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The Company has established the “Supplier Code of Conduct” (please refer to the link for details), which requires suppliers to abide by relevant norms on issues such as labor rights, occupational safety and health, environmental protection and ethics, and follow the “Supplier Evaluation Procedures” to review the conditions of suppliers with legality, good reputation, protection of employees’ rights and interests, emphasis on food safety and environmental protection. By forming an inter-departmental team to conduct supplier evaluation operations, assess whether the suppliers comply with relevant laws and regulations and supervise improvements, and establish a sustainable supply chain management mechanism.

The Company’s supply chain management practices are as follows：

＜On-site evaluation of new suppliers＞

• A new supplier needs to submit relevant documents such as business registration certificate to prove that it is a legitimate company and factory, and to be investigated whether it had ever committed violations and penalties such as air pollution, water pollution, waste, toxic chemical substances, etc. as the reference for assessing legal compliance and environmentally friendly.
• Conduct on-site evaluation of a new raw material supplier and outsourced OEM factory by focusing on suppliers’ plant safety and sanitation, mechanical equipment condition, quality design, incoming material control, process control, finished product control, abnormal correction, customer complaint handling, labor safety, labor rights and corporate social responsibility, etc.
• Verify the certificates of each item when conducting on-site evaluation, and whether they have been fully implemented to review whether the establishment of the supplier system planning is sound.
• After the on-site evaluation, the supplier will be asked to reply to the recommended improvement matters, and finally the overall evaluation result and comments will be reviewed for a second examination.
• Only those who pass the evaluations will become qualified suppliers.

＜Continuous monitoring of qualified suppliers＞

• Conduct irregular on-site audits on qualified raw material suppliers and OEM factories.
• Conduct the annual regular evaluation for the raw material suppliers and outsourced OEM factories that had transactions in the previous year in every January.
• The annual regular evaluation is based on four areas including quality, cost, delivery time, service/coordination to score and grade, as the basis for risk management.
• For suppliers whose evaluation results are unqualified, the procurement will be stopped immediately, and relevant assistance such as consultation and counseling will be provided, and clear goals and improvement time will be given.

＜Supplier ranking management＞

• According to the annual regular evaluation results of suppliers, the grades are divided. Those with a total score of 81 or more are considered as excellent suppliers with Grade A; those with a total score of 65-80 are qualified as qualified suppliers with Grade B; and those with less than 65 points are considered as unqualified suppliers with Grade C.
• The results of the supplier audit conducted in the past three years are shown in the table below：

• We will suspend the purchases from incompetent suppliers while providing consultation and guidance as well as specific goals and changes required for to the supplier to meet the Company’s standards. Purchases can be resumed when the supplier has made the necessary improvements.

＜Contractor Management＞

• With reference to the government’s Procurement Act, contract selection is done by price comparison and/or negotiation in an open and fair manner.
• The Company has designed a “Hazard Prevention Notice” that actively provides safety management consultation to the contractors before the construction begins to maintain labor safety.