Annual Report 2019

55 ANNUAL REPORT 2019 BUILDING A SUSTAINABLE SUPPLY CHAIN Persisted in win-win cooperation with its partners of the supply chain, the Group has formulated Implementation Rules for Supplier Management (Trial) ( 《供應商管理實 施細則 ( 試行 ) 》 ) in compliance with the supply chain management systems and standards of China Merchants Group. The Group analyses the risk of possible corruption, information leakage, dishonesty, deficiencies in product or service qualities, fraudulent materials or identities in the supply chain in detail, and suspends, cancels or permanently cancels the qualifications of suppliers based on the degrees of severity and damage. The Group observes strict standards and requirements in selecting suppliers with a view to motivating their fulfillment of social responsibilities and driving the mutual sustainable development for upstream and downstream supply chain. Transparent Procurement The Group conducts tendering activities under the principles of openness, fairness, justice and honesty and all subordinate units must comply with the requirement of “Tender and Report where Requires” ( 「應招必招、應上必上」 ). The Group makes full use of the transaction platforms to carry out tendering activities and has implemented a procurement mechanism that combines “centralized procurement of bulk supplies” and “independent procurement by subordinate units” in order to enhance the transparency, efficiency and standardization of procurement. In 2019, the number of suppliers totaled 830 , among which 827 were located in Mainland China while 3 were located in Hong Kong, Macau, Taiwan and other countries. Assessments were conducted against 724 suppliers and 6 of them were disqualified. Supports for the Growth of Suppliers The Group assists the growth of suppliers by means of classification management, supplier evaluation and incentives, supplier withdrawal and interactions with suppliers, with an aim to enhance their abilities in performance of responsibilities. Classification Management The Group implements a categorization and classification management for suppliers, pursuant to which suppliers are classified into four classes, namely A, B, C and D. Classes A, B, C and D represent “Excellent Supplier”, “Good Supplier”, “Average Supplier” and “Disqualified Supplier”, respectively. Encouraging Responsible Suppliers In order to facilitate the growth of suppliers, the Group evaluates suppliers from the aspects of comprehensive corporate strength, transactional behavior, performances of contracts and other management. Under the same conditions, purchasers may give priority consideration to invite class A suppliers within relevant profession- al sectors for participation in tendering/procure- ment projects within their competence. Interactions with Suppliers The Group regularly interacts with OEM suppliers, distributors and project contractors through various channels such as mails, phone conversations and interviews, thereby delivering advanced concepts and experiences to suppliers for mutual growth.