDEA GROUP CO., LTD.

       NOTES TO THE FINANCIAL STATEMENTS
       FOR THE YEAR ENDED 31 DECEMBER 2023
       (All amounts in RMB ’000 Yuan unless otherwise stated)
       [English translation for reference only]

2      Summary of significant accounting policies and accounting estimates (Cont’d)

(32)   Significant changes in accounting policies

       The Ministry of Finance released the Circular on Issuing Interpretation No. 16 of Accounting
       Standards for Business Enterprises in 2022, which stipulates that deferred income taxes
       related to assets and liabilities arising from individual transactions are not applicable to initial
       recognition exemption and this is effective from 1 January 2023. The Ministry of Finance
       released the Q&A on Implementation of Accounting Standards for Business Enterprises in
       2023. The financial statements for the year ended 31 December 2023 and for the year
       ended 31 December 2022 have been prepared by the Group and the Company in
       accordance with the above interpretation and Q&A, which have no significant impacts on
       the financial statements of the Group and the Company.

3      Taxation

(1)    Main tax category and rate

       Category                     Tax base                                         Tax rate

       Enterprise income tax Levied based on taxable income                    Note (a)
       Value-added tax       Taxable value-added amount (Tax payable is Note (b)
          (“VAT”)             calculated using the taxable sales amount
                                multiplied by the applicable tax rate less
                                deductible input VAT of the current period)
       City maintenance and The amount of VAT paid                             1% or 5% or 7%
          construction tax
       Educational surcharge The amount of VAT paid                            3% or 5%
       Local educational     The amount of VAT paid                            2%
          surcharge
       Property tax          Price-based property is subject to a 1.2% tax 1.2% or 12%
                                rate after a 30% cut in the original price of
                                property; rental- based property is subject to
                                a 12% tax rate for the rental income.




                                                      - 43 -
           MIDEA GROUP CO., LTD.

           NOTES TO THE FINANCIAL STATEMENTS
           FOR THE YEAR ENDED 31 DECEMBER 2023
           (All amounts in RMB ’000 Yuan unless otherwise stated)
           [English translation for reference only]

3          Taxation (Cont’d)

(1)        Main tax category and rate (Cont’d)

(a)        Notes to the enterprise income tax rate of the principal tax payers with different tax rates

(a-1)      The following subsidiaries of the Group are subject to an enterprise income tax rate of 15%
           in 2023 as they qualified as high-tech enterprises and obtained the High-tech Enterprise
           Certificate:

Taxpayer                                             High-tech Enterprise           Certificate   Validity
                                                       Certificate number      acquisition date

Wuhu Midea Kitchen & Bath Appliances Mfg.
  Co., Ltd.                                            GR202134003382       18 September 2021     3 years
Changsha Sunye Electric Co., Ltd.                      GR202143000846       18 September 2021     3 years
Anhui Welling Auto Parts Corporation Limited           GR202134002578       18 September 2021     3 years
Hefei Hualing Co., Ltd.                                GR202134000541       18 September 2021     3 years
Anhui Meizhi Precision Manufacturing Co., Ltd.         GR202134004969       18 September 2021     3 years
Hefei Midea Laundry Appliance Co., Ltd.                GR202134003561       18 September 2021     3 years
MR Semiconductor Ltd.                                  GR202131000701       10 September 2021     3 years
Reis Robotics (Kunshan) Co., Ltd.                      GR202132000238         3 November 2021     3 years
Wuxi Filin Electronics Co., Ltd.                       GR202132000964         3 November 2021     3 years
Welling (Wuhu) Motor Manufacturing Co., Ltd.           GR202134003666        18 November 2021     3 years
Beijing Huatairunda Energy Saving Co., Ltd.            GR202111004112        17 December 2021     3 years
Guangdong Midea Intelligent Technologies Co.,
  Ltd.                                                 GR202144008039       20 December 2021      3 years
WINONE ELEVATOR COMPANY LIMITED                        GR202144006432       20 December 2021      3 years
Guangdong Midea Environmental Technologies
  Co., Ltd.                                            GR202144004692       20 December 2021      3 years
Meicloud Technology Co., Ltd.                          GR202144008715       20 December 2021      3 years
Guangdong Midea Kitchen Appliances
  Manufacturing Co., Ltd.                              GR202144008574       20 December 2021      3 years
GD Midea Heating & Ventilating Equipment Co.,
  Ltd.                                                 GR202144001270       20 December 2021      3 years
Guangdong Swisslog Technology Co., Ltd.                GR202144005648       20 December 2021      3 years
Toshiba HA Manufacturing (Nanhai) Co., Ltd.            GR202144002672       20 December 2021      3 years
Guangdong Meizhi Precision- Manufacturing
  Co., Ltd.                                            GR202144003890       20 December 2021      3 years
Shenzhen Hongzhi Software Co., Ltd.                    GR202144200284       23 December 2021      3 years
Shenzhen CLOU Precision Measurement Co.,
  Ltd.                                                 GR202144202249       23 December 2021      3 years
Shenzhen Clou Intelligence Industry Co., Ltd.          GR202144200806       23 December 2021      3 years
CLOU Global Technology Co., Ltd.                       GR202144206543       23 December 2021      3 years
Foshan Shunde Midea Electrical Heating
  Appliances
Manufacturing Co., Ltd.                                GR202144012791       31 December 2021      3 years
Foshan Midea Chungho Water Purification
  Equipment. Co., Ltd.                                 GR202144010400       31 December 2021      3 years
Hefei Midea Heating & Ventilating Equipment
  Co., Ltd.                                            GR202234002343         18 October 2022     3 years
Anhui Meizhi Compressor Co., Ltd.                      GR202234002700         18 October 2022     3 years
WDM Esaote(Suzhou)Medical Technology Co.,
  Ltd.                                                 GR202232006635       18 November 2022      3 years
Midea Group Wuhan Heating Ventilation
  Equipment Co.,Ltd.                                   GR202242004390       29 November 2022      3 years
Wuhan TTium Motor Technology Co., Ltd.                 GR202242004712       29 November 2022      3 years
Huaian Welling Motor Manufacturing Co., Ltd.           GR202232018102       12 December 2022      3 years
KUKA Robotics Manufacturing China Co., Ltd.            GR202231004961       14 December 2022      3 years
Shenzhen Midea Payment Technology Co., Ltd.            GR202244208053       19 December 2022      3 years
Foshan Shunde Midea Electric Science and
  Technology Co., Ltd.                                 GR202244002733       19 December 2022      3 years
Guangzhou Midea Hualing Refrigerator Co., Ltd.         GR202244004828       19 December 2022      3 years




                                                          - 44 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

3       Taxation (Cont’d)

(1)     Main tax category and rate (Cont’d)

(a)     Notes to the enterprise income tax rate of the principal tax payers with different tax
        rates(Cont’d)

(a-1)   The following subsidiaries of the Group are subject to an enterprise income tax rate of 15%
        in 2023 as they qualified as high-tech enterprises and obtained the High-tech Enterprise
        Certificate(Cont’d):

        Name of taxpayer                                              No. of the High-tech                         Term of
                                                                     Enterprise Certificate    Dates of issuance    validity
        Guangdong Yueyun Industrial Internet Innovation
           Technology Co., Ltd.                                        GR202244006484         22 December 2022     3 years
        GD Midea Environment Appliances Mfg. Co.,Ltd.                  GR202244008573         22 December 2022     3 years
        Wanliyun Medical Information Technology (Beijing) Co.,
           Ltd.                                                        GR202211008024         30 December 2022     3 years
        Hubei Midea Laundry Appliance Co., Ltd.                        GR202342000522           16 October 2023    3 years
        Sichuan CLOU Energy Electric Co., Ltd.                         GR202351003347           16 October 2023    3 years
        Hubei Midea Building Technology Co., Ltd.                      GR202342000405           16 October 2023    3 years
        MiSiliconn Semiconductor Technologies Co., Ltd.                GR202351100902           16 October 2023    3 years
        Handan Midea Air-Conditioning Equipment Co., Ltd.              GR202313000973         28 December 2023     3 years
        Chongqing Midea General Refrigeration Equipment Co.,
           Ltd.                                                        GR202351101572           26 October 2023    3 years
        Hubei Midea Refrigerator Co., Ltd.                             GR202342000311           16 October 2023    3 years
        Hiconics Eco-energy Drive Technology Co., Ltd.                 GR202311003112           26 October 2023    3 years
        Wuxi Little Swan Electric Co., Ltd.                            GR202332003281          6 November 2023     3 years
        Suzhou CLOU-MGE Electric Co., Ltd.                             GR202332003299          6 November 2023     3 years
        Jiangsu Midea Cleaning Appliances Co., Ltd.                    GR202332002439          6 November 2023     3 years
        Midea Group Wuhan Refrigeration Equipment Co., Ltd.            GR202342003400         14 November 2023     3 years
        Midea Network Information Services (Shenzhen) Co., Ltd.        GR202344206239         15 November 2023     3 years
        Kuka Systems (China) Co., Ltd.                                 GR202331002862         15 November 2023     3 years
        Shenzhen CLOU Electronics Co., Ltd.                            GR202344204605         15 November 2023     3 years
        Midea Intelligent Lighting & Controls Technology Co., Ltd.     GR202336001435         22 November 2023     3 years
        Beijing Wandong Medical Technology Co.,Ltd.                    GR202311003930         30 November 2023     3 years
        Wuhu Maty Air-Conditioning Equipment Co., Ltd.                 GR202334004899         30 November 2023     3 years
        Wuhu Midea Smart Kitchen Appliance Manufacturing Co.,
           Ltd.                                                        GR202334006446         30 November 2023     3 years
        Shanghai Swisslog Healthcare Technology Co., Ltd.              GR202331005355         12 December 2023     3 years
        Midea Welling Motor Technology (Shanghai) Co., Ltd.            GR202331003851         12 December 2023     3 years
        Guangdong Midea Precision Mould Technology Co., Ltd.           GR202344005048         28 December 2023     3 years
        KUKA Robotics Guangdong Co., Ltd.                              GR202344010905         28 December 2023     3 years
        Guangdong Shunkai Switch Co., Ltd.                             GR202344003261         28 December 2023     3 years
        Guangdong Witol Vacuum Electronic Manufacture Co.,
           Ltd.                                                        GR202344003728         28 December 2023     3 years
        Foshan Shunde Midea Washing Appliances
           Manufacturing Co., Ltd.                                     GR202344017927         28 December 2023     3 years
        Guangdong Welling Motor Manufacturing Co., Ltd.                GR202344008685         28 December 2023     3 years
        Foshan Welling Washer Motor Manufacturing Co., Ltd.            GR202344007566         28 December 2023     3 years
        GD Midea Air-Conditioning Equipment Co., Ltd.                  GR202344001853         28 December 2023     3 years
        Guangzhou Hualing Refrigerating Equipment Co., Ltd.            GR202344003947         28 December 2023     3 years
        Guangdong Meizhi Compressor Limited                            GR202344005746         28 December 2023     3 years
        Guangdong Midea Consumer Electric Manufacturing Co.,
           Ltd.                                                        GR202344008924         28 December 2023     3 years
        Foshan Shunde Midea Water Dispenser Manufacturing
           Co., Ltd.                                                   GR202344017783         28 December 2023     3 years




                                                        - 45 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

3       Taxation (Cont’d)

(1)     Main tax category and rate (Cont’d)

(a)     Notes to the enterprise income tax rate of the principal tax payers with different tax rates
        (Cont’d)

(a-2)   According to the Notice of the Ministry of Finance, the State Taxation Administration on
        Preferential Enterprise Income Tax Policies for Hainan Free-trade Port (Cai Shui [2020] No.
        31), the Company’s certain subsidiary in Hainan is subject to enterprise income tax at a rate
        of 15% from 1 January 2020 to 31 December 2024.

(a-3)   Pursuant to the Notice on Extending the Preferential Enterprise Income Tax Policies for
        Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen,
        enterprises that meet the notice requirements are subject to a reduced enterprise income
        tax rate of 15%. Therefore, Midea Commercial Factoring Co., Ltd., a subsidiary of the
        Company, is subject to enterprise income tax at a rate of 15% from 1 January 2021 to 31
        December 2025.

(a-4)   According to the Announcement on Continuing the Enterprise Income Tax Policies for the
        Development of Western China jointly issued by the Ministry of Finance, the State Taxation
        Administration and the National Development and Reform Commission on 23 April 2020,
        Chongqing Midea Air-Conditioning Equipment Co., Ltd., Chongqing Midea Commercial
        Factoring Co., Ltd., Chongqing Annto Logistics Technology Co., Ltd. and Guiyang Annto
        Logistics Technology Co., Ltd., subsidiaries of the Company, are subject to enterprise
        income tax at a rate of 15% from 1 January 2021 to 31 December 2030.

(a-5)   According to the Announcement of the Ministry of Finance and the State Administration of
        Taxation on Implementing the Preferential Income Tax Policies for the Development of Small
        and Micro Enterprises (Announcement [2022], No. 13) and the Announcement of the
        Ministry of Finance and the State Administration of Taxation on Implementing the
        Preferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial
        and Commercial Households (Announcement [2023], No. 6) and Announcement of the
        General Administration of Taxation of the Ministry of Finance on Further Supporting the
        Development of Small and Micro Enterprises and Individual Industrial and Commercial
        Households (Announcement [2023], No. 12) jointly issued by the Ministry of Finance and
        the State Taxation Administration, for Shenzhen Midea Capital Corporation Limited,
        Shanghai Andezhilian Supply Chain Technology Co., Ltd., Foshan Annto Logistics
        Technology Co., Ltd., Shenzhen Annto Intelligent Technology Co., Ltd., Tianjin Annto
        Network Technology Co., Ltd., Jingzhou Meian Storage and Transportation Co., Ltd.,
        Chongqing Wanxiang Medical Equipment Co., Ltd, Shanghai Wandong Yingrui Medical
        Technology Co., Ltd, and Suzhou Wanying Medical Technology Co., Ltd, subsidiaries of the
        Company and qualified as small low-profit enterprises, in 2023, EIT is based on a 20% rate
        applied to 25% of its taxable income amount.

(a-6)   The Company's subsidiaries in the Chinese mainland other than those mentioned in (a-1)
        to (a-5) are subject to enterprise income tax at the rate of 25%.

(a-7)   In August 2008, Midea Electric Trading (Singapore) Co., Pte Ltd., the Company's subsidiary,
        was awarded with the Certificate of Honour for Development and Expansion (No. 587) by
        the Singapore Economic Development Board and is subject to the applicable preferential
        income tax rate of 6% for 2023. Lifestyle Orchestra Co.Pte.Ltd. and Little Swan International
        (Singapore) Co., Pte. LTD., the Company's subsidiaries, are subject to enterprise income
        tax at the rate of 17%.




                                                       - 46 -
         MIDEA GROUP CO., LTD.

         NOTES TO THE FINANCIAL STATEMENTS
         FOR THE YEAR ENDED 31 DECEMBER 2023
         (All amounts in RMB ’000 Yuan unless otherwise stated)
         [English translation for reference only]

3        Taxation (Cont’d)

(1)      Main tax category and rate (Cont’d)

(a)      Notes to the enterprise income tax rate of the principal tax payers with different tax rates
         (Cont’d)

(a-8)    The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax at the rate
         of 16.5%. Such subsidiaries include Midea International Trading Company Limited, Midea
         International Corporation Company Limited, Midea Home Appliances Investments (Hong
         Kong) Co., Limited, Century Carrier Residential Air-conditioning Equipment Co., Limited,
         Midea Refrigeration (Hong Kong) Limited, Welling Holding Limited, Welling International
         Hong Kong Ltd., Chairing Holding Limited, Main Power Electrical Factory Limited and Midea
         Investment (Asia) Company Limited.

(a-9)    The Company's subsidiaries in BVI and Cayman Islands are exempted from enterprise
         income tax. Such subsidiaries include Mecca International (BVI) Limited, Titoni Investments
         Development Ltd., Midea Investment Holding (BVI) Limited, Midea Electric Investment (BVI)
         Limited, Welling Holding (BVI) Ltd., Midea Holding (Cayman Islands) Limited and Midea
         Investment Development Company Limited.

(a-10) Springer Carrier Ltda., the Company's subsidiary in Brazil, is subject to Brazil enterprise
       income tax at the rate of 34%.

(a-11)   Some subsidiaries of TLSC, the Company's subsidiary in Japan, are subject to Japan
         enterprise income tax at the rate of 34.01%.

(a-12) Clivet S.P.A (“Clivet”), the Company's subsidiaries in Italy, are subject to Italy enterprise
       income tax at the rate 24%.

(a-13) KUKA Group, the Company's subsidiary in Germany, is subject to Germany enterprise
       income tax at the rate of 32%.

(a-14) Servotronix Motion Control Ltd. (“SMC”), the Company's subsidiary in Israel, is subject to
       Israel enterprise income tax at the rate of 23%.

(a-15) Misr Refrigeration and Air Conditioning Manufacturing Company, S.A.E., the Company's
       subsidiary in Egypt, is subject to Egypt enterprise income tax at the rate of 22.5%.

(a-16) Midea America Corp., the Company's subsidiary in the USA, is subject to USA enterprise
       income tax at the rate of 21%.

(a-17) Midea Consumer Electric (Vietnam) CO., LTD., the Company's subsidiary in Vietnam, is
       subject to Vietnam enterprise income tax at the rate of 20%.

(a-18) Midea Refrigeration Equipment (Thailand) Co., Ltd., the Company's subsidiary in Thailand,
       is exempt from enterprise income tax under the investment promotion policy of the Thailand
       Board of Investment.




                                                        - 47 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

3       Taxation (Cont’d)

(1)     Main tax category and rate (Cont’d)

(b)     Notes to the VAT rate of the principal tax payers with different tax rates

(b-1)   Pursuant to relevant provisions of the Announcement on Relevant Policies for Deepening
        Value-Added Tax Reform (Announcement [2019] No. 39) jointly issued by the Ministry of
        Finance, the State Taxation Administration and the General Administration of Customs and
        relevant regulations, the applicable tax rate of revenue arising from sales of goods and
        rendering of repairing and replacement services of the Company’s certain subsidiaries is
        13% from 1 April 2019, and that of revenue arising from real estate leasing and
        transportation services of the Company’s certain subsidiaries is 9%.

(b-2)   Financial services, consulting services and storage services provided by the Company and
        certain subsidiaries are subject to VAT at the rate of 6%.

(b-3)   Rental revenue of the Company’s certain subsidiaries is subject to easy levy of VAT at the
        rate of 5%.

(b-4)   Pursuant to relevant provisions of the Announcement on Clarifying the Value-added Tax
        Reduction and Exemption Policies for Small-scale Value-added Tax Taxpayers and Other
        Policies (Announcement [2023] No. 1) issued by the Ministry of Finance and the State
        Taxation Administration, certain subsidiaries of the Company engaged in the production
        service sector are eligible for a 5% additional VAT deduction based on deductible input VAT
        in the current year from 1 January 2023 to 31 December 2023.

(b-5)   Pursuant to relevant provisions of the Announcement on Relevant Tax Policies for Further
        Supporting the Business Startup and Employment of Priority Groups (Announcement [2023]
        No. 15) issued by the Ministry of Finance, the State Taxation Administration, the Ministry of
        Human Resources and Social Security and the Ministry of Agriculture and Rural Affairs, for
        certain subsidiaries of the Company that employ the people who have been lifted out of
        poverty and those who have been registered as unemployed for more than half a year and
        hold the Certificate of Employment and Start-up or the Registration Certificate of
        Employment and Unemployment (stating “tax policy for business absorption”), since the
        month of signing the labour contracts of more than 1 year and paying the social security
        contributions, their VAT, city maintenance and construction tax, educational surcharge, local
        educational surcharge and enterprise income tax will be deducted in sequence and based
        on quota in accordance with the actual number of employees in 3 years from 1 January
        2023 to 31 December 2027.




                                                       - 48 -
        MIDEA GROUP CO., LTD.

        NOTES TO THE FINANCIAL STATEMENTS
        FOR THE YEAR ENDED 31 DECEMBER 2023
        (All amounts in RMB ’000 Yuan unless otherwise stated)
        [English translation for reference only]

3       Taxation (Cont’d)

(1)     Main tax category and rate (Cont’d)

(b)     Notes to the VAT rate of the principal tax payers with different tax rates (Cont’d)

(b-6)   Pursuant to the Notice on the Additional Value-added Tax Credit Policy for Advanced
        Manufacturing Enterprises (Announcement [2023] No. 43) issued by the Ministry of Finance
        and the State Taxation Administration, advanced manufacturing enterprises are eligible for
        a 5% additional VAT deduction based on deductible input VAT in the current year from 1
        January 2023 to 31 December 2027. The following subsidiaries of the Group are approved
        as advanced manufacturing enterprises for 2023 which can enjoy the above policy:

         KUKA Robotics Guangdong Co., Ltd.                         Handan Midea Air-Conditioning Equipment Co., Ltd.
                                                                   Midea Group Wuhan Refrigeration Equipment Co.,
         Guangdong Swisslog Technology Co., Ltd.                      Ltd.
                                                                   Midea Group Wuhan Heating Ventilation Equipment
         Kuka Robotics Manufacturing China Co., Ltd.                  Co.,Ltd.
         Reis Robotics (Kunshan) Co., Ltd.                         Guangzhou Hualing Refrigerating Equipment Co., Ltd.
         Hefei Hualing Co., Ltd.                                   GD Midea Air-Conditioning Equipment Co., Ltd.
         Hubei Midea Refrigerator Co., Ltd.                        Hefei Midea Heating & Ventilating Equipment Co., Ltd.
         Guangzhou Midea Hualing Refrigerator Co., Ltd.            WINONE ELEVATOR COMPANY LIMITED
         Toshiba HA Manufacturing (Nanhai) Co., Ltd.               GD Midea Heating & Ventilating Equipment Co., Ltd.
                                                                   Chongqing Midea General Refrigeration Equipment
         Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd.          Co., Ltd.
         Foshan Shunde Midea Washing Appliances                    Guangdong Midea Consumer Electric Manufacturing
             Manufacturing Co., Ltd.                                  Co., Ltd.
         Foshan Shunde Midea Water Dispenser Manufacturing         Foshan Shunde Midea Electrical Heating Appliances
             Co., Ltd.                                                Manufacturing Co., Ltd.
         Foshan Midea Chungho Water Purification Equipment.
             Co., Ltd.                                             GD Midea Environment Appliances Mfg. Co., Ltd.
         Hiconics Eco-energy Drive Technology Co., Ltd.            Jiangsu Midea Cleaning Appliances Co., Ltd.
                                                                   Guangdong Witol Vacuum Electronic Manufacture
         Huaian Welling Motor Manufacturing Co., Ltd.                  Co., Ltd.
                                                                   Guangdong Midea Kitchen Appliances Manufacturing
         Dorna Technology Co., Ltd.                                    Co., Ltd.
         Anhui Meizhi Compressor Co., Ltd.                         Wuxi Filin Electronics Co., Ltd.
         Anhui Welling Auto Parts Corporation Limited              Wuxi Little Swan Electric Co., Ltd.
         Anhui Meizhi Precision Manufacturing Co., Ltd.            Hefei Midea Laundry Appliance Co., Ltd.
         Welling (Wuhu) Motor Manufacturing Co., Ltd.              Hubei Midea Laundry Appliance Co., Ltd.
         Guangdong Meizhi Compressor Limited                       Shenzhen CLOU Electronics Co., Ltd.
         Guangdong Welling Motor Manufacturing Co., Ltd.           Shenzhen CLOU Precision Measurement Co., Ltd.
         Foshan Welling Washer Motor Manufacturing Co., Ltd.       Shenzhen Clou Intelligence Industry Co., Ltd.
         Guangdong Meizhi Precision- Manufacturing Co., Ltd.       CLOU Global Technology Co., Ltd.
         Guangdong Midea Intelligent Technologies Co., Ltd.        Guangdong Shunde Switch Factory Co., Ltd.
         Guangdong Midea Environmental Technologies Co., Ltd.      Hubei Midea Building Technology Co., Ltd.
         Changsha Sunye Electric Co., Ltd.                         MiSiliconn SemiConductor Technologies Co., Ltd.
         Wuhan TTium Motor Technology Co., Ltd.




                                                          - 49 -
      MIDEA GROUP CO., LTD.

      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2023
      (All amounts in RMB ’000 Yuan unless otherwise stated)
      [English translation for reference only]

4     Notes to the consolidated financial statements

(1)   Cash at bank and on hand

                                                         31 December 2023      31 December 2022

      Cash on hand                                                   1,603                  1,645
      Cash at bank (a)                                          44,521,913             28,581,529
      Other cash balances (b)