China National Machinery Industry Corporation Social ... · Cambodia, China Heavy Machinery...

China National Machinery Industry Corporation

Social Responsibility Report

Work Together Win Together

Time Scope of the Report

This Report is the second Social Responsibility Report released by China National Machinery Industry Corporation (“SINOMACH”) and covers the period from January 1, 2010 to December 31, 2011, while some of its contents may be traced back to 2006 where appropriate.

Organizational Scope of the Report

This Report covers the headquarters and subordinate enterprises of SINOMACH (see “About Us” for organization structure).

Explanation of the Report Data

All the data in the Report come from SINOMACH’s official documents and internal statistics and have been audited by relevant departments.

Basis of the Report Preparation

This report has been prepared according to the Guiding Opinions on Performance of Social Responsibilities by State-Owned Enterprises under the Central Government released by the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, the Sustainability Reporting Guidelines (Version 3.0) of the Global Reporting Initiatives (GRI) and ISO26000 Guidance on Social Responsibility 2010.

Derivative Reading

For SINOMACH’s Social Responsibility Report 2011 (network edition), please visit its website: http://www.sinomach.com.cn

Orientation of Future Improvement

To improve SINOMACH’s social responsibility management system and upgrade SINOMACH’s social responsibil ity management performance.

Chairman’s Message

Key figures

Care and Support by Central Leadership

About Us

Corporate Values

Corporate Strategy

3

4

6

10

20

22

118

120

123

124

125

Responsibility Management - Continuously Enhance Soft Power

Economic Development - Successfully Re-build a New SINOMACH

Independent Innovation - Build a Technology-Oriented Enterprise

Employee Development – Work, Share and Grow Together

Work Safety - Stay Vigilant in Peace Time in Consolidating the Foundation

Environmental Protection and Conservation - Environment-Friendly and Low Carbon Practices to Create Our Future

Corporate Citizenship - Work Together to Promote Harmony

24

34

54

64

76

86

100

Prospects for the Future

Index of GRI Indicators

The UN Global Compact's ten principles

Rating Report

Feedback Form

2 China National Machinery Industry Corporation

董董董

任任任

32011 Social Responsibility Report

The year 2011 is the opening year of the “12th Five-Year Plan” and also a year for SINOMACH to dedicatedly seek development

and overcome difficulties to compile splendid chapters in our history. According to the requirements of the CPC Central Committee

and the SASAC of the State Council for the development of central enterprises, SINOMACH has adhered to the conception of

inaugurating corporate development, accelerated the transformation of its economic development mode and committed itself to

active promotion of organic growth.

We have always committed ourselves to following scientific development and to forging a valuable SINOMACH. Creating greater business value and social value, which is considered as its key pursuit, SINOMACH has focused on the quality and

efficiency of growth, constantly pushed forward changes in the modes of management, stood on the two industries of equipment

manufacturing and modern manufacturing services and become strong and achieved excellence in the three principal operations

of R&D and manufacturing of machinery equipment, project contracting, and trade and services. In 2011, SINOMACH recorded

RMB1910 billion of Operating revenue, RMB78billion of total profits and a total foreign trade volume of RMB110billion, ranking

No.435 among Fortune Global 500. For many successive years, SINOMACH has been ranking in first place on the list of Top 100

Enterprises in the Chinese machinery industry and assessed by the SASAC as Grade A in performance among central enterprises.

We have always committed ourselves to innovation-oriented growth and building the brand of innovative SINOMACH. SINOMACH has firmly established the concept of innovation, accelerated the perfection of the system of scientific and technological

innovation, laid emphasis on fostering a team of science and technology talents and actively promoted the formulation of the

industrial standards. SINOMACH has constantly increased its capability of innovation through science and technology, enhanced

management innovation, continued to identify and solve new problems arising during its development based on the perspective and

act of innovative ideas, innovative learning and innovative working to fully promote its management level and build an “innovation-

oriented” enterprise. .

We have always committed ourselves to practicing environmental protection and conservation to strive to create an environment-friendly SINOMACH. In strict accordance with the national requirements for energy efficiency and emissions

reduction, SINOMACH has insisted on the sustainable development of environmental protection, energy-saving and high

efficiency, stressed the awareness of green concept, strived to develop cyclic economy, perfected an Environmental Protection

and Conservation management system, pushed ahead energy efficiency and emissions reduction and actively carried out clean

production, and enhanced comprehensive utilization of resources to build a “resource-saving and environment-friendly” enterprise.

We have always committed ourselves to the accomplishment of working together to create a responsible SINOMACH. Following the core values of “working together and winning together”, SINOMACH has been actively involved in community

building, devoted to social welfare undertakings and strengthening communications with stakeholders to achieve the sustainable

development of enterprises, stakeholders and society and environment.

We have always committed ourselves to following the concept of putting people first to foster a happy SINOMACH. SINOMACH has conscientiously practiced the concept of “business development not only by the employees, but also for the

employees”, followed the correct value orientation, insisted on its development by its people and for its people, taken effective

measures to secure employees’ rights and interests and promote employees’ development, laid emphasis on care for employees

and fulfilled the coordinated growth of enterprise and employees.

Passing through spring blooms and autumn harvests, we have made our achievements through concerted efforts. In 2010,

SINOMACH released its first Social Responsibility Report in which it fully disclosed to the stakeholders its actions and achievements

in performing responsibility since its incorporation. On that basis, SINOMACH prepared the Strategic Plan for Social Responsibility

of China National Machinery Industry Corporation, which pointed the way to push ahead the future endeavors for social

responsibility and manifested the determination of SINOMACH to strengthen social responsibility management and actively bear

social responsibility. In the future, SINOMACH will, according to the requirements of the SASAC of the State Council, fully perform

social responsibility, continue to strengthen the communications and exchanges with stakeholders and make great efforts to attain

the goal of “becoming the world’s top enterprise with international competitiveness”.

Message from Chairman


Key Figures

Operating revenue

Unit: RMB100 million

Unit: RMB100 million

Pre-tax ProfitsEquities Attributable to Equity Holders of the Parent Company

Total Profits

Total Assets Unit: RMB100 million

Ratio of Retained and Increased Value of State-owned Assets

EVA

Unit: Ton of Standard Coal/RMB10,000

Comprehensive Energy Consumption for RMB10,000 Operating Revenue

Unit: Ton of Standard Coal/RMB10,000

Comprehensive Energy Consumption for RMB10,000 Output Value

Unit: Ton

SO2 Emissions Unit: Ton

COD Emissions

Unit: %

610.6

805.1980.2

2007 2008 2009 2010 2011

683.0

974.21035.0

1522.2

1910

1313.6

1665

22.2

2009 2010 2011

38.5

43.7124.9

125.9

116.3

120.2

2006 2007 2008 2009 2010

120.0

20112006 2007 2008 2009 2010

14.332.8

38.7 48.4 66.778

164.1

218.4235.0

295.7

52.2

93.6

129.8

183.6

53.3 56.974.8

97.5

2008 2009 2010 2011

0.0074

0.0100

0.0080

0.0077

2008 2009 2010 2011

0.1133

0.1009 0.0829

0.0901

2011 2009 2010 2011

1344.2 1257.91368.9

2009

554.9 459.8429.7

2010


A Total of In-Service Employees in 2011

Total Safety Accidents Accident Death Rate Per Thousand EmployeesUnit: Occurrence

83940

Unit: ‰

Investment in training

Labor Contracts Singed with Employees for Six Successive Years

100%

Unit: RMB100 million79109

83940

40785

70776 7173975703

2006 2007 2009 2010 20112008

50 4779

86

74

48

2006 2007 2009 2010 20112008

0.0236

0.01180.0175

0

0.0114

2007 2008 2010 20112009

Total Donations

Unit: RMB10,000Unit: RMB10,000

Investment in Work safety20892.2

15223.01922.114820.0

2565.0

2788.0

340.6312.6

10849.5

5982.35208.1

2006 2007 2009 201020082006 2007 2009 2010 20112008

5876

1658

2400

32783407

5044

2006 2007 2009 2010 20112008


Care and Support by Central Leadership

General Secretary Hu Jintao Inspected China YTO Group Corporation

On July 10, 2010, Hu J ingtao, General

Secretary of the CPC Central Committee and

Chinese President, inspected China YTO Group

Corporation subordinate to SINOMACH.

“I hope all of you will vigorously carry

forward glorious traditions, continue to

deepen enterprise reform, vigorously

enhance the capability of Independent

innovation, constantly adapt to new

market changes and strive to create the

new splendor of YTO.” - Hu Jintao

General Secretary Hu Jintao Attended the Signing Ceremony for the Three-Party Cooperation Agreement on the Construction of the Gas-Fired Power Plant Project in Scholkino of Crimea, Ukraine

On September 2, 2010, witnessed by Hu

Jingtao, General Secretary of the CPC Central

Committee and Chinese President, and by

President Yanukovich of Ukraine, Chairman

Ren Hongbin on behalf of SINOMACH signed

the Three-Party Cooperation Agreement on

the Construction of the Gas-Fired Power Plant

Project in Scholkino of Crimea, Ukraine with

the Ministry of Fuel and Energy of Ukraine and

the Export-Import Bank of China.


Premier Wen Jiabao Drove a “Dong Fang Hong” to Harvest and Plant during his inspection of the Summer Agricultural Work in Henan Province

On June 10, 2010, during his inspection of the

summer agricultural production and agricultural

and rural work in Henan Province, Premier Wen

Jiabao went to the harvesting site in a high-yield

wheat demonstration area and personally drove

a “Dong Fang Hong” tractor for harvesting and

sowing.

Chairman Wu Bangguo Witnessed the Cooperation Framework Agreement on Privatization of Byelorussian Enterprises

On September 19, 2011, witnessed by Wu

Bangguo, Chairman of the National People’s

Congress Standing Committee, General Manager

Xu Jian of SINOMACH signed the cooperation

framework agreement on privatization of

Byelorussian enterprises with the Byelorussian

Ministry of Economy.


Jia Qinglin and Zeng Peiyan Personally Made a Special Trip to SINOMACH to Visit Veteran Leaders of Machinery Industry

On February 3, 2010, Jia Qinglin, Member of the

Standing Committee of the Political Bureau of the

CPC Central Committee and Chairman of the Chinese

People’s Political Consultative Conference, and Zeng

Peiyan, former Vice Premier of the State Council,

personally made a special trip to SINOMACH to visit

the veteran leaders of machinery industry who were

attending the New Year’s party and expressed great

expectations for the development of SINOMACH.

V i c e P r e s i d e n t X i J i n p i n g Talked With Representatives of SINOMACH and other Chinese-Funded Enterprises in Angola

On November 20, 2010, Vice President Xi Jinping

had discussions in Luanda with the representatives

of Angola-based Chinese-funded enterprises during

his visit to the African country. Board Chairman Ren

Hongbin attended and spoke at the discussions.

Premier Wen Jiabao and Prime Minister Hun Sen Witnessed the Signing Ceremony for CHMC Cambodian Rural Power Grid Stage I Project

On December 13, 2010, wi tnessed by

Chinese Premier Wen Jiabao and Prime

Min i s te r Hun Sen o f the K ingdom o f

C a m b o d i a , C h i n a H e a v y M a c h i n e r y

Corporation subordinate to SINOMACH

entered into the “EPC Contract on Rural

Power Grid Stage I Project” with Cambodia

National Electric Power Corporation.


Russian Vice President Xi Jinping Attended the Signing Ceremony of CNEEC for the EPC Contract on Russian KSG Iron Mine

On March 23, 2010, China National Electric Engineering Co., Ltd.

subordinate to SINOMACH entered into the financing and EPC

cooperation agreement for the construction and development of

the Kimkan, Sutara and Garinskoye (KSG) Iron Ore Mining Project

in the Far East of Russia with the Industrial and Commercial Bank

of China and ARICOM of Russia.

Vice President Xi Jinping Attended the Signing Ceremony for a Project in Laos

On June 16, 2010, jointly witnessed by Vice President Xi Jinping

and Laos Vice President Bounnhang Vorachith, China CAMC

Engineering Co., Ltd. subordinate to SINOMACH signed the

Business Contract for the Laos Bailey Bridge Project.

Vice Premier Zhang Dejiang Made a Visit to SINOMACH for Inspection and Direction

On June 30, 2010, accompanied by Xiao Yaqing, Deputy Secretary-

General of the State Council, and Li Wei, Deputy Director of the

SASAC of the State Council, Zhang Dejiang, Vice Premier of the

State Council, arrived at SINOMACH for inspection. He affirmed

the outstanding achievements made by SINOMACH in its rapid

development in recent years and hoped that SINOMACH could

seize opportunities in the global financial crisis and quicken the

pace of “going global” to accomplish more on the international

market.



About Us

Profile

Established in January 1997, China National Machinery Industry Corporation (SINOMACH) is a

large State-owned enterprise approved by the State Council and directly administered by the

State-owned Assets Supervision and Administration Commission (SASAC). As a large state-

owned central enterprise group with a broad business scope, outstanding predominance in

industrial chains and strong R&D capabilities in the Chinese machinery industry, SINOMACH has

shaped the three business sectors of R&D and manufacturing of machinery equipment, project

contracting, and trade and services. Its services cover the majority of key national economic

sectors and it has expanded its business operations to over 170 countries and regions in five

continents of the world.By the end of 2011, SINOMACH owned 43 wholly-owned and holding

subsidiaries including 7 listed companies and more than 130 overseas service branches, with

total assets amounting to RMB166.5 billion. In 2011, SINOMACH was first placed among the

“Global 500”, ranking No. 435. It has remained No.1 among Top 100 Enterprises in the Chinese

machinery industry and has been rated as Grade A in the performance assessment of central

enterprises by the SASAC for many successive years.

For years, SINOMACH has been following the core value of “Working Together, Winning

Together”, taking it as its responsibility to guide the orientation of the machinery industry and

establish the development path for the machinery industry, actively conducting the construction

of a “harmony” culture and committing itself to fusing the philosophy of social responsibility in

the corporate management and operation to enhance the capability of sustainable development

and promote the harmonious development of enterprises and society.

SINOMACH will focus on its two core businesses of equipment manufacturing and modern

manufacturing services to foster an integrated world-class equipment industrial group with

international competitiveness and become the leader in the Chinese machinery industry and a

creator of social value.

About Us


I n J a n u a r y 1 9 9 7 , u p o n

the consent o f the State

Council and the approval of

the former State Economic

a n d Tr a d e C o m m i s s i o n ,

SINOMACH was established

with 29 subsidiaries and was

subordinate to the former

Ministry of Machinery Industry.

Course of Development

1997

1998 1999

2000 2003

2004

I n M a r c h 1 9 9 8 , a f t e r t h e

restructuring of governmental

organizat ions of the State

C o u n c i l , S I N O M A C H w a s

subordinate to the former State

Bureau of Machinery Industry.

In May 1999, a management system reform was

carried out for 242 scientific research institutions

subordinate to 10 state bureaus and institutes

administered by the former State Economic and Trade

Commission, and 25 scientific research institutes

subordinate to the former State Bureau of Machinery

Industry joined SINOMACH.

In June 1999, upon the approval of the former

State Economic and Trade Commission, Xinlian

Group joined SINOMACH and consolidated China

Agricultural and Husbandry Machinery Corporation

subordinate to SINOMACH into the China Harvester

Machinery Corporation.

In September 1999, Ch ina Geo-Equipment

Corporation, subordinate to the former Ministry of

Land Resources, joined SINOMACH.

In October 1999, SINOMACH was listed among the

enterprises administered by the Central Government

and became one of the 520 key State-owned

enterprises.

In October 2000, according

to the national requirements

for the system reform of the

central entities of engineering

reconnaissance and des ign,

8 reconnaissance and design

institutes subordinate to the

former State Bureau of Machinery

Industry joined SINOMACH.

In November 2003, upon the

a p p r o v a l o f t h e S A S A C , 6

en te rp r i s e s i n c lud ing Ch ina

Automobile Industry Import &

Export Corporation and CAIC

Foreign Economic and Technical

Cooperation Company subordinate

to the former China Automobile

Industry Corporation (CAIC) were

transferred to SINOMACH.

In April and July 2004, upon the approval

of the SASAC, China Automobile Trading

Center and China Machinery International

Engineering Design & Research Institute

successively entered SINOMACH.

In 2004, Tianj in Research Inst i tute of

Construction Machinery acquired “China

Development”, which became the first publicly

listed company of SINOMACH.


2005

2006 2007

2008

2009

2011

In May 2005, Luoyang Bear ing Sc ience &

Technology Co., Ltd. was successfully listed on the

Shenzhen Stock Exchange.

In September 8, 2005, as approved by the SASAC

of the State Council and ratified by the State

Administration for Industry and Commerce, the full

name of SINOMACH was officially changed from

“China National Machinery Equipment (Group)

Company” to “China National Machinery Industry

Group Company”.

In November and December

2007, upon the approval of

the State Council, China Foma

(Group) Co., Ltd. and China

Ocean Aviation Group Inc.

successively joined SINOMACH.

In June 2006, China CAMC

Engineering Co., Ltd. was

successfully listed on the

Shenzhen Stock Exchange.

In February 2008, YTO Group Corporation

entered the Group upon the approval of

the SASAC and, in July, Changsha Qidian

Automotive Products Co., Ltd. entered

SINOMACH.

On June 1, 2009, approved by the State-owned Assets

Supervision and Administration Commission of the

State Council and ratified by the State Administration

for Industry and Commerce, China Nat ional

Machinery Industry Group Company was renamed

China National Machinery Industry Corporation.

In July 2009, upon the approval of the State Council,

Chinese Academy of Agricultural Mechanization

Sciences entered SINOMACH.

In June 2011, Lanpec

Technologies Limited was

successfully listed on the

Shanghai Stock Exchange.

About Us


Ren Hongbin Chairman and Deputy Secretary

of “CPC”

Xu Niansha Secretary of CPC and Vice Chairman

Xu Jian Director and President

Chen Zhi Vice Chairman

Li Zhanyong Deputy Secretary of “CPC” and Secretary

of the Discipline Inspection Committee

Luo Jiamang Chief Financial Officer

Xie Biao Vice president

Liu Dagong Vice president

Ding Hongxiang Deputy General Manager

Liu Bing Secretary of the Board of Directors

Wang Shuqing President Assistant

Zhao Bing President Assistant

Wang Qiang Chief Legal Adviser

Su Weike President Assistant

Liu Jingzhen President Assistant

Liu Zuqing President Assistant

Wei Feng Employee Director and Chairman

of the Trade Union

Ren Hongbin Chairman and Deputy Secretary

of “CPC”

Xu Niansha Secretary of CPC and Vice Chairman

Xu Jian Director and President

Chen Zhi Vice Chairman

Han Xizheng Outside Director

Corporate Governance

Management Team

Board of Directors

As a solely State-owned company registered according the Company Law, SINOMACH has no shareholders’ meeting and the State-owned Assets

Supervision and Administration Commission of the State Council performs the contributor’s functions according to law upon the authorization of the

State Council.

SINOMACH has a board of directors, which is the company’s decision-making body and decides on all the major matters of the company within the

scope of its functions and powers as stipulated in the Articles of Association. The board of directors is responsible to the company and the contributor.

The board of directors shall exercise its decision-making power by holding the board of directors meetings and adopting resolutions thereof.

The board of directors of SINOMACH has set up a prudent and scientific authorization mechanism that takes into consideration both balance and

efficiency. On the precondition of ensuring compliance with laws and regulations, it has granted appropriate authorization to its standing committee,

chairman and general manager. The Articles of Association of SINOMACH and the governance documents of the board of directors including the

Working Rules of the Board of Directors have specifically stipulated the division of functions and powers of the board of directors and the managers

and specified their rights and obligations.

Taking advantage of the opportunity for experimentation with the board of directors, SINOMACH will constantly optimize the setup of the board,

actively perfect its institutional construction, strengthen its day-to-day operation and management, reinforce risk management, make the decisions of

the board more scientifically rational and continuously upgrade the governance effect of the board.

Liu Gaozhuo Outside Director

An Dewu Outside Director

Lian Weizeng Outside Director

Zhang Lailiang Outside Director

Wei Feng Employee Director and Chairman

of the Trade Union

Liu Bing Secretary of the Board of Directors


Wholly-owned and Holding Enterprises

Board of Directors

General Manager

Deputy General Manager

Secretary of the Board of Directors

Office of the Board of Directors

Comprehensive M

anagement Departm

ent

Strategic Planning Department (Corporate

Culture Department)

Hum

an Resources Departm

ent (Organization

Department of the Party Com

mittee)

Assets and Financial Department

Reform and Developm

ent Department

Investment M

anagement Departm

ent

Auditing Department

Legal Affairs Department

Party Comm

ittee’s Working Departm

ent (Trade U

nion Office)

Discipline Inspection Office (Supervision O

ffice)

Business Development Departm

ent (Production Safety Departm

ent)

Sci-Tech Development Departm

ent (M

ilitary Industry Managem

ent Office)

Central Research Institute

Chief Accountant

DeputySecretary

Deputy Secretary and Discipline Inspection Secretary

Secretary of Party Committee

Special Committee of the Board of Directors

Wholly-Owned and Holding Enterprises

State-owned Assets Supervision and Administration Commission of the State Council (SASAC)

About Us


No. Name of Entity Chinese Abbreviation

English Abbreviation

1 China National Machinery & Equipment I/E Corporation ZSJT CMEC

2 China CAMC Engineering Co., Ltd ZGGJ CAMCE

3 China Foma Machinery (Group) Co., Ltd. ZGFM CFMC

4 China Ocean Aviation Group Inc. ZHH COAGI

5 China Geo-Equipment Corporation ZZZGS CGE

6 China Machinery Industry Construction Group Inc. ZJJS SINOCONST

7 China National Machine Tool Corporation JCZGS CNMTC

8 China National Heavy Machinery Co., Ltd ZGZJ CHMC

9 China National Electric Engineering Co., Ltd ZGDG CNEEC

10 China National General Machinery Engineering Corporation ZTGS GME

11 China National Automation Control System Corp. ZGZK CACS

12 China National Complete Engineering Co., Ltd ZGCT CMCEC

13 SINOMACH Finance Co., Ltd GJCW SINOMF

14 SINOMACH Automobile Corp., Ltd GJQC Sinomach Auto

15 China National Automotive Industry Import & Export Corp. ZQJCK CAIEC

16 China National Automotive Industry International Corp. ZQGJ CNAICO

17 SINOMACH Capital Management Corporation GJZC Sino-Capital

18 Chinese Academy of Agricultural Mechanization Sciences ZGNJY CAAMS

19 China IPPR International Engineering Corporation ZGZY IPPR

20 Beijing Materials Handling Research Institute BQY BMHRI

21 YTO Group Corporation ZGYT YTO

22 SUMEC Group Corporation SMDJT SUMEC

By the end of 2011, SINOMACH owned 43 wholly-owned and holding subsidiaries.Wholly-owned and

Holding Enterprises


No. Name of Entity Chinese Abbreviation

English Abbreviation

23 China Perfect Machinery Industry Corp., Ltd. ZGPF CPMIC

24 China SINOMACH Heavy Industry Corporation GJZG SINOMACH-HI

25 China Abrasives Import & Export Corporation ZMGS CAEC

26 China United Engineering Corporation ZGLH CUC

27 China Automotive Industry Engineering Corporation ZQGC AE

28 No.6 Institute of Project Planning & Research of Machinery Industry Co., Ltd ZJLY SIPPR

29 Changchun Research Institute for Mechanical Sciences Co., Ltd CCJXY CRITM

30 Shenyang Academy of Instrumentation Science SYYBY SAIS

31 Hefei General Machinery Research Institute HFTYY HGMRI

32 Lanpec Technologies Limited LKGX LANPEC

33 Luoyang Bearing Science & Technology Co., Ltd ZYKJ ZYS

34 Zhengzhou Research Institute for Abrasives & Grinding SMS ZRIAG

35 Tianjin Design & Research Institute of Electric Drive TCS TRIED

36 China National Electric Apparatus Research Institute Co., Ltd ZGDQY CEI

37 Guangzhou Mechanical Engineering Research Institute Co., Ltd. GZJXY GMERI

38 Jinan Foundry & Metalforming Machinery Research Institute Co., Ltd JNZDS JFMI

39 Chongqing Materials Research Institute CCY CIMRI

40 Chengdu Tool Research Institute Co., Ltd GJS CTRI

41 China National Heavy Machinery Research Institute Co., Ltd ZGZXY CNHMRI

42 Suzhou Electromachining Machine Tool Research Institute Co., Ltd. SZDJG SEMTI

43 Guilin Electrical Equipment Scientific Research Institute GLDKY GLESI

About Us


The Group currently has 7 listed companies.

Stock Name

Stock Name

Stock Name

Stock Name

Stock Name

Stock Name

Stock Name

YTO Group (HK00038)

LINHAI POWER (SH600099)

LAMCE (SZ002051)

CHANGLIN (SH600710)

ZYS (SZ002046)

DINGSHENG TIANGONG (SH600335)

LANPEC (SH601798)


Ranking Among Chinese Top 500

Enterprises

Ranking Among Global Top 225

International Project Contractors

Ranking Among Central Enterprises in

Integrated Performance Assessment

In 2011, SINOMACH enjoyed wide recognition from all walks of life and its social influence was further expanded.

2006

2007

2007

2008

2008

2009

2008

2009

2010

2009

2010 2011

2011

2010 2011

No.

No.

435

1

SINOMACH ranked No.435

among Fortune Global 500

companies in 2011

SINOMACH won the National “May 1st” Labor Medal

FORTUNE

SINOMACH has continued to

rank No. 1 among the Chinese

Top 100 machinery enterprises

for many successive years.

Social

Acknowledgement

2006 2007

About Us


Corporate Values

Core ValuesCorporate Culture

Work Together Win Together

任任

任任

任任

任任

Pool Centripetal Force

Enhance Executive Force

Increase Competitiveness

Rely on Key Points of

Development

Expand Development

Orientation

Lead the Development

Take Responsibility

Build Up Trust

Common Development

Pursue Complementation and

Win-Win Results

Accomplish Benefit Sharing

Maintain Sound Development

Harmony

“Harmony” is Fusion and Merger

-SINOMACH is closely united for mutual cooperation; remains

consistent in goal, thought and action; and pools efforts to work

harmoniously as one.

“Harmony” is Responsibility

-SINOMACH guides the development orientation of the machinery

industry, safeguards the interests of the country and enterprises, makes

progress together with the industry, grows together with employees

and interconnects with the society.

“Harmony” is Putting People First

-SINOMACH adheres to the concept of people being the first

resource, respects every employee, mobilizes enthusiasm, displays

initiative, improves creativity and fosters humanistic harmony.

“Harmony” is Innovation

-SINOMACH establishes the development path for the machinery

industry and engages in emancipation of thought, transformation of

ideas, Independent Innovation and pursuit of excellence to enhance its

vigor and vitality.

“Harmony” is Harmony

-SINOMACH displays the resultant force of its subordinate

enterprises and achieves win-win results internally and externally;

and SINOMACH people, enthusiastic and enterprising, strive to seek

common development with one heart and one mind.

Cooperation

Innovation

Partnership

Win-Win

Results


Corporate VisionCorporate Mission

The Leader of the Machinery Industry and the Creator of the Social Values

Guiding the Development Orientation of the Machinery Industry and Establishing the Development Path for the Machinery Industry

As the largest enterprise group in the Chinese

machinery industry, SINOMACH should take on the

important task of revitalizing the Chinese machinery

industry and become the leader in this industry.

Meanwhile, as a large central enterprise, SINOMACH

should create huge economic value for the country

and more importantly, realize due social value

to constantly contribute to social prosperity and

progress.

“Guiding the development orientation of the machinery industry and

establishing the development path for the machinery industry” is the

personal motto of SINOMACH people in innovation, rapid development

and pursuit of excellence; and the requirement for SINOMACH to display

integrated strengths, create a first-class platform, foster first-class people

and attain the goal of becoming a first-class international enterprise.


establishing the development path for the machinery industry” means that

SINOMACH must take both political responsibility and social responsibility

in its efforts to explore the path of development of China’s machinery

industry, meet the needs of customers, employees, shareholders and the

society, and put into practice the historical responsibility SINOMACH is

taking.


establishing the development path for the machinery industry” requires

SINOMACH to actively integrate its resources, perfect its internal business

relations, enhance core competitiveness, retain and increase the value of

State-owned assets and fulfill the heavy responsibilities endowed by the

country and history on SINOMACH.


establishing the development path for the machinery industry” requires

SINOMACH to stand at the strategic height of international competition,

target the most excellent international enterprises and constantly make

improvements to continuously win trust and recognition from customers

in its fields of activity.


establishing the development path for the machinery industry” is the long-

term pursuit of SINOMACH. Currently, SINOMACH needs to be careful

of the stages of historical development and should neither run ahead of

history nor lag behind the responsibilities and tasks endowed by history.

It should base itself on reality and work in a down-to-earth way to press

forward the specific work and tasks in the two major fields: the equipment

manufacturing industry in which it has comparative advantages and the

modern manufacturing service industry in which it has certain strengths.


Corporate Strategies

Strategy for Capital Operation

For the purpose of retaining and

increasing the value of capital, by

means of the operation of industrial

capital, financial capital, property

right capital and intangible capital, in

the form of merger and acquisition,

asset injection, public l isting of

enterprises, increasing capital to

enlarge capitalization, equity swap,

joint-venture operation and strategic

alliance and on the basis of intensive

development, we will vigorously

expand the extensive development

path.

In pursuit of the central goals of

enhancing equipment manufacturing

capabilities and upgrading modern

manufacturing service capabilities,

we will improve industrial structural

efficiency, innovate in thinking and

methods; and foster and integrate

business opportunit ies through

sca le expans ion, technologica l

breakthrough, industrial upgrade and

capability enhancement to seek new

points of profit growth. Through the

benign interaction between industry

and capital, we will walk down a new

road for leap-forward development.

Strategy for Continuous Innovation

We will persist in taking the innovation-

dr iven development path, br ing along

scientific and technological progress and

strengthen management innovation to build

an innovation-oriented SINOMACH and

accomplish sustainable development.

We will strengthen scientific and technological

innovations to improve the added value and

technical content of products and services.

We will highly value original innovation,

vigorously push ahead integrated innovation,

strive to strengthen the digestion, absorption

and re-innovation of the acquired technologies

and push for advanced technologies to be

industrialized and project-oriented; reinforce

the building of the system of scientific and

technological innovations, develop the

mechanisms for promoting and ensuring

technological innovation and effectively display

the role of the Central Research Institute

and the R&D organizations of subsidiaries.

Focusing on the major business sectors, we

will push forward the effective integration

of scientific and technological resources

and make greater investment in research

and development; through cooperation

with domestic and foreign institutions in

technology, project and scientific research

funding, as well as upgrading our products,

techniques and technological development,

and enhancing the awareness of intellectual

property rights and reinforce the creation,

application, management and protection of

such rights.

We w i l l c o n t i n u o u s l y p u s h f o r wa r d

m a n a g e m e n t i n n o v a t i o n , e n h a n c e

m a n a g e m e n t q u a l i t y a n d i m p r o v e

management eff ic iency. We wi l l apply

advanced conceptions, thinking and methods

in management, reinforce IT application

construction, innovate on business modes,

promote the scientif ic management of

strategies, human resources, investment,

finance, science and technology, quality and

risks, as well as upgrading corporate culture

and reforming management systems and

mechanisms to allow the Group’s corporate

management to become scientific, intensive

and lean.

Strategy for Strengthening Enterprise Through People

With the aim of fostering and bringing up numerous talent

contingents with optimized structure, rational layout and

excellent qualities, we will establish the comparative

advantages in talent competition and lay the talent

foundation for the Group’s long-term stable development.

Constantly improve the HR management system. Following

the principle of putting people first and basing enterprises

on people, we will perfect the HR management system for

talent absorption, selection, appointment and assessment;

set up a market-based talent remuneration system, further

improve the existing assessment system and explore and

adopt advanced assessment methods to develop effective

incentive and constraint mechanism; adhere to the concept

that “development relies on employees, development is

for employees and development achievements are shared

by all employees” and shape the growth mechanism under

which enterprises and employees share interests; and set

up the channels for career development of employees, pay

attention to the vertical development of human resources

and reinforce the horizontal exercise of human resources.

Speed up the selection and introduction of high-level

talents. On the basis of following the successful practices

of the past, we will improve the measures for high-level

talent selection and management and make greater

efforts for the selection and cultivation of talent; better

the system for engagement of operation management

personnel and improve employment mechanisms under

which people can be promoted or demoted and can be

recruited or dismissed; and perfect an internal cadre

exchange system and reinforce such internal exchanges

to promote the fully effective utilization of internal human

resources.

Strengthen HR training and development. We will integrate

the Group’s various training resources, fully develop and

utilize the existing production facilities, scientific research

conditions and other resources, make more investment

in training and set up the Group’s talent training

organizations to turn them into the HR development base,

cultural communication base and leadership enhancement

base for the Group to carry forward culture, publicize and

implement strategies, update knowledge and improve

qualities and skills; provide in-advance training to the

human resources required for enterprise development,

strictly stipulate the contents, majors and orientations of

training studies and establish and improve the system

for examination and evaluation of the training results;

and introduce the international standards for corporate

training and standardize the management of the training

process to improve training quality.


Prospects for Development

by 2020

Business Positioning

According to the Group’s principles for

strategic positioning and industrial selection

and its standards for industrial development

or ientat ion, in the next ten years, we

will take the equipment manufacturing

i ndus t r y and mode rn manu fac tu r i ng

service industry as the core of the Group’s

business development, persist in combining

extensive growth and intensive development,

constantly strengthen the mutual support

and collaborative development between

the equipment manufacturing industry and

the modern manufacturing service industry,

shape international competitive advantages in

manufacturing and services in some key fields

of the machinery industry and stand at the

forefront of these industries.

Specifically, the Group’s future business

development patterns include the two fields

of “equipment manufacturing industry and

modern manufacturing service industry”

and three main businesses of “machinery

equipment R&D and manufacturing, project

contracting, and trade and services”. In these

three main businesses, we will consolidate

and strengthen the existing predominant

operations, foster and develop the emerging

operations that have the potential of huge

growth and play a supportive role for other

operations. In the future, we will mainly

consolidate and strengthen such operations

as electric power equipment, agricultural and

forestry machinery, engineering machinery,

e lec t romechan ica l p roduct t rade and

services, automobiles, general contracting

and regional development and operation of

projects, and design consulting, and we will

foster and develop such operations as smart

manufacturing equipment, equipment for

green and emerging industries, and financial

and investment services.

Business Goals by 2020

By 2020, the Group will strive to realize

RMB25-30 billion of total profits and RMB500-

600 billion of business revenue, continuously

hold the first place among Chinese Top 100

enterprises in the machinery industry, rise

to a middle ranking among the world’s top

500 companies and stand higher than the

industrial average in return on assets.

Strategy for Transformation and Upgrade

We will push forward the transformation of

growth modes from a primary dependence

on element input and scale expansion

to a primary dependence on technical

progress, improvement of workers’ abilities

and innovation in operation modes

and management. We will upgrade the

operating capabilities of enterprises, extend

from product and business operation to

capital operation, transform from being

absorbed in operating efficiency to laying

equal emphasis on operating efficiency

and structural efficiency, move from scale

development to coordinated development,

advance the combination of production

and finance and reinforce advantages in

collaborative competition. We will optimize

market structure and move from focusing

on international market to laying equal

emphasis on domestic and foreign markets

to enhance the Group’s ability to withstand

risks, optimize industrial structure and

promote the even development of the

equipment manufacturing industry and

modern manufacturing service industry.

The Group will enhance the capabilities

of Independent Innovation and industrial

d e v e l o p m e n t , e x t e n d e q u i p m e n t

manufacturing products from low and

middle end to middle and high end,

extend modern manufacturing services

from common services to comprehensive

services, constantly perfect the industrial

c h a i n a n d c o n t i n u o u s l y e n h a n c e

competitive advantages.

Strategy for Brand Upgrade

We will scientifically perfect the organization

of brand management, improve brand

management rules and build up the brand

management platform to shape the Group’s

scientific and systematic brand management

system.

We will tap into and enhance the core

value of our branding, further clarify

the positioning, image and spirit of the

brands as well as the goals and tasks of

brand enhancement, promote corporate

development through branding, develop a

good interactive relationship between brand

operation and enhancement of the Group’s

core competitiveness and create more added

value.

Based on the strategic positioning and

business characteristics of the Group’s

development, we will straighten out the

brand system level by level and gradually

shape the brand framework featuring

the “Group’s brand - business brands -

subsidiaries’ brands - product brands” to

rationalize the allocation of brand resources

and maximize the accumulative brand

assets.

We will integrate and coordinate the use of

various communication means to improve

the pertinence of communication and

popularization and, through the effective

integration and application of various

communication resources, we will enhance

the reputation and prestige of the Group’s

brand, reinforce the status of the SINOMACH

brand in the machinery industry, build up

a powerful brand image, fully elevate the

Group’s brand influence and gradually

realize leap-forward development from local

brand to international brand so that the

Group’s brand matches its status as a world-

class enterprise.

Through brand upgrade, we will display the

role of brands as intangible assets, increase

the cohesion and control of resources,

expand market influence and enhance the

competitiveness of the Group.

Continuously Enhance Soft Power

Responsibility Management

To strengthen social responsibility

m a n a g e m e n t i s t h e i n t e r n a l

requirement for enterprises to

undertake s t rategic mis s ions

and put into practice core values

and it is the inevitable course

f o r e n t e r p r i s e s t o e n h a n c e

comprehensive competitiveness

and realize prospects and goals.

S INOMACH highly va lues the

work of soc ia l respons ib i l i ty

management, constantly perfects

social responsibility governance,

c o n t i n u o u s l y s t r e n g t h e n s

communication with stakeholders

and a lways commits i t se l f to

achieving its long-term sustainable

development.


Social Responsibility Model of SINOMACH

SINOMACH’s development mission of “guiding the development orientation of the machinery industry and establishing the development path for the machinery

industry” requires us to fully implement the outlook on scientific development, actively undertake responsibilities, reward the society and, through ceaseless

pursuit, strive to promote the long-term and maximized interests of employees, enterprises, the country and society.

Through good-faith, steady and scientific operation, advance corporate development, continuously create stable and excellent economic

value, ensure the retention and increase of the value of State-owned assets and provide the society with ideal returns.

Put people first, protect their rights and interests, build up growth channels and let them produce and live in a harmonious and safe

environment and share the achievements of corporate development.

Rely on profound scientific research strengths, constantly innovate, respond to major industrial demands through high-quality products and

services, and help customers create value.

Follow the strong awareness of environmental protection, fuse responsibility for environment in the Group’s own operation, bring into play

our scientific and technological advantages and, through green technologies, green products and green projects, contribute our strength to

the sustainable development of nature and human society.

With a kind heart, warmly offer a helping hand and commit to charity and public welfare, and serve the building of a harmonious society.

Concept of Social Responsibility I.

Corporate Citizen

Responsibility Management

Economic Development

Scientific and Technological

Innovation

Environmental Protection and Conservation

Work safetyEmployee Growth

Widely Respected Leader for

Sustainable Machinery Industry

27

Responsibility Management 2011 Social Responsibility Report

Strengthen Social Responsibility Management

The Strategic Plan for Social Responsibility of China National

Machinery Industry Corporation clearly states that in the

next five years, SINOMACH will take it as its basic starting

point to fulfill the social responsibility performance at

the international advanced level, carry on the work of

social responsibility in an orderly and effective manner,

further establish and improve the management organ for

social responsibility organizations, perfect the operation

mechanisms for such organizations and shape a social

responsibility management system featuring complete

structure, clearly defined levels, clear-cut rights and

responsibilities, smooth flows and highly efficient operation

to provide powerful organizational guarantee for the

performance of social responsibility by SINOMACH.

(I) Make Strategic Plan for Social Responsibility

II.

Follow One

Core Concept

Implement Five

Major Projects

Fulfill Six

Main Tasks

Build Two

Main Mechanisms

Carry on Three

Responsibility Practices

Adhere to Four

Cardinal Principles

1 2

3

45

6

SINOMACH’s Basic

Thinking for Future

Development of Social

Responsibility


Director (Board Chairman)

Deputy Director (Corporate management)

Working Office for Social Responsibility

Secretary-GeneralMembers

(chief of each department)

Organizational Setup of the Working Committee of SINOMACH for

Social Responsibility

Director: Ren Hongbin

Deputy Directors: Xu Niansha, Xu Jian, Chen Zhi, Li Zhanyong,Luo

Jiamang, Xie Biao, Liu Dagong, Ding Hongxiang

Members: Liu Bing, Wang Shuqing, Zhao Bing, Wang Qiang, Su Weike,

Liu Jingzhen, Liu Zuqing, Wei Feng, Yu Xiaoyuan, Shi Hui, Wang Xiyan,

Han Xiaojun, Yang Hongyan, Wang Bo, Quan Huaqiang, Sun Miao, Pi

Anrong, Wang Yuqi

Secretary-General: Wang Xiyan (concurrent)

Working Office for Social Responsibility: A Working Office for

Social Responsibility is to be established

(II) Working Committee of SINOMACH for Social Responsibility

(III) Chart of Certification Course of SINOMACH Social Responsibility System

SINOMACH Headquarters established

Complying with SR management

standards

(SA8000)

Management system documents

released and put into operation

Accepting General Standards

Headquarters SR Management

System certified and audited by

SGS

SINOMACH obtained SR

Management System

(SA8000: 2001) Certificate

SINOMACH obtained renewed SR

Management System (SA8000:

2008) Certif icate after being

reevaluated

On August 1, 2007

On November 14-16, 2007

December 14, 2007

December 14, 2010

SINOMACH SR System (SA8000: 2008) Certificate

29


IV. Table of Functions Distribution Subordinate to SINOMACH SA8000 SR Management

System

Note: “▲”stands for leader or department in charge and “△”for related department

1.Child labor △ △ △ ▲ △ △ △ △ △ △ △ △ △

2.Forced labor △ △ △ ▲ △ △ △ △ △ △ △ △ △

3.Health and safety ▲ △ ▲ △ △ △ △ △ △ △ △ △ ▲ △

4.Freedom of organizing trade unions and collective negotiation rights

▲ △ △ △ △ △ △ △ △ △ ▲ △ △ △

5.Discrimination △ △ △ ▲ △ △ △ △ △ △ △ △ △

6.Punitive measures ▲ △ △ △ ▲ △ △ △ △ △ △ △ △ △

7.Working hours ▲ △ △ △ ▲ △ △ △ △ △ △ △ △ △

8.Remuneration ▲ △ ▲ △ △ △ △ △ △ △ △ △

9.1 Management system ▲ △ △ △ △ △ △ △ △ △ △ △ △ ▲

9.2 Management review ▲ ▲ △ △ △ △ △ △ △ △ △ △ △ △ ▲

9.3 Corporation representative ▲ △ △ △ △ △ △ △ △ △ △ △ △ △

9.4 Worker representative △ △ △ △ △ △ △ △ △ ▲ △ △ △

9.5 Plan & implementation △ △ △ △ △ △ △ △ △ △ △ △ ▲

9.6 Management of suppliers and subcontractors

▲ △ ▲ △ △ △ △ △ △ △ △ △ △ △

9.7 Promises of suppliers and subcontractors

▲ △ ▲ △ △ △ △ △ △ △ △ △ △ △

9.8 Evidence of suppliers and subcontractors

▲ △ ▲ △ △ △ △ △ △ △ △ △ △ △

9.9 Control over family workers

9.10 Handling misgivings ▲ △ △ △ ▲ △ △ △ △ △ ▲ △ △ △

9.11 Corrective actions ▲ △ △ △ ▲ △ △ △ △ △ ▲ △ △ △

9.12 External communication ▲ △ ▲ △ △ △ △ △ △ △ △ △ △ △

9.13 Verifying channels ▲ △ △ △ △ △ △ △ △ △ △ △ ▲ ▲

9.14 Records △ ▲ △ ▲ △ △ △ △ △ ▲ △ ▲ ▲

General M

anagerSystem

Representative of Regulator

Assets &

Financial Departm

ent

Reform &

Developm

ent Departm

ent

Deputy G

eneral Manager

Investment M

anagement D

epartment

Discipline Inspection O

ffice (Supervision O

ffice)

Com

prehensive Managem

entD

epartment

Office of the Board of D

irectors

社会责任管理体系要求

Auditing D

epartment

Strategic Planning Departm

ent (C

orporate Culture D

epartment)

Legal Affairs D

epartment

Bu

siness D

evelop

men

t Dep

artmen

t (W

ork Safety Departm

ent)

Hum

an Resources Departm

ent (Party C

omm

ittee’s O

rganization Departm

ent)

Party Com

mittee ’

s Working D

epartment

(Trade Union O

ffice)

Sci-Tech Developm

ent Departm

ent (M

ilitary Industry Managem

ent Office)

DepartmentsSR Elements


1. Publishing Social Responsibility Report

On April 8, 2010, SINOMACH released its first social responsibility

report - 2009 Social Responsibility Report of China National Machinery

Industry Corporation. With 134 pages and over 100,000 words, in the

form of texts, case studies, charts, tables and pictures, the Report fully

disclosed the practices and achievements of SINOMACH in economic,

environmental and social responsibilities in the past decade since its

establishment and systematically expounded the corporate culture

SINOMACH had accumulated and the social responsibility outlook it

had developed in the course of more than ten years of development.

Meanwhile, it also made solemn promises for future performance of

social responsibility.

2. Improving Social Responsibility System

While perfecting the mechanism for social responsibility reporting

and disclosure, SINOMACH has committed itself to innovation in

its management system. At the headquarters, it has implemented a

management system integrating four standards; and at subsidiaries,

it has gradually promoted the establishment of the SA8000 social

responsibility management system. By closely combining social

responsibility elements with department functions and subsidiary

operation, it has built up a two-tiered solid management system for

social responsibility improvement. The establishment of the system

and its operational improvements have played a positive role in

scientific organization and standardized management and SINOMACH

has gradually built up the image of a responsible, advanced enterprise.

(V) Carrying on Social Responsibility Practices

Release Conference for SINOMACH 2009 Social Responsibility Report

31


SINOMACH actively carries out social responsibility training. In 2011, the main leaders of the Group and its subsidiaries participated in the relevant

training in social responsibility, perfected a social responsibility network knowledge platform and further enhanced employees’ level of understanding

and ability to participate.

3. Participating in Subject Studies

In 2011, SINOMACH actively participated in the study of social responsibility subjects, became a member of the Subject Group for Studies on

Guidance for Social Responsibility of Central Enterprises organized by the SASAC of the State Council and took part in the Subject Group for Outline

of Harmonious Development Strategies for Central Enterprises During the “12th Five-Year Plan” Period. SINOMACH was successfully selected as one

of the first practice enterprises in the Guidance for Social Responsibility in the Chinese Industry of International Contract Projects. The Group attended

the application symposium on the Guidelines to Compilation of Chinese CSR Report (the “Guidelines”), at which it reported its achievements and

experience in carrying on social responsibility work, offered opinions on the revision of the Guidelines and actively made the Group’s voice heard,

thus enhancing the Group’s strong reputation and influence in social responsibility.

SINOMACH was appraised as 2010 “Golden Bee - Social Responsibility Leader Enterprise”

(VI) Strengthening Social Responsibility Training

SINOMACH Working Meeting on Corporate Culture, Brand and Social Responsibility Training


Stakeholders Expectations on the CorporationMethods of Communication & Response

Chinese Government

Actively implement macro regulation policies of the state, carry on industrial integration according to the overall state plan for the machinery industry, strengthen work safety management, promote employment and bring forward industrial development of the value chain

Participate in the formulation of laws, regulations and policy documents, attend meetings, report on special subjects, submit statistical statements and visits

SASAC

Realize the retention and increase of the value of State-owned assets, particularly the overseas assets, perfect corporate governance structure, strengthen and optimize principal operations, fully reinforce risk management and enhance corporate comprehensive competitiveness

Work out rules and regulations, propose work goals, reinforce EVA assessment, report on work and report statistical statements

InvestorContinuously increase corporate value, strengthen management and control to reduce operation risks, repay principal and interest and pay dividend on schedule

Accurate and timely disclosure of information, regular visits, annual report and shareholders’ meeting

Employees

Safeguard employees’ lawful rights and interests, provide stable employment opportunities, work out a reasonable remuneration guarantee mechanism, and expand employees’ career development channels, provide safe and healthy working environment, actively implement the policy for localizing overseas employees

Set up trade unions at all levels, regularly hold employees’ representative meetings, and build up smooth channels for internal communication

Enterprises in the Same

Industry

Bear industrial and trade responsibilities, set industrial and trade paradigm, and make more contributions to the industry and trade

Actively join industrial and trade associations, take the initiative to build up industrial and trade exchange platform, organize and convene industrial and trade activities

CustomersOperate in good faith, provide premium and cheap products, upgrade customer service quality and build up the good reputation of enterprises in the machinery industry

Closely communicate with customers, strictly perform contracts and provide extensive information on products and services

Environment

Actively implement the state policies on energy efficiency and emissions reduction, realize green operation, manufacture green machinery products, protect the ecological environment, and carry on green office work

Work out a relevant environmental protection system, accelerate green scientific innovation and actively participate in environmental protection activities

Cooperative Partners

Abide by business ethics and relevant laws and regulations, establish long-term cooperation relationships, safeguard the interests of upstream and downstream enterprises, and accomplish mutual benefits and win-win development

Strategic cooperation negotiations, meeting of high-level leaders, invitation to bid and bidding, day-to-day business exchanges, and regular visits

Community and Public

Promote sustainable development of community economy, actively support social welfare undertakings, and forge public welfare projects with SINOMACH characteristics

Enter into joint construction agreements, participate in construction of community projects, regularly communicate and carry out friendship-building events

Non-government

Organizations

Support the development of social groups and organizations, implement organizational charters, strengthen the disclosure of operation information, and participate in public welfare undertakings

Actively attend relevant meetings and willingly offer suggestions

Stakeholders EngagementIII.

33


Major Social Organizations/Groups SINOMACH Has Joined

No.Name of Association or Society

Position No.Name of Association or Society

Position

1China Machinery Industry Federation (CMIF)

Vice Chairman 15China Association of Machinery Industry Culture (CAMIC)

Vice Chairman

2China Enterprise Confederation (CEC)China Enterprise Directors Association (CEDA)

Vice Chairman 16China Machinery Enterprise Management Association (CMMA)

Deputy Director-General

3China Internat ional Contractors Association (CICA)

Vice Chairman 17China-Europe Association for Economic & Technical Cooperation (CEATEC)

Deputy Director-General

4China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME)

Vice Chairman 18 China Machinery Industry Education Society Deputy Director-

General

5China Mechanical Engineering Society (CMES)

Deputy Director-General 19

China Machinery Industry Auditing Society (CASMI)

Vice Chairman

6China Association of Agricultural Machinery Manufacturers (CAAMM)

Chairman 20 China Auto Talents Society (CATS)Deputy Director-

General

7China Chamber of Internat ional Commerce (CCOIC)

Vice Chairman 21 China Supervision Society Machinery Branch Vice Chairman

8China Association of International Engineering Consultants (CAIEC)

Vice Chairman 22Accounting Society of China (ASC) Machinery Industry Branch

Chairman

9C h i n a N a t i o n a l A s s o c i a t i o n o f Engineering Consultants (CNAEC)

Vice Chairman 23China Chamber of Commerce for Import and Export of Machinery and Electronic Products Electric Power Equipment Branch

Vice Chairman

10China Exploration & Design Association (CEDA)

Deputy Director-General 24 China Electrotechnical Society (CES)

Executive Director

11China Association for Engineering Construction Standardization (CECS)

Deputy Director-General 25 China Association of Work Safety (CAWS)

Executive Director

12Society of Automotive Engineers of China (SAE-China)

Deputy Director-General 26 China Labor Society

Executive Director

13China Association of Automotive Manufacturers (CAAM)

Vice Chairman 27Shanghai Cooperation Organization (SCO) China Business Council

Executive Director

14China Association of Plant Engineering Consultants (CAPEC)

Deputy Director-General 28

Accounting Society for Foreign Economic Relations & Trade of China (AsFETC)

Executive Director



Successfully Re-forging a New SINOMACH

Economic Development

As a large State-owned central

enterprise group with a broad

bus ine s s s cope , out s tand ing

predominance in industrial chains

and strong R&D capabilities in

the Chinese machinery industry,

S I N O M A C H h a s v i g o r o u s l y

strengthened the integration

of its subordinate enterprises,

o p t i m i z e d t h e d e v e l o p m e n t

of the whole industrial chain,

actively promoted management

change, constantly expanded the

space for market development,

accelerated transformation and

upgrade, created good operating

performance and accomplished

inclusive growth.


SINOMACH has adhered to the outlook on scientific development, constantly optimized and readjusted industrial structure, fostered the core

competitiveness of the three main businesses, promoted Independent Innovation, successfully withstood the impact of the global financial crisis and

accomplished leap-forward development.

By the end of 2011, SINOMACH recorded business revenue of RMB191.0 billion, total profits of RMB7.8 billion and a total import and export volume

of RMB11.0billion, representing a growth of 25.6%, 16.8% and 28.8%respectively, thus realizing the retention and increase of the value of State-

owned assets.

SINOMACH 2007-2011

Operating revenue

Unit: RMB 100 million

Total Assets

Unit: RMB 100 million

RMB 100 million

Total Pro�ts Total Imports & Exports VolumeUnit: US$ 100 million

Inscription by Jia Qinglin, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and CPPCC Chairman

Good PerformanceI.

683.0

974.2

980.2

1522.2

1910.0

610.6

805.1

1035.0

1314.6

1665.0

2007 2008 2009 2010 2011

32.8 38.748.4

66.7

78.086

110

57 63 62

2007

2007

2008

2008

2009

2009

2010

2010

2011

20112007 2008 2009 2010 2011

37

Economic Development 2011 Social Responsibility Report

China foreign trade Top 500

SINOMACH recorded a sales income of US$22.487 billion in 2010, which saw

it appear on the list of Fortune Global 500 for the first time, where it ranked

No. 435. Except those in the automobile industry, SINOMACH is the first

Chinese machinery enterprise appearing in the Global 500.

Ranking Among Chinese Top 500 Enterprises

On January 14, 2011, S A S A C D i r e c t o r W a n g Yo n g s e n t a congratu latory le t ter to SINOMACH on the splendid achievements it made in 2010 and to extend Spring Festival g r e e t i n g s t o a l l t h e employees. No.

No.

No.55 No.9No.1326

77

Ranking Among Global Top 225 International Project ContractorsContractors

Ranking Among ENR Global 200 Engineering Consulting & Design Enterprises

Ranking Among Central Enterprises in Integrated Performance Assessment

Inscription by Zhang Dejiang, Vi ce P remie r o f t h e S t a t e Council

cases


The overall competitiveness of the whole industrial chain is

the concentrated manifestation of the core competitiveness of

SINOMACH. Through integration of resources, SINOMACH has

optimized the allocation of its internal and external resources, fully

displayed the synergistic effect of the industrial chain and developed

the synergistic ability of a complete industrial chain covering design,

R&D, manufacturing, system integration, project contracting, and trade

and services. It has also strengthened capital operation, optimized the

industrial layout of the Group’s whole industrial chain by means of

integrating financial capital and industrial capital, shaped industrial

sectors with a leading position by improving organizational structure

in a market-based manner, effectively increased economic benefits

and efficiency, controlled unique advantages in industrial value and

market competition and committed itself to advancing the Chinese

equipment manufacturing industry to make the transition from “Made

in China” to “Created in China”.

Through years of development, SINOMACH has gradually shaped the

three major business sectors of R&D and manufacturing of machinery

equipment, project contracting, and trade and services; and its

services have covered the majority of key national economic sectors.

On May 24, 2010, CCTV Xinwen Lianbo (Network News

Broadcast) made a special report on SINOMACH.

Inscription by Lu Yongxiang, Vice Chairman of the NPC Standing Committee

Synergistic Integration for Whole Industrial Chain Development

II.

cases

39


The development of the machinery industry represents the impulse for

realizing modernization. Keeping pace with the development trends

of international advanced manufacturing technologies, SINOMACH

focuses on the development of equipment manufacturing industry and

has become the largest agricultural, forestry and geological equipment

manufacturer and one of the important engineering machinery

manufacturers in China. Meanwhile, it has also brought along the

development of a great number of small and medium enterprises,

promoted the progress of the machinery industry as a whole, taken

on the important task of revitalizing the Chinese machinery industry,

provided more and better technical equipment support for all industries

of the national economy, accelerated technical progress, facilitated

the industrial upgrade, absorbed labor to increase employment and

enhanced the strengths of “Made in China”.

"In the future development of the equipment manufacturing industry, SINOMACH will focus on five industries: 1. Electric power equipment: including equipment for power stations and for power transmission and transformation; 2. Engineering and agricultural machinery equipment: including agricultural, forestry and engineering machinery; 3. Smart manufacturing equipment: including key basic parts, high-end monitoring and control systems, smart mainframes, and logistical equipment for sorting, storage and transportation; 4. Automobile industry: including auto parts, refitting vehicles and special vehicles; and 5. Equipment for green and emerging industries: mainly supported by the state, this has enormous space of growth. "

-----Development Strategy of China National Machinery Industry Corporation (2011-2020)

(I) Committed to Forging an “Aircraft

Carrier” in Equipment Manufacturing

As the largest agricultural, forestry and geological equipment manufacturer and an important engineering machinery manufacturer in China, SINOMACH has ranked No. 1 among the Chinese Top 100 machinery enterprises for many successive years. Vice Chairman Chen Zhi attends the press conference announcing the list of Top 100 Enterprises in the Chinese machinery industry.

“Smile-shaped Layout of the Industrial Chain

- Just like the upturned corners of one’s

smiling mouth, market and R&D are the two

highest ends of the Group’s benefits while

manufacturing is the low end of the benefits.

But the industrialization of SINOMACH’s

s c i e n t i f i c r e s e a r c h i n s t i t u t e s n e e d s

manufacturing enterprises to supplement

the layout of production capacity it hopes to

accomplish.”

--Ren HongbinBoard Chairman of China National Machinery

Industry Corporation


On-Site Operation of Agricultural Machinery in Northeastern China

Assembly Line of Tong Fang Hong Diesel Engines Glycol Pilot Test Devices

cases

41


As a technology-based central enterprise, SINOMACH brings into full play its advantages in technology, talent and scientific research

achievements to help small and medium enterprises (SMEs) to increase added value of products and solve their difficult problems of

technical bottlenecks and weak capability of Independent Innovation. Through the development of its core operations of equipment

manufacturing, SINOMACH has brought along a great number of SMEs. China YTO Group Corporation alone, one of the subordinate

enterprises of SINOMACH, can bring along over 800 enterprises producing auxiliary devices and can annually provide job opportunities for

nearly 400,000 persons in product marketing, services at repair stations, community services and so on.

Asia’ largest Garbage Grab Crane with a hoisting capacity of 25 tons and a closed grab bucket volume of 15m3

165MN Forging Machine

“Dong Fang Hong” Heavy -Duty Tractor with Power Gear Shift filled the domestic gap

Big Bearing, a key supporting device for Wind Turbine Generator System

Advancing the Development of SMEs

The development and enlargement of State-owned enterprises creates greater

space for collaborative development of private enterprises. In the industrial

chain and layout of State-owned enterprises are concentrated an enormous

group of enterprises of different ownerships. They support each other and jointly

promote social and economic development.

--Ren HongbinBoard Chairman of China National Machinery Industry Corporation


Malaysia Kuching Power Station (Stage II)

Three Generators Under Construction Congo (Brazzaville) Imboulou Hydropower Station

The Morupule B 4×150MW Coal-fired Power Plant Project in Botswana was an EPC project undertaken by China National Electric

Engineering Co. Ltd. under SINOMACH, with a contract value of US$970 million. It marked China’s first entry into the country’s power

market, and was also the largest power plant project in the country. The project was a key project under the 421 National Program, and

achieved success in financing through a new model of multinational cooperation, awarded as the “deal of the year” by several publications,

including African Investors, Project Finance and International Project Finance.

100% localization was achieved

in the construction of this project,

i.e. the construction was fully

undertaken by local contractors

and all building materials were

procured locally.

Botswana Morupule B 4×150MW Coal-fired Power Plant Project

Indonesia INDRAMAYU Coal-Fired Power

Station Stage II Project

SINOMACH has prepared the Development Plan of SINOMACH for Project Contracting Operation to actively perfect the business chain of project

contracting, increase the technical content of such business and enhance system integration ability to provide customers with all-directional and

multi-level package of solutions. SINOMACH actively responded to the national strategy of “going global”, vigorously carried out EPC business and

completed a great number of EPC projects in numerous countries and regions in Asia, Africa, South America and Oceania, which had provided a

great many job opportunities for local people and promoted local economic development. SINOMACH has become a leading international project

contractor.

(II) Vigorously Expanding Project Contracting

cases

43


In 2010, SINOMACH firmly seized the market opportunities during the post financial crisis period, created its market development thinking and mode

and made outstanding achievements. The value of newly-signed contracts reached US$35.3 billion, an increase of 68% on a yearly basis and the

best figure in the Group’s history. Among these, the contractual price of the Argentina Railway Reconstruction Project undertaken by China National

Machinery & Equipment I/E Corporation (CMEC) subordinate to SINOMACH was US$2.5 billion, the largest international engineering contracting

project undertaken by a Chinese enterprise in South America, and the Australian 600,000 Kilowatt Integrated Drying & Gasification Combined Cycle

(IDGCC) Power Station Project undertaken by China National Electric Engineering Co., Ltd. (CNEEC) is the world’s largest clean energy power project

using lignite gasification technology.

China National Automation Control System Corporation subordinate to SINOMACH Won and Signed the First Refinery Project in Cambodia

On November 29, 2011, President Xu Jian attended

the signing ceremony for the EPC Contract Framework

Agreement on 5 Million Tons/Year Refinery Project between

China National Automation Control System Corporation

(CACS) subordinate to S INOMACH and Cambodia

Petrochemical Co., Ltd. in Phnom Penh, capital of Cambodia,

and jointly witnessed the signing with Cambodian Deputy

Prime Minister Sok An.

Located at Kampong Saon, Cambodia and covering an

area of 600,000 square meters, this oil refinery has a

designed annual handling capacity of 5 million tons; the

static investment in it is about US$1.6 billion and its

construction period is 36 months. This is the first refinery in

Cambodia and also the most technically advanced refinery

in Southeast Asia. The Cambodian government attaches

great importance to the construction of this refinery. After

the project is completed and goes into production, it will

enable Cambodia to achieve self-sufficiency of fuel oil and

overcome its predicament of complete dependence on oil

importation. The project will play an important role and be of

great significance for promoting the economic development

and industrialization of Cambodia. Meanwhile, this project

will also create about 2000 employment positions for local

people.

SINOMACH has achieved good market expansion effect

through its engineering contracting projects, particularly

electric engineering projects in Cambodia, and made

important cont r ibut ions to Cambodian economic

development and improvement of local people’s livelihood.

SINOMACH has won local owners’ trust through its excellent

project quality and built a profound friendship with the local

people.


In project exploration and design, SINOMACH owns 18 exploration and design institutes with more than 6000 exploration and design professionals.

For many years, it has ranked among the first 100 on the list of ENR “Global Top 200 Engineering Consulting & Design Enterprises”. During the “11th

Five-Year Plan” period, it has won over 1200 awards such as Scientific Achievement Awards at provincial and ministerial levels or above, the Excellent

Exploration and Design Award, Lu Ban Award and Zhan Tianyou Award.

Brazil-China Friendship Center Unveiled

Yemen National Grand Library

45


Supervision Project of Zimbabwe Hospital with China’s Assistance

“Sail of White Cloud” at the Asian Games

World Expo Performance Center

World Expo CenterSupervision Project of China International Trade Center Stage III

In project construction and supervision, relying on its professional technical power, SINOMACH has ensured that projects are completed smoothly. Numerous

famous projects and buildings represent the painstaking efforts of SINOMACH people, such as the “One Axis and Two Halls” for Shanghai World Expo, the steel

structure project in Shanghai Hongqiao traffic hub, and the “Sail of White Cloud”, the main landscape for the Opening Ceremony of the Asian Games.

cases


Jiangsu SUMEC Group Corporation subordinate to SINOMACH participating in Europe Solar Energy Show

In automotive service trade, the Group follows the operation concept

of “serving both auto-makers and auto-users” and persists in seeking

the way forward through transformation, promoting development

through upgrade and pursuing benefits through management.

Currently it operates with automobile import and export trade,

marketing and integrated after-sales services as core supporting

operations, with automotive engineering consultation, design and

construction, automobile inspection and automobile exhibition as

main operations and with second-hand auto transaction, automobile

financial services, automobile leasing and automobile information

services as standby operations.

As an important window for introducing foreign advanced

technologies and equipment to the Chinese machinery industry

and for launching China’s high-quality electromechanical products

to the international market, SINOMACH has constantly extended

service chains, innovated on trade modes and enhanced market

competitiveness. Currently it possesses a perfect marketing system,

broad market shares and smooth trade channels and it has basically

formed a pattern featuring diversified trade products, various trade

modes and globalized trade, and which focuses on electromechanical

product trade and automotive service trade to optimize worldwide

allocation of resources, accomplish exchanges of products and

promote mutual benefits and win-win results.

In electromechanical product trade, by reinforcing the development

of new products, the Group has increased the technical content and

added value of products. Meanwhile, it selectively entered the new

energy field and promoted the optimization and upgrade of product

structure.

(III) Actively Expanding Trade and Services

47


With the goal of perfecting the industrial chain and according to the strategy of “laying equal emphasis on internal integration and external

absorption and carrying on internal integration first and then external reorganization”, SINOMACH has adhered to the three principles of “making up

shortages, becoming stronger and larger and achieving mutual benefits and win-win results” in external reorganization and has mainly completed the

internal resources integration with the listed companies as the platform or with going public as the aim in internal reorganization, making resources

flow and concentrate toward high-benefit fields - predominant operations, predominant enterprises and excellent operators.

New progress has been made in reorganization. Aiming to enrich and perfect its industrial chain and upgrade its comprehensive strengths in

equipment manufacturing and following the guidance of the Guiding Opinions on Promoting Reorganization of External Resources, SINOMACH has

“laid equal emphasis on external absorption and internal integration” to steadily push ahead the reorganization of corporate resources and enhance

corporate competitiveness.

Corporate system transformation has been continuously promoted. SINOMACH worked out the Guiding Opinions of SINOMACH on Standardizing

the Work of Corporate System Transformation. Based on the “three main businesses”, it has promoted the enterprises of the same sectors to be

integrated and to go public. Since 2010, it has carried out the pilot work of transforming the system of its subordinate enterprises including China

National Electric Engineering Co., Ltd., China Machinery Industry Construction Group Inc., No. 6 Institute of Project Planning & Research of Machinery

Industry Co., Ltd., Guangzhou Mechanical Engineering Research Institute Co., Ltd., China National Electric Apparatus Research Institute Co., Ltd.,

China National Machinery & Equipment I/E Corporation and China SINOMACH Heavy Industry Corporation.

(IV) Continuously Strengthening Capital Operation

Renaming and unveiling ceremony for China National Electric Engineering Co., Ltd. subordinate to SINOMACH

Chairman Ren Hongbin struck the gong for the opening of Lanpec Technologies Limited (LANPEC SH601798) subordinate to SINOMACH on Shanghai Stock Exchange

China Machinery Industry Construction Group Inc. subordinate to SINOMACH convenes the meeting on launching the work of system transformation

cases


(I) Reinforcing Strategic Management

Management innovation constitutes the impetus for corporate development and the key to transformation of development mode. SINOMACH continuously

pushes ahead management innovation, applies advanced management concepts, thinking and methods, strengthens strategic management, pushes forward

EVA assessment, reinforces brand construction, carries out overall risk management, perfects IT application construction and ensures corporate management

change is intensive and lean so as to lay a solid foundation for the Group’s long-term development.

Since 2002, SINOMACH headquarters have gradually set up the management system integrating the four standards of Quality (ISO9001: 2008), Environment

(ISO14001: 2004), Occupational Health and Safety (OHSAS18001: 2001) and Social Responsibility (SA8000: 2008), successfully passed relevant certification

and obtained the certificates for quality, environment, occupational health and safety, and social responsibility systems.

Management Change Tamping Development Foundation

SINOMACH highly values the work of strategic management and

has revised and perfected the Measures of SINOMACH for Strategic

Management and other strategic management systems. In 2010,

the Group held a series of special and strategic symposiums entitled

“Readjusting and Optimizing Structure, Transforming Development

Mode and Enhancing New Advantages in Competition”, worked out

its development plan during the “12th Five-Year Plan” period and

the ten-year development strategy and launched the formulation of

the branch plans and sub-plans for sci-tech development, branding,

social responsibility, IT application, project contracting, automobile

and agricultural machinery to ensure the effective linking and

SINOMACH Strategic Symposium

mutual support among master plan, branch plans and sub-plans. The

Group reinforced the implementation, evaluation and assessment

of the strategic plans and actively pushed forward the fulfillment

of such plans. Jiangsu SUMEC Group Corporation, China Machinery

Industry Construction Group Inc., China Automobile Trading Co., Ltd.,

China National Automotive Industry International Corp. and China

National Electric Engineering Co., Ltd. subordinate to SINOMACH

valued the strategic guiding role, continuously perfected the strategic

management system, reinforced strategic implementation and saw

that their operating performance continuously improved.

III.

49


According to the requirements of SASAC, SINOMACH firmly builds

up the concept of value management and the awareness of capital

cost to make decisions more scientifically rational. In 2010, the Group

officially incorporated EVA into the indicator system for operation

performance assessment to strengthen the assessment management

of its subordinate enterprises. In 2011, SINOMACH achieved

RMB4.374 billion in EVA, an increase of 13.6%.

011 Symposium of Central Enterprise Groups on Financial Monitoring and Control

In 2011, SINOMACH won the honorable title “National

Excellent Unit of Corporate Culture Building 2011”

appraised by China Corporate Culture Research

Institute”.

With “Work Together, Win Together” as its core corporate value,

SINOMACH vigorously strengthens the building of corporate culture

and brand.

In the past two years, the Group has further perfected the brand

management system, pushed forward the integration of brand

systems, carried on the unified management of brand communication

and brought into full play the resultant force of the “brand family”,

promoted corporate development through branding, fully displayed

the role of brands as intangible assets and developed the sound

interaction between brand operation and enhancement of the Group’s

core competitiveness. It has actively pushed ahead the building of

the strategic brand of “China’s Industrial Pillar” and successfully

built up the brand image of “A Force of China to Support the World”.

Meanwhile, it has strengthened the master plan for the building of

corporate culture, included and absorbed the excellent cultural factors

of its subordinate enterprises, promoted the Group’s cultural fusion,

forged the cultural carrier of SINOMACH Culture and Brand (magazine)

and reinforced the publicity and training in corporate culture and

branding.

SINOMACH Culture and Brand (magazine)

(II) Carrying on EVA Management

(III) Building Culture and Brand of SINOMACH

cases


On August 24, 2010, the SASAC Symposium on the Work of Corporate Cultural Fusion was held at SINOMACH. SASAC Deputy Director Huang Danhua attended the meeting and affirmed SINOMACH’s work in promoting cultural fusion.

Exchange Meeting on Cultural Fusion of Central Enterprises

SINOMACH actively strengthens risk control and prevention. Through segmented management rules and methods, it effectively prevents operation

management risks, rigorously controls investment risks and brings into full play the risk prevention role of legal and auditing work. It actively pushes

forward the building of an all-round risk management system and has made great progress and effectively upgraded risk management and control

ability to provide guarantee for the sustainable development of the Group.

(IV) Carrying Out All-Round Risk Management

The Latest Risk Management Developments of SINOMACH in 2010

Supervision and management of major

projects became more standardized

Make prudent and scientific decisions on major projects, strengthen supervision and

management of major projects, hear and deliberate on the special report on the

implementation of major projects twice a year, require managers to set up supervision systems

for implementation of major projects, and select key projects to undergo follow-up evaluation.

Financial risk management was further

reinforced

Reinforce the supervision of accounts receivable and inventory, strengthen budgetary

management and strictly control the scale of guarantee to reduce corporate financial risks.

The legal system for risk prevention and

control was generally improved

The full-process and all-round control system for contracts having generally been set up, and

the building of the legal mechanisms for corporate risk prevention constantly improved.

51


1. Operating According to the Laws

SINOMACH rigorously abides by the requirements of relevant laws

and regulations in the places where it operates and persists in carrying

on operation according to law. With the corporate system of general

counselor at the core, it constantly promotes the construction of legal

organizations and the corporate counselor system. By the end of 2010,

24 subordinate enterprises had set up special legal organizations with

full-time legal professionals; and 100% of its important affiliates had

set up the legal affairs organizations with over 200 full-time and part-

time legal personnel. There were 137 full-time counselors with these

affiliates, accounting for 69% of all counselors.

Strengthen legal risk prevention. In 2010, the SINOMACH actively

upgraded the level of legal work and realized legal checks on 100%

of corporate rules and regulations, economic contracts and important

decision-making matters. It printed and distributed the Measures

for Management of Major Legal Dispute Cases in Subordinate

Enterprises of China National Machinery Industry Corporation to push

forward and strengthen the building of the counselor system and

“Final of Debate Competition for Strengthening Corporate Legal Publicity to Promote Legal Risk Construction” of China YTO Group Corporation subordinate to SINOMACH

(V) Persisting in Operating According to Law and Regulation

SINOMACH rigorously requires its subordinate enterprises to operate according to laws and regulations, actively pushes forward the building of

an anti-corruption and integrity system, reinforces auditing and supervision and improves internal control systems to ensure that the corporation

operates according to laws and regulations.

organizations in the subordinate enterprises, fully enhance their level

of operating according to law and ensure that the management of

legal affairs supports corporate strategic decisions and operation. In

2010, no significant legal dispute cases occurred in the whole Group.

Carry on publicity and training in law popularization. SINOMACH

substantially materializes the “Five-Five” law-popularizing work

of the SASAC. Every year, it regularly engages relevant experts and

professors to conduct training in such laws as the Company Law

and the Property Right Law for all the employees of the Group

and through debate meetings and other diverse platforms, leaves

employees’ legal awareness remarkably improved and their legal

knowledge greatly enriched, thus putting in place law-popularizing

publicity.


Indicator Unit 2008 2009 2010 2011

Number of audited items of economic responsibility Item 14 9 15 24

Number of audited investment projects Project 10 6 1 6

Number of audited engineering contracting projects Project 1 1 1 2

Number of audited special items Item 13 14 15 19

Number of proposed auditing suggestions Item 135 92 76 168

Number of disclosed important matters and issues Item 232 155 107 348

Summary of Auditing of SINOMACH Headquarters in 2008-2011

Summary of Auditing of Subordinate Enterprises in 2008-2011

Indicator Unit 2008 2009 2010 2011

Number of audited items of economic responsibility Item 99 110 94 152

Number of audited engineering projects Project 735 683 489 674

Number of proposed auditing suggestions Item 947 919 1004 1232

management. In the past two years, the Group has organized

and conducted the tracking inspection on the implementation of

auditing opinions on economic responsibilities. In 2010, it inspected

41 auditing opinions in 8 entities; 76% of such opinions had been

materialized and 24% were being materialized.

SINOMACH has also actively pushed ahead the building of auditing

systems and teams, reinforced work-related communication and

exchange among auditing departments and personnel at all levels,

and promoted the publicity of internal control and auditing rules.

2. Auditing

According to the requirements of the goal of putting “the Group’s

internal auditing work system under centralized and unified operation”

proposed by the Meeting of Central Enterprises on Internal Auditing

Work, SINOMACH has well handled the transformation of the mechanism

for internal auditing organizations from dispersed management to

centralized management, set up the auditing work center and formulated

the Temporary Measures of China National Machinery Industry

Corporation for the Management of the Auditing Work Center, thus

providing the organizational and HR guarantee for reinforcing auditing,

expanding the scope of auditing and improving auditing quality. To

realize the auditing work, the Group conducts annual on-site tracking

inspections on the implementation of the auditing opinions on economic

responsibilities for the previous year and verifies the corrective measures

and their results item by item.

In 2010, focusing on risk control and relying on the building of the

auditing system, SINOMACH displayed the functions of auditing in

preventing, revealing and withstanding risks and fully revised the

original Regulations on Auditing of Economic Responsibilities During

Term of Office and the Operation Guide in the procedures, contents

and report of auditing. Its subordinate enterprises newly established,

revised and improved 51 auditing rules during the year to promote the

standardization of internal auditing and strengthen corporate operation 2010 SINOMACH Auditing Work Meeting

53


SINOMACH’s New Developments in IT Application Construction Work in 2011

SINOMACH was classified by the State-owned Assets

Supervision and Administration Commission of the

State Council (SASAC) as Level B during the IT process

of SASAC SOEs, which has increasingly enhanced

the support of IT to SINOMACH’s administration and

business operations任

At the corporate level, SINOMACH

announced its information development

plan for the 12th Five Year Plan Period,

which defines the goal, direction and key

areas of work for the next stage任

SINOMACH has achieved submission of

project management and operational

statistics level by level, and increased

the t ime l i nes s and accu racy o f

information.

3. Combating Corruption and Upholding Integrity

Firmly focusing on the center of production, scientific research and operation and on the overall

situation of reform, development and stability and giving priority to promoting the building

of the punishment and prevention system, SINOMACH has promoted the implementation of

the responsibility system of combating corruption and upholding integrity, deepened efficiency

supervision, conducted special supervision and inspection, reinforced publicity and education in

combating corruption and upholding integrity and played an active role in accomplishing the

corporation’s leap-forward development.

In 2010, SINOMACH revised the Tour Inspection Work Measures (for Trial Implementation) of the

CPC Committee of China National Machinery Industry Corporation and the Efficiency Supervision

Work Measures of China National Machinery Industry Corporation, laid emphasis on institutional

construction and constantly improved the building of the punishment and prevention system.

To deepen efficiency supervision. At key places, key links and important posts, the Group

strengthens efficiency supervision. It has carried on the work of identifying the remarkable

problems in the field of project construction, improved the reporting and complaint system,

made public the reporting telephone hotline for the special campaign to correct the remarkable

problems in the field of project construction and set up a reporting mailbox.

To carry on special supervision and inspection. The Group thoroughly carried out the special

work of correcting the remarkable problems in the field of project construction, formulated and

circulated the Implementation Plan of SINOMACH for Carrying out the Special Work of Correcting

the Remarkable Problems in the Field of Project Construction and other related documents, and

reinforced the awareness of and institutional guarantee for standardizing project management.

To strengthen publicity and education in combating corruption and upholding integrity. The Group

carried on the publicity and education mainly in the Rules for Clean Administration and Some

Regulations. During the year, it carried on the clean practitioner education at the two sessions of

training classes for newly appointed leading cadres and the headquarters’ employees and 102

persons received the training. The subordinate enterprises organized the learning in various ways,

including the organization of 260 lectures attended by 7626 leaders and central figures at all

levels. The Group conducted 284 lectures of caution and case-based education and 12,920 leaders

at all levels and employees at key posts participated in the activities.

2010 Discussion and Commendation Meeting on

Discipline Inspection Work

IT application represents the important means of improving the efficiency of modern corporate

management. SINOMACH has quickened the pace of its IT application construction and, focusing

on improving the Group’s management and control ability, management level and efficiency,

steadily pushed forward the IT construction work.

(VI) Promoting IT Application Construction


55

Independent Innovation 2011 Social Responsibility Report

Forging a Technology-Based Enterprise

Independent Innovation

Technical innovation constitutes

t h e i m p o r t a n t s u p p o r t f o r

t r a n s f o r m i n g t h e m o d e o f

corporate development and also

the inevitable choice for becoming

stronger and better. SINOMACH

persists in taking the road of

innovation-driven development to

optimize the allocation of science

and technology resources, make

more investment in sc ientif ic

r e s e a r c h a n d d e v e l o p m e n t ,

deepen the reform in scientific

and technological management

mechanisms, perfect the scientific

and technological innovation

system, accelerate the course of

industrialization of science and

technology, foster the contingent

of science and technology talents,

p romote the fo rmula t ion o f

industrial standards, strengthen

the protection of intel lectual

property rights, constantly increase

the contributions of technical

progress to the Group’s growth of

benefits, and become the leader of

Chinese machinery and equipment

manufacturing technologies.


SINOMACH gradually perfects the scientific and technological innovation system that adapts to the new situation. According to the actual conditions,

it has perfected the scientific and technological innovation system guided by the strategy, centering on subordinate enterprises and oriented to the

market, shaped the system of tracking the international technology frontier in the field of machinery and equipment, and striven to get national

support in policy and capital.

SINOMACH has established the technological innovation system oriented to the market and fused with “production, learning, research, trade

and finance”. Its internal system consists of three levels, namely, the strategy decision-making level, strategy implementation level and product &

technology development level, and its extensive system is mainly composed of industrial technology innovation alliances, strategic cooperation for

joint tackling of key problems and so on.

Reinforce the construction of scientific research and service platform. The Group owns the leading R&D and system integration capabilities in

the fields of heavy-duty machinery, power station equipment, general petrochemical equipment, machine tools, automotive engineering and

environmental protection equipment. In 2010, it set up the Central Research Institute to adapt to the development needs in the new period and

realize its involvement in global competition in sustainable development and at higher levels.

SINOMACH Symposium on Technological Innovation and Sustainable Development

Improving the Scientific and Technological Innovation System

I.

Build Up Three Platforms Ful�ll Four Tasks

1.Platform for dovetailing national science and technology

programs.

2.Platform for absorption, cultivation, exchange and

training of high-end talents.

3.Platform for making full use of the Group’s various

internal and external resources of science and technology.

1.Carry on strategic research of domestic and foreign technical

development within the Group’s line of main businesses.

2.Carry on the research of forward-looking and frontier technologies,

key bottleneck technologies and common technologies that support

industrial development.

3.Carry on the research of the technologies for emerging industries of

strategic importance to lay the technical foundation for the incubation of

new industries.

4.Carry on the work of customizing R&D technical services for the

Group’s subordinate manufacturing enterprises.

Main Functions of the Central Research Institute - Building Up Three Platforms and Fulfilling Four Tasks

57


8 National-level

engineering (technology)

research centers

5 National

corporate technology

centers

4 Corporate

national key

laboratories

8 National innovation-oriented

enterprises

6 National

productivity promotion

centers

40 National

standardization technology

committee

14 Postdoctoral

workstations

Scienti�c Research Institutes Subordinate to SINOMACH

Picture of the Industrial Base (completed project) of Jinan Foundry & Metalforming Machinery Research Institute Co., Ltd. subordinate to SINOMACH


Actively undertaking national scientific research projects. The year

2010 was a crucial year for jointly tackling a series of national

projects including a Key National Science and Technology Project

and a National Science and Technology Support Program. In 2010,

SINOMACH won 222 scientific research achievements at provincial

and ministerial levels or above, including 1 Award for National

Scientific and Technological Progress, 90 Awards for Scientific and

Technological Progress and 94 awards for exploration and design.

In 2011, SINOMACH newly added 72 national scientific research

projects with funds of RMB 0.22 billion; and a great number of

new technologies and products were successfully developed and

popularized in application.

By 2020, the Group will remarkably enhance its independent innovative capabilities, own a group of major high-end technical products with independent intellectual property rights and foster a group of technology-oriented enterprises with international competitiveness. The rate between the Group’s technical investment and income will be up to 2.5%, of which the rate of technical investment against income will be up to 8-10% for R&D enterprises and up to 3-5% for manufacturing enterprises, and project contracting enterprises and trade and service enterprises will gradually increase their investment in science and technology so as to gradually increase the said rate. The Group will remain at an advanced level among central enterprises in the scientific and technological progress indicators such as annual average applications for patents, annual average excellent achievements of various kinds at provincial and ministerial levels or above, and the commercialization rate of scientific achievements, and constantly enhance the guiding role in the development of the Chinese machinery industry.--Development Strategy of China National Machinery Industry Corporation

(2011-2020)

Increase investment in science and technology. Centering on the main business sectors, SINOMACH pushes ahead the effective integration of

scientific and technological resources, supports investment in scientific research projects with earmarked science and technology development fund

and provides sufficient fund guarantee for common, proprietary and unique technologies. In 2011, the Group invested RMB 3.5 billion in science and

technology, an increase of 17% on a yearly basis.

SINOMACH’s Investment in Science and Technology in 2007-2011

Income from Principal Operations of SINOMACH’s Institutes in 2007-2011

Profits of SINOMACH’s Institutes in 2007-2011

Unit: RMB100 million Unit: RMB100 million Unit: RMB100 million

13.9

20.421.7

3035

2007 2008 2009 2010 2011

7.54 7.18

9.8

13.5

16.8

2007 2008 2009

93.7105.9

131.6

176.3

225.1

2007 2008 2009 2010 2011 2010 2011

59


Scientific research strength constitutes the foundation and guarantee for

attaining the Group’s goal of “being domestically the strongest in overall

capabilities”. To solve the problem that technology is out of joint with

industry, SINOMACH has provided major support for the high-tech products

featuring advanced technical content, promising development prospects,

large market capacity, strong promoting effect and leading technical

strengths, rapidly industrialized scientific achievements and compensate

technological innovation, forming the benign interaction between scientific

innovation and industrialization.

The significant project of “Multi-Purpose Agricultural Equipment &

Facility Development” under the National Science and Technology

Support Program organized and implemented by the Chinese Academy

of Agricultural Mechanization Sciences (CAAMS) subordinate to

SINOMACH during the “11th Five-Year Plan” period realized the

integration of technology, achievement, industry and popularization

and their rapid zero-distance dovetailing and was successfully checked

and accepted.

“Multi-Purpose Agricultural Equipment & Facility Development” Project

High-end Numerically Controlled Complete Metalforming Equipment Industrial Base of Jinan Foundry & Metalforming

Machinery Research Institute Co., Ltd. subordinate to SINOMACH

General Assembly Workshop for Numerically Controlled Turret Punch Press

Promoting the Development of Independent Innovation

Currently, SINOMACH owns 28 national Class-A institutes and their

industrialization development represents the key path for promoting the

Group’s expansion toward the high end of the value chain in the equipment

manufacturing industry and realizing the dovetailing between technology

and capital. While promoting the technical upgrade of industrial structure

and bringing along the common development of related industries and

SMEs, SINOMACH has enhanced the product research and production level

of such institutes and fulfilled their transformation from single institutes

to modern new enterprises oriented toward high-technology products.

By constantly innovating, facing high-end markets and making the core

business of equipment manufacturing bigger and stronger, it has taken on

the responsibility for revitalizing the Chinese machinery industry.

In 2010, CAAMS and Hefei General Machinery Research Institute

subordinate to SINOMACH won the Excellent Team Award for

implementation of the National Science and Technology Program during

“11th Five-Year Plan” period; and CAAMS, as the Director-General

member of the Technical Innovation Strategy Alliance of Agricultural

Equipment Industry, won the Excellent Organization Award for

organization and management of the National Science and Technology

Program during the “11th Five-Year Plan” period.

II.

cases


Some Important Products or Projects Great Significance

Key Technologies for Control and Evaluation of Long-Period Operation Risks in Large Petrochemical Device System and Their Application in Projects

Second Prize for National Science and Technology Progress Award

Key Technical Equipment for Harvesting Corn Seeds and Straw Second Prize for National Science and Technology Progress Award

Studies on Key Technologies for Time-Dependent Analysis and Control of the Process of Complex Steel Structure Construction and Their Application in Projects

Second Prize for National Science and Technology Progress Award

Agricultural Equipment Technical Innovation Project Second Prize for National Science and Technology Progress Award

Project of “Research on Technologies and Devices for Joint Harvesting of Sweet Sorghum Stalks and Spikes

Key project subject for research on modern agricultural smart equipment and technology under National High-Technology Research and Development Program (863 Program)

High-Performance NC Discharge Milling Technology and Equipment with Special Materials

A project under National High-Technology Research and Development Program (863 Program)

Power Thick-Plate NC Laser Cutter and 3D NC Laser Cutter Major National Science and Technology Project “High-Grade NC Machine Tool and Basic Manufacturing Equipment”

Set Equipment for Near Net Shaping of Sand Casting Major National Science and Technology Project “High-Grade NC Machine Tool and Basic Manufacturing Equipment”

Large-Scale NC Radial-Axial Annular Rolling Machine Major National Science and Technology Project “High-Grade NC Machine Tool and Basic Manufacturing Equipment”

High-Performance Cutting Tools for Key Parts of High-Speed Trains

A key project under National Science and Technology Support Program during the “11th Five-Year Plan” period

R&D and Application of Key Technologies for Roller Bend Forming

First Prize for Science and Technology Award of the Chinese Machinery Industry

4NC Diesel Engine Second Prize for Science and Technology Award of the Chinese Machinery Industry

“Shenzhou 8” space craft realized the rigid connection with the target craft of “Tiangong 1” and they combined into a complex, which indicated the

first successful docking in China’s manned space flight. This marked that China had made a milestone step forward in its expedition of exploring outer

space. SINOMACH’s three affiliates, Luoyang Bearing Science and Technology Co., Ltd., Lanpec Technologies Limited and Guilin Electrical Equipment

Scientific Research Institute assisted the “kiss” between “Tiangong” and “Shenzhou 8” in outer space, which again displayed their own technological

strengths and their supporting role in significant national science and technology projects.

SINOMACH Assisted “Tiangong” and “Shenzhou 8” to Kiss in Outer Space

“Fixed Table Five-Axis Linkage Precision NC EDM Machine Tool” developed in a major science and technology project.

SINOMACH Assisted “Tiangong” and “Shenzhou 8” to Kiss in Outer Space

cases

61


A first-class enterprise should have first-class employees. SINOMACH

exerts its efforts to build a high-quality sci-tech talent contingent that

is suitable for the Group’s development and is structurally reasonable.

According to the Plan of China National Machinery Industry

Corporation for Building a High-Level Talent Contingent (2005-2010),

the Group worked out the Temporary Measures of China National

Machinery Industry Corporation for Management of High-Level

Science and Technology Talents to provide institutional guarantee for

the building of the sci-tech talent contingent in selection, incentive,

management and other aspects.

By the end of 2011, the Group had 31144 professional technicians

including 7498 intermediary and senior professional technicians and

11298 intermediary ones. Currently the Group has 2 academicians of

the Chinese Academy of Engineering, 962 persons enjoying special

government allowances, 17 national candidates for the “Hundred

Million Project” and 24 young and middle-aged experts with

outstanding contributions.

In 2010, Yang Ladao, Deputy Chief Engineer of China National

Heavy Machinery Research Institute Co., Ltd. (CNHMRI)

subordinate to SINOMACH, won the honorable title of “National

Science and Technology Worker”. Yang is one of the subject

leaders in continuous casting of CNHMRI, an expert enjoying

special government allowances of the State Council, a Level I-II

candidate for the National Hundred Million Talent Project and an

expert with outstanding contributions in Shaanxi Province.

Yang Ladao Won the Title of “National Excellent Science and

Technology Worker”

Fostering Science and Technology Talent Contingent

By the end of 2011, the SINOMACH had hosted or participated in

the formulation and reformulation of more than 1709 industrial

standards including more than 1018 national standards, which dealt

with machinery, electronics and many other fields. This has improved

product quality and technical services, effectively standardized

industrial development, provided technical support for industrial

product quality control and offered strong guarantee for further

accelerating the localization of China’s major equipment.

By the end of 2011, SINOMACH had part ic ipated in formulating and reformulating more than 0000 industrial standards

By the end of 2011, SINOMACH had participated in formulating and reformulating more than 0000 national standards

1709 1018Item Item

III.


As a scientific research unit falling within the

technology, standard and quality industry, this

institute has ten national standard committees and

has played an important role in deeply progressing

China’s standardization. In 2010, it won the title of

“Key High-Technology Enterprise for National Torch

Program”.

Hefei General Machinery Research Institute subordinate to SINOMACH Made

Notable Achievements in Standardization Work

SINOMACH vigorously supports its subordinate enterprises to participate in the work of formulating national and industrial standards. It has

deliberated and worked out the Implementation Measures (for Trial Implementation) of SINOMACH for Subsidizing the Work of Formulating and

Revising Standards, according to which it subsidized 21 subordinate enterprises to prepare 477 standards with a total subsidy of RMB1.643 million

in 2011. Meanwhile, by actively participating in symposiums on industrial standards, the Group promptly provided enterprises with information on

industrial standards and made positive contributions to the industrial and national standardization work. In 2010, the Group and its subordinate

China IPPR International Engineering Corporation and China United Engineering Corporation were appraised as Advanced Collectives in National

Engineering Construction Standardization and five comrades including President Xu Jian were appraised as Advanced Individuals in National

Engineering Construction Standardization.

Promoting the Formulation of Industrial Standards

The standard project of “General Specifications for JB/

T10784-2007 Mechanical Dry Power Compacting Presses” of

Jinan Foundry & Metalforming Machinery Research Institute

Co., Ltd. subordinate to SINOMACH won the 2010 China

Contribution Award for Innovation on Standards.

IV.

cases

63


Corporate competition is increasingly changing from products and services to technologies

and it becomes more and more important to protect intellectual property rights (IPR).

SINOMACH vigorously promotes the IPR strategy focusing on patents. It enhances the

awareness of patent and IPR protection, reinforces the patent application and utilization,

and implements the rewarding policies for authorized patents. Taking the chance of

launching the third group of IPR pilot units and focusing on patents, the Group constructed

the IPR management and protection system, established the incentive mechanism for

effectively using IPR system to promote scientific and technological innovation and brought

into play the guiding role of IPR in science and technology management.

In 2011, the Group obtained 658 authorized patents, including 133 invention patents.

SINOMACH 2007-2011

Authorized Patents

That it is hard to obtain evidence for infringement upon IPR

and it is expensive to safeguard IPR is the common view of

many enterprises on IPR protection. In 2010, SUMEC Group

Corporation subordinate to SINOMACH made concerted

efforts with the customs and judicial departments and

successfully captured at Customs a batch of oil generators

that counterfeited the trademark of “SUMEC” and were to

be exported to Nigeria. This safeguarded the image of “Made

in China” and promoted the development of the market

economy.

Safeguarding Trademark Rights, SUMEC Captured “Counterfeiter”

Strengthening the Protection of Intellectual Property Rights

Unit: Item

Invention Patents

“Agr i cu l tu ra l Equ ipment Techno logy Innovation Project” won the National Science and Technology Progress Award in 2011

V.

cases

625

658

104133

432

9135

336

20

205

2007 20072008 20082009 20092010 20102011 2011


65

Employee Development 2011 Social Responsibility Report

Build, Share and Grow Together

Employee Development

SINOMACH adheres to the concept

that “development by employees,

development for employees and

development achievements are

shared by all employees” and

materially achieved the goal of

putting people first and undergoing

harmonious development. The

Group sticks to the strategy of

strengthening enterprises through

employees , g i ve s p r io r i t y to

development of human resources,

improves employees’ qualities and

capabilities, ensures employees’

rights and interests and cares for

the wellness of the employees;

improves a series of rules and

systems focusing on distribution

systems and shapes the mechanism

for enterprises and employees to

share interests. It uphold fairness

and justness to make all employees

equally and widely engaged in the

Group’s reform and development.

We pool ta lents through the

concept of common development,

guide them through correct values

and foster them through the

growing business development.


SINOMACH strictly observes the Labor Law of the People’s Republic of China, the Labor Contract Law, the Regulations on Collective Contract and

other relevant laws and regulations. In 2011, 100% of regular employees signed the labor contract. We insist that all employees be equal, ensure that

no employees are discriminated against due to their difference in race, gender, age and other factors, prohibit the use of child labor and oppose forced

labor in all its forms.

Focusing on promoting the building of the system of employees’ representative meetings and making public the corporate affairs, SINOMACH actively

provides for all the employees’ rights including democratic participation, democratic management, democratic supervision and democratic decision

making, constantly perfects the system of equal consultations and collective contracts and establishes and improves the interests coordination

mechanism. The Group strengthens the supervision and inspection of the performance of collective contracts to enhance enterprises’ consciousness of

and initiative in performing such contracts. The Group has had 100% of its subordinate units at all levels set up trade union organizations to reinforce

consultations and communications between enterprises and employees. It constantly pushes forward the corporate democratic management work

with the employees’ representative meeting at the core to guarantee employees’ right to participate in making major corporate decision. The Group

persists in making corporate affairs known to the public and promotes democratic management and democratic supervision.

Protecting Employees’ Rights and Interests

SUMEC Group Corporation

subordinate to SINOMACH

W o n t h e H o n o r a b l e

Title of “National Model

Enterprise for Harmonious

Labor Relations”

2nd Representatives Congress of SINOMACH Trade Union

I.

cases

67


CPMIC Pushed Forward the Work of Corporate

Democratic Management

Chinese Academy of Agricultural Mechanization Sciences subordinate to SINOMACH Holding the Second Session of the Eighth Employees’ Representative Meeting in 2011

China Perfect Machinery Industry Co., Ltd. subordinate to SINOMACH

has strongly advanced the work of democratic management, democratic

decision making and democratic supervision and, in 2010, was appraised

as an Advanced Unit of Shanghai (2009-2010) in Making Corporate Affairs

Pubic and in Democratic Management by the Leading Group of Shanghai.

SINOMACH adheres to the principle of combining security and incentive,

gradually improves the corporate system of remuneration and benefits

and fully carries on the work concerning corporate annuity. 50% of its

enterprises have set an annuity plan and participants in such plans have

accounted for 34.4% of all employees. The benefits of “five types of

insurance and one reserve” have covered 100% of employees.


Adhering to the guideline of combining internal and external training and long

and short training periods, as well as to the principle of combining pertinence

and levels, SINOMACH works to improve the educational training system, sets

up the cultivation and education platform and optimizes and integrates all kinds

of educational training resources. Through systematic and diversified forms

of training such as university-enterprise cooperation, joint running of schools,

international training, post rotation and advanced studies on special subjects,

SINOMACH synchronously carries out its all-directional, three-dimensional and

multi-level mode of training and education.

By maintaining smooth channels for continuing technical training and academic

education, SINOMACH creates the opportunities and atmosphere for continuous

learning to fully promote employee development. It sets up the training system

for all employees including leaders, managers, professional technicians and

highly-skilled personnel to increase employees’ participation rate and training

quality and enhance employees’ business skills, knowledge structure, executive

ability and innovative awareness.

In 2011, the Group hosted about 700 person-time training at executive level,

organized 2 sessions of foreign training projects with 23 trainees and successively

participated in the subjects of corporate IT and law in the project “SINOMACH

Senior Operation Managers Going to EU to Learn Courses of Modern Corporate

Operation Management” held at EU Headquarters in Brussels, Belgium and in

the project “SINOMACH Senior Operation Managers Going to the US to Learn

Courses of Modern Corporate Operation Management” at US Stanford University.

Reinforcing Employee Training

Organizing a Trip to Beijing Hyundai Automobile Corporation for Learning and Visit

II.

SINOMACH Holding the Second Session of the Training Class for New Employees in 2010

69


China CAMC Engineering Co., Ltd. subordinate to

SINOMACH Actively Organizing Employee Training

China Perfect Machinery Industry Co., Ltd. under

SINOMAC arranged training for employees according

to the Employee Training Plan. Its subordinate China

Sinogy Electric Engineering Co., Ltd. invited a professor-

level senior engineer to teach the FIDIC clause applied in

international engineering.

cases


China Perfect Machinery Industry Co., Ltd. subordinate to SINOMACH invited foreign lecturers to teach knowledge of

international business etiquettes.

Of the three participants selected by SINOMACH for “NC

Lather Worker Competition of Central Enterprises”, one

employee won a Bronze Medal, one ranked among the

Top 50 and the other received an Honorable Certificate

for Excellence.

China Automotive Industry Engineering Corporation

subordinate to SINOMACH carried out various forms of

educational training for new employees.

cases

71


SINOMACH innovates on the talent recruitment mechanism, actively

develops and utilizes domestic and international talent resources and

attracts a great number of high-level interdisciplinary talents.

SINOMACH maintains a smooth path for employee career development,

advocates equal job opportunity and uses competition for placement in

100% of positions. Its headquarters carries out public position competitions

every three years to realize fair competition and scientific selection

processes.

SINOMACH adheres to the philosophy that “development decides

employment and employment submits to development”. Through

theoretical training and other measures, it has fostered a sufficient number

of young cadres well-structured and with excellent qualities. It strengthens

the building of entrepreneur contingents and operation management

teams to build an international, professional and learning-oriented team of

entrepreneurs; and optimizes the knowledge structure, age structure and

specialty structure of operation management to foster management teams

composed of the “old, middle-aged and young” people.

SINOMACH emphasizes the building of a professional talent contingent.

Currently the Group has 845 technical professionals at the national level,

and the total number of profession technicians increased by 69.5% during

the “11th Five-Year Plan” period.

SINOMACH pushes forward the building of a highly-skilled talent

contingent, strengthens the training of highly-skilled professional employees,

continuously carries out various kinds of employee skills competitions and

technical contests and actively selects employees to participate in various

national-level employee skills competitions to develop a potent atmosphere

of learning and practicing skills and to improve employees’ business skills in

an all-round manner.

Promoting Employee Development

With the aim of building an assessment system combining strategic

orientation and performance orientation, SINOMACH establishes a

salary distribution system that keeps consistent in responsibilities, rights

and benefits and combines incentives and restrictions. It carries out the

annual remuneration assessment system to closely peg employees’ salary

to corporation economic benefits; and through the guidance of income

distribution policy, realizes the benign interaction between performance

assessment and resources allocation.

In 2010, SINOMACH signed the Yearly Operation Goal Responsibility

Document with the operators of its 47 subordinate enterprises and revised

the Measures for the Management of Enterprise Operator’s Operating

Performance Assessment to promote the common and sustainable

development of enterprises and entrepreneur teams through rules.

SINOMACH values the development and inspiration of high-technology

talents. In 2009, it appraised and selected the first 65 high-technology

talents in the whole Group and built the high-technology talent contingent

with academicians, experts and masters at the core to inspire talents’ vigor

and impetus for innovations.

SINOMACH encourages its subordinate enterprises to set up leading

organizations for performance assessment to provide organizational

guarantee for performance. 84% of the subordinate enterprises have set

up such leading organizations and some of the subordinate enterprises

utilized the strategy-oriented performance assessment management

tools and methods such as balanced scoring cards and key performance

indicators. The Group’s headquarters sets up the linkage mechanism under

which the remuneration of employees at the headquarters is pegged to

the remuneration of subsidiaries’ employees and with the minimum salary

of the enterprises of SINOMACH in most financial difficulty to constantly

improve work efficiency and the level of management.

Senior Technical Professionals Intermediary Technical Professionals

Primary Technical Professionals

Unit: Person

SINOMACH 2007-2011

III.

5315 5857 61006808

9508 9188

7146

749810916

1234810299

11298

6246

87098929

2007 2007 20072008 2008 20082009 2009 20092010 2010 20102011 2011 2011


SINOMACH employee won first place in manual argon arc welding at the 2010 International Welding Competition.

In 2010, the “Pressure Vessel and Pipeline Safety Engineering Technology” team of Hefei General Machinery Research Institute

subordinate to SINOMACH won the title “National Advanced Collective of Technological Professionals” and was cordially received by

Party and state leaders at the Great Hall of the People. This was the first time that SINOMACH was included in the national core appraisal

list and won the award.

On September 16-18, 50 delegations from 49 subordinate

enterprises gathered in Beijing to participate in the “Fourth

Accounting Knowledge Competition of SINOMACH” sponsored by

SINOMACH and Chinese Accounting Society Machinery Branch.

This accounting knowledge competition aimed to promote

SINOMACH’s financial and accounting personnel to strengthen

professional qualities and promote its subordinate enterprises to

set up advanced and scientific financial management systems so

as to raise the financial management of SINOMACH to a higher

level.

In 2010, SINOMACH held its first Welding Competition and over

60 entrants with 16 delegations from 10 subordinate enterprise

participated in it, which inspired the employees’ enthusiasm for

learning technologies and skills.

Awards Won By SINOMACH in Various Skills Competitions

SINOMACH Successfully Held the Fourth Accounting Knowledge Competition

cases

73


SINOMACH always values care and concern for each employee, seeks to establish a multi-

level and multi-subject employee support system and manifests its individualized concern for

employees. In terms of in-service employees, retired employees and employees in financial

difficulty, it has carried out diversified support endeavors based on employees’ needs to enhance

corporate cohesion and construct a harmonious enterprise.

With the development of enterprise and the pace of work quickening, employees’ work pressure

is gradually increasing. SINOMACH fully realizes the mental and physical stress caused by work

pressure to employees and encourages them to participate in various sports activities to take

exercise and build up a strong constitution; and actively pushes ahead the building of clubs and

associations based on interest groups to display employees’ hobbies and specialties, enrich their

leisure time and help them achieve a balance between work and life. The Group actively sets up

various culture, sports and entertainment associations and organizes various sports competitions

to unite, inspire and bring together employees and foster a harmonious and progressive

corporate culture atmosphere.

SINOMACH fully develops a support fund, works out the fund management measures, uses

the funds allocated by the Group and the donations from subordinate enterprises, employees

and people from all walks of life to subsidize social welfare undertakings and carries on public

welfare events that closely center on the three core areas of employees in financial difficulty

seeing the doctor, their children’s education and life assistance. By reinforcing the management

and operation functions of the Support Fund Management Committee, the Group has made the

work of assisting employees in financial difficulty regular, rule-based and standardized.

SINOMACH highly values the help and support for employees in financial difficulty, further

improves the effective mechanisms for assisting and giving relief to those in distress, sets up

the records of internal employees in difficulty, enriches the scope and content of assistance

and does its best to help the families of employees in difficulty to get through their difficulties,

supports employees in difficulty to get rid of their burdens in seeing the doctor and ensuring

their children’s education and development. It persists in going deep into the grassroots units

and making more communications to remain in touch with the actual conditions of employees

in difficulty; and enthusiastically carries out enlivening events and sends its warmth and support

directly to employees in difficulty.

Emphasizing Employee CareIV.

Board Chairman Ren Hongbin Visits Enterprises in Xinjiang Uygur Autonomous Region


SINOMACH, which values and carries

forward the fine tradition of respecting

and cherishing the elderly, held the “Old

Comrades’ Symposium on the Seniors

Day 2010” to understand needs and

hear constructive opinions.

In 2010, China Foma Machinery (Group) Co., Ltd. subordinate to SINOMACH set up the “Foma Loving Care Fund”, worked out the

Measures for Management of the Loving Care Fund of China Foma Machinery (Group) Co., Ltd, raised a total of RMB125,410 improved its

mechanisms for assisting those in financial distress and subsidized 33 employees in financial difficulty to promote corporate harmony.

On June 1, Children’s Day, 2010, China

CAMC Engineering Co., Ltd. organized

the world parent-child event to help

employees balance work and family

commitments and build harmonious

and warm families.

Foma Loving Care Fund

Cantata of China IPPR International Engineering Corporation subordinate to SINOMACH

The Basketball Team of China IPPR International Engineering Corporation subordinate to SINOMACH won the basketball championship among (Beijing) exploration and design units.

75


In 2011, when major changes occurred in the security situation of Libya,

the residential and infrastructure construction project of SINOMACH for

the city of Zawiya was under way and the lives of 298 on-site personnel

were seriously threatened. Under the unified leadership of the SASAC of

the State Council, SINOMACH gave first priority to the personal security

of overseas personnel, actively went into deployment and response and

swiftly launched the emergency response plan. Through the Ministry

of Foreign Affairs, the Ministry of Commerce and other government

departments and with the aid of cooperative partners, contractors

and international professional rescue organizations, it participated in

the action to permit the orderly withdrawal of personnel from Libya.

Meanwhile, through personal visits and phone calls, the Group actively

eased the concerns of the families of the trapped personnel. Mother-Daughter Reunion

SINOMACH Welcomes Families Home

cases


77

Work Safety 2011 Social Responsibility Report

Stay Vigilant in Peace Time in Consolidating the Foundation

Work Safety

Work Sa fe ty cons t i tu te s the

important guarantee for achieving

s u s t a i n a b l e d e v e l o p m e n t .

SINOMACH earnestly implements

the requirements of the national

laws, regulations and policies on

work safety, always adheres to the

philosophy of putting people first

and prioritizing safe development,

improves safety management

systems, reinforces work safety

management, perfects emergency

response systems, strives to foster

the atmosphere of safety culture

and commits itself to forging a

substantially safe enterprise.


Safety in the Workplace at SINOMACH during 2006 to 2011

In 2011, SINOMACH and its subordinate enterprises set up the leading

organizations for work safety, the supervision and management

organizations for work safety and the response coordinating

organizations for work safety and enlisted full-time (and part-

time) work safety management personnel. In light of their business

characteristics and personnel changes, the companies readjusted

and enriched the personnel of all management organizations, further

specified their management functions and reinforced work safety

management capabilities to provide organizational guarantee for the

Group’s safety production management work.

Improve the Work Safety System

SINOMACH Work Safety Organizations

Accident Type UnitYear

2006 2007 2008 2009 2010 2011

Serious Accident Accidents

Incidents 0 0 0 0 0 0

Accident Fatality Rate Per 1000 Employees

‰ 0.0457 0.0175 0 0.0114 0.0236 0.118

Death Toll Individuals 2 1 0 1 2 1

Number of Seriously Injured Persons

Individuals 2 4 2 2 0 2

Number of Persons Suffering Minor Injury

Individuals 75 81 72 45 48 45

Unit: Incidents Unit: ‰

Total Number of Workplace Accidents Accident Serious Injury Rate Per Thousand Employees

Leading Organization for

Work Safety

Supervision and Management

Organization for Work Safety

Response Coordinating

Organization for Work Safety

I.

(I) Setting Up Work Safety Organizations

0.0457

0.0701

0.0230 0.02280

0.0237

2006 2007 2008 2009 2010 2011

7974

86

48 50 47

2006 2007 2008 2009 2010 2011

79


In 2010, SINOMACH’s work safety work was fully affirmed by the

SASAC and the State Safety Supervision Administration. The State

Safety Supervision Administration specially sent a “thank you letter”

to positively highlight the active efforts and important contributions

that SINOMACH had long made for work safety.

SINOMACH Was Fully Affirmed in Work Safety Work

SINOMACH highly values the building of a work safety system and has successively released the Work Safety Management Measures of

China National Machinery Industry Corporation, the Overall Response Plan of China National Machinery Industry Corporation for Work Safety

Accidents and Overseas Sudden Events and other rules, regulations and measures to standardize, supervise and instruct the work safety work

of its subordinate enterprises.

In light of their specific conditions, the Group’s subordinate enterprises vigorously carried out the activities of formulating rules and

regulations. Proceeding from overall safety management, personnel safety management, equipment and facility management and

environmental and occupational health management, they gradually improved various rules and regulations for work safety and operating

procedures for job positions to standardize and institutionalize work safety management.

Summary of Work Safety Accidents and Sudden Events

Chart of Hidden Safety Dangers at Construction Site

(II) Working Out a Work Safety Management System

cases


SINOMACH adheres to the guideline of “Safety First, Prevention Foremost and Overall Control”, persists in production operation according to laws

and regulations and reinforces responsibility implementation and investigation. It constantly expands investment in work safety and improves its

capabilities of work safety guarantee, continuously strengthens basic management and team building, emphasizes and reinforces safety supervision

and inspection to promptly discover and control hidden dangers, and uses all kinds of measures to fully strengthen corporate work safety work.

In 2011, SINOMACH again revised the Work Safety Responsibility Document and the main principals of the Group, and its subordinate enterprises

signed the Work Safety Responsibility Document. All subordinate enterprises broke down and segmented level by level the work safety responsibility

goals and contents, signed the work safety responsibility documents at all levels, resolutely carried out the principle that “whoever is in charge

is responsible”, put in place the work safety responsibilities in all posts and links at all levels and constructed a comprehensive work safety

responsibility system.

According to the requirements of the newly revised Work Safety Management Measures and the Tentative Measures for Assessment of Work

Safety Responsibility Goals, SINOMACH carried out strict assessment of its subordinate enterprises’ work safety work, fed back the main problems

discovered in the assessment and then worked out rectification plans to implement one by one. By taking this chance, it pushed forward all safety

work to fully enhance the Group’s work safety management level.

In the past two years,, SINOMACH has basically remained stable in its overall work safety situation, driven down the total number of accidents,

fatalities, serious and extraordinarily serious accidents as well as the main relative indicators of work safety, achieved zero-occurrence of work safety

accidents at the rather serious level or above and provided guarantee for the accomplishment of all the Group’s operation goals.

Strengthening Work Safety ManagementII.

(I) Realizing Work Safety Responsibility

On November 3-6, 2011, Xu Jian, President of SINOMACH, led a delegation to Indonesia to investigate the projects of INDRAMAYU 3×330MW Power

Plant and AWAR-AWAR 2×350MW Power Plant being constructed by the Group there and made survey and inspection of their progress and work

safety work. During the period, Mr. Xu and his delegation also had a talk with Mr. Iskan, President of Indonesia National Electric Power Corporation, on

relevant cooperation matters. Xie Biao, Vice President of SINOMACH, also attended the investigation and survey.

President Xu Jian Led a Delegation to Indonesia to Investigate \Projects Under Construction

cases

81


SINOMACH always values the expansion of investment in work safety

to ensure the smooth progress of work safety. To further improve work

safety conditions and create a safe working environment, the Group

and its subordinate enterprises have, according to actual conditions,

constantly expanded investment in work safety, updated or renovated

the existing outdated and backward facilities and equipment with

hidden safety risks step by step and according to plans to ensure their

safe operation and further enhance the substantial safety level.

SINOMACH highly values the work of checking and controlling hidden

dangers, further reinforces supervision and inspection and strictly

supervises all units to realize safety responsibility performance. It

strengthens on-site supervision and inspection, strictly checks and

punishes any acts under the “three violations”, that is, “violating

rules in directing employees, violating regulations in operation

and violating labor disciplines” and substantially puts in place the

personnel’s responsibilities, rectification measures, rectification funds,

rectification time limits and emergency response plans. In 2011,

SINOMACH successively carried out self-inspection, mutual inspection

and supervision and inspection of work safety 14 times.

On September 19-21, 2010, SINOMACH organized relevant personnel as a Joint

Inspection Group to carry on a great work safety inspection of its subordinate

Foundry & Metalforming Machinery Research Institute Co., Ltd. and had exchanges

of experience in work safety management of production and manufacturing

enterprises. The Inspection Group inspected the work safety management files

and production and manufacturing workshops one by one and put forward 6

rectification requirements. JFMMRI carried out the rectification according to the

Inspection Group’s requirements and reported the rectification results to the Work

Safety Department of SINOMACH.

SINOMACH Carried on Work Safety Inspection of Its Subordinate Jinan Foundry & Metalforming Machinery Research Institute Co., Ltd

SINOMACH”s Investment in Work Safety During the

“11th Five-Year Plan” Period

20892.2

Unit: RMB 10,000

Amount of Investment:

5208.1 5982.3

10849.5

14820.0

2006 2007 2008 2009 2010

(II) Expanding Investment in Work Safety (III) Reinforcing Safety Supervision

Management


According to the actual conditions of work safety emergency response management, SINOMACH has established and improved the relevant

emergency response system that complies with its actual development conditions and features unified leadership, overall coordination, categorized

management, classified responsibility, integration of departments at all levels, and focus on each department’s jurisdiction, to ensure that, after the

occurrence of work safety accidents and overseas sudden events, it can carry out emergency assistance in a swift, effective and orderly way, control

and handle the accidents and events and ensure the safety of personnel and property.

Improving Emergency Response Management Mechanism

Chart of Emergency Response Organization Structure

Communication Liaison Group

Emergency Assistance Group

News Release Group

Logistical Guarantee Group

Plan Management Group

Emergency Response Command Center

III.

(I) Setting Up Work Safety Organizations

Xu Jian, President of SINOMACH, gave instructions for the follow-up work of handling the sudden event in Libya.

83


According to the corporation’s requirements for work

safety, SINOMACH and its subordinate enterprises have

incorporated the work of emergency response exercises

in the annual work safety work plan, laid down the

exercise plans and work schemes and vigorously carried

out response exercise activities to upgrade the safety

awareness and mutual-rescue abil ity of emergency

response managers and operators and enhance the ability

to respond appropriately to work safety accidents and

sudden events.

This expounds in general the

response guidelines and policies

for accidents and events, the

structure of emergency response

organizations and their response

functions, actions, measures

and guarantee and other basic

requirements and procedures and

it is an integrated document for

responding to various accidents and

events.

Overall Emergency Response Plan Special Emergency Response Plan

SINOMACH Contingency Plan

On-Site Disposition Plan

This is a plan or scheme made for

specific kinds of accidents and

events, danger sources and response

guarantee and has clear rescue

procedures and specific emergency

rescue measures.

This is the emergency disposition

measures made for specific devices,

sites or facilities, and posts.

The Purchase Center Oil Depot of China YTO Group Corporation subordinate to SINOMACH Carrying Out the Exercises of the Emergency Rescue Plan for Major Accidents

To standardize the work of emergency response management and effectively respond to sudden events, SINOMACH has worked out very

effective plans for emergency response management.

(II) Making Plan for Work Safety Emergency Response Management

(III) Actively Carrying on Emergency

Response Exercises


SINOMACH and its subordinate enterprises regularly conduct work

safety education and training, reinforce the certificate-obtaining

training for work safety management personnel and special operation

personnel and also strengthens the three-level safety education

and training of new employees as well as the safety training of

the personnel who have changed posts or returned to work, so as

to ensure all practitioners have the work safety knowledge and

management ability suitable for their enterprise’s production and

operation activities.

During the event of work safety month, China National Heavy Machinery Corporation

subordinate to SINOMACH made the exhibition board with the theme of “Safe Development,

Prevention Foremost, Check and Control Hidden Dangers and Perfect Management”. In the

form of texts and pictures, it publicized and popularized the common knowledge of work

safety management such as emergency response management, identification of risk sources,

checking and controlling of hidden dangers and common hidden dangers on construction

sites, to enhance employees’ awareness of safety management.

On August 24-27, 2010, SINOMACH held a session of training for work safety management personnel in Beijing jointly with China Work Safety

Science Research Institute which holds Grade-A qualifications for national safety training. This training laid emphasis on such contents as “work

safety technology for architecture construction and supervision and inspection of on-site work safety, cases of typical accidents and emergency

rescue, creation of work safety standards for machinery enterprises, and establishment of occupational health and safety management system

and identification and evaluation of risk sources”. This training improved vocational qualities and operation abilities of work safety management

personnel within the sector of SINOMACH and upgraded the level of work safety management.

China National Heavy Machinery Corporation subordinate to SINOMACH

Carried Out “Work Safety Month” Event

SINOMACH Held a Training for Work Safety Management Personnel

SINOMACH values the building of work safety culture, gradually reinforces the educational training in work safety, strengthens the vocational and

professional development of safety management personnel, constantly pushes ahead the popularization of safety concepts, laws and knowledge and

strives to foster a work safety culture atmosphere among all employees.

Closely centering on the theme of “Safe Development and Prevention

Foremost”, SINOMACH carried out the “Work Safety Month” event

and continued to further check and control hidden dangers for work

safety within the whole Group. This event enhanced work safety

awareness, promoted the building of safety culture, popularized the

laws, regulations and knowledge regarding work safety, reinforced

all employee’s involvement in the full-process and all-directional

checking and control of hidden dangers for work safety, enabled all

enterprises to carry out the work of work safety and achieved rather

positive results.

Fostering Work Safety CultureIV.

(I) Carrying Out the

“Work Safety Month” Event

(II) Strengthening Education and Training

in Work Safety

cases

85


SINOMACH and its subordinate enterprises value and strengthen the building of professional talent contingents for work safety and incorporate the

training of certified safety engineers for obtaining certificates in the corporate emphases of work safety training, which has effectively improved the

Group’s professional capabilities in work safety management. This endeavor was praised by the State Administration for Work Safety Supervision.

At the national work symposium of certified safety engineers, SINOMACH shared the experience as one of the central enterprises that delivered

speeches. By the end of 2010, the number of certified safety engineers registered in SINOMACH had reached 247, an increase of 49 persons on a

yearly basis.

Project contracting is one of the Group’s three main businesses, and

particularly the foreign project contracting has a bearing on the long-

term development of the Group. The work safety management in project

contracting and construction constitutes the important guarantee for the

smooth progress of a project.

SIINOMACH reinforces and standardizes the work safety management

EPC projects, strengthens the supervision of contractors and has drafted

Safety Management of Construction Projects

the Guiding Opinions on Work Safety Management of EPC Projects of the

Group, which has been officially released and implemented. The guiding

opinions provide definite requirements for the safety matters at every link

in the process of the EPC projects and clearly define the functions of related

personnel. All relevant enterprises have worked out the measures or rules

for work safety management of EPC projects to further put in place the

work safety responsibilities of subcontractors and effectively control the

occurrence of work safety accidents at the subcontractor units.

V.

(III) Improving Practitioners’ Safety Qualities

Xie Biao, Vice President of SINOMACH, Arrived in Indonesia for On-Site Investigation of the Awar-Awar 2×350MW Project



Environment-Friendly and Low Carbon to Create Our Future

Environmental Protection and Conservation

Ecological environment is the

foundation for human subsistence

and development. S INOMACH

commits itself to fusing corporate

s t r a t e g i c d e v e l o p m e n t w i t h

environmental protection and

actively gets involved in responding

to g lobal c l imate change. In

light of the characteristics of the

machinery industry, relying on the

Group’s scientific and technological

advantages in environmental

protection and making it as its

mission to upgrade the industrial

level of environmental protection,

S I N O M A C H r e i n f o r c e s g r e e n

management system, vigorously

promotes energy efficiency and

emiss ions reduct ion, act ive ly

carries out green production,

implements and accomplishes green

development, persists in green and

low-carbon operation, brings along

more counterparts and public to

jointly promote the environmental

protection undertaking, make

contributions to the building of a

“resource-saving and environment-

friendly” society and substantially

perform corporate environmental

responsibility.


Environmental protection needs the guarantee of perfect systems and mechanisms. SINOMACH has made efforts to build up the “three systems” for

energy efficiency and emissions reduction (EEER) to reinforce its green management. The first was to establish and improve the classified instruction

and management system. In 2008, the Group laid down the Opinions of China National Machinery Industry Corporation on Implementation of Energy

Efficiency and Emissions Reduction to carry out classified instruction and management of its subordinate enterprise. The second was to establish and

improve the organizational leading management system. The Group established the Leading Group for Energy Efficiency and Emission Reduction

with the main leader as its head, set up the Working Office for Energy Efficiency and Emissions Reduction and arranged special departments to be

responsible for the day-to-day work concerning energy efficiency and emissions reduction. The Group’s secondary enterprises have all established the

leading groups for EEER led by their main principals. The third was to establish and improve the EEER assessment, reward and punishment system. The

Group has signed the 2010 Goal Responsibility Document for Energy Efficiency and Emissions Reduction with its key internal enterprises and specified

relevant requirements for assessment, reward and punishment. In light of their actual conditions, the Group’s key internal enterprises have also

broken down the goals and assigned them to units at lower levels and some enterprises have already set the measures for assessment management

to perfect the assessment system.

During the "11th Five-Year Plan", SINOMACH formulated the

Tentative Measures of China National Machinery Industry Corporation

for the Management of Energy Efficiency and Emissions Reduction,

strengthened the building of the EEER systems and according to the

requirements of SASAC, reported over 30 key EEER projects with total

investment of RMB460 million. By the end of 2010, SINOMACH had

fully fulfilled the EEER goals and tasks assigned by the state during

the “11th Five-Year Plan” period. According to the statistics, in the

past two years, the Group’s subordinate enterprises have invested an

accumulative amount of nearly RMB200 million in EEER and carried

out more than 500 measures for technical renovation, technical

process upgrade and energy efficiency.

In 2010 at the end of the “11th Five-Year Plan” period, SINOMACH’s

comprehensive energy consumption per RMB10,000 output value

decreased by 62.99% from the base 2005 level, comprehensive energy

consumption per RMB10,000 of added value decreased by 67.24%

from the base 2005 level, comprehensive energy consumption per

RMB10,000 of business revenue decreased by 37.06% from the base

2005 level, emissions of SO2 decreased by 62.92% the 2005 level and

emissions of COD decreased by 1276.06% from the 2005 level.

Perfecting System to Reinforce Green Management

Carrying Out Green Production Through EEER

I.

II.

89

Environmental Protection and Conservation 2011 Social Responsibility Report

Pollutant Emissions After EEER During the “11th Five-

Year Plan” Period

“Display the Group’s advantages in

scientific research and design strengths,

emphasize the improvement of EEER

performance at the links of technical R&D

and product design, and make active

contributions to EEER from the Group’s

internal and external enterprises in the

areas of products and services.”

--Development Plan of China National

Machinery Industry Corporation

EEER Poster released June 19, 2010

The completion of this technical renovation project will

break through the status quo of China’s dependence

on imported high-end polyimide film and create

the conditions for building the base for research,

development and production of Chinese mid-and high-

end polyimide film, so as to maintain the Group’s guiding

position in R&D and production of polyimide film in

China.

Technical Renovation Project for Production

of Polyimide Film

The Group’s Energy Consumption After EEER During

the “11th Five-Year Plan” Period

Unit: Ton Standard Coal/RMB10,000

Unit: Ton

Emissions of SO2

Emissions of COD

0.2664

0.4997

3624.75

957.951368.87 1344.17

0.0143

0.1133

140.54 228.57 211.46

0.0074

0.3356

0.1009

0.0100

0.2517

0.0986

-1652.84

0.0090

0.1637

2005

2005

2008

2008

2010

2010

2009

2009

Comprehensive Energy Consumption per RMB10,000 Output Value

Comprehensive Energy Consumption per RMB10,000 Business revenue

Comprehensive Energy Consumption per RMB10,000 Added Value

cases


Through the research on key technologies such as metal structure optimization technology and highly energy-efficient electrical dragging

and automation control technology of cranes as well as light-weight optimization technology, Beijing Materials Handling Research

Institute subordinate to SINOMACH saw the new-type overhead crane products decrease by 20-25% in average weight, decrease by 15-

20% in height, increase by 5-10% in effective work scope, decrease by 10-15% at most in tire pressure and save energy by 10-15%.

China United Northwest Institute for Design and

Research subordinate to SINOMACH undertook

the project of the Shaanxi Science and Technology

Resources Center. After its completion, the Center will

fill Shaaxi’s gap in the comprehensive utilization of

architectural EEER technologies and become a symbolic

building integrating energy efficiency, environmental

protection and science and technology.

The project of comprehensive resource utilization

and upgrade of Guangzhou Petrochemical Thermal

Power Plant of China United Engineering Corporation

subordinate to SINOMACH was awarded the First Prize

for National Excellent EEER Design Project of Thermal

Energy Engineering in 2010.

SINOMACH fully fuses the concept and requirements of environmental protection into the choice of product design, production process flows and

materials to make the products more eco-friendly and to reduce the consumption of resources and the emission of greenhouse gases.

(I) Green Design

cases

91


SINOMACH fuses advanced environmental protection technologies and techniques in the production process. Aiming at saving energy and reducing

consumption and by means of management and technology, the Group accomplishes pollution and waste control in the entire process of production

and reduces pollutant emissions and material consumption.

Name of Subsidiary Green Techniques

China Foma (Group) Co., Ltd. subordinate

to SINOMACH

In the construction of its new factory area, it adopted electrodeless lamps to replace the original metal halide lamps and reduce electric energy consumption; and some domestic water such as bath water was heated with solar thermal collectors to replace original electric heaters and reduce electric energy consumption.

China Ocean Aviation Group Inc. subordinate

to SINOMACH

Realized the alteration of chemical materials production line and the full recovery and treatment of waste gas and water.

Guangzhou Mechanical Engineering Research

Institute Co., Ltd. subordinate to SINOMACH

Conducted in-depth survey on its utilization of energy and discharge of industrial waste and entrusted environmental testing institutions to regularly test discharged sewage and atmosphere at production area to ensure professional and accurate data. It recti�ed phenomena such empty running and rotation in equipment, loss and leakage of oil and discharge of industrial waste liquids. In the purchase of �xed assets particularly production equipment, it added the energy e�ciency indicator.

No. 6 Institute of Project Planning & Research

of Machinery Industry Co., Ltd. subordinate to

SINOMACH

Many advanced technologies of the large-scale overall mobile combined spraying-baking water rotating purifying paint line adopted in Qizhong Machine Tool Paint Production Line can reduce about 8064 kilograms of toluene xylene emissions, 8960 kilograms of dust emissions, 34380 kilograms of water and 597,000 cubic meters of natural gas consumption. They have notable e�ect on water and energy e�ciency and emissions reduction and can produce remarkable economic and environmental bene�ts.

China YTO Group Corporation Launching Sewage Treatment

and Reclaimed Water Reuse Project

The project uses “IBR biological/biochemical low energy

consumption sewage treatment” technology (the core of

which belongs to the sci-tech demonstration project under

National 863 Program). After the sewage treatment and

reclaimed water reuse project is put into operation, the

enterprise can annually reduce about 348 tons of COD

emissions on average and also increase the efficiency of

water utilization.

Sewage Treatment, Reclaimed Water Reuse and

Deep Treatment Project

(II) Green Techniques

cases


The new energy industry has become the strategic pillar industry for

the new round of global economic development. With its available

strengths in the field of new energy, SINOMACH actively pushes

forward the transformation of business mode of the new energy

industry, reinforced R&D and investment in green design and green

projects as well as in new energy and energy-efficient eco-friendly

products and technologies to foster the growth point of a green

economy and the new advantages in market competition, integrate

internal and external resources and fully promote the corporation’s

sustainable development.

Supply of PhonoSolar Photovoltaic Parts to Weipureke Power Plant in the Czech Republic – the largest single solar power plant in East Central Europe and the fifth largest in the world

In light of the characteristics of the machinery industry, SINOMACH

displays its advantages in technical research and development and

through the development of series of green products and services,

jointly forging resource-saving enterprises with customers. Meanwhile,

it actively fosters emerging industries and puts further investment in

technical R&D of solar power generation, power generation through

garbage combustion and remanufacturing technology.

Innovation on Environmental Protection to Realize Green Development

The “Research of Energy-Saving Technologies for Large-Scale Engineering Machinery” carried out by Tianjin Engineering Machinery

Research Institute subordinate to SINOMACH is to develop energy-saving loading machines and leveling machines that are extremely

competitive on the market through the development of energy-saving technologies for large-scale engineering machines. Compared

with a common 6-ton loading machine of the typical model, the trial-manufactured energy-saving loading machine can save energy

by 9-20% and compared with a common leveling machine of the typical model, the energy-saving leveling machine can save energy

by 5-10%.

Carrying on “Research of Energy-Saving Technologies for Large-Scale Engineering Machinery

III.

(I) Reinforcing Innovation on EP Science

and Technology

cases

93


Key Green Technological Achievements of SINOMACH During the “11th Five-Year Plan” Period

Technological Achievements Environmental Benefits

LRS525 Road Recycler Energy-saving EP Equipment Provide solutions to “green” construction technologies

Research and Development of Technical Equipment for Biomass Collection, Storage, Processing and Utilization

A project of Chinese Academy of Agricultural Mechanization Sciences subordinate to SINOMACH, i.e. the development of advanced technologies for using biomass resources to replace traditional energy resources. According to preliminary estimation, China currently has 1.5 billion tons of agricultural and forestry waste biomass, equivalent to about 740 million tons of standard coal, and the amount with potential for development is equivalent to about 460 million tons of standard coal.

360-degree rotation small four-stroke gasoline engine

Developed by SUMEC Group Corporation subordinate to SINOMACH, this new product features internationally leading technologies to reduce consumption. Compared with the existing two-stroke gasoline engines, it can reduce pollutant emissions by 86% and oil consumption by 28%.

YTR4108 Fuel Engine Developed by China YTO Group Corporation subordinate to SINOMACH, this type of diesel engine adopts the technologies such as internal EGR, necking-down ω-shaped firebox, platform reticulate pattern cylinder cover, metal ceramet piston ring, high-pressure fuel injection pump and multi-hole small-aperture nozzle, and reduces exhaust emissions.

Method of Reducing the Power of Hydraulic System of Multi-layer Hot Press and Its Practical Application in a Device

Developed by China Foma Machinery (Group) Co., Ltd. subordinate to SINOMACH, this device can introduce the hydraulic oil supply of the board loader and unloader in the artificial board multi-layer press into the closure and pressure-increasing process to diminish the total capacity of hydraulic system and reduce consumption of raw materials, sanding power consumption and consumption of sand belts.

Converter Flue Gas Dry Cleaning and Recovery System

Researched and designed by China National Heavy Machinery Research Institute Co., Ltd. subordinate to SINOMACH, this system’s flue gas recovery technology fully considers explosion prevention, dust removal efficiency, flue gas and dust recovery and utilization and energy consumption, and has good economic and social benefits.

Key Auxiliary Bearings for Large and Medium Wind Power Generators

Developed and manufactured by Luoyang Bearing Science and Technology Co., Ltd. subordinate to SINOMACH, it has obtained stage-by-stage research achievements in bearing selection analysis and performance analysis and laid a good foundation for the development of bearings for 1MW, 1.5MW and 2MW wind power generators.

Project of EEER System Engineering for Comprehensive Utilization of Residual Heat from Group Control Furnace

Designed by No. 6 Institute of Project Planning & Research of Machinery Industry subordinate to SINOMACH for Suzhou Far-East Grinding Wheel Co., Ltd, it realized the reuse of energy resources and waste resources.

Energy-Saving Systems for Recovery of Residual Heat of Flue Gas

Jointly developed by China National Electric Engineering Co., Ltd. subordinate to SINOMACH and Guangzhou Kedi Thermal Power Equipment Co., Ltd, the large-scale integrated heat recovery system increased the applications of recovered residual heat; and the phenol-water, soot-blowing and tar-removal circulating water system both saved water and realized zero emission of waste water.

Research on Fuel Consumption Rate of LR Series of Diesel Engines

Using virtual computer technology, supercharged and supercharged medium-cooled technology, high-pressure injection technology for fuel system, optimized combustion system, system, electric-control system and other measures, China YTO Group Corporation makes reduced the fuel consumption of the diesel engine by 15 grams for per kWh, and based on a 100 kW engine, it has been determined that about 1500 grams of diesel is saved each hour.


SINOMACH is committed to industrializing EP science and technology, actively expands green emerging markets, constantly develops and produces

EP products applicable in many fields, and creates value for the society in water resource utilization, energy resources, EP and so on.

Large-Scale Complete Set Equipment of Sand Preparation and Clean Forging

Teda Base of Otis Elevator is the first manufacturing and R&D base

of Otis Global and even in the elevator industry that integrates

numerous green and energy-efficient technologies including heat-

preserving walls, outside sun-protection windows, roof greening

and rainwater recovery. Meanwhile, it is also one of China’s first

industrial plant projects that applied for LEED Gold Certification

set by USGBC. It plays a wide-reaching demonstration role in

promoting the smart, eco-friendly and highly energy-efficient

concept of industrial buildings in China and promotes the high-

technology and sustainable corporate image of “Made in China”.

A Bird’s-Eye View of Teda Base of Otis Elevator

Teda Base of Otis Elevator

Electric Power Saver

(II) To develop Green and EP Products

cases

95


Applying scientific technical means, SINOMACH actively forges eco-friendly engineering projects in engineering of the electric power industry,

construction of the EP industry and engineering construction to accomplish green development of the machinery industry and promote environmental

and ecological protection.

1. Engineering of Electric Power Industry

The electric power industry undertakes the mission of providing basic energy guarantee for national economic and social sustainable development.

In the field of engineering construction of the electric power industry, SINOMACH sticks to independent technological innovation and emphasizes

the development and application of energy-efficient and eco-friendly technologies for electric engineering construction to provide support for better

economic and social development.

This power plant project is by far the largest project in economic

and trade cooperation between China and Sri Lanka and also the

first coal-fired power plant in Sri Lanka. After its completion, the

project will be helpful for alleviating the electric power shortage in

Sri Lanka, reducing people’s living costs and improving livelihoods. It

is of great significance for promoting Sri Lanka’s economic and social

development.

On January 12, 2011, a grand ceremony for the main dam closure was held on the site of Tatay Hydropower Plant in Koh Kong, Cambodia, a

BOT project undertaken by China National Heavy Machinery Corporation subordinate to SINOMACH. After its completion, the project will play

a very active role in the development of Cambodian electric sector, the local economic development of Koh Kong and the economic and social

development of Cambodia and will make important contributions to the promotion of economic and trade cooperation and the traditional

friendship between China and Cambodia.

Sri Lanka Puttalam Coal-Fired Power Plant Project

Cambodia Tatay Hydropower Plant BOT Project

Signing Ceremony for Strategic Cooperation Agreement on Puttalam Coal-burning Power Plant in Sri Lanka

The Closure Ceremony for the BOT Project of Cambodia Tatay Hydropower Plant

(III) Forging Eco-Friendly Engineering Projects

cases


In 2011, China National Machinery & Equipment I/E Corporation subordinate to SINOMACH signed the EPC Contract for the Tanzania

Northwest Power Grid Project with Tanzania National Electric Power Corporation. This project is of great significance for strengthening the

construction of Tanzanian State Grid and promoting local economic development, particularly economic development in the Northwest of

Tanzania.

On September 4, 2010, China CAMC Engineering Co., Ltd.

subordinate to SINOMACH and Venezuela Electric Power

Company signed a commercial contract for the Venezuela

Bithia Thermal Power Plant Project. With a contract value

of US$956 million, the project not only filled a CAMCE

gap in the power generation field, but also effectively

alleviated the local shortage of electric power; and it has

made contributions to China-Venezuela economic and trade

development and the friendship between the two peoples.

Tanzania Northwest Power Grid Project

Project of Venezuela Bithia Thermal Power Plant

2. Development of the EP Industry

SINOMACH actively develops the EP industry, strengthens the development of new technologies for energy efficiency and EP, promotes ecological

environment improvement and resources protection and enhances green development capabilities.

Shaoxing 300,000 Tons/Day Urban Sewage Treatment Project

Signing Ceremony for Venezuela Bithia Thermal Power Plant Project

Lanxi 40000m3/Day Sewage Treatment Project Shanghai Bailong Port Sewage Treatment Plant

cases

97


China National Automation Control System Corporation

subordinate to SINOMACH and Beijing Recycle Environmental

Protection Technology Development Co., Ltd. signed the

Carbon Assets Cooperation and Management Contract. Both

parties will cooperate in the carbon assets management of the

Sanitary Landfill Gas Power Generation Engineering Project at

Gaoantun in Chaoyang District, Beijing and CACS will use the

“clean development mechanism (CDM)” in this project for the

first time. It is estimated that, after the project is completed,

the emissions of carbon dioxide will be reduced by 140,000

tons annually and the owner will thereby receive an income of

about 800,000 euros from emissions reduction.

As the general contractor and operator of Guangzhou

Donghaoyong Water Purifying Project, China National General

Machinery Engineering Corporation subordinate to SINOMACH

adopted the advanced engineering technology and constructed

the water purifying plant with a daily treatment capacity of

100,000 tons and covering an area of 50 mu (about 33350 m2)

in an underground building of more than 1900 m2. It is by far the

largest underground solid comprehensive water purifying plant

in China. This project fundamentally improved the water quality

and environment of Donghaoyong in Guangzhou, turned the

4.5-km stinking ditch in the urban center into a green ecological

corridor, giving the old city area a new charming look and

providing new experience for urban environmental alteration.

On August 13, 2011, General Secretary of the CPC Central

Committee Hu Jintao inspected Donghaoyong in Guangzhou and

gave important instructions: “Building a fine urban ecological

environment is the earnest expectation of the broad mass of

the people and also an important task of urban construction. It

is hoped that Guangzhou continues to effectively handle urban

ecological regulation such as river and stream control, do these

positive things well and give residents a graceful and habitable

living environment”.

CACS Developing a Low-Carbon Economy Guangzhou Donghaoyong Water Purifying Project

General Secretary Hu J intao Inspect ing Donghaoyong in Guangzhou

cases


3. Green Project Construction and Design

Applying new concepts, technologies and materials and adopting many advanced technologies such as an energy-saving illumination distribution

system, compressing system for classified garbage collection and new-type energy recovery technology for plate exchangers, SINOMACH

accomplished transformation and integration of high-tech achievements in engineering construction design and fostered the amicable public space

based on a good humanistic environment and predominant natural environment.

Buildings B1 and B2 in Shanghai Garden Mill Energy-Saving and Eco-Friendly Industrial Park Winning American LEED Gold Award

Shanghai Garden Mill Energy-Saving and Eco-Friendly Industrial Park Designed by China IPPR International Engineering Corporation subordinate to SINOMACH

In 2010, Changlin Industrial Park began

construction. The Environmental Impact

Report was prepared and the energy-

efficiency evaluation report was made for

the project. The project construction was

carried out in strict accordance with the

requirements of the evaluation report, the

rain and sewage pipelines and sewage

treatment station were newly built and

purification, combustion or dust-removal

devices were equipped for waste gas in

production.

Energy-Efficient Construction of Changlin Industrial Park

Energy efficiency is mainly manifested as follows:

1) In the main substation, in the construction of 110KV main substation, load

management energy-saving technology was adopted, the maximum load of the

grid was reduced, and the benefits of saving electric power and reducing the

installed capacity of the power system were obtained;

2) In illumination, electrodeless lamps were adopted to replace hydrargyrum lamps,

highly-efficient electric induction ballasts were used to replace the common

ones, and sound-control, light-control, time-control, sense-control and other

smart switches and key switch controls were adopted to ensure energy-saving

illumination;

3) In power transformation and distribution, the highly efficient transformers with

low copper and iron losses were adopted, power-saving operation of transformers

and rational layout of distribution circuits were carried out, and local reactive

power compensation was adopted to reduce losses in power distribution; and

4) In electromotor, full use was made of frequency control technology to realize

power-saving operation of the electromotor.

cases

99


SINOMACH actively advocates green office work, carries on green and eco-friendly practices in day-to-day work and strives to reduce the impacts of

corporate operation on ecological environment.

According to the requirements of building a resource-efficient and

environment-friendly enterprise and substantially performing social

responsibility, SINOMACH closely centers on the theme of “Action of

All Citizens for Energy Efficiency” and actively devotes itself through

various means to green low-carbon office activities. The Group fuses

the philosophy of green development into its specific activities,

advocates an economical life style and moderate consumption,

safeguards environmental protection facilities and encourages every

person around to actively get involved in the building of a resource-

saving-oriented society so as to jointly create a good atmosphere in

which everyone cares for saving on resources and everyone personally

practices saving on resources.

In 2010, SINOMACH established the Leading Group for Energy

Efficiency and Emissions Reduction (EEER). By reinforcing publicity and

education and implementing a series of EEER measures, it allowed

all the employees to become unified in their thinking and consciously

develop the habit of energy efficiency. From 2010 until now, taking the

favorable opportunity of organizing the event of “Energy Efficiency

Publicity Week” and focusing on saving on electricity, water and

oil, the Group makes full use of internal journals, e-mails and other

channels to actively publicize the significance of saving resources,

decreasing energy consumption and reducing pollutant emissions

and makes due contributions to the building of a resource-saving and

environment-friendly enterprise.

SINOMACH Publicity Pictures for Environmental Protection in 2010

Energy Saving and Environmental Protection for Green Office Work

IV.

On June 15, 2010, Beijing SINOMACH Longsheng Automotive Trading Co., Ltd. held

the Dongfeng Honda Oil Saving Challenge Competition Final in Beijing. Through

the event, many drivers not only understood the advantages of Honda CIVIC in oil

saving, but also learned some oil-saving techniques such as applying the accelerator

lightly and using the brake less. This helped the drivers to form correct driving habits,

effectively improve oil-saving skills and actively get involved in EEER activities

through practical actions.

Actively Carrying on “EEER” Events

Publicity Pictures for Dongfeng Honda Oil Saving Challenge Competition Final

(I) Sticking to Green Low-Carbon Office Work (II) Reinforcing EP Publicity and Training

cases



Work Together to Promote Harmony

Corporate Citizenship

SINOMACH follows the core value

of “Work Together, Win Together”,

commits i tself to carry ing on

responsible operation around

the world, adheres to the basic

requirements of performing social

responsibility and accomplishing

mutual benef its and win-win

development with stakeholders,

earnestly observes local laws and

regulations, promotes harmonious

development of communities,

devotes itself to social public

welfare, fosters a positive image

as a corporate citizen and pursues

sustainable social development.


SINOMACH has emphasized the establishment of cooperative relationship with other players in the same industry and carried out various forms of

cooperation in relevant fields to accomplish resource sharing and win-win development. SINOMACH has strived to establish long-term cooperative

relationships with suppliers based on equality and mutual benefits, provided suppliers with broad platforms for business development and value

enhancement and supported a great number of suppliers to grow together with the Group.

SINOMACH actively has pursued cooperation with stakeholders, perfected the mechanism for government-enterprise communication and

collaboration, strengthened strategic cooperation with other players in the industry, and reinforced cooperation among production, education and

research.

The Group has actively established the mechanism for cooperation with local governments, accelerated the development of the equipment

manufacturing industry and took this as the key to industrial restructuring. It has actively carried out mutual visits and meetings with the governments

of different countries to enhance understanding and maintain long-term stable cooperative relationships with local governments.

Signing Framework Agreement on Strategic Cooperation with the Zhejiang Provincial People’s Government

Chairman Ren Hongbin met with GE Chairman and CEO Jeffrey Immelt Chairman Ren Hongbin met with Governor of Illinois, US

Promoting Mutual Benefits and Win-Win Development Through Cooperation

Signing Framework Agreement on Strategic Cooperation with the Zhejiang Provincial People’s Government

I.

SINOMACH and Zhejiang Provincial People’s Government signed

the framework agreement on strategic cooperation. The Group fully

displayed its integrated advantages in the machinery industry and

helped in the joint building of the industrialization base for high-tech

electromechanical products to support Zhejiang in the development

of agricultural machinery and its related basic parts as well as the

R&D and manufacturing of agricultural engineering equipment and

grain storage and processing equipment.

(I) Jointly Creating Strategic Cooperative Relationships

cases

103

Corporate Citizenship 2011 Social Responsibility Report

To express thanks to China National Machinery & Equipment I/E Corporation subordinate to SINOMAC for the Putalam Coal-Fired Power

Plant it undertook as a general contractor and for the friendship of the Chinese people, the Sri Lanka Government printed Putalam Coal-

Fired Power Plant on its currency issued in 2010 for commemoration.

Sri Lanka Printed Putalam Coal-Fired Power Plant on Its Currency

China YTO Signed Strategic Cooperation Agreement with Caterpillar

Jiangsu Linhai and JCB Company Signed Long-Term Supply Agreement

China YTO Signed Strategic Cooperation Agreement with Caterpillar

Jiangsu Linhai Dynamic Machinery Group Corporation subordinate

to SINOMACH and British JCB Company, one of the world’s five

largest engineering machinery and agricultural manufacturing

companies, signed a long-term supply agreement and established

an all-round cooperation relationship.

The year 2011 was the tenth year since China YTO Forging

Branch subordinate to SINOMACH and Caterpillar, the world’s

largest manufacturer of earthwork engineering and building

and mining machinery, first carried out cooperation in product

supply, product R&D and corporate management. This year,

the parties entered into a long-term strategic cooperation

agreement on forging business operations.

Sri Lankan Currency Printed with Putalam Coal-Fired Power Plant

cases


In 2011, SINOMACH and Tsinghua University held

10 education projects for Master’s Degree Students

in Engineering. The production-education unity and

university-enterprise cooperation platform built up by

Tsinghua University for SINOMACH involved 2 schools, 1

research institute, 5 departments, 7 key national labs, 10

research centers and 15 research institutes of Tsinghua

University, and pioneered the aforementioned unity and

cooperation.

Based on their long-term cooperation in the past, SINOMACH and

China Export & Credit Insurance Corporation have deepened and

expanded fields and points of cooperation and signed the strategic

cooperation agreement. In the form of annual communication

meetings, they jointly looked back at their work, reported achievements

and discussed specific cooperation projects to deepen their common

understanding of cooperation.

Consolidating Export and Credit Insurance SupportBank-Enterprise Cooperation Assisted China YTO with Strategic Development

China YTO Group Corporation subordinate to SINOMACH and the

Import and Export Bank of China carried out strategic cooperation

in the three fields of “going global”, construction of an export base,

and trade financing business. In May 2011, both parties entered into

a strategic cooperation agreement, according to which, in the next

five years, the Import and Export Bank of China will provide China

YTO with export supplier credit, import credit, trade financing and

other credit support and other financial services.

SINOMACH Carrying on University-Enterprise Cooperation with Tsinghua University

SINOMACH values and maintains financing advantages and it is a strategic cooperative partner with many financial institutions including the Import

and Export Bank of China, Bank of China, China Construction Bank, Industrial and Commercial Bank of China, Bank of Communications and China

Export & Credit Insurance Corporation. In 2011, SINOMACH obtained bank credit lines of over RMB200 billion and had a AAA-rating in long-term

credit.

SINOMACH actively explored modes of cooperation among Production, Education and Research, made full use of its comprehensive advantages in

R&D and manufacturing of machinery equipment and in industrial chain and promoted the establishment of the Strategic Alliance for Innovation in

Industrial Technologies, which focused on enterprises and integrated production, education and research, to constantly enhance industrial innovation

capability and overall competitiveness. By 2011, the Group set up 14 corporate postdoctoral workstations.

(II) Sharing Advantages Through Cooperation Among Enterprises, Campuses and

Research Institutes

(III) Bank-Enterprise Cooperation to Achieve Mutual Benefits and Win-Win Development

SINOMACH and Chinese Academy of Sciences Signed Strategic Cooperation Agreement

cases

cases

105


The China-Guinea-Bissau Friendship Hospital designed

by China IPPR International Engineering Corporation

subordinate to SINOMACH is one of the 30 hospitals

announced by President Hu Jintao at Chinese-African

Cooperation Forum to be constructed for Africa under

China’s assistance.

China-Guinea-Bissau Friendship Hospital

Assisting in Construction of African Hospitals

SINOMACH has strictly observed the laws and regulations of

host countries, paid taxes in good faith and actively practiced the

responsibility as an international corporate citizen. By the end

of 2011, SINOMACH had carried out operations in more than 20

African countries including Angola, Sudan and Equatorial Guinea.

SINOMACH and its subordinate enterprises actively got involved in

the local construction of hydropower infrastructure, public service

infrastructure and related auxiliary engineering facilities, made

positive contributions to the improvement of local African livelihoods,

economic development and social development through their

outstanding project quality and fostered a profound friendship with

the African people.

In multinational operations, SINOMACH has always pursued equal

and unbiased employment policies, worked out labor protection

regulations and measures, directly and indirectly provided 13,000

job opportunities for Africa, carried out localized procurement and

community investment, got involved in local community welfare

activities, advocated on topics of safety, health and education for

African children and persisted in serving local communities and

residents by various means and in various forms. In 2010, China

National Machinery & Equipment I/E Corporation subordinate to

SINOMACH stood out among 400 enterprises and won the Chinese-

African Friendly Contribution Award as the fifth-placed on the Internet

vote ranking on the appraisal and selection of “Chinese Top 10 Africa-

Moving Enterprises”.

Promoting Harmonious Development of Communities

In the African communities where projects were conducted, the

overseas personnel of SINOMACH actively launched, mobilized,

organized and participated in various kinds of community welfare

activities, held literary and entertainment events to promote

friendship and cultural exchanges, provided relevant resources for

project operation to aid the construction and development of local

communities and improve the community residents’ access to a

healthy life and employment, and actively got involved in the common

construction of international communities.

Operations Covering

More Than

Providing

Job

Opportunities

for Africa

African Countries

13,00020

II.


Special Topic ──

Moving Africa

Since 1970, China National Machinery & Equipment I/E Corporation (CMEC) subordinate to SINOMACH has

assisted African countries with construction and carried out large-scale livelihood project contracting in Sudan,

Congo and other countries. A great many projects in important industrial fields have greatly improved Africa’s

local infrastructure and people’s living standard and laid a sound foundation for African economic development.

The “Chinese-African Friendly Contribution Award” signifies the extremely positive affirmation of China National

Machinery & Equipment I/E Corporation for actively participating in the development and construction of African

countries, making outstanding contributions to local economic and social development and earnestly performing

corporate social responsibility and actively repaying local people. In 2010, CMEC actively responded to the initiative

of Chinese-African Friendly Association and contributed RMB500,000 to the “Special Fund for Chinese-African

Friendly Contribution Award” to continue benefiting the African people.

Award Ceremony for “Chinese-African Friendly Contribution Award - Top Ten Africa-Moving Chinese Enterprises”

The cause we have worked for is to the benefit of Africa’s development, to help promote

the benign cycle of economic development on the continent, and raise their living standard

higher and higher, and this is our principle.

-Jin Chunsheng, Vice President of China National Machinery & Equipment I/E

Corporation subordinate to SINOMACH

During more than four years, through our implementation of some significant electric power

projects, I feel that Sudan has made great progress in electric power supply. At first, there

were 3 or 4 power failures each week. Now there is about 1 power failure each week or even

no failures.

- Li Chen, Business Manager of Sudan Fula Project

107


In Garri, Sudan, a student

of Khartoum University

p r e s e n t e d a p o e m i n

Chinese to the construction

workers of China National

Machinery & Equipment I/E

Corporation subordinate to

SINOMACH

Continuous rainfall caused a serious flood disaster,

which affected more than 6000 victims and 35

villages had to be moved. China National Machinery

& Equipment I/E Corporation subordinate to

SINOMACH donated 300 bags of rice and malaria-

resistance medicine with a total value of about

RMB200,000.

Donating to Nigerian Flood-Stricken Masses Public-Service Ad Launched in Africa to Advocate Loving Care for Children’s Health

Donated Materials Arrived at Disaster-Stricken Area

Yellow sands cover your eyes.

Sweat soaks your clothes.

You make nothing of hardships, traveling afar.

You’ve left your hometowns and families.

I don’t know what you’re called, but I know what you’re for

For the development of Africa, for the rise of Sudan.

For the electric cause of Sudan, for the people of Sudan.

Black skin and yellow skin, let’s go hand in hand.

Chinese and Sudanese, let’s stand shoulder to shoulder.

Let’s work together to greet a happy tomorrow,

Let’s join hands in creating greater miracles.

Let’s cheer for splendid victory,

Let’s toast the Chinese-Sudanese friendship.

The public infrastructure in African cities is simple and

crude and improperly discarded glass often brings

accidental harm to children. To promote loving care for

children’s safety and health in Angola in the west coast

of Africa, China National Machinery & Equipment I/

E Corporation subordinate to SINOMACH launched a

public-service advertisement in local public broadcasting

media to advocate the public’s care for children’s health

and reduce the improper actions that may potentially

harm children.

“Are you willing to see this pair of feet bloodied all over due to

stepping on broken wine bottles? If you’re a child’s father or elder

brother, from this very moment, stop leaving empty bottles lying

about. Give them a stretch of pure land and let them run freely and

grow happily.”

--Content of Public-Service Ad

cases


Vice Chairman Xu Niansha Inspecting the Construction Project of Viana School of Technology in Angola

China CAMC Engineer ing Co. , L td. subordinate to SINOMACH Donated Sports Equipment to the State of Sennar, Sudan

In the process of constructing Malabo City Grid

Project in Equatorial Guinea, we helped the

country build a high-level professional team

in electric technology and cultivate talents for

follow-up electric power projects and helped

them become the backbone force of the

management of electric power projects. Positions, Safety and Technical Training Offered for Operation and Maintenance Personnel of the State Grid of Equatorial Guinea

Employees for New Project of Congo Water Plant Stage II Planting Trees Locally

People from Surrounding Villages Came to Offer Congratulations at the Completion Ceremony for Nigeria Thermal Power Plant

Building Local Electric Professional Team for Malabo City Grid Project in Equatorial Guinea

cases

109


Vice Chairman Xu Niansha communicated with the local medical personnel of Angola

Medical personnel of the group for Gabon Belinga Iron Ore Project provided medical aid, distributed medicines and explained medical knowledge for Gabonese patients

In the electric power project in Equatorial Guinea, SINOMACH offered more than 20 specialty courses including Electrical Engineering Basic and Electronic Technology for the personnel of Equatorial Guinea.

The Kenyan City Grid Reconstruction Project group gave donations for the construction of a primary school.

China CAMC Engineering Co., Ltd. donated stationary to Mozambican students.


In light of its advantages in agricultural equipment products and services, SINOMACH actively invested relevant resources and relied on technical services

to convey its care for agriculture, rural peoples and countryside and reinforce communications with peasant users. It rationally and effectively promoted

harvesting and sowing with agricultural machinery to fully guarantee labor results and economic benefits and jointly build harmonious towns.

As China’s largest professional harvesting machinery manufacturer, Luoyang Zhongshou Machinery Equipment Co., Ltd. subordinate

to SINOMACH has highly valued and ensured harvesting and takes it as its own mission to serve agriculture, rural peoples and the

countryside (APC). During the peak period of the summer harvest in 2010, Luoyang Zhongshou dispatched about 230 technicians

and 125 service vehicles and relied on more than 240 dealers and over 70 service stations to serve wheat production areas in over

10 provinces and guarantee summer harvest results through machinery equipment services. Meanwhile, it emphasized the building

of service capabilities and carried on a series of technological actions such as “2011 Nationwide Introduction of Able Rural Peoples’

Enrichment Through Science and Technology” and “Sci-Tech Caravan Action by Agricultural Experts on Farmland” to provide all-

round technical instruction and on-site training for agricultural machinery operators.

SINOMACH Agricultural Machinery Promoted Summer Agricultural Work and Luoyang Zhongshou Helped APC

Science and Technology Assists Agriculture, Rural Peoples and the Countryside to Promote Ecological and Sustainable Development

Agricultural Minister Han Changbin Expressing Sincere Care

Trans-Regional Operation Service Team of Dealers of Luoyang Zhongshou Machinery Equipment Co., Ltd. subordinate to SINOMACH

cases

111


SINOMACH is enthusiastic in supporting social public welfare programs, actively performs its responsibility as a corporate citizen, strives to

repay the society, always emphasizes the in-depth integration of public welfare programs and the advantages of machinery technology and

makes efforts to build up a strategic welfare platform. The Group values the social effect of donations, earnestly gets involved in social public

welfare activities such as relieving disasters, helping those in poverty, comforting the elderly and orphans and supporting education and

students, and provides all the possible intellectual, material and financial support for medical care, education, cultural activities and other

public service fields.

SINOMACH follows the concept that “education is fundamental for a

hundred-year plan” and has made long-term commitments in the field

of assisting students in financial difficulty. Through ceaseless efforts, it

has constantly provided funds and resources for poor areas and poor

people’s groups to support their education and contributed funds in

the building of Liaoyuan Primary School in Qinglong County, Hebei

Province Changfu.

Taking the “Loving Care Fund” it launched in 2006 as the platform

and with the Loving Care Fund Management Committee and Office

as the organizational guarantee, SINOMACH set up a separate bank

account and personnel to manage and standardize the use of the

loving care fund, explored the mode of providing public welfare as

strategic cooperative partner of charities and gradually developed

toward the mode of strategic public welfare.By the end of 2011,

SINOMACH had indirectly helped more than 1880 staffs and 680

students in supporting education through the Loving Care Fund.

Making Earnest Efforts for Social Public Welfare Programs

“Five Olympic Rings” Formed by Olympic Volunteers

III.

(I) Show Loving Care to Assist Students in Financial Difficulty

China Automobile Trading Co., Ltd. (CATC) participated in the “Warming the West” Public Welfare Program

CATC joined hands with chinahope.org.cn and Lan Hua Cao Art

Foundation in sponsoring the 2011 “Warming the West” Public

Welfare Program, which was officially launched on September 16.

By early December, over 500 packs of clothes, stationary, first-aid

kits and other materials prepared for winter were donated all over

Beijing and were delivered to Qinghai Province. Another batch of

donations from Beijing will be delivered to the schools in poverty-

stricken areas in Gansu Province before the end of December.

Those donations would help the kids in a number of schools in the

provinces get through the winter safely.

China Automobile Trading Co., Ltd. (CATC) participated in the “Warming the West” Public Welfare Program

案例


For years, SINOMACH has taken it as its own mission to help and support seven counties of four provinces and spared no efforts to succeed in the

support work. The Group highly valued the work of alleviating poverty for development. The Group’s leader directly served as the head of the working

group for alleviating poverty and specified special efforts to support special areas. SINOMACH was actively engaged in assistance through cadres to

help local economic development. It helped Wusu of Xinjiang Autonomous Region to prepare the development plan for the equipment manufacturing

industry and donated RMB 1 million to Tacheng.

After the earthquake in Yushu, Qinghai Province, SINOMACH

made donations for the construction of “SINOMACH Dong

Fang Hong Library” for Yushu Lodging National School.

Employees of all the Group’s subordinate enterprises

donated more than RMB 3.13 million, of which RMB3 million

was used for the construction of the library and RMB130,000

for purchasing books and so on.

Signing Ceremony for Assistance in the Construction of the Library

Reconstruction After Disaster in Yushu, Qinghai

(II) Helping the Poor to Assist Development

cases

President Xu Jian joined the delegation organized by

the State-owned Assets Supervision and Administration

Commission of the State Council (SASAC) and SASAC SOEs in

an inspection of Xinjiang Uygur Autonomous Region during

July 12-17, 2010. The trip aimed to inspect the investment

projects and the social and economic development in

Xinjiang, and investigate how to further promote the aid to

Xinjiang through partnership. In addition, President Xu Jian

presented to Standing Vice Commissioner Zhang Wenqiang

of Tacheng Prefecture the development plan for equipment

manufacturing in Wusu City. President Xu Jian presents to Standing Vice Commissioner Zhang Wenqiang of Tacheng Prefecture the development plan for equipment manufacturing in Wusu City

President Xu Jian presents development plan to Standing Vice Commissioner Zhang Wenqiang of Tacheng Prefecture

113


SINOMACH Capital Management Corporation established

a strategic charity partnership with the China Taiping Life

Insurance “Loving Care Library”. In 2011, through the

“Loving Care Library”, the Group donated books, textbooks

and office articles to poverty-stricken primary schools and

relied on its experience accumulated in educational fields

over the years to actively explore the cooperation mode of

donating books.

Establishing Strategic Cooperative Partnership with “Loving Care Library”

“Loving Care Fund” Actively Helping People in Financial Difficulty

In 2010, the charity funds of the Group’s “Loving Care Fund” benefited 296 employees and 145 students in financial difficulty.

In response to serious natural disasters, SINOMACH actively donated

money and articles for the earthquake in Yushu, the mudslide in

Danqu, the drought in southwest China, the typhoon in Hainan and

other disaster-stricken areas. In 2010, at the scene of the “Sympathy

for Yushu and Boundless Love - Large-Scale Donation Event”,

SINOMACH donated RMB5 million to assist the disaster-stricken

people with disaster relief.

SINOMACH highly valued and displayed the advantages of its strong

leadership and technology in the machinery industry and made great

efforts to support disaster relief and rescue. In the disaster-stricken

areas of Wenchuan and Qinghai Yushu, the Group successively put in

all kinds of machinery equipment and human services and persistently

made commitments to all kinds of disaster relief around China.

The Group has shaped its unique relief guarantee mechanisms and

measures and taken on important tasks for the country and society in

disaster relief and rescue.

(III) Taking on Important Tasks in Disaster Relief


董董董董董董董董董董董董董董董董董董董董董董董董董董董董Results Chart of Yushu Prefecture Tibetan Hospital completed by China IPPR International Engineering Corporation subordinate to SINOMACH

Hyundai (Jiangsu) Engineering Machinery Co., Ltd, a joint venture of China Foma Machinery (Group) Co., Ltd. subordinate

to SINOMACH, immediately donated 19 excavators worth over RMB13 million to the earthquake-stricken area of Wenchuan

and used technical means to participate in relief and rescue.

Assisting Earthquake Relief and Rescue by Means of Modern Machinery

During the relief and rescue in the Wenchuan

earthquake, SINOMACH leased large-scale Russian

sling-loading helicopter to dispatch crawler dozers to

the disaster area.

The small electric tools donated by SINOMACH cut

off reinforced steel bars in excavation for Wenchuan

earthquake rescue to improve assistance efficiency

and strive for success during the crucial first 72 hours

in earthquake rescue.

Lanzhou Power Station & Vehicle Institute Co., Ltd.

subordinate to SIINOMACH donated its superior

product - 30kW trailer manned by technical personnel

and the disaster relief army of the PLA Lanzhou

Military Area Command fought shoulder to shoulder

at the earthquake-stricken Yushu in Qinghai.

Special Topic ──

Earthquake Relief

115


Vehicles of SUMEC Group Corporation subordinate to SINOMACH for Transporting Earthquake Relief Materials

董董董董董董董董董董董董董董董董董董董董Changlin Co., Ltd. subordinate to SINOMACH Supported Earthquake Relief

In October 2010, Hainan Province was assaulted by “Typhoon Dawei” and suffered

economic losses of nearly RMB10 billion. A great number of tractors were overrun,

which impacted the autumn plowing. The users’ service stations of China YTO

Group Corporation subordinate to SINOMACH took an active role to repair a total

of 84 tractors and 56 diesel engines and donate 60 barrels of lubricating oil. Four

engineers of China IPPR International Engineering Corporation arrived at the severely-

stricken Wenchang to assist with the planning for post-disaster reconstruction. In the

devastated and collapsing rural houses and at their personal risk, they checked and

registered hidden dangers in the buildings household by household and village by

village. The agricultural machinery operators in the disaster-stricken areas of Wenchang

of Sichuan and Qionghai of Hainan wrote a thank you letter to China YTO: “Looking

at the tractors and agricultural machines overrun in the flood, we were stricken with

anxiety. Just at this time, YTO’s service personnel arrived to swiftly repair agricultural

machines and replace machine oil for us free of charge. It’s you who have roused our

confidence in overcoming the disaster to rebuild our homestead; and your action makes

us agricultural machine users feel YTO’s warmth and social responsibility as a large

enterprise.”

In 2010, the minority area of Kuerle in Xinjiang Autonomous Region suffered severe

drought, which brought great difficulty to the production at graperies and vegetable

farms. The Second Assembly Factory of China YTO Group Corporation subordinate to

SINOMACH specially designed the Tong Fang Hong 240PD-1 “Canopy King” tractors

suitable for local drought-resistance work and production in Kuerle, Xinjiang to support

the local minority people’s drought resistance and production through mechanical

science and technology.

SINOMACH Used Modern Machinery to Relieve Drought and

Flood Disasters

China YTO Group Corporation subordinate to

SINOMACH provided Dong Fang Hong loading

machines to assist armies of armed traffic

police, who opened up National Highway

214, the trunk line from Xining to Yushu, to

guarantee the “lifeline” for transporting the

earthquake relief materials to Yushu, Qinghai.

Employees of China United Northwest

Institute for Design and Research subordinate

to SINOMACH rushed to earthquake-stricken

Yushu in Qinghai and carried out professional

assessment of the dangerous houses among

temples and other religious sites there to

support post-disaster reconstruction in Yushu

through their professional strengths.

Assisting Disaster-Stricken Areas in Southwest China

The southwestern areas of China suffered extraordinarily serious drought rarely seen in

history and the Hefei General Machinery Research Institute subordinate to SINOMACH

carried out the event of “Showing Loving Care to Support Disaster-Stricken Areas”. All

of its 863 employees donated money and a total of RMB86,555 was raised.

SINOMACH Employees Donating Money

cases


Employees of SINOMACH and its subordinate enterprises were enthusiastic in public-service activities, actively repaid the society, actively donated

money in such public-service activities as assisting poverty-stricken students and got involved in all kinds of volunteer activities. The Group and its

subordinate enterprises encouraged and organized employees to participate in the public-service events with the theme of respecting the elderly,

assisting those without family and helping the handicapped, and set up volunteer teams to support and get involved in important national and

regional activities. They have obtained admirable achievements and been affirmed by people in all walks of life.

China National Electric Apparatus

Research Institute Co., Ltd. and

Guangzhou Mechanical Engineering

R e s e a r c h I n s t i t u t e C o . , L t d .

subordinate to SINOMACH responded

to the municipal government’s call,

actively publicized, supported and

participated in the Asian Games and

organized the volunteer teams to

serve the Asian Games and make

contributions to a “Peaceful Asian

Games”, “Civilized Asian Games” and

“Harmonious Asian Games”.

China National Automotive Industry Import & Export Corporation subordinate to SINOMACH Engaged in

Learning and Practice Activities for Striving to Be Advanced and Excellent

Asian Games Volunteers

(IV) Employees’ Public-Service and Volunteer Teams

cases

117


Caring for Mentally Handicapped Children

China CAMC Engineering Co., Ltd. subordinate to SINOMACH was concerned about the topic of mentally handicapped

children’s development and organized employee volunteers to get involved in caring for mentally handicapped children.

They went to Beijing Zhiguang Special Educational Training School to carry on colorful and varied exchange and get-

together activities, explore the mode of donating for the operation of the loving care base and strive to provide support for

the life, education and employment of the mentally handicapped children.

Volunteers of China United Northwest Institute for Design and Research subordinate to SINOMACH Respecting the Aged on the Seniors Day

Scene of Exchange and Get-together Activities


The year 2012 is the crucial year for SINOMACH to carry out its “12th Five-Year Plan” and ten-year development strategy. According to the relevant requirements of the SASAC of the State Council and SINOMACH, and based on its development practice, SINOMACH will continue to be guided by its successful experience, further enhance the awareness of hardships and risks, seize opportunities, respond to challenges, deepen reform and make continuous innovations to promote the Group’s sustainable development.

We shall continue to transform the modes of economic development, deepen the changes in management modes, quicken the pace of independent innovation and base ourselves on “two fields and three main businesses” to seek a higher level in operating performance.

We shall adhere to the concept of work safety, continuously reinforce the awareness of work safety, constantly strengthen work safety management and actively foster the atmosphere of safety culture to ensure the Group’s stable situation of work safety.

Prospects for the Future


Appendix

We shall continuously enhance the awareness of environmental protection and energy saving, improve the environmental management system, expand investment in the R&D of environmental protection technology and deeply carry out the practice of green operation to make greater contributions to the accomplishment of China’s goal of energy efficiency and emissions reduction.

We shall adhere to the concept of putting people first, always follow the core value of “Work Together, Win Together” and constantly strengthen communication and exchange with employees and other stakeholders to attain the common development of enterprises and stakeholders.

We shall continue to strengthen social responsibility management, constantly perfect the mechanisms for disclosing information about social responsibility, actively work out the measures for implementing the Group’s social responsibility plan and key social responsibility projects, and continuously promote the effective combination of the social responsibility concept with the Group’s day-to-day operation.

With their sails flying in the wind, hundreds of ships compete in the river. SINOMACH will closely center on strategic positioning in social responsibility as a widely respected and sustainable pacemaker in the machinery industry and join hands with stakeholders in re-forging the new brilliance of SINOMACH!


1. Strategy and Analysis

1.1 Statement from the most senior decision-maker of the organization about the relevance of sustainability to the organization and its strategy.

P3

1.2 Description of key impacts, risks, and opportunities. P50

2. Organizational Profile

2.1 Name of the organization. P11

2.2 Primary brands, products, and/or services. P11

2.3 Operational structure of the organization. P11

2.4 Location of organization’s headquarters. Title page

2.5 Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

P11

2.6 Nature of ownership and legal form. P11

2.7 Markets served. P38

2.8 Scale of reporting organization. P4-5

2.9 Significant changes during the reporting period regarding size, s tructure, or ownership. Inapplicable

2.10 Awards received in the reporting period. P19

3. Report Parameters 3.1 Reporting period (e.g., fiscal/calendar year) for information provided. Title page

3.2 Date of most recent previous report. Title page

3.3 Reporting cycle. Title page

3.4 Contact person for questions regarding the report or its contents. Title page

3.5 Process for defining report content. Title page

3.6 Boundary of the report. Title page

3.7 State any specific limitations on the scope or boundary of the report. Title page

3.8 Basis for disclosing information on partners, subsidiaries, leased facilities, outsourced operations, and other entities with remarkable influence.

Inapplicable

3.9 Data measurement techniques and the bases of calculations. Title page

3.10 Explanation of the effect of any re-statements of infor mation provided in earlier reports, and the reasons for such re-statement.

Title page

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

Title page

3.12 Table identifying the location of the Standard Disclosures in the report. P120-122

3.13 Policy and current practice with regard to seeking external assurance for the report. P123

4. Governance, Commitments, and Engagement

4.1 Governance structure of the organization. P15

4.2 Indicate whether the Chair of the highest governance body is also an executive officer. P14

4.3 For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.

P14

4.4 Mechanisms for shareholders and employees to provi de recommendations or direction to the highest governance body.

P66

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives. P71

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided. P71

4.7 Process for determining the qualifications and expertise of the members of the highest governance body. P71

4.8 Internally developed statements of mission or values, codes of conduct, and principles. P20-21

4.9 Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance.

P28

4.10 Processes for evaluating the highest governance body’s own performance. Inapplicable

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization. P3

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives which the organization subscribes to or endorses.

P105

4.13 Memberships in associations and/or national/international advocacy organizations which the organization holds. P33

4.14 List of stakeholder groups engaged by the organization. P32

4.15 Basis for identific ation and selection of stakeholders with whom to engage. P3

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. P32

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns.

P32

GRI G3 Standards Index

Index of GRI (Global Reporting Initiative) Indicators


Appendix

5. Economic Performance Indicators

EC1 Direct economic value generated and distributed. P4-5

EC2 Financial implications and other risks and opportunities for the organization’s activities due to changes in the macroeconomic environment.

P36

EC3 Coverage of the organization’s defined benefit plan obligations. P71

EC4 Significant financial assistance received from government. P56

EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.

Inapplicable

EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation. P103

EC7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation.

P71

EC8 Development and impact of infrastructure investme nts and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.

P105

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts (e.g. driving local economic development).

P39/P41/P59

6. Environmental Performance Indicators

EN1 Materials used by weight or volume. P89

EN2 Percentage of materials used that are recycled input materials. Inapplicable

EN3 Direct energy consumption by primary energy source. P89

EN4 Indirect energy consumption by primary source. P89

EN5 Energy saved due to conservation and efficiency improvements. P93

EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

P93

EN7 Initiatives to reduce indirect en ergy consumption and reductions achieved. P88-89

EN8 Total water drawn by source. Inapplicable

EN9 Water sources significantly affected by draw of water. Inapplicable

EN10 Percentage and total volume of water recycled and reused. Inapplicable

EN11 Location and size of land owned, leased, or managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

Inapplicable

EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

Inapplicable

EN13 Habitats protected or restored. Inapplicable

EN14 Strategies, current actions, and future plans for managing impacts on biodiversity. Inapplicable

EN15 Number of International Union for Conservation of Nature (IUCN) Red Li st species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Inapplicable

EN16 Total direct and indirect greenhouse gas emissions by weight. P88-89

EN17 Other relevant indirect greenhouse gas emissions by weight. P88-89

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. P88-89

EN19 Emissions of ozone-depleting substanc es by weight. Inapplicable

EN20 Nitric oxide (NO), sulfur oxide (SO), and other significant air emissions by type and weight. P88-89

EN21 Total water discharge by quality and destination. Inapplicable

EN22 Total weight of waste by type and disposal method. Inapplicable

EN23 Total number and volume of significant spills. Inapplicable

EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annexes I, II, III, and VIII, and percentage of transported waste shipped internationally.

Inapplicable

EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff.

Inapplicable

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. P93

EN27 Percentage of products sold and their packaging materials that are reclaimed by category. Inapplicable

EN28 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations.

Inapplicable

EN29 Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce.

Inapplicable

EN30 Total environmental protection expenditures and investments by type. P88



7. Labor Practices and Decent Work Performance Indicators

LA1 Total workforce by employment type, employment contract, and region. P5

LA2 Total number and rate of employee turnover by age group, gender, and region. Inapplicable

LA3 Benefits provided to full-time employees P66-75

LA4 Percentage of employees covered by collective bargaining agreements. P66

LA5 Minimum notice period(s) regarding operational changes. P66

LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.

Inapplicable

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work related fatalities by region. P78

LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

P68-70

LA9 Health and safety topics covered in formal agreements with trade unions. P66

LA10 Average hours of training per year per employee by employee category. P68-70

LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing car eer outcomes.

P71-72

LA12 Percentage of employees receiving regular performance and career development reviews. Inapplicable

LA13 Composition of governance bodies and breakdown of employees by category according to gender, age group and other indicators of diversity.

P71

LA14 Ratio of basic salary of men to women by job category. Inapplicable

8. Human Rights Performance Indicators

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening.

Inapplicable

HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken. Inapplicable

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Inapplicable

HR4 Total number of incidents of discrimination and actions taken. Inapplicable

HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.

P66

HR6 Operations identified as having significant risk for incidents of child labor, and (core) measur es taken to contribute to the elimination of child labor.

P66

HR7 Operations identified as having significant risk for incidents of forced or compulsory labor, and (core) measures to contribute to the elimination of forced or compulsory labor.

P66

HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.

Inapplicable

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken. Inapplicable

9. Society Performance Indicators

SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including their entry, operation and exit.

P105-110

SO2 Percentage and total number of business units analyzed for risks related to corruption. P53

SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures. P53

SO4 Actions taken in response to incidents of corruption. P53

SO5 Public policy positions and participation in public policy development and lobbying. Inapplicable

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country. Inapplicable

SO7 Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes. Inapplicable

SO8 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations.

Inapplicable

10. Product /Service Responsibility Performance Indicators

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.

Inapplicable

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

Inapplicable

PR3 Type of product and service information re quired by procedures, and percentage of significant products and services subject to such information requirements.

Inapplicable

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.

Inapplicable

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisf action. Inapplicable

PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.

Inapplicable

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.

Inapplicable

PR8 Total numb er of substantiated complaints regarding breaches of customer privacy and losses of customer data. Inapplicable

PR9 Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services.

Inapplicable



AppendixThe UN Global Compact's ten principles

The UN Global Compact's ten principles 2011 Performance

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

Put people first, protect their rights and interests, build up growth channels and let them produce and live in a harmonious and safe environment and share the achievements of corporate development.

Principle 2: make sure that they are not complicit in human rights abuses.

Safeguard employees’ lawful rights and interests, provide stable employment opportunities, work out a reasonable remuneration guarantee mechanism, and expand employees’ career development channels, provide safe and healthy working environment, actively implement the policy for localizing overseas employees.

Labor Standard

Principle3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Set up trade unions at all levels, regularly hold employees’ representative meetings, and build up smooth channels for internal communication.

Principle4: the elimination of all forms of forced and compulsory labor;

SINOMACH strictly observes the Labor Law of the People’s Republic of China, the Labor Contract Law, the Regulations on Collective Contract and other relevant laws and regulations. In 2011, 100% of regular employees signed the labor contract. We insist that all employees be equal, ensure that no employees are discriminated against due to their difference in race, gender, age and other factors, prohibit the use of child labor and oppose forced labor in all its forms.

Principle 5: the effective abolition of child labor; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

Focusing on promoting the building of the system of employees’ representative meetings and making public the corporate affairs, SINOMACH actively provides for all the employees’ rights including democratic participation, democratic management, democratic supervision and democratic decision making, constantly perfects the system of equal consultations and collective contracts and establishes and improves the interests coordination mechanism.In multinational operations, SINOMACH has always pursued equal and unbiased employment policies, worked out labor protection regulations and measures, directly and indirectly provided 13,000 job opportunities for Africa, carried out localized procurement and community investment, got involved in local community welfare activities, advocated on topics of safety, health and education for African children and persisted in serving local communities and residents by various means and in various forms.

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Environmental protection needs the guarantee of perfect systems and mechanisms. SINOMACH has made efforts to build up the “three systems” for energy effi ciency and emissions reduction (EEER) to reinforce its green management.

Principle8: undertake initiatives to promote greater environmental responsibility; and

During the “11th Five-Year Plan”, SINOMACH formulated the Tentative Measures of China National Machinery Industry Corporation for the Management of Energy Efficiency and Emissions Reduction, strengthened the building of the EEER systems and according to the requirements of SASAC, reported 30 key EEER projects with total investment of RMB460 million.

Principle9: encourage the development and diffusion of environmentally friendly technologies.

SINOMACH fuses advanced environmental protection technologies and techniques in the production process. Aiming at saving energy and reducing consumption and by means of management and technology, the Group accomplishes pollution and waste control in the entire process of production and reduces pollutant emissions and material consumption.

Anti-Corruption

Principle10: Businesses should work against all forms of corruption, including extortion and bribery.

Firmly focusing on the center of production, scientifi c research and operation and on the overall situation of reform, development and stability and giving priority to promoting the building of the punishment and prevention system, SINOMACH has promoted the implementation of the responsibility system of combating corruption and upholding integrity, deepened effi ciency supervision, conducted special supervision and inspection, reinforced publicity and education in combating corruption and upholding integrity and played an active role in accomplishing the corporation’s leap-forward development.


Rating Report

Rating Report on SINOMACH CSR Report 2011Upon the request of China National Machinery Industry Corporation (hereinafter SINOMACH), CSR Research Center of Economics Division of Chinese Academy of Social Sciences invited experts from Chinese Expert Committee on CSR Report Rating to form SINOMACH CSR Report 2011 Rating Team. The rating team rated SINOMACH CSR Report 2011 (“report”) as follows.1. Rating Criteria Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises (CASS-CSR 2.0) published jointly by the aforesaid Center, China Enterprise Confederation, China Petroleum and Chemical Industry Association, China Light Industry Federation, the Sino-German Corporate Social Responsibility Project, China WTO Tribune and China Committee of Corporate Citizenship. 2. Rating ResultsCompleteness（★★★☆）The Report discloses information on corporate responsibility practices in terms of corporate responsibility management, production safety, environmental conservation and corporate citizenship. With 65 Key Performance Indicators being disclosed, the report has fair completeness. Materiality（★★★★）The Report discloses many material issues such as business integrity & fair competition, product and technology innovation, quality management, safe production and local employment. The report has good materiality. Balance（★★★☆）This report discloses negative information on the number of safety related incidents, mortality rate per thousand people, the number of injuries and causalities etc. But the negative incidents and countermeasures are not disclosed. Therefore the report has fare degree of balance. Comparability（★★★★★）This Report discloses data on 43 key performance indicators of more than 3 consecutive years. The report has excellent comparability. Readability（★★★☆）This report illustrates responsible practices using pictures and charts, though some parts of the report are unclear and verbose. The report has fair readability. Creativity（★★★☆）This report illustrates corporate environmental reasonability in terms of green stewardship, green production, green innovation and green office. Therefore bears fair creativity. Overall rating（★★★★）Through evaluation and deliberations, the rating team agreed to rate SINOMACH CSR Report 2011 as a good report by giving a four-star rating to it. 3. Suggested improvements 1. Improve the completeness by disclosing more indicators on water and energy resources conservation, obsolete equipment recycling etc. 2. Improve the degree of balance by disclosing the incurring negative incidents and the countermeasures.3. Improve the readability by using more diverse and representative pictures. 4. Rating team Team leader: Peng Huagang, Vice president of executive council of the Center and director general of Research Bureau, SASAC.Team members: Yin Gefei, Deputy Director of WTO Tribune Zhang Wang, Secretary General of China Listed Companies CSR Research Center, Security TimesZhong Hongwu, Director of CSR Research Center, Economics Division, Chinese Academy of Social Sciences Zhang En, Deputy Executive Director of CSR Research Center, Economics Division, Chinese Academy of Social Sciences

Chen Jiagui

Chairman of rating expert panel

Standing committee member of NPC

Acting chairman of Presidium of Divisions,

Chinese Academy of Social Sciences

Peng Huagang

Head of the rating team

Vice president of executive council of the Center

Director general of Research Bureau of SASAC


Appendix

Feedback Form

Respectable Reader,

Thank you very much for reading the 2011 Corporate Social Responsibility Report of China National Machinery Industry

Corporation in the thick of things. In the preparation of the Report, it’s hard to avoid flaws and omissions. We request that you

can propose your valuable opinions and feed them back to us so that we can make continuous improvements on it.

Thank you!

China National Machinery Industry Corporation

December 2011

1. How do you generally evaluate the CSR Report of SINOMACH?

□Good □Fairly Good □Moderate □Poor □Don’t understand

2. How has SINOMACH done in performing market responsibility?


3. How has SINOMACH done in performing environmental responsibility?


4. How has SINOMACH done in performing social responsibility?


5. Do you think whether this Report can reflect the significant impacts of SINOMACH on market, environment

and society?

□Yes □Moderately □No

6. How objective and complete do you think are the information, data and indicators disclosed in this Report?

□Highly □Fairly highly □Moderately □Fairly poorly □Poorly

7. How logically do you think this Report has been prepared?


8. How readable do you think is this Report?


9. If you have other opinions and suggestions on the SR work of SINOMACH and this Report, you’re welcomed

to put them forward here:

Note: Please mark “√”in the appropriate “□”.

Widely Respected Leader for Sustainable Machinery Industry

Ch

ina

Na

tion

al M

ach

ine

ry Ind

ustry C

orp

ora

tion

This report is printed on recycled paper. This report is printed with soy ink.

Add：No.3 Danling Street, Haidian District, Beijing100080, P.R.ChinaTel：86-10-82688888Fax：86-10-82688811Http://www.sinomach.com.cnE-mail：[email protected]

Date post:	21-Aug-2020
Category:	Documents
Upload:	others
View:	6 times
Download:	0 times

China National Machinery Industry Corporation Social ... · Cambodia, China Heavy Machinery...

Documents