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个股公告正文

格力电器:2016年年度报告(英文版)

日期:2017-11-15附件下载

        GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI   Annual Report 2016




GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI




 Annual Report 2016




                    April 2017




                           00
                        GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI   Annual Report 2016




 Section I Important Notice, Table of Contents and Paraphrase


The Board of Directors, Board of Supervisors, all directors, supervisors

and Senior Management Personnel of the Company hereby guarantee

that the contents are authentic, accurate and complete, and there are no

false records, misleading representations or material omissions in the

Annual Report, and shall take all the joint and several legal

responsibilities.

Dong Mingzhu, the Company's responsible person, Wang Jingdong,

responsible person in charge of accounting work and Liao Jianxiong,

in-charge person of accounting institution (accounting superintendent)

hereby declare and warrant that the financial report in the Report is

authentic, accurate and complete.

All the directors attended the meeting of the Board of Directors in

respect of deliberation of the Report.

The Company's profit distribution proposal passed upon deliberation at

the meeting of the Board of Directors is set out as below: Based on the

total stock capital of 6,015,730,878 of the Company, all directors were

distributed a cash dividend of RMB 18 (tax included) per 10 stocks and

given 0 bonus share (tax included). Public reserve funds were not used

for capitalization.




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                                                    Table of Contents



Section I Important Notice, Table of Contents and Paraphrase ................................................................1

Section II Company Profile and Main Financial Indices ............................................................................4

Section III Corporate Business Overview .................................................................................................9

Section IV Discussion and Analysis of Business Operation ...................................................................16

Section V Important Events ....................................................................................................................48

Section VI Changes in Stock Capital & Information of Shareholders ......................................................57

Section VII Related Information of Preferred Stock ................................................................................63

Section VIII Directors, Supervisors, Senior Management Personnel and Employees ............................64

Section IX Corporate Governance ..........................................................................................................85

Section X Financial Report .....................................................................................................................91

Section XI Index of Documents ............................................................................................................234




                                                                        2
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                                            Paraphrase


                  Items                   Means                            Contents

Company, the Company, the enterprise,
                                          Means   GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
GREE ELECTRIC APPLIANCES or GREE

GREE GROUP                                Means   Zhuhai Gree Group Co., Ltd.

Finance Company                           Means   Zhuhai Gree Group Finance Company Limited

Jinghai Guaranteed                        Means   Hebei Jinghai Guaranteed Investment Co., Ltd.

CSRC                                      Means   China Securities Regulatory Commission

Guangdong Securities Regulatory Bureau    Means   Guangdong Regulatory Bureau of CSRC

Report Period                             Means   the period from 1 January 2016 to 31 December 2016




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           Section II Company Profile and Main Financial Indices


I. Company information

Stock Abbreviation             GREE ELECTRIC APPLIANCES           Stock Code                000651

Stock Exchange                 Shenzhen Stock Exchange

Name in Chinese                珠海格力电器股份有限公司

Name Abbreviation in
                               格力电器
Chinese

Name in Foreign Language
                               GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
(if any)

Name Abbreviation in foreign
                               GREE
language (if any)

Legal Representative           Dong Mingzhu

Registered Address             Jinji West Road, Qianshan, Zhuhai City, Guangdong Province

Post Code of Registered
                               519070
Address

Office Address                 Jinji West Road, Qianshan, Zhuhai City, Guangdong Province

Post Code of Office Address 519070

Website                        http://www.gree.com.cn

Email                          gree@gree.com.cn


II. Contacts and contact information

                                          Board Secretary                      Securities Affairs Representative

Name                                      Wang Jingdong

                                          Jinji West Road, Qianshan, Zhuhai
Address
                                          City, Guangdong Province

Tel                                       0756-8669232

Fax                                       0756-8622581

Email                                     gree0651@cn.gree.com




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III. Information disclosure and place of the report

                                                                    China Securities Journal, Securities Times,
Media designated by the Company for information disclosure
                                                                    Shanghai Securities News and Securities Daily

Website specified by CSRC for release of the Annual Report          http://www.cninfo.com.cn

Place where the Annual Report is available for inspection           Securities Legal Affairs Department of the Company


IV. Alteration of registration

Organization code                                                          91440400192548256N

Changes (if any) in the main business since listing of the Company         No change

Changes (if any) in the controlling shareholders                           No change


V. Other related information
Accounting firm engaged by the Company

Name of the Accounting Firm                Union Power Certified Public Accountants (Special General Partnership)

Office Address                             No. 169 Donghu Road, Wuchang District, Wuhan City

Names of Accountants as Signatories        Wang Bing, He Li

Sponsor engaged by the Company to perform continuous supervision during the Report Period

□ Applicable √ Not applicable

Financial adviser engaged by the Company to perform continuous supervision during the Report Period

□ Applicable √ Not applicable

VI. Main accounting data and financial indices
Whether the Company will retroactively adjust and restate the accounting data of previous years because of changes on
the accounting policy and correction of accounting errors, etc.

□ Yes √ No

                                                                                        Increase/
                                                                                      Decrease over
                                             2016                     2015                                   2014
                                                                                       the previous
                                                                                          year
Operating Revenue (Yuan)               108,302,565,293.70         97,745,137,194.16            10.80% 137,750,358,395.70
Net profit attributable to
shareholders of listed Company          15,420,964,990.94         12,532,442,817.66            23.05%   14,155,167,229.36
(Yuan)
Net profit attributable to
shareholders of listed Company          15,600,520,445.21         12,313,582,570.49            26.69%   14,144,950,462.04
less non-recurring gains and




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losses (Yuan)
Net cash flow generated from
                                      14,859,952,106.92        44,378,381,827.68           -66.52%     18,939,165,507.73
operating activities (Yuan)
Basic earnings per share
                                                    2.56                     2.08           23.08%                      2.35
(Yuan per Share)
Diluted earnings per share
                                                    2.56                     2.08           23.08%                      2.35
(Yuan per Share)
Weighted average return on net
                                                  30.41%                   27.31%            3.10%                35.23%
assets
                                                                                       Increase/
                                                                                     Decrease over
                                    At the end of 2016      At the end of 2015                         At the end of 2014
                                                                                      the previous
                                                                                         year
Total asset (Yuan)                  182,369,705,049.35      161,698,016,315.06              12.78% 156,230,948,479.88
Net asset attributable to
shareholders of listed Company        53,863,951,278.13        47,521,376,091.77            13.35%     44,152,654,824.68
(Yuan)


VII. Accounting Data Differences under Domestic and Foreign Accounting
Standards

1. Differences in net profit and net assets in the financial report disclosed under international
accounting standards and that disclosed under domestic accounting standards

□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under international accounting
standards and that disclosed under domestic accounting standards during the Report Period.


2. Differences in net profit and net assets in the financial report disclosed under overseas
accounting standards and that disclosed under domestic accounting standards

□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under overseas accounting
standards and that disclosed under domestic accounting standards during the Report Period.


VIII. Quarter-based Main Financial Indicators

                                                                                                                 Unit: Yuan

                                      Quarter 1                Quarter 2             Quarter 3              Quarter 4

Operating incomes                  24,640,675,696.66      24,542,144,380.03      33,245,891,313.38       25,873,853,903.63

Net profit attributable to
                                    3,159,816,132.99       3,242,653,852.65         4,826,589,275.21      4,191,905,730.09
shareholders of listed company




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Net profit attributable to
shareholders of listed
                                        3,133,470,823.80      3,920,819,811.65     4,700,144,150.16        3,846,085,659.60
companies after deduction of
non-recurring profit and loss

Net cash flows from operating
                                        6,117,619,903.98      5,337,251,013.81     2,707,392,718.78         697,688,470.35
activities

Whether major differences exist between the above financial indicators or their sum and those in the disclosed quarterly
report and semi-annual report
□ Yes       √ No


IX. Non-recurring Profit and Loss Items and Amounts

√ Applicable □ Not applicable
                                                                                                                    Unit: Yuan

                       Item                         Amount in 2016      Amount in 2015    Amount in 2014      Description

                                                                                                            Profit and loss
Gains and losses from disposal of non-current
                                                                                                            from disposal of
assets (including the provision for asset             -12,245,120.40      -8,078,976.10    -13,604,321.23
                                                                                                            fixed/intangible
impairment write-off part)
                                                                                                            assets

                                                                                                            Financial
Governmental subsidies recorded into the                                                                    rewards,
current gains and losses (excluding the                                                                     technological
governmental subsidies closely relating to the                                                              innovation
                                                      960,287,886.56 1,160,736,574.04     681,875,856.67
business of the enterprise and enjoyed by a                                                                 subsidies and
fixed quota or a fixed amount in accordance                                                                 development
with the state policies)                                                                                    project grants,
                                                                                                            etc.

Gains and losses of the fair value change of
the trading financial asset and liability held by                                                           Investment
the Company, investment income from the                                                                     income, gains
disposal of the trading financial asset and         -1,136,058,635.86   -916,913,668.52 -653,382,850.98 and losses from
liability and available-for-sale financial asset,                                                           changes in fair
except for the effective hedging business in                                                                value
relation to the normal operation of Company

Reversal of impairment provision for the
accounts receivable for which an independent            5,556,302.40
impairment test is conducted

Non-operating incomes and expenditures
                                                       28,307,584.72      37,595,046.55     -5,068,130.68
other than the above items

Less: Influence amount of income tax                   17,078,192.05      44,984,019.01     -4,880,796.83




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                      Item                        Amount in 2016       Amount in 2015    Amount in 2014    Description

Influence amount of minority equity (after tax)      8,325,279.64         9,494,709.79      4,484,583.29

Total                                             -179,555,454.27       218,860,247.17    10,216,767.32         --

Explanation should be given for non-recurring profit and loss items defined by the Company according to Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring
Profit and Loss and for non-recurring profit and loss items which are listed in Explanatory Announcement No. 1 on
Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss and defined
as recurring profit and loss items.
□ Applicable √ Not applicable
No non-recurring profit and loss items which are defined or listed in Explanatory Announcement No. 1 on Information
Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss were defined by the
Company as recurring profit and loss items during the Report Period.




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                 Section III Corporate Business Overview

I. Major Businesses Engaged in during the Report Period


1. Major businesses and position in industry
Currently, Gree runs two major brands of GREE and TOSOT, covering a wide range of
products such as residential air conditioners, central air conditioners, air source water
heaters, home appliances, industrial products and mobile phones. Gree has a number of
subsidiaries including Landa Compressor, Gree Electrical, Kaibang Motor, Xinyuan
Electronics, Intelligent Equipment, Precision Mould, and Renewable Resources, covering
the whole industry chain from upstream production of components to downstream
recycling of waste products.
Gree has developed products covering 20 major categories, 400 series and over 12,700
varieties, which have been sold to over 300 million users in over 160 countries and regions.
Here, the production and sales volume of Gree residential air conditioners has been No.1
in the air conditioner industry of China for 22 consecutive years since 1995, and taken the
lead in the world for 12 years since 2005.
According to the statistics of ChinaIOL.com, the domestic market share of Gree residential
air conditioners reached 42.73% in 2016. According to the statistics of news.ehvacr.com,
the domestic market share of Gree commercial air conditioners reached 16.2% and
maintained the first place for five consecutive years.
2. Industry Overview
According to the statistics of ChinaIOL.com, due to the downward pressure on the overall
economy in China, the cumulative domestic sales volume of residential air conditioners
was 60,485,600 sets in 2016, indicating a year-on-year drop of 3.64%. Thanks to the
improved economic conditions abroad, the export volume increased by 9.74% as
compared to 2015, and 47,927,400 sets of air conditioners have been exported in total.
Among residential air conditioners, in addition to the intelligent characteristic of residential
air conditioners that becomes more and more significant, product energy efficiency, energy
saving and environmental protection also turn to be important conditions for a brand to



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have a foothold in the market.
According to the statistics of aircon.com.cn, the overall capacity of China's central air
conditioner market in 2016 was about RMB70 billion, indicating an increase of 10% over
2015, and a trend of recovery on the market. The VRF units and unitary units were still the
products that drove the market growth in 2016. "Coal-to-electricity" became one of the
most noteworthy events in the HVAC industry in 2016. The significance of the air-source
heat pump water heater, the major product of "coal-to-electricity", is self-evident to the
whole HVAC industry. Especially under the situation that the central air conditioning project
market is relatively sluggish, it seems that "coal-to-electricity" brings another possibility for
the development of central air conditioner manufacturing enterprises.
In terms of brand concentration, as the industry brand concentration was further
enhanced, the brands of domestic home appliance series and those of domestic chillers
were combined into national brands to compete with American and European brands and
Japanese and Korean brands, creating a situation of tripartite confrontation. The overall
market share of nine major national brands including Gree has reached about 40%, far
higher than that of the other two camps, wherein Gree ranked first with the market share
of 16.2%.

II. Significant Changes in Major Assets

1. Significant changes in major assets


             Major assets                                       Significant changes

Equity assets                     None

Fixed assets                      None

Intangible assets                 None

                                  Year-on-year decrease of 71%, caused by conversion to fixed assets from the
Construction in progress
                                  construction in progress that has reached the intended usable condition


2. Major overseas assets

□ Applicable √ Not applicable




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III. Core Competence Analysis


1. Brand advantage of worldwide reputation and firm channel discourse power
Gree is the largest state-controlled listed company integrating R&D, production, sales and
service in the world. The production and sales volume of Gree's residential air conditioners
has ranked No.1 in the air conditioner industry of China for 22 consecutive years since
1995, and taken the lead in the world for 12 consecutive years since 2005, securing its
leading position in the industry.
In 2016, Gree shouldered the responsibility of the state, regarded re-energizing "Made in
China" as its responsibility and implemented brand promotion and marketing by centering
on "The Pillars of a Great Power". Both the brand promotion effect and activity ranked in
the forefront of the industry: Gree won the "China Brand Innovation Award" granted by
People's Daily, "Industry No.1 of Chinese Brand Integrity Enterprises" conferred by the MS
Weekly periodical office of People's Daily and the editorial board of chinappzw.com, and
the title of "Ten Major Influential Events of 2016 China Business Leader Festival - Gree
Direct Marketing Storm on November 11" awarded by the Southern Metropolis Daily.
According to the "2016 China Brand Value Evaluation Information Session" held by the
China Council for Brand Development and other organizations jointly, Gree got the first
place in the light industry group with the brand strength of 967 and the brand value of
RMB54.9 billion. The "GREE" brand has been deeply rooted in the hearts of people and
enjoys a worldwide reputation. It has established a good reputation among distributors and
consumers. Gree's air conditioners have ranked No.1 in terms of customer satisfaction for
five consecutive years. In the 2015 air conditioning product satisfaction evaluation results
issued by the China Association for Quality and National Consumer Committee, Gree's air
conditioners got the highest score of 84.4 points in customer satisfaction of air conditioning
brands, and ranked first in the industry in the sub-dimensions such as customer
satisfaction, loyalty, overall brand image and perceived quality of industry.
Gree owns 27 regional sales companies and 25,000 exclusive stores in China. Its channel
building ideas are unique in the home appliance industry and its channel mode is called "a
novel marketing mode in the economic sphere of the 21st century" in the academic circle.
While, the marketing mode of its "self-built channel" enables "integrity" of the enterprise to


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be manifested throughout all phases from production to sales, thus ensuring that Gree
stands firm in the fierce competition of channels and firmly grasps the discourse power and
initiative of channels. At the same time, the company shows the advantage of solid online
and offline business layout. It maintains a good strategic partnership offline with Gome,
Suning and other large home appliance chain stores, and closely cooperates with
Jingdong, Tmall and other online shopping platforms.
2. World's largest production scale and a full range of product lines
Gree boasts 10 major production bases in the world, including Zhuhai, Chongqing, Hefei,
Zhengzhou, Wuhan, Shijiazhuang, Wuhu, Changsha, Brazil, and Pakistan, with the annual
capacity of residential air conditioners exceeding 60 million sets and that of commercial air
conditioners exceeding 5.5 million sets, and the production scale ranks first in the world.
Meanwhile, it has the perfect supporting capacity and the most complete industry chain in
the field, effectively ensuring independent production and supply of key components for air
conditioners.
Gree provides consumers with a wide range of products such as water purifiers, water
heaters, air conditionners, boilers, and household appliances, and has developed products
in 20 major categories, 400 series and over 12,700 specifications including residential air
conditioners and commercial air conditioners, and the perfect and complete product lines
can meet the general and personalized needs of customers at different levels. Gree's
products (including independent brands and OEM products) have been exported to more
than 210 regions and countries worldwide. Air conditioners of self-owned brand "GREE"
have been exported to more than 160 regions and countries around the world.
3. Opening up the upstream and downstream industry supply chains and boasting
powerful supply chain control
In addition to the world's maximum production scale and full range of production lines, the
company further opened up the upstream and downstream industry supply chains
including compressors, motors, capacitors, and enameled wire products, which greatly
enhanced the capability of the company in controlling the upstream and downstream
supply chains, and guarantees the production efficiency. Export of industrial products is
promoted vigorously as the internal demands are satisfied.


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In the aspect of compressor industry, the "three-cylinder two-stage compressor of variable
volume ratio" independently developed by Gree was identified as the world leading level;
Gree's scroll compressors with class leading performance have pioneered the industry,
dismantling the monopolistic domination of foreign scroll compressor technologies; Gree
overcame the control technology of hybrid magnetic bearing and the control technology of
high power and high speed motor, and realized independent R&D of high power and high
speed motors.
In terms of motor industry, Gree developed 52 models of motors in 5 series of servo
motors, and successfully used them for injection molding and sheet metal manipulators
and 608 robots; it also developed a type of washing machine motor and put it into
production. In terms of capacitor industry, trial assembly of samples was completed for the
new energy automobile capacitor; and the 20A smart power module sample has been put
into the reliability test.
In the aspect of enameled wire products, Gree focused on development of new products
for new energy automobile such as corona resistant enameled wires and aluminum
enameled wires, and grasped the key production technology and process requirements to
meet the market demands in more fields.
4. Perfect independent innovation system and strong technology R&D strength
Adhering to the philosophy of "Science and technology change life; science and technology
create life" and insisting on "Independent research and development of core technologies",
Gree is dedicated to construction of the independent innovation system, and promotes the
enterprise to realize strategic transformation from "scale driven performance growth" to
"innovation driven sustainable development" by focusing on "creating an innovative culture
of self transcendence, building a highly integrated R&D system, possessing original core
technologies, and constructing a full range of product series".
As the largest air conditioner R&D center in the world, Gree currently has more than 8,000
scientific researchers, 2 state-level technology research centers, 1 state-level industrial
design center, and 1 provincial-level key laboratory of enterprise; it has established 7
academies, 52 institutes and 632 laboratories; Gree has applied for over 27,000
technology patents in total, including more than 10,000 invention patents.


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Gree is the only enterprise in the home appliance industry of China that does not set the
upper limit for scientific research input, and the input depends on the need. In recent years,
its investment in scientific research exceeded RMB4 billion. Gree regards the national
standards and international standards as thresholds and consumer demands as the highest
standards, pursues perfection in R&D, and accumulates experience steadily. Now, it boasts
15 world leading core technologies. Particularly, the pioneering PV air conditioner has made
a great contribution to the human life and the nice environment. Gree undertook 29 major
national science and technology projects, and won 2 second prizes of national science and
technology progress, 1 second prize of national technical invention, 2 gold awards of China
appearance design and 10 China patent excellence awards.
5. Powerful cost control capability and financial strength
Gree sets quality technical standards for internal control that are far above national
standards to ensure high reliability of products, and never delivers immature or unqualified
products to consumers. Gree establishes unique screening plants in the industry for
implementing comprehensive check on all purchased parts; issues bans of the president
and promotes the "Eight Prohibitions" policy; and implements strict quality control in all
phases including trial preparation of new products, incoming inspection of components and
parts, product manufacturing, transportation and installation so as to feasibly guarantee
product quality. It also established and implemented “Gree‘s Comprehensive Quality
Control Mode – T9 Management System” oriented by customer demands and social
responsibilities to implement overall control on product quality. This also made Gree
famous for its excellent product quality.
Gree procures raw materials in a centralized manner to give full play to the scale
advantages of the group, improve the bargaining power of procurement, and effectively
control the procurement cost; it carries out regular or irregular special analysis on
important raw material consumption differences to promote cost control of key materials
and improve the material utilization efficiency of branch plants; it adopts positive measures
such as the domestic first settlement mode of "quota-based material requisition and
settlement", increasing the equipment utilization (including storage equipment), and
reducing office costs to lower the manufacturing and routine office costs continuously.


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Nowadays, when corporate loans prevail in China and many household electric appliance
enterprises are trapped in hardship, Gree still maintains an abundant cash flow, and its
powerful financial advantage is obvious.
6. Management innovation, talent innovation and cultural innovation
Gree follows the management policy of "Be Fair, Be Open, Be Dedicated". The company
strengthens management by relying on institutional building, cultural construction and staff
training, with a view to enhancing the internal core competitiveness. At the same time, it
attaches importance to system establishment and keeps strictly the rules for reward and
punishment to guarantee benefits and quality through system construction. Management of
Gree also focuses on details such as a piece of paper and a drop of water, and strict and
standardized management has enabled Gree to gain a momentum for rapid development.
Gree has a complete talent training system of "selection, cultivation, appointment and
retention" to promote competent employees and degrade incapable ones, providing a
career path for all kinds of talents. It has established an effective incentive system to
inspire employees' sense of honor and enthusiasm. For example, the cadre performance
management system has operated for years, and the performance oriented evaluation
mechanism has become a self-exercise and growth platform for middle-level cadres of the
company. The increasingly perfect talent management mechanism has laid a solid
foundation for sustainable development of the company.
The corporate culture of Gree regards "truth, faith, honesty, novelty and courtesy" as the
core sense of worth, "loyalty, friendship, hardworking and aggressiveness" as the
enterprise spirit and "less empty talk and more real work" as the working attitude.
Meanwhile, Gree is committed to people-centered principles to persist in innovation and
strive for excellence, and make contributions to quality improvement of the human life and
social progress.
Due to implementation of corporate management and personnel and cultural innovation
initiatives, Gree increased its overall production efficiency by 10.5% in 2016. The number
of workers needed was reduced by 4,294, which is equivalent to 2,244 persons when
working hours are taken into account.




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   Section IV Discussion and Analysis of Business Operation

I. Overview


(I) General description

The year of 2016 is the first year of China's Thirteenth Five-year Plan, as well as the first

year of supply-side reform and a crucial year for the home appliance industry.

This year is also the first year for Gree to start transformation. By virtue of its courage and

wisdom of reform, Gree regarded "transformation, breakthrough and innovation" as its

guiding ideology of annual operations, objectively analyzed the economic situation at

home and abroad, actively adapted itself to changes of the times, and sped up industrial

transformation in the fields such as intelligent equipment, smart home and mould on the

precondition of consolidating the existing air conditioner market share. The company's net

profit attributable to shareholders of the listed company in the year increased by 23.05%

over last year when the overall income was kept basically stable.

This year Gree also became one of the first enterprises in the responsibility extension pilot

list of electric appliance and electronic product manufacturers released by the Ministry of

Industry and Information Technology. This greatly affirmed the performance of Gree in the

sustainable development and recycling field of waste electronic products and electric

appliances, and played an important role in development of the renewable resource

industry in the entire home appliance industry and green transformation of the electric

appliance and electronic product industry.

Gree did hard work in the year, and adopted environment-friendly practices to design and

produce healthy, energy-saving and green products. Its three independently developed

technologies or products, namely, efficient permanent magnet synchronous inverter

centrifugal ice cool storage unit of dual operating conditions, cooling technology at the

ambient temperature of -40°C and the three-cylinder two-stage compressor of variable

volume ratio, were identified and deemed to reach the world leading level. Gree seized the

opportunity of "coal-to-electricity" policy, and developed innovative heat pump heating


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products for all types of buildings. Moreover, it won the bid for "coal-to-electricity" projects

in Beijing, Shanxi and Tianjin many times, giving full play to the scale effect of industry

giants and winning the market opportunities and a good reputation among users. The

accumulative quantity of authorized patents of the company reached 15,862 as of

December 31, 2016, and the total quantity of authorized invention patents reached 911 in

the whole year of 2016. Gree ranked No.7 in the national invention patent list and No.1 in

the home appliance industry in 2016.

This year Gree increased the installation fee by RMB100 for installation workers and

increased the wage of each employee by RMB1,000. From shareholders to installation

workers and to employees, Gree's benefits were distributed to all the stakeholders so that

they shared the development achievements and the social responsibility was further

highlighted.

Gree stood out from numerous Asian famous brands, and was appraised as "the most

trusted brand in Asia" by the international brand consulting group of America in 2016. In

addition, in the "2016 China Brand Value Evaluation Information Session" held by the

China Council for Brand Development and other organizations jointly, Gree got the first

place in the light industry group by relying on its brand strength of 967 and brand value of

RMB54.9 billion. Gree's air conditioners were also stationed in all kinds of Olympic venues

in Rio of Brazil, and created "three uniquenesses" of Chinese air conditioner brand in the

Rio Olympic Games project. "Direct Marketing Storm on November 11"conducted by Gree

was awarded the title of "Ten Major Influential Events of 2016 China Business Leader

Festival" by the Southern Metropolis Daily.

In 2016, the company regarded "transformation, breakthrough and innovation" as its

guiding ideology of annual operations, objectively analyzed the economic situation at

home and abroad, and actively adapted itself to changes of the times. In the

macroenvironment of industrial destocking and upgrading of air conditioning products,

Gree made great efforts continuously to make innovation and strive for excellence,

achieved a breakthrough in perspectives of informatization, intelligence, diversity and

multiple channels by carrying out the innovation driven strategy, promoting the diversified


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industry development and strengthening the strategic decisions such as deep integration

of informatization with the manufacturing process, and made a lot of innovation

achievements in the four aspects of platform, standard, management and talent.

The year of 2016 was also the critical year during which the company started adjustment

and transformation. On the premise of consolidating the existing air conditioner market

share, the company accelerated industry transformation in the intelligent equipment, mould

and other fields. The company achieved the gross revenue of RMB110.1 billion for the year,

indicating an increase of 9.5% over last year; it achieved the net profit of RMB15.4 billion

attributable to shareholders of the listed company, indicating an increase of 23.05% over

last year.

In 2016, the high-efficiency permanent-magnet synchronous inverter centrifugal ice-

storage chiller developed independently by Gree was identified and deemed to reach the

world leading level by the Department of Science and Technology of Guangdong Province;

the cooling technology at the ambient temperature of -40°C was identified and deemed to

reach the world leading level; and the research and application of the three-cylinder two-

stage compressor of variable volume ratio was recognized as international initiative and

deemed to reach the world leading level. The Underwriters Laboratories (UL) issued the

first UL certificate of heat pump water heater to Gree, and Gree's PV centrifugal chiller and

low-temperature heating VRF were awarded the AHRI certificate of the United States.

Besides, the company won the "China Brand Innovation Award" granted by People's Daily

for the brand building field; the "Industry No.1 of Chinese Brand Integrity Enterprises"

conferred by the MS Weekly periodical office of People's Daily and the editorial board of

chinappzw.com; the title of "Ten Major Influential Events of 2016 China Business Leader

Festival-Gree Direct Marketing Storm on November 11" awarded by the Southern

Metropolis Daily.

Due to its courage of representing "Made in China" and initiative of fulfilling corporate

responsibilities, the company won the "Annual Enterprise Award of the Eleventh People's

Corporate Social Responsibility Award" issued by people.cn. Gree has always maintained

the leading position in the air conditioner industry at home and abroad, and won the title of


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"2016 Meritorious Manufacturing Enterprise in Guangdong" awarded by Guangdong

Manufacturers Association and Guangdong Association for the Promotion of Industrial

Development; the title of "Top 50 Manufacturing Enterprises in Guangdong Province"

awarded by Guangdong Manufacturers Association, Guangdong Research Institute for

Industry Development and the Enterprise Competitiveness Research Center of

Guangdong Academy of Social Sciences; and the honors such as "2016 Ten Major Air

Conditioner Export Enterprises in China" and "2016 Ten Smart Home Appliance Export

Enterprises in China" issued by China Chamber of Commerce for Machinery and

Electronic Products Import and Export.

(II) Transformation, Innovation and Breakthrough in 2016

1. Four major transformations: informatization, intelligence, diversity and multiple
channels

(1) Informatization transformation: Promoting in-depth integration of informatization
and industrialization for enhanced development


In 2016, the company laid out the informatization strategy by centering on the main

direction of deeply integrating informatization with industrialization, and put an emphasis

on construction of a fully integrated information platform for real-time sharing. Horizontally,

the upstream and downstream were extended and got through using the procurement

collaboration platform and sales collaboration platform to support efficient collaboration in

the supply chain and maintain competitiveness of the company on the whole chain.

Vertically, the MES was used to connect through the field operators and the management,

support fine management and maintain high efficiency of field operation.

The company has completed the implementation of ERP, MES and WMS systems in

Changsha and other new bases, providing a uniform core information platform for the new

bases.

In 2016, Gree's intelligent manufacturing project obtained approval to become the national

intelligent manufacturing special project and Guangdong intelligent manufacturing

demonstration project of 2016. Seven internal management systems were built up in the


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company's manufacturing system, including the HR system, synergistic system, cost

system, equipment system, information system, production centralized control system, and

operation performance system. Currently, all the departments have formed the operating

model focusing on self-management and supplemented by functional supervision, further

enhancing the management level of production system and the prevention and control

capabilities.

Besides, the manufacturing system centering on "double benefit" was established to

operate the management system, and the overall productivity of the company was

increased by 10.5% in 2016. The number of workers needed was reduced by 4,294, which

is equivalent to 2,244 persons when working hours are taken into account; the total cost

amount of the year was reduced by about RMB387 million by implementing the projects

such as new process development and utilization, quality inspection procedure

optimization and production line arrangement optimization.

(2) Intelligent transformation: Implementing supply-side reform to take the lead in
the air conditioner industry


The upgrading of consumption and development of Internet and Internet of things

accelerated the process of product intelligence. Product intelligence not only changes the

product functions of the enterprise, but also promotes industry changes, bringing great

opportunities for enterprise transformation and upgrading. In 2016, Gree kept up with the

times, implemented the supply-side reform, and seized the opportunity to transform and

upgrade to product intelligence.

In terms of the inverter technology and product R&D, 10 major series and 15 main models

(including 40 sub-models) of Gree's air conditioners were all selected as "Energy

Efficiency Leader" air conditioning products of 2016 publicized by the Ministry of Industry

and Information Technology. Gree completed design and development of multiple new and

intelligent energy-saving inverter air conditioners such as Rose Ⅱ, I-Cool, T-Fresh,

Goldshell floor standing unit, inverter air conditioner Enjoy, BPJG, which were significantly

improved in aspects of space saving and intelligence. Moreover, the company mastered



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the three core technologies, including carrying the photosensitive sensor, the global

original self-cleaning technology of evaporator, and the intelligent voice control technology.

Gree independently developed the high-end inverter washing machine series products in

the new field and the pure electric vehicle air conditioner with a highly efficient and reliable

heat pump.

To gain market share, Gree adjusted the product sales structure in 2016, and successively

launched a variety of first-class energy efficiency inverter air conditioners, among which

the high-end residential air conditioners represented by the "Energy Efficiency Leader-Run

Series" received a very positive response from the market; the company constantly

strengthened promotion and publicity of intelligent air conditioning products, e.g., Enjoy

and Junyue equipped with the Wi-Fi function, in an effort to provide consumers with the

most considerate products.

In terms of R&D of intelligent products, Gree, on the basis of completing local and remote

control of a single machine, integrated the residential air conditioner, commercial air

conditioner, household appliance and intelligent routing to work out an integrated smart

home solution for linkage induction control; it developed household Goldshell local voice

and App voice control, subsequently developed the functions such as voice dialog and

facial recognition at the same time, and successfully used them for Gree medium/high-end

air conditioners; it added intelligent Wi-Fi functions to water purifier, kitchen three-piece

suit, electric fan and some special air conditioners, and studied the functions such as

intelligent mode, intelligent network distribution, and data reporting.

In the aspect of R&D of commercial air conditioning products, Gree developed products by

focusing on the concept of energy saving, environmental protection and intelligent

interconnection, and created Gree intelligent residential central air conditioning system

integrating multiple functions such as air conditioning, floor heating, hot water, lighting,

temperature control and intelligent control; it developed GMV Shurui multi-function

residential VRF unit to meet the air conditioning requirements of kitchen, bathroom, living

room and dining room at the same time; it won the bidding for the MS01 nuclear power

centrifugal chiller project and MS02 nuclear power air-cooled screw unit project to enter


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the nuclear power market; it developed the ultra-low temperature wall-mounted heat pump

floor heating residential central air conditioner successfully and placed it on the northern

part of the country.

(3) Diversified transformation: Maintaining the leading position in the air-
conditioning sector and exploiting emerging areas


On July 23, 2016, Gree officially announced its entry into the era of diversification at the

Second China Manufacturing Summit Forum. Gree extended from the air conditioner

manufacturing technology by centering on the two sectors of smart home appliances and

intelligent manufacturing, brought into play the synergistic effect from products to

equipment, and achieved the development objective of advancing in line on a number of

tracks, namely, heading for depth in the traditional fields such as home appliance

manufacturing and constantly exploiting the boundary in the emerging fields such as

intelligent equipment manufacturing.

① Developing household appliances towards fine quality, diversification and
intelligence


In 2016, the company completed 346 household appliance development projects in total,

among which IH rice cookers were promoted among media outlets nationwide through the

National People's Congress, and thus covering the high-, and mid-to-low end markets

comprehensively; the wastewater challenges was resolved for water purifiers, and the

realized waste water/clean water ratio of 1:1 kept the water purification technology of Gree

stable at the forefront of the industry; the 2nd-generation apple-shape rice cooker has

gained popularity for its design aesthetics and unique creativeness.

② Strengthening R&D of communication technologies by taking smart home as the
entry points


With the product diversification and smart home as the entry points, Gree explored the

way forward for household consumer electronics, communication and industrial control

chips, and developed the chips with independent intellectual property rights. In 2016, Gree



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focused on R&D of intelligent interaction, intelligent connection and intelligent cloud

platform, connected its products to the smart home system, and provided access for third

party manufacturers through the wireless module, "Gree +" App and open interface of

cloud platform, formulating a smart home ecosystem of Gree. Wireless connection has

been achieved on all the key products of Gree such as Painting Era air conditioner,

Goldshell air conditioner, Rose air conditioner, dehumidifier, rice cooker, air purifier, water

purifier, intelligent range hood, disinfection cabinet plug-in, and washing machine, and

remote control, fault alarm and maintenance services can be implemented through

"Gree+" App for all the products.

Gree put the 2G mobile phones into mass production in 2016, and the 2G mobile phone

with a 5.5-inch screen and 3G mobile phone with a 6-inch screen are in the R&D stage.

Gree also established the complete and professional development processes and

standards for mobile phone software, hardware, structure and test, and gathered a certain

R&D strength in the mobile phone business.

③ Transforming and upgrading to the intelligent equipment industry and mould
manufacturing industry to cultivate new profit growth points


In 2016, Gree gradually occupied the international and domestic high-end equipment
market while completing transformation and upgrading of its own manufacturing system.

This year, Gree mainly completed development of products such as the 750W servo driver

based on the Ethernet bus type, three-axis and five-axis manipulator control systems, bus

type motion controller, and compressor automatic on-line.

For the mould industry, Gree put an emphasis on research and application of new

technologies and new materials such as spray-free injection molding of metal effect, in-

mould hot cutting technology, PT-25 spool, integrated forward inclined centrifugal fan blade

mould, and 3D printing technology to implement green manufacturing of moulds.

Meanwhile, Gree improved the automation and information level of mould making to

realize intelligent manufacturing of moulds.




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④ Achieving intermediate results in PV products, PV systems and industrial touch
screens by relying on PV air conditioners


The transition of PV air conditioners indicates the development of multiple models based

on the existing PV centrifugal chiller and PV VRF unit, including the PV VRF for All Power

Supply Application, single-phase side air outlet PV VRF unit, and airborne converter of

560KW PV centrifuge, so as to satisfy different occasions and needs. Gree PV systems

have been sold in many regions at home and abroad.

The self-made 1G 12-inch industrial touch screen was been put into mass production and
all the centrifugal units were switched uniformly in August, and all the machines operated

properly; Gree made a breakthrough in technologies for the 7-inch industrial touch screen

and high-end 23.8-inch industrial PC, and mastered the core technologies.

⑤ Sticking to the strategic direction of "Saving, green, environmental protection
and resource regeneration" for sustainable development to formulate a closed loop
industrial chain of resource regeneration and adhering to green ecological
manufacturing


The self-built channel, cost reduction project and management system construction project

were completed in the renewable resource sector, and the four bases (Changsha,

Zhengzhou, Wuhu, and Shijiazhuang) passed the three-in-one system (18000, 14000 and

9000 systems) review conducted by the certification body SGS and received the

corresponding certificate in June.

(4) Channel transformation: Building a platform to strengthen cooperation and
making great efforts through online and offline linkage


Gree owns 27 regional sales companies in China and nearly 30,000 exclusive stores

throughout the world. Gree observes the rule that the market emerges before factories,

and its unique channel construction idea was distinguished in the home appliance industry.

In 2016, Gree set up an innovative management model of sales company based on the

original offline channel, and established Gree image stores and flagship stores in urban

cities, highlighting the brand image of Gree exclusive stores and enhancing the experience


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of consumers. In addition, Gree established 20 new TOSOT home appliance stores in all

regions throughout the country. Gree also paid more attention to entry into offline stores in

2016. Based on the original situation that all the sales companies cooperated with Gome

stores, Gree signed agreements with Suning and entered more than 740 Suning stores.

With the rapid scale expansion of China's online shopping industry, the necessity of

accelerating interconnection between the traditional manufacturing industry with Internet

has become a consensus of the industry. In this situation, Gree carried out the strategic

planning for online sales of Gree brand, and made huge investment to build its own

comprehensive e-commerce sales platform "GREE Mall". It focused on layout on the most

influential third party e-commerce platforms in China such as Jingdong mall, Tmall, Gome

and Suning.com, ensured customer resource sharing with domestic key accounts (KAs),

and achieved brilliant sales performance in great promotion activities such as June 18,

June 28, November 11 and December 12, wherein air conditioners topped the sales list of

similar products in the home appliance industry on JDcom platform, and the two major

brands KINGHOME and TOSOT were also outstanding in the e-commerce home

appliance category.

In 2016, the online e-commerce sales volume of the company reached RMB4,580 million

(excluding the sales volume on Taobao), increased by 91.14% over last year, wherein the

year-on-year increase on JDcom was 93.15% and that on Tmall was 84.42%; the year-on-

year increase of Gree air conditioners on JDcom reached 145.5% in the refrigeration year

of 2017 (August to December 2016), the sales volume of Gree air conditioners on JDcom

in the "June 18" Shopping Festival of 2016 exceeded RMB380 million, and the sales

volume of Gree air conditioners exceeded RMB310 million in the "November 11" Shopping

Festival, topping the list of the air conditioner industry. According to statistics, the

cumulative online and offline sales volume of Gree exceeded RMB3.4 billion during the

"November 11" period of 2016, nearly doubled over the same period last year.




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2. Four major innovations and breakthroughs: Platform, standard, management and
talent

(1) Platform innovation: Building an innovation foundation platform to achieve
technical breakthroughs


In 2016, Gree further improved the science and technology innovation system of the

enterprise by centering on construction of the six major innovation foundation platforms:

national public scientific research platform, intellectual property strategy management

platform, standard strategy management platform, integrated R&D design platform,

infrastructure testing platform, and information technology support platform.

The establishment and operation of the national public scientific research platform has

become the core power for Gree to make innovations. Based on the two national technical

research centers, namely, the existing national engineering research center and national

enterprise technology center, the company added the two national scientific research

platforms(the key state laboratory and state-level industrial design center) to further build

the innovation chain focusing on "basic research-industrial design-engineering-production-

automation".

In construction of the intellectual property strategy management platform, the company

established the special intellectual property office in 2016, and used intellectual property

rights in the three aspects of innovation driving, free use, and legal monopoly to help the

company to expand the market share, enhance the added value of product intellectual

property rights and increase the brand value. The company applied for 5,976 patents in the

whole year, including 3,662 invention patents and 871 authorized invention patents,

increased by 100% as compared to the previous year.

In terms of construction of the standard strategy management platform, Gree completed

platform planning for 38 categories of products such as residential air conditioners,

commercial air conditioners, and household appliances, combined the product platform to

complete use planning for 504 categories of key materials, and created material libraries

for all kinds of product platforms. Gree worked out regulations on all kinds of product



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platforms and material use, and sorted out development processes of the company to

improve the document template and the review and signing process, making sure the

product platform and material planning are strictly implemented in the product

development process.

In the aspect of building the integrated R&D design platform, the company performed

orderly development for the planning project of each product under the overall planning of

project management in 2016. It completed 2,427 product projects, 401 technical research

projects, 280 process research projects, and 165 management innovation projects in the

whole year.

Regarding construction of the infrastructure testing platform, the company established a

strategic cooperation partnership with an international authoritative certification and testing

institution in 2016, and received the comprehensive strategic partner certificate of smart

home product evaluation, testing and certification issued by SGS. Gree successively built

the household appliance energy efficiency laboratory, automobile air conditioning

laboratory, air purifier energy efficiency laboratory, and the inverter master process

monitoring system, and constantly improved the testing function of the existing laboratory

to provide users with more reliable, safe, comfortable and energy-saving products.

In terms of construction of the information technology support platform, the company

vigorously promoted integrated application of multiple information systems, e.g., to use big

data to establish a multidimensional analysis basis and implement flexible combination

and query analysis based on analysis dimensions; to integrate the PLM system of the HQ

with that of each subsidiary company to share the design and R&D business resources;

and to realize the standardization of design and coordination between design and process

to build an integrated closed loop change management system of digital design and

manufacturing.




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(2) Standard innovation: Customer-oriented, strict quality control

① Using the most strict standards and means to develop and manufacture products


By relying on the Comprehensive Quality Control Mode – T9 Management System that is

responsive to the needs of customer demands and social responsibilities, Gree studied the

quality standard of residential air conditioner products, and delivered the full set of

corresponding scientific research achievements from parts to overall units; studied key

points of air conditioners for nuclear power projects and other core quality projects, and

used key management points in the nuclear power quality system as reference to

promoted their application in other air conditioner products; comprehensively implemented

the strict quality management mode to deliver the special control requirements of key

materials, and to strengthen the inspection control requirements, experimental verification

control requirements and the approval and release requirements of department head.

② Carrying out reliability research with a view to improving the quality


In 2016, the company organized the structure, system, electrical component, controller,

and process working teams to start the ten-year life research, and carried out 113 projects

in total in the year according to the detailed analysis on after-sales failures, covering the

core after-sales issues related to key components such as compressor, four-way valve,

motor, motion mechanism, and controller. The research findings of all the projects have

been included in the design specifications, inspection specifications and process

documents to start control and improve the quality of products and parts at

(3) Management innovation: Strengthening institutional building to promote
sustainable development of enterprise


In 2016, the company promulgated the Supervision and Management Measures to

constantly improve the supervision and reporting mechanism. More than 60 complaints of

all types were accepted through channels such as president mailbox, e-mail, letter, and

call. The supervision unit carried out careful investigation for all the complaints, and



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punished the responsible person seriously once the fact was verified, creating an open

and transparent atmosphere. The company carried audit projects from the aspects such as

the company's procurement, material consumption, expenditure, subsidiary control and

infrastructural project settlement by aiming to sound internal control, improved operating

management and increased economic benefit.

In 2016, Gree fully implemented the safety subject management responsibility system of

"one position with two responsibilities" for safe production, steadily promoted the

investigation and rectification of hidden dangers, and carried out special supervision and

inspection work. It improved the lighting environment of workshop operation, and

completed the special rectification work of harmful positions, annual monitoring plan for

occupational health, on-site harmful substance detection of position operation, and

occupational disease protection pre-evaluation of new projects, ensuring the occupational

health of employees. There were no major safety accidents, occupational disease

accidents, and environmental pollution accidents in the company in 2016.

(4) Talent innovation: Reinforcing talent training to meet the diversified talent
demands

① Recruitment and training of skilled workers


Gree adopted the strategy of going out and introducing talents, through school-enterprise

cooperation for instance, to introduce more skilled workers. It carried out the skill grade

evaluation for the second batch of skilled workers, performed position skill grade

evaluation for 408 persons in 16 work types, and granted skill allowance to skilled workers

according to the allowance standard for skills at different levels and the actual work days.

② Creating a talent pool and deepening personnel training


Gree organized to implement the 2016 college student cultivation work called "Dreaming

Gree", special training camp of excellent supervisors, and the pilot school of team leaders,

helped the front-line managers to reserve basic management knowledge and skills and

improve the capability of finding and solving problems, worked out the annual learning plan


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for all members by combining business innovation, performance breakthrough and

capability improvement, and irregularly organized a series of lectures of experts at the

technology frontier in numerous fields to broaden the horizon of technology R&D talents.

③ Perfecting the personnel assignment mechanism of the group to promote the
utilization of human resources within the group


The company further improved the personnel assignment mechanism based on change

adjustment of the sales and production plan, specified the assignment principle and

division of labor, and smoothly fixed the staff shortage and surplus contradiction between

different companies through personnel assignment in the group.

④ Strengthening the shift of thinking and enhancing the quality of cadres


The company strengthened the publicity and education work of conduct and clean

government, organized all the party members of the company to carry out the learning and

educational activity called "Two Studies, One Action", and completed activities of the

discipline education and learning month of 2016.

All the cadres are required to be enterprising with the spirit of challenge, dare to

emancipate the mind and break away from conventions, and acquire the regulating ability,

decision making ability and coping ability. Gree organized the management cadre reading

association, sorted out and recommended the reading list of one term every two months,

and helped wide management cadres to construct a compound knowledge structure and

widen the working field of view.

II. Analysis on principal businesses

1. Overview

See the description in "Overview" of "Discussion and Analysis of Business Operation".




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2. Revenue and cost

(1) Composition of operating income

                                                                                                                     Unit: Yuan

                                      2016                                            2015                         Increase/
                                                                                                                 Decrease over
                                              Proportion in                                  Proportion in
                            Amount                                       Amount                                   the previous
                                            Operating Income                             Operating Income
                                                                                                                     year

Total operating
                     108,302,565,293.70                 100%         97,745,137,194.16                 100%             10.80%
income

Categorized by industry

Household
appliances              93,187,780,602.40             86.04%         87,930,981,568.34               89.96%              5.98%
manufacturing

Other businesses        15,114,784,691.30             13.96%          9,814,155,625.82               10.04%             54.01%

Categorized by product

Air Conditioner     88,085,431,144.00               81.33% 83,717,936,071.67                      85.65%                 5.22%

Household
                        1,717,749,799.40             1.59%         1,522,676,680.86                1.56%                12.81%
Appliances

Other main
                        3,384,599,659.00             3.13%         2,690,368,815.81                2.75%                25.80%
business

Other businesses    15,114,784,691.30               13.96%         9,814,155,625.82               10.04%                54.01%

Categorized by region

Domestic-main
                    76,937,875,361.69               71.04% 74,596,089,512.78                      76.32%                 3.14%
business

Overseas-main
                    16,249,905,240.71               15.00% 13,334,892,055.56                      13.64%                21.86%
business

Other businesses    15,114,784,691.30               13.96%         9,814,155,625.82               10.04%                54.01%




                                                              31
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(2) Industry, product, or region accounting for more than 10% of the Company's operating
income or operating profit

                                                                                                                     Unit: Yuan

                                                                                 Increase or      Increase or      Increase or
                                                                       Gross     Decrease of     Decrease of       Decrease of
                      Operating incomes         Operating Cost         Profit     Operating       Operating        Gross Profit
                                                                       Margin    Income over       Cost over       Margin over
                                                                                  Last Year        Last Year        Last Year

Categorized by industry

Household
appliances                 93,187,780,602.40    58,696,494,773.92       37.01%          5.98%            2.26%           2.29%
manufacturing

Categorized by product

Air Conditioner            88,085,431,144.00    54,139,594,914.83       38.54%          5.22%            1.04%           2.54%

Categorized by region

Domestic                   76,937,875,361.69    45,233,448,281.99       41.21%          3.14%            -2.26%          3.25%

Overseas                   16,249,905,240.71    13,463,046,491.93       17.15%         21.86%            21.09%          0.53%

In case of adjustment of statistical caliber for the Company's main business data during the Report Period, main
business data after statistical caliber adjustment at the end of the Report Period in the recent year
□ Applicable √ Not applicable


(3) Physical item income is higher than service income                               √ Yes □ No

(4) Fulfillment of major sales contracts signed by the Company by the end of the Report Period
□ Applicable √ Not applicable

(5) Composition of operating cost

                                                                                                                     Unit: Yuan

                                                2016                                  2015                         Increase/
    Industry                                           Proportion to                          Proportion to     Decrease over
                      Item
   Category                            Amount           Operating           Amount             Operating          the previous

                                                           Cost                                   Cost               year

                  Raw material    50,686,746,372.66          86.35% 49,475,367,352.33                86.20%              0.15%
Household
                  Labor wage       3,045,769,786.11           5.19%     2,857,770,151.94                4.98%            0.21%
appliances
                  Depreciation       888,033,503.41           1.51%       718,107,626.91                1.25%            0.26%
manufacturing
                  Energy             570,886,040.26           0.97%       530,054,999.43                0.92%            0.05%




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(6) Changes in the consolidation scope occurred during the Report Period

√ Yes □ No

① Establishment of subsidiaries
                                                Amount of      Amount of
                                                subscribed         paid-in                 Net assets of
                                                                                                            Net profit of the
                      Equity      Time point      capital          capital     Ratio of    the end of the
   Company                                                                                                       period
                    acquisition    of equity    contribution contribution contribution        period
     Name                                                                                                   (ten thousand
                      mode        acquisition      (ten             (ten         (%)       (ten thousand
                                                                                                                 Yuan)
                                                 thousand      thousand                       Yuan)
                                                  Yuan)            Yuan)

Gree Precision
                                   January
Mold (Wuhan)      Establishment                    8,000.00         8,000.00      100.00        9,250.70            1,250.70
                                    2016
Co., Ltd.

Zhuhai Gree
                                   January
Precision Mold    Establishment                   10,000.00        10,000.00      100.00       10,729.95              729.95
                                    2016
Co., Ltd.

Zhuhai Gree
New Material      Establishment March 2016         3,000.00         3,000.00      100.00        3,003.19                  3.19
Co., Ltd.

Zhuhai Gree
Energy
Environment       Establishment   May 2016        20,000.00        20,000.00      100.00       19,693.35             -306.65
Technology
Co., Ltd.

Gree Electric
Appliances
                  Establishment   April 2016      30,000.00        30,000.00      100.00       29,983.76              -16.24
(Hangzhou)
Co., Ltd.


② Disposal of subsidiaries
The Company was not involved in disposal of subsidiaries in the current period.

③ Changes in the consolidation scope arising from other causes
The Company was not involved in changes in the consolidation scope arising from other causes in the
current period.

(7) Major changes or adjustment of businesses, products or services during the Report Period

□ Applicable √ Not applicable




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(8) Major sales customers and suppliers of the Company

Major sales customers

Total sales amount of 5 top customers (RMB)                                                         23,226,504,349.02

Proportion of total sales amount of 5 top customers to the annual sales volume                                  21.09%

Information of 5 top customers

    Serial Number              Customer Name             Sales Volume (Yuan)       Proportion to Annual Sales Volume

1                     First                                     5,228,133,544.67                                4.75%

2                     Second                                    5,155,193,209.64                                4.68%

3                     Third                                     4,515,539,732.88                                4.10%

4                     Fourth                                    4,318,366,377.22                                3.92%

5                     Fifth                                     4,009,271,484.61                                3.64%

Total                                  --                    23,226,504,349.02                                  21.09%

Other description of major customers
□ Applicable √ Not applicable
Major suppliers of the Company

Total amount of purchase of top 5 suppliers (RMB)                                                    11,099,378,125.82

Percentage to the total amount of annual purchase                                                               20.34%

Information about top 5 suppliers of the Company

    Serial                                                                            Percentage to the total amount of
                         Name of supplier              Amount of purchase (yuan)
    Number                                                                                    annual purchase

1            First                                                 4,461,559,823.86                               8.17%

2            Second                                                3,046,563,469.67                               5.58%

3            Third                                                 1,330,117,211.46                               2.44%

4            Fourth                                                1,274,772,351.17                               2.34%

5            Fifth                                                   986,365,269.66                               1.81%

Total                             --                              11,099,378,125.82                             20.34%

Other information about the major suppliers
□ Applicable √ Not applicable




                                                           34
                                         GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                          Annual Report 2016




3. Expenses
                                                                                                                      Unit: Yuan

                                                                           Increase/
                                  2016                2015             Decrease over       Description of the material change
                                                                      the previous year

Sales expense              16,477,265,963.04 15,506,341,694.21                   6.26%

Overhead Expense            5,488,955,551.20     5,048,746,635.48                8.72%

                                                                                          Mainly attributable to the increase of
Financial expense          -4,845,546,598.04     -1,928,797,250.18             151.22%
                                                                                          exchange gains


4. Investment in research and development

□ Applicable √ Not applicable


5. Cash flows
                                                                                                                      Unit: Yuan

                                                                                          Increase/           Description
                                                                                       Decrease over
              Item                        2016                      2015
                                                                                        the previous
                                                                                            year

Sub-total of cash inflows from
                                    75,515,435,932.31        118,796,508,123.64               -36.43%
operating activities

Sub-total of cash outflows from
                                    60,655,483,825.39         74,418,126,295.96               -18.49%
operating activities

                                                                                                        Mainly attributable to
Net cash flows from operating                                                                           the decrease of cash
                                    14,859,952,106.92         44,378,381,827.68               -66.52%
activities                                                                                              received from sales of
                                                                                                        commodities

Sub-total of cash inflows from
                                     3,440,714,420.01             1,179,307,976.84            191.76%
investing activities

Sub-total of cash outflows from
                                     22,687,267,114.11            5,892,462,841.32            285.02%
investing activities

                                                                                                        Mainly attributable to
                                                                                                        reclassification of the
                                                                                                        time deposits of more
Net Cash Flow from
                                    -19,246,552,694.10        -4,713,154,864.48               308.36% than one year to other
Investment Activities
                                                                                                        cash payments
                                                                                                        relating to investing
                                                                                                        activities




                                                             35
                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                              Annual Report 2016



                                                                                             Increase/              Description
                                                                                           Decrease over
               Item                          2016                         2015
                                                                                            the previous
                                                                                               year

Sub-total of cash inflows from
                                       14,492,936,150.59            11,354,411,980.55              27.64%
financing activities

Sub-total of cash outflows from
                                       20,244,496,336.04            19,037,433,985.61               6.34%
financing activities

Net Cash Flow from Financing
                                       -5,751,560,185.45            -7,683,022,005.06             -25.14%
Activities

Net increase in cash and cash
                                       -6,043,656,822.39            33,858,545,732.13             -117.85%
equivalents

Major factors that result in major changes in relevant data
√ Applicable □ Not applicable


III. Non-core business analysis

□ Applicable √ Not applicable


IV. Assets and liabilities

1. Major changes in assets composition

                                                                                                                          Unit: Yuan

                                       At the end of 2016                             At the end of 2015
                                                                                                                        Change of
                                                    Proportion to total                           Proportion to total
                                   Amount                                         Amount                                proportion
                                                          assets                                         assets

Monetary capital            95,613,130,731.47                  52.43%       88,819,798,560.53                54.93%          -2.50%

Accounts receivable          2,960,534,651.37                   1.62%        2,879,212,111.93                 1.78%          -0.16%

Inventories                  9,024,905,239.41                   4.95%        9,473,942,712.51                 5.86%          -0.91%

Investment real estate            597,736,633.95                0.33%            491,540,849.66               0.30%           0.03%

Long-term equity
                                  103,913,171.51                0.06%             95,459,187.55               0.06%           0.00%
investment

Fixed assets                17,681,655,478.06                   9.70%       15,431,813,077.20                 9.54%           0.16%

Construction in
                                  581,543,756.84                0.32%        2,044,837,830.02                 1.26%          -0.94%
Progress

Short-term borrowing        10,701,081,645.32                   5.87%        6,276,660,136.03                 3.88%           1.99%




                                                                   36
                                             GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                            Annual Report 2016



2. Assets and liabilities measured by fair value

                                                                                                                           Unit: Yuan

                                                           Accumulated Depreciation
                                          Gains and                                          Amount of     Amount of
                         Amount at                           fair value        reserves                                   Amount at
                                         losses from                                         buying in     selling out
        Item            the beginning                        changes           withdrawn                                  the end of
                                        changes in fair                                      during the    during the
                        of the period                      recognized in       during the                                 the period
                                            value                                             period         period
                                                              equity            period

Financial assets

1. Financial
assets measured
by fair value and
their changes
recognized in the
                                 0.00               0.00            0.00              0.00          0.00          0.00           0.00
gains and losses
during the current
period (Excluding
derivative
financial assets)

2. Derivative                                                                                                            250,848,418.
                                 0.00 250,848,418.63
financial assets                                                                                                                   63

3. Financial                                                               -
                        2,614,719,17                   -                                                   1,235,305,7 1,312,303,56
assets available                                           257,463,774.
                                 7.56 117,730,422.98                                                             99.23           0.40
for sale                                                                  59

                                                                           -
                        2,614,719,17                                                                       1,235,305,7 1,563,151,97
Subtotal                                133,117,995.65 257,463,774.                   0.00          0.00
                                 7.56                                                                            99.23           9.03
                                                                          59

                                                                           -
                        2,614,719,17                                                                       1,235,305,7 1,563,151,97
Total                                   133,117,995.65 257,463,774.                   0.00          0.00
                                 7.56                                                                            99.23           9.03
                                                                          59

                        1,189,028,36                                                                                     394,763,490.
Financial liabilities                   794,264,876.04
                                 6.37                                                                                              33

Whether there are significant changes in the main asset measurement attribute of the Company during the Report Period.
□ Yes √ No


V. Investments

1. Overall review

□ Applicable √ Not applicable




                                                                    37
                                                                       GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                                  Annual Report 2016



2. Major equity investments obtained during the Report Period

□ Applicable √ Not applicable


3. Major non-equity investments during the Report Period

□ Applicable √ Not applicable


4. Financial asset investment

(1) Securities investment

                                                                                                                                                                                                                        Unit: Yuan
                                                                                                                         Accumulated Amount
                                                                                      Carrying         Gains and                                         Amount of        Profit and           Carrying
                                                    Initial         Accounting                                            fair value       of buying                                                          Accounting      Capital
   Type of        Security    Abbreviation of                                       amount at the     losses from                                        selling out      loss during         amount at
                                                 investment       measurement                                              changes          in during                                                         calculation    Source of
  securities       code       security name                                          beginning of     changes in                                         during the       the Report          the end of
                                                    cost              method                                              recognized          the                                                                items      Investment
                                                                                      the period       fair value                                          period           Period            the period
                                                                                                                           in equity         period


Stocks listed
                                                                                                                                                                                                              Available-
on domestic
                              WANDA              1,235,305,7 Measure at              1,224,378,63 89,659,496.0                                          1,235,305,7 120,851,956.                              for-sale
and overseas 3699                                                                                                                                0.00                                                                       Private
                              COMM-H SHS                  99.23 fair values                   9.47                  8                                          99.23                  07                      financial
stock
                                                                                                                                                                                                              assets
exchanges


Stocks listed
                                                                                                                                                                                                              Available-
on domestic                   RS                                                                                     -                 -                                                -
                                                617,323,352 Measure at               463,502,488.                                                                                            417,612,710 for-sale
and overseas 1528             MACALLINE-                                                              74,149,015.8 282,610,139.                  0.00                    49,087,059.8                                       Private
                                                              .86 fair values                    09                                                                                                     .40 financial
stock                         H SHS                                                                                 7                12                                                 3
                                                                                                                                                                                                              assets
exchanges


                                                                                                                                       -
                                                 1,852,629,1                         1,687,881,12 15,510,480.2                                          1,235,305,7 71,764,896.2 417,612,710
Total                                                                    --                                              282,610,139.            0.00                                                              --            --
                                                          52.09                               7.56                  1                                          99.23                    4               .40
                                                                                                                                     12




2) Investment in derivatives

                                                                                                                                                                                                     Unit: RMB 10,000
                                                                                                                                                                                                        Proportion of

                                                                                                                                                                       Withdrawing                         the ending       Profits and
 Operation                      Whether or                                                                                             Amount of        Amount of
                                                  Type of          Initial amount                                   Beginning                                          depreciation         Ending          contract          losses
  name of         Incidence           not                                                                                              buying in        selling out
                                                investment in of investment Start date           Expiry date        investment                                           reserve        investment amount to net            during the
 investment        relation     transaction                                                                                            during the       during the
                                                 derivatives       in derivatives                                    amount                                             amount (If          amount      assets at the         report
in derivative                   was related                                                                                                period         period
                                                                                                                                                                          any)                             end of the         period

                                                                                                                                                                                                        report period


Jinrui                                          Futures
                Non-related                                                         January   December
Futures co.,                   No               Hedging                -4,344.29                                         -4,344.29                                                            930.31              0.02%       -3,695.41
                party                                                               1, 2016   31, 2016
LTD                                             Contract


                                                Forward

Financing       Non-related                     Foreign                             January   December
                               No                                      -9,757.11                                         -9,107.11                                                          21,863.04             0.41% -160,328.22
Institution     party                           Exchange                            1, 2016   31, 2016

                                                Contract




                                                                                                           38
                                                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                  Annual Report 2016



                                                 (Buying in)


                                                 Forward

                                                 Foreign
Financing       Non-related                                                       January   December
                                No               Exchange          -109,795.73                                -109,795.73                                              -36,254.55          -0.67%     -77,838.77
Institution     party                                                             1, 2016   31, 2016
                                                 Contract

                                                 (Selling out)


Total                                                              -123,897.13       --           --          -123,247.13               0            0                   -13,461.2         -0.24%     -241,862.4


Capital Source of Investment in Derivatives                      Private


Lawsuits (if apply)                                              None


Disclosure Date of Announcement on Approval of
                                                                 29 April, 2016
Investment in Derivatives by Board of Directors (if any)


Disclosure Date of Announcement on Approval of

Investment in Derivatives by Board of Shareholders (if           May 20, 2016

any)


                                                                 In order to evade any risk in the cost of purchase of raw materials by the company which might arise from wide fluctuations of the price of

                                                                 bulk raw materials, the Company carried on the hedging business for part of the raw materials and duly locked the cost of raw materials

                                                                 according to the futures market situation to reduce any uncertainty risk from fluctuations of the market price of the spot goods; meanwhile,

                                                                 the Company carried out foreign exchange transactions by bank's financial instruments to evade any risk in the fluctuations of exchange

                                                                 rate and interest rate, reduce foreign exchange liabilities and conduct the cost locking, and realize the maintenance and increase of the

                                                                 value of foreign exchange assets. The Company laid down the Rules for Hedging Management of Futures and "Internal Control System of

                                                                 Forward Foreign Exchange Transactions to execute the full appraisal and control of the investment in derivatives and risks in open interest,

                                                                 and the detailed description is provided below: 1. Legal and regulatory risk; While the Company carried on hedging and foreign exchange

                                                                 transactions, it was required to follow the laws and regulations and specifically stipulate the rights and obligations with the agency. Control

Risk analysis of open interest of derivatives and control        measures: The Company assigned the responsible department to strictly execute the contract review, clarify the rights and obligations,

measures during the Report Period (including but not             strengthen compliance check and ensure the Company's investment in derivatives and operation of open interest in accordance with any

limited to market risk, liquidity risk, credit risk, operation   laws and regulations and internal control system of the Company. 2. Operation risk: it means any risk in operation arising out of imperfect

risk and legal risk)                                             internal process, operation of employees and system. Control measures: The Company established the corresponding management

                                                                 system, clarified the division of responsibilities and examination & approval procedures of the hedging and foreign exchange transactions,

                                                                 built more perfect supervision mechanism and effectively reduced any operation risk through business, decision and transaction

                                                                 processes. 3. Market risk: The price change of bulk goods and uncertainty of fluctuations of exchange rate of foreign exchange market

                                                                 bring a greater market risk to the futures business and foreign exchange transactions. Control measures: The principle of prudent and

                                                                 moderate operation is upheld in the futures hedging and foreign exchange transactions of the Company, in which any speculative

                                                                 transaction is not permitted. As to the hedging business, the Company strictly restricted the number of hedging not to exceed the number

                                                                 of actual spot transaction and the open interest of the futures not to exceed the number of hedged spot goods and implemented the

                                                                 mechanism to stop loss. In respect of the foreign exchange transactions, the Company effectively prevented the market risk by judging the

                                                                 trend of foreign exchange rate and utilizing a contract to lock the settlement of exchange rate.


The detailed usage and related hypothesis and

parameter setting should be disclosed in terms of the
                                                                 The loss under the futures hedging contract during the Report Period was RMB -36.9541 million; the loss under the forward foreign
market price of the invested derivatives or changes in fair
                                                                 exchange contract during the Report Period was RMB -1288.3377 million
value of the products during the Report Period and

analysis on the fair value of the derivatives.


Descriptions about whether there were major changes in

the accounting policies and detailed accounting principle
                                                                 No change
of the Company's derivatives during the Report Period as

compared to the last report period.


                                                                 In the opinion of the Company's independent directors, the Company improved its management level by strengthening internal control and

Special opinions of independent directors regarding the          carrying out the risk prevention measures as well as stabilizing price fluctuations through futures hedging. It also enhanced its foreign

investment in derivatives and risk control of the Company exchange risk control level through foreign exchange transactions. The above investment in derivatives helps to give play to competitive

                                                                 advantages of the Company, so it is feasible for the Company to carry on the investment in derivatives under controllable risk.




                                                                                                        39
                                         GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                    Annual Report 2016



5. Usage of raised funds

□ Applicable √ Not applicable
The Company was not involved in any usage of raised funds during the Report Period.


VI. Sales of major assets and equities

1. Sales of major assets

□ Applicable √ Not applicable
The Company was not involved in sales of major assets during the Report Period


2. Sale of major equities

□ Applicable √ Not applicable


VII. Analysis on major controlling shareholder and joint stock companies


Information regarding major subsidiaries and joint stock companies that contribute over 10% of net profits to the

Company

                                                                                                                  Unit: Yuan

  Company       Company                      Registered                             Operating    Operating
                             Main business                Total assets Net assets                                Net profits
    Name           type                        capital                              incomes        profit

Zhuhai Gree
Group
                             Financial       1,500,000,   47,281,381, 3,991,395,5 1,806,178,7 755,239,78 565,683,875
Finance         Subsidiary
                             Services        000               537.98       96.38        86.46          7.64             .70
Company
Limited

Gree Electric
Appliances                   Air Conditioner 230,000,00 4,151,182,5 1,603,925,6 6,003,558,2 572,243,77 495,242,297
                Subsidiary
(Chongqing)                  Manufacturing 0                      79.30     96.90        90.41          5.07             .87
Co., Ltd.

Zhuhai Gree
                             Varnished Wire 169,315,58 4,389,384,0 558,318,60 5,271,208,5 89,283,939. 105,118,540
Electrical      Subsidiary
                             Manufacturing 6                      73.36      0.96        19.11              10           .38
Co., Ltd.

Zhuhai
Kaibang
                             Motor                        2,192,560,5 1,148,288,8 2,547,696,5 342,640,96 307,394,086
Motor           Subsidiary                   82,000,000
                             Manufacturing                        64.73     56.44        69.08          2.51             .95
Manufacture
Co., Ltd.

Gree Electric Subsidiary Air Conditioner 150,000,00 13,536,010, 8,556,512,4 12,853,036, 848,317,97 781,659,370




                                                             40
                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                            Annual Report 2016



  Company        Company                        Registered                               Operating        Operating
                             Main business                   Total assets Net assets                                       Net profits
       Name        type                           capital                                 incomes           profit

Appliances                   Manufacturing 0                      085.42        57.41           912.52           1.10              .16
(Hefei) Co.,
Ltd.

GREE
(Zhongshan)                  Small Home
                                                             593,451,749 267,745,43 742,546,78 24,768,806. 14,430,119.
Small Home Subsidiary Appliances               30,000,000
                                                                       .77       5.72              8.99              33             96
Appliances                   Manufacturing
Co.

Zhuhai
Landa                        Compressor                      12,048,122, 7,099,158,7 9,289,864,9 1,144,188,1 1,024,334,8
                Subsidiary                     93,030,000
Compressor                   Manufacturing                        098.67        45.39            23.44         26.31             18.93
Co., Ltd.

Gree Electric
Appliances                   Air Conditioner                 5,498,716,4 3,130,074,8 5,754,348,5 508,354,65 497,797,529
                Subsidiary                     20,000,000
(Zhengzhou)                  Manufacturing                           88.60      61.48            38.31           6.08              .83
Co., Ltd.

Gree Electric
Appliances                   Air Conditioner                 4,581,385,2 1,271,070,5 7,885,098,0 511,666,390 446,778,556
                Subsidiary                     10,000,000
(Wuhan) Co.,                 Manufacturing                           24.78      74.07            48.92               .87           .34
Ltd.

Gree Electric
Appliances                   Air Conditioner                 4,038,327,6 1,481,356,9 5,283,788,0 324,880,05 344,595,105
                Subsidiary                     20,000,000
(Wuhu) Co.,                  Manufacturing                           22.59      91.42            52.62           3.06              .70
Ltd.

Gree Electric
Appliances                   Air Conditioner 100,000,00 3,709,208,4 685,659,24 4,068,579,7 230,704,50 351,737,311
                Subsidiary
(Shijiazhuan                 Manufacturing 0                         21.97       7.38            28.71           9.93              .35
g) Co., Ltd.

Information about acquisition and disposal of subsidiaries during the Report Period
√ Applicable □ Not applicable
                                                                                                                 Unit: RMB 10,000

                                             Methods of acquisition and disposal of        Impact on overall production and
               Company Name
                                               subsidiaries during the Report Period           operation and financial results

Gree Precision Mold (Wuhan) Co., Ltd. Establishment                                     1,250.70

Zhuhai Gree Precision Mold Co., Ltd.       Establishment                                729.95

Zhuhai Gree New Material Co., Ltd.         Establishment                                3.19

Zhuhai Gree Energy Environment             Establishment                                -306.65



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Technology Co., Ltd.

Gree Electric Appliances (Hangzhou)
                                       Establishment                  -16.24
Co., Ltd.


VIII. Information about businesses controlled by the Company

□ Applicable √ Not applicable


IX. Prospects of the Company's future development

In 2017, Electric Appliances regarded "challenging oneself and controlling the future" as the guiding

ideology of the enterprise's annual management work to lay out the diversification strategy,
and constantly extend to the intelligent manufacturing, smart home and new energy
industries as consolidating and developing the air conditioning industry. It adheres to the
management policy of being fair and impartial, open and transparent, and scrupulous in separating

public from private interests, scrupulously abides by the conduct code of telling the truth,
doing practical things, attaching importance to principles and the spirit of dedication, and
doing good deeds and great things, and steadfastly focuses on independent innovation
and intelligent manufacturing to achieve good results in both efficiency and benefit.

(I) Vigorously implementing the innovation driven development strategy to realize
technical breakthroughs of key products

     1. Complete technical upgrading and innovative strategic planning based on
classification. Use reversed thinking to consider technological progress, keep close to the
market and users in product planning, and create demands as meeting consumer
demands.
     2. Improve the new product development efficiency. Continue to intensify the project
management and product innovation R&D management, popularize big data applications,
and constantly summarize sharing and technical exchanges, and improve the efficiency of
new product development; improve the project team responsibility system and integrate
the lean design method into the new product R&D process by centering on the project.
     3. Carry out the product platform design comprehensively and improve the
standardization level. Using software to manage the product family tree, and realize


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automatic control of the product platform and key material planning; promote
generalization of key materials from the design source, reduce the production cost, and
enhance the development and production efficiency; make sure that the product design
idea is innovative and attach importance to skills to reduce the resource waste during the
design.
    4. Pay attention to the new development trend of the industry. Strengthen the
research and development of artificial intelligence in the home appliance field, and
promote the development of smart home technologies; keep concerned about the haze
problem, make contributions to the "coal to electricity" market of the country, and improve
the product performance as reducing costs.
    5. Continue to reinforce the research into new technologies and original technologies.
Continue to reinforce the research into the magnetic suspension bearing and control
technologies, small size, light weight and high efficiency of compressor, new field motor
products, ultra-low temperature air source heat pump heating products, technologies and
products in the communication field, and washing machines, and keep the leading position
in industry technologies.

(II) Consolidating the air conditioner market share and expanding the diversified
new industry layout

    1. Consolidate the domestic market share of residential air conditioners, optimize the
sales structure of commercial air conditioner products, and steadily expand the market
share of superior products.
    2. Stick to the strategic deployment of maintaining growth, adjusting the structure and
establishing an international brand in overseas sales and vigorously develop independent
brands.
    3. Focus on the development direction of "high end, intelligence and high-quality" to
enrich the product lines of household appliances, and enhance the performance price ratio
of products to provide consumers with health products.
    4. Speed up the market development of the intelligent equipment and mould industry,
carry out intensive study by focusing on the two major fields of robots and precision


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machine tools, and provide independently developed high-end equipment for "Made in
China 2025" as completing transformation and upgrading of the company's independent
manufacturing system.
    5. Reinforce promotion of all the industrial product brands. Take into account the
domestic and overseas markets to build the brand image of "high quality, excellent service
and strong lineup" of industrial products; actively seek cooperation opportunities with the
e-commerce platform, and open up a new battlefield of Internet marketing.
    6. Cooperate with Yinlong to broaden the related industry chain. Firmly grasp the
opportunities and challenges brought by cooperation with Yinlong, and create new profit
growth points in mould, motor, automotive air conditioning, intelligent equipment and other
fields.
    7. Accelerate the industrial layout and technological breakthroughs of the new energy
industry sector, and launch independent and innovative new energy products; expand the
market share of photovoltaic air conditioning products and achieve the technical
breakthrough of optical storage integration; tackle the energy control protocol and strategy
to achieve development of the distributed control systems and distributed energy systems
at the home level, building level and urban level.
    8. Make the mobile phone industry big and strong, and formally start offline channel
sales of mobile phones.
    9. Adhere to the sustainable development strategy direction of "saving, greenness,
environmental protection and resource regeneration", form the closed loop industrial chain
of resource regeneration, and insist on green ecological manufacturing.

(III) Vigorously promoting standardization and informatization to enhance the
enterprise management level

    1. Intensify the efforts to implement standardization in all the phases of product R&D
to transit from design of good products to design of good products of meeting the needs of
automation production.
    2. Establish an information center, timely grasp the market, industry and related
dynamics, and comprehensively analyze the inter-system information in the enterprise to


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ensure smooth implementation of the supply side reform.
    3. Set up a big data center, and promote the analysis and application of big data in
each operation link of the company to effectively increase the enterprise management
level.
    4. Guarantee quality management from the source, adopt the forced mechanism to
enhance the management level, and make sure that everyone controls quality during
routine production, process, management and design.

(IV) Promoting the transformation of intelligent manufacturing to improve per capita
efficiency

    1. Implement the autonomous management mode to further clarify the double-effect
subject management responsibility of "efficiency and benefit".
    2. Strengthen reform and innovation of the value chain, deepen lean production,
improve supply chain logistics, promote the JIT mode, realize direct distribution of the
supplier, and further eliminate transit stock and transport waste.
    3. Build a "sales centered" internal service system and improve the flexibility of
production and procurement supply.
    4. Comprehensively introduce the efficiency oriented contract wage system and
automatic accounting system of production efficiency to promote efficiency guarantee and
increase.

(V) Tightening cost control to improve economic benefits

    1. Implement cost control from the design source and optimize product pricing ideas.
    2. Strengthen the audit supervision, especially reinforce the audit management
aiming to management process control.
    3. Reinforce risk control, including external risk, internal management risk and new
business risk.




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(VI) Strengthening personnel training to scientifically and efficiently meet the
diversified talent demand of the company

    1. Speed up construction of GREE College. Promote technician training to meet the
company's demand for transformation and upgrading of skilled workers; energetically
cultivate expert talents, including management experts, technical experts and skill experts,
so that the company can truly become a talent training base.
    2. Establish a sound and dynamic group personnel planning and control mechanism,
effectively control fluctuation of the personnel scale, and further strengthen the
management work of post determination and organizational structure delimiting.
    3. Continue to broaden the recruitment channels, enhance the independent
recruitment ability, and scientifically and efficiently meet the need of diversified talents.
    4. Provide the platform, direction and goal to young people so that they have the
ability to undertake and control the future development of the company.

(VII) Strengthening the thinking transformation and quality improvement of cadres

    1. Increase efforts to establish the cadre appointment and removal mechanism of
promoting capable ones and demoting untalented ones Cultivate a capable and thoughtful
team; create a corporate culture with the spirit of dedication and perseverance, and the
atmosphere in which all members are united and companionate and willing to help and
learn from each other, and build the core competitiveness of enterprise.
    2. Strengthen the system construction, reinforce work style construction, and create a
working atmosphere of mutual help to promote sustainable development of the enterprise.
    3. Build and update the cadre reserve bank to find excellent talents.




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X. Reception of activities including researches, communication and interviews

1. Registration form for reception of activities including researches, communication and
interviews

√ Applicable □ Not applicable

                            Method of     Type of reception
  Time of reception                                                        Basic situation index of research
                            reception           object

                                                              For details, see the Record Table for Investor Relations
January 22, 2016       Others            Institution          Activities disclosed by the Company on www.cninfo.com.cn
                                                              from 5 January, 2016 to 22 January, 2016

                                                              For details, see the announcement disclosed by the
August 23, 2016        Others            Others
                                                              Company on www.cninfo.com.cn on 25 August, 2016

                                                              For details, see the Record Table for Investor Relations
September 2, 2016      Field Research    Institution          Activities disclosed by the Company on www.cninfo.com.cn
                                                              from 24 August, 2016 to 2 September, 2016

                                                              For details, see the Record Table for Investor Relations
September 27, 2016 Others                Institution          Activities disclosed by the Company on www.cninfo.com.cn
                                                              from 13 September, 2016 to 27 September, 2016

                                                              For details, see the Record Table for Investor Relations
November 21, 2016 Others                 Institution          Activities disclosed by the Company on www.cninfo.com.cn
                                                              from 2 November, 2016 to 21 November, 2016

Times of reception                       89

Number of received institutions          895

Number of received individuals           0

Number of other received objects         36

Whether undisclosed material
information is revealed, disclosed or    No
divulged




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                                    Section V Important Events

I. Information about common stock profit distribution and capitalization from capital
reserve funds

The common stock profit distribution policy in the report period, especially preparation, execution or adjustment of the
cash dividend policy √ Applicable □ Not applicable

The Dividend program for the year of 2015 was implemented on July 7, 2016: Calculated
by the total stock capital of the Company equivalent to 6,015,730,878 stocks, all directors
will be distributed a cash of RMB 15.00 (tax included) per 10 stocks, with the total amount
of cashes to be distributed in such a way up to RMB 9,023,596,317 and the balance to be
carried forward to the next year.


                                       Special description of the cash dividend policy

In compliance with provisions of the Articles of Association or requirements of the
                                                                                                        Yes
resolution of the general meeting of shareholders:

The dividend standard and ratio are definite and clear:                                                 Yes

The related decision procedures and mechanisms are complete:                                            Yes

Independent directors perform their duties responsibly and play their due roles:                        Yes

Minority shareholders have the opportunity to fully express their opinions and demands
                                                                                                        Yes
and their legitimate rights and interests are fully protected:

The conditions and procedures are transparent and comply with regulations if the cash
                                                                                                        Yes
dividend policy is adjusted or changed:

The common stock dividend distribution plan (preplan) and the capitalization plan (preplan) from capital reserve funds in
recent three years (including the Report Period)

1. Profit distribution preplan for the year of 2016
Calculated by the total stock capital equivalent to 6,015,730,878 stocks, all directors will be
distributed a cash of RMB 18.00 (tax included) per 10 stocks, with the total amount of
cashes to be distributed in such a way up to RMB 10,828,315,580.40 and the balance to
be carried forward to the next year.
This distribution plan still needs to be approved by the general meeting of shareholders for
the year of 2016.



                                                                 48
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2. Profit distribution plan for the year of 2015
Calculated by the total stock capital of the Company equivalent to 6,015,730,878 stocks,
all directors will be distributed a cash of RMB 15.00 (tax included) per 10 stocks, with the
total amount of cashes to be distributed in such a way up to RMB 9,023,596,317 and the
balance to be carried forward to the next year.
3. Profit distribution plan for the year of 2014
Calculated by the total stock capital of the Company equivalent to 3,007,865,439 stocks,
all directors will be distributed a cash of RMB 30.00 (tax included) per 10 stocks, with the
total amount of cashes to be distributed in such a way up to RMB 9,023,596,317 and the
balance to be carried forward to the next year; capital reserve funds are used for
capitalization, and 10 stocks will be added per 10 stocks for all directors based on the total
stock capital of the Company equivalent to 3,007,865,439 stocks.

Table for common stock cash dividends of the Company in the recent three years
(including the Report Period)
                                                                                                                     Unit: Yuan

                                                                     Proportion to net
                                          Net profit attributable
                                                                    profit attributable to
                                               to common                                                        Proportion of
                      Amount of cash                                      common             Amount of cash
                                         shareholders of listed                                                 cash dividends
       Year              dividend                                     shareholders of        dividends based
                                           company in annual                                                    based on other
                       (tax included)                                listed company in        on other ways
                                         consolidated financial                                                     ways
                                                                       consolidated
                                               statements
                                                                    financial statements

2016                 10,828,315,580.40       15,420,964,990.94                    70.22%                 0.00           0.00%

2015                  9,023,596,317.00       12,532,442,817.66                    72.00%                 0.00           0.00%

2014                  9,023,596,317.00       14,155,167,229.36                    63.75%                 0.00           0.00%

The profits of the Company in the Report Period and the parent company’s profits distributable to
common shareholders are positive, but the common stock cash dividend distribution preplan has not
been put forward.
□ Applicable √ Not applicable




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II. Preplan for profit distribution and capitalization from public reserve funds in the
Report Period

√ Applicable □ Not applicable

                                             Cash dividends of this distribution

If profits are distributed when the Company's development stage has entered the mature period and significant capital
expenditure has been arranged, the minimum proportion of cash dividends to the profits to be distributed this time should
be 40%.

            Detailed description of the preplan for profit distribution or capitalization from public reserve funds


III. Fulfillment of commitments

1. Commitments of the Company's actual controllers, shareholders and acquirers, the Company
and other related parties of commitments that have been fulfilled completely in the Report
Period or have not been fulfilled completely as of the end of the Report Period

□ Applicable √ Not applicable
1. The Company did not have any commitments of the Company, shareholders, actual controllers, acquirers, directors,
supervisors, senior management personnel or other related parties that have been fulfilled completely in the Report
Period or have not been fulfilled completely as of the end of the Report Period in the Report Period.


2. The Company’s assets or projects involve earnings forecast and the Report Period is still in
the earnings forecast period and the Company explains the assets or projects that achieve the
original earnings forecast and the relevant reasons

□ Applicable √ Not applicable


IV. The listed company’ non-operating funds occupied by the controlling
shareholders and their related parties

□ Applicable √ Not applicable
No controlling shareholder or its related party occupied non-operating funds of the listed company in the Report Period of
the Company.

V. Description about the “Non-standard Audit Report” of the accounting firm in the
Report Period by the Board of Directors, Board of Supervisors and independent
director (if any)
□ Applicable √ Not applicable


VI. Description about changes in the accounting policies, accounting estimates and
accounting methods in comparison to the financial report of last year

□ Applicable √ Not applicable



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The Company didn’t involve any change in the accounting policies, accounting estimates and accounting methods in the
Report Period.


VII. Description about the retrospective restatement required for correction of
significant accounting errors that occurred in the Report Period

□ Applicable √ Not applicable
The Company didn’t involve any correction of significant accounting errors in the Report Period that requires
retrospective restatement.


VIII. Description about changes in the consolidated statement scope in comparison
with the financial report of last year

√ Applicable □ Not applicable
① Establishment of subsidiaries
                                                          Amount of
                                                          subscribed      Amount of                    Net assets of Net profit of
                               Equity       Time point      capital      paid-in capital   Ratio of    the end of the the period
   Company Name              acquisition     of equity    contribution    contribution contribution       period         (ten
                                  mode      acquisition      (ten        (ten thousand       (%)       (ten thousand thousand
                                                           thousand          Yuan)                        Yuan)         Yuan)
                                                            Yuan)

Gree Precision Mold                          January
                          Establishment                       8,000.00         8,000.00       100.00        9,250.70    1,250.70
(Wuhan) Co., Ltd.                             2016

Zhuhai Gree Precision                        January
                          Establishment                     10,000.00        10,000.00        100.00      10,729.95       729.95
Mold Co., Ltd.                                2016

Zhuhai Gree New
                          Establishment March 2016            3,000.00         3,000.00       100.00        3,003.19         3.19
Material Co., Ltd.

Zhuhai Gree Energy
Environment               Establishment      May 2016       20,000.00        20,000.00        100.00      19,693.35       -306.65
Technology Co., Ltd.

Gree Electric
Appliances                Establishment     April 2016      30,000.00        30,000.00        100.00      29,983.76        -16.24
(Hangzhou) Co., Ltd.

② Disposal of subsidiaries
The Company was not involved in disposal of subsidiaries in the current period.
③ Changes in the consolidation scope arising from other causes
The Company was not involved in changes in the consolidation scope arising from other causes in the
current period.




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IX. Engagement and disengagement of accounting firms

Currently engaged accounting firms

                                                                                Union Power Certified Public Accountants
Name of domestic accounting firm
                                                                                               (Special General Partnership)

Remuneration for the domestic accounting firm (RMB 10,000)                                                              396

Consecutive years for the domestic accounting firm to render audit service                                                2

Names of certified public accountants of the domestic accounting firm                                  Wang Bing and He Li

A new accounting firm was engaged in the current period
□ Yes                  √ No
Engagement of an accounting firm for internal control auditing, financial adviser or sponsor
□ Applicable         √ Not applicable

X. Suspension of listing and termination of listing after disclosure of the annual
report
□ Applicable         √ Not applicable

XI Matters related to bankruptcy reorganization
□ Applicable          √ Not applicable
The Company was not involved in any matter related to bankruptcy reorganization in the Report Period.

XII. Major legal action or arbitration
□ Applicable          √ Not applicable
The Company was not involved in any major legal action or arbitration during the Report Period.

XIII. Punishment and rectification
□ Applicable          √ Not applicable
The Company was not involved in any punishment or rectification during the Report Period.

XIV. Integrity status of the Company and its controlling shareholders and actual
controllers
□ Applicable          √ Not applicable

XV. Implementation of the Company’s equity incentive plan, employee stock
ownership plan or other employee motivation measures
□ Applicable          √ Not applicable
The Company was not involved in any equity incentive plan, employee stock ownership plan or other employee
motivation measures or their implementation during the Report Period.

XVI. Significant related transactions
1. Related transactions associated with day-to-day operation
□ Applicable √ Not applicable




                                                            52
                                                                    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                               Annual Report 2016



                                                                                               Amount of                     Approved
                                                                  Related                                     Proportion                  Exceeding                   Available
                                  Type of         Contents of                     Prices of      related                    transaction                Settlement
                   Incidence                                    transaction                                   to amount                       the                    market price      Date of    Disclosure
Related parties                    related          related                        related    transactions                  amount (ten                of related
                    relation                                       pricing                                     of similar                 approved                    of similar     disclosure      index
                                transactions transactions                        transactions (ten thousand                  thousand                 transactions
                                                                  principle                                   transaction                    quota                   transactions
                                                                                                 Yuan)                        Yuan)


                  The

                  company in
Hebei
                  which the
Shengshi                                                                                                                                              Payment
                  Company's     Sales of       Sales                                                                                                                                29 April,     www.cninfo.
Xinxing Gree                                                    Market price Market price       242,627.79         2.75%       500,000 No             before         Market price
                  director      commodities revenue                                                                                                                                 2016          com.cn
Trading Co.,                                                                                                                                          delivery
                  serves as
Ltd.
                  general

                  manager


                  The

                  company in
Zhejiang
                  which the
Shengshi                                                                                                                                              Payment
                  Company's     Sales of       Sales                                                                                                                                29 April,     www.cninfo.
Xinxing Gree                                                    Market price Market price       431,836.64         4.90%       800,000 No             before         Market price
                  director      commodities revenue                                                                                                                                 2016          com.cn
Trading Co.,                                                                                                                                          delivery
                  serves as
Ltd.
                  general

                  manager


                  The

                  company in
Henan
                  which the
Shengshi                                                                                                                                              Payment
                  Company's     Sales of       Sales                                                                                                                                29 April,     www.cninfo.
Xinxing Gree                                                    Market price Market price       522,813.35         5.94%      1,000,000 No            before         Market price
                  supervisor    commodities revenue                                                                                                                                 2016          com.cn
Trading Co.,                                                                                                                                          delivery
                  serves as
Ltd.
                  general

                  manager


Total                                                                --               --      1,197,277.78         --         2,300,000       --           --             --               --         --


Details of huge-amount sales return                             Not applicable


Actual fulfillment (if any) in the Report Period when the

total amount is estimated by category for the daily related Not applicable

transaction to take place in the current period


Cause (if applicable) of the large difference between the
                                                                Not applicable
transaction price and market reference price




2. Related transactions of acquisition or sales of assets or equity

□ Applicable √ Not applicable
The Company was not involved in any related transaction of acquisition or sales of assets or equity in the Report Period.


3. Related transactions of common foreign investment

□ Applicable √ Not applicable
The Company was not involved in any related transaction of common foreign investment during the Report Period.




                                                                                                      53
                                       GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                       Annual Report 2016




4. Associated credits and liabilities

□ Applicable √ Not applicable
The Company was not involved in any associated credit or liability in the Report Period.


5. Other significant related transactions

□ Applicable √ Not applicable
The Company was not involved in any other significant related transaction during the Report Period.


XVII. Major contracts and their fulfillment

1. Information about trusteeship, contracting and lease

(1) Trusteeship

□ Applicable √ Not applicable
The Company was not involved in any trusteeship during the Report Period.


(2) Contracting

□ Applicable √ Not applicable
The Company was not involved in any contracting matter during the Report Period.


(3) Lease

□ Applicable √ Not applicable
The Company was not involved in any lease during the Report Period.


2. Major guarantee

□ Applicable √ Not applicable
The Company was not involved in any major guarantee during the Report Period.


3. Entrusting others to execute any cash asset management

(1) Entrusted financing

□ Applicable √ Not applicable
The Company was not involved in any entrusted financing during the Report Period.


(2) Entrusted loan

□ Applicable √ Not applicable




                                                           54
                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI       Annual Report 2016



The Company was not involved in any entrusted loan during the Report Period.


4. Other major contracts

□ Applicable √ Not applicable
The Company did not have any other major contract during the Report Period.


XVIII. Social responsibilities

1. Fulfilling the social responsibilities of taking targeted measures in poverty alleviation

(1) Summary of taking targeted measures in poverty alleviation in the year


Electric Appliances owns a salvage guarantee system for assisting employees in
difficulties at multiple levels, including the social insurance of employees, sunshine mutual
fund relief of critical diseases, and one-time temporary difficulty relief. The rescued group
can basically cover the medical expense reimbursement and poverty relief arising from
sudden major diseases of employees, poverty caused by unexpected accidents in the
family, later expenses of chronic diseases and critical illnesses of employees, and sudden
diseases of family members, so as to accurately solve practical difficulties of employees
with a greater capital expenditure pressure, ensure active concern and active support in
the real sense, and carry forward the collective spirit of mutual aid. In 2016, the Company
rescued 238 employees, involving an amount of RMB1.687 million, making Gree

employees in difficulties grateful, and injecting infinite force to the corporate development.

(2) Subsequent targeted poverty alleviation plan


To help related employees to settle difficulties and shake off poverty, highlight the guiding
demonstration effect of assistance, bring into full play the Company's concern and care of
employees in difficulties, earnestly solve difficulties for these employees, and strengthen
the tenet consciousness and mass concept, the Company planned to carry out the long-
term partner assistance plan for employees in difficulties to assist them in the "one-on-one"
manner in 2017.




                                                         55
                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                         Annual Report 2016



2. Fulfilling other social responsibilities


Gree actively and voluntarily performed its social responsibilities, effectively protected the
lawful rights and interests of all stakeholders, won with its strength the recognition of the
enterprise, brand and products from capital market and consumer market and promoted
the low-carbon green growth in the industry through various activities. (Please refer to the
Social Responsibilities Report for the Year 2016 on www.cninfo.com.cn)
If the listed company and its subsidiaries are key pollutant discharge units published by the environmental protection
department
No
If any social responsibilities report is published
√ Yes □ No

                                           Social responsibilities report of enterprise

                                                              If corporate                Report disclosure standard
                     If environmental         If social
                                                              governance
Enterprise nature     information is      information is
                                                             information is      Domestic standard         Foreign standard
                          contained           contained
                                                                 contained

State-owned
                    Yes                 Yes                Yes                 CASSCSR1.0               Others
enterprise

Specific circumstances

1. If the Company passed the environmental management
                                                                  Yes
system certification (ISO14001)

2. The Company's annual expenditure on environmental
                                                                  284
protection investment (ten thousand Yuan)

3. The Company's emission reduction performance of
                                                                  No environmental pollution accident
waste gas, waste water and waste residue


XIX. Description of other significant matters

□ Applicable √ Not applicable
The Company did not have any other significant matter to be described in the Report Period.


XX. Significant matters of the Company’s subsidiaries

□ Applicable √ Not applicable




                                                               56
                                        GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                         Annual Report 2016




            Section VI Changes in Stock Capital & Information of

                                                  Shareholders

I. Changes in stock capital

1. Changes in stock capital
                                                                                                                     Unit: Share

                        Before the change                   Increase/Decrease (+, -)                     After the change

                                                                  Stock
                                                  New Bonus Converted
                         Qty         Percentage                             Others       Subtotal        Qty         Percentage
                                                  Issue Issue     from
                                                                 Reserve

I. Stocks with
trading
                       43,613,644        0.72%                             1,514,855 1,514,855 45,128,499                0.75%
restriction
conditions

3. Stocks held
by other               43,613,644        0.72%                             1,514,855 1,514,855 45,128,499                0.75%
domestic capital

Stocks held by
the domestic           43,613,644        0.72%                             1,514,855 1,514,855 45,128,499                0.75%
natural person

II. Tradable
Stocks without
                                                                                     -                5,970,602,
trading             5,972,117,234       99.28%                                           -1,514,855                     99.25%
                                                                           1,514,855                           379
restriction
conditions

1. RMB ordinary                                                                      -                5,970,602,
                    5,972,117,234       99.28%                                           -1,514,855                     99.25%
stocks                                                                     1,514,855                           379

III. Total of                                                                                         6,015,730,
                    6,015,730,878      100.00%                                                                         100.00%
stocks                                                                                                         878

Causes of changes in stock capital

√ Applicable □ Not applicable




                                                            57
                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                    Annual Report 2016



Ms. Dong Mingzhu, Chairperson & President of the Company, cumulatively increased the hold shares

by 498,000, Mr. Xu Zifa, Director, cumulatively increased the hold shares by 1,403,300, Mr. Wang Jingdong, Vice

President, Finance Chief and Board Secretary, cumulatively increased the hold shares by 155,800.


2. Changes in restricted shares

□ Applicable √ Not applicable


II. Issuance and listing of securities

1. Issuance of securities (excluding the preferred stock) in the Report Period

□ Applicable √ Not applicable
2. Description about changes in the Company’s total number of stocks and shareholder
structure, and assets and liability structure

□ Applicable √ Not applicable
3. Existing internal employee stock

□ Applicable √ Not applicable

III. Information about the shareholders and actual controllers

1. Total number of shareholders and their shareholding status

                                                                                                                                 Unit: Share

                                                                                                          Total number of
                                  Total number of
                                                                      Total number of                     preferred shareholders
Total number of                   common
                                                                      preferred shareholders              (if any) whose voting
common                            shareholders at
                                                                      (if any) whose voting               rights were restored at
shareholders at        396,962 the end of last            338,129                                     0                                     0
                                                                      rights were restored at             the end of last month
the end of the                    month before the
                                                                      the end of Report Period            before the disclosure
Report Period                     disclosure date of
                                                                      (See Note 8)                        date of the annual
                                  the annual report
                                                                                                          report (See Note 8)

    Shareholding of the shareholders holding more than 5% of total stocks or shareholding of the top 10 shareholders

                                                      Total number      Increase/                                      Pledge or freezing
                                                                                     Number of      Number of
                                                      of the stocks     Decrease
     Name of          Nature of     Shareholding                                     the trading    the trading
                                                    held at the end       in the                                        Stock
   shareholder      shareholder      proportion                                      restricted    unrestricted                      Qty
                                                      of the Report      Report                                         status
                                                                                     stocks held stocks held
                                                         Period           Period

Zhuhai Gree         State-owned                                                                    1,096,255,62                    50,625,0
                                         18.22% 1,096,255,624                                                         Frozen
Group Co., Ltd.     legal person                                                                                  4                        00




                                                                  58
                                        GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                        Annual Report 2016



Hebei Jinghai       Domestic
Guaranteed          non-state-
                                         8.91%     535,762,033                            535,762,033
Investment Co.,     owned legal
Ltd.                person

Qian Hai Life       Domestic
Insurance Co.,      non-state-
                                         4.12%     247,905,586                            247,905,586
Ltd. – Hai Li Nian owned legal
Nian                person

Hong Kong
Securities          Foreign
                                         2.38%     143,055,489                            143,055,489
Clearing            legal person
Company Ltd.

China Securities State-owned
                                         2.08%     125,224,256                            125,224,256
Finance Co., Ltd. legal person

Central Huijin
Asset               State-owned
                                         1.40%       84,483,000                            84,483,000
Management          legal person
Co., Ltd.

                    Foreign
UBS AG                                   1.28%       77,157,409                            77,157,409
                    legal person

Hillhouse Capital
                    Foreign
Management –                            0.84%       50,457,100                            50,457,100
                    legal person
HCM China Fund

                    Domestic
National Social
                    non-state-
Security Fund                            0.83%       49,855,164                            49,855,164
                    owned legal
108 portfolio
                    person

                    Domestic
Dong Mingzhu        natural              0.74%       44,318,492                            44,318,492
                    person

Situation (if any) where a strategic investor or general legal person becomes
                                                                                   None
one of top 10 shareholders due to placement of new shares (see Note 3)

Description for affiliated relationship or concerted action of the above
                                                                                   None
shareholders

                       Shareholding of the top 10 shareholders without trading restriction conditions

                                      Number of the trading unrestricted stocks held at           Type of stocks
        Name of shareholder
                                                 the end of the Report Period             Type of stocks         Qty

Zhuhai Gree Group Co., Ltd.                                                1,096,255,624 RMB ordinary        1,096,255,624




                                                             59
                                         GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                      Annual Report 2016



                                                                                           stocks

Hebei Jinghai Guaranteed                                                                   RMB ordinary
                                                                             535,762,033                      535,762,033
Investment Co., Ltd.                                                                       stocks

Qian Hai Life Insurance Co., Ltd. –                                                       RMB ordinary
                                                                             247,905,586                      247,905,586
Hai Li Nian Nian                                                                           stocks

Hong Kong Securities Clearing                                                              RMB ordinary
                                                                             143,055,489                      143,055,489
Company Ltd.                                                                               stocks

                                                                                           RMB ordinary
China Securities Finance Co., Ltd.                                           125,224,256                      125,224,256
                                                                                           stocks

Central Huijin Asset Management                                                            RMB ordinary
                                                                              84,483,000                          84,483,000
Co., Ltd.                                                                                  stocks

                                                                                           RMB ordinary
UBS AG                                                                        77,157,409                          77,157,409
                                                                                           stocks

Hillhouse Capital Management –                                                            RMB ordinary
                                                                              50,457,100                          50,457,100
HCM China Fund                                                                             stocks

National Social Security Fund 108                                                          RMB ordinary
                                                                              49,855,164                          49,855,164
portfolio                                                                                  stocks

                                                                                           RMB ordinary
Dong Mingzhu                                                                  44,318,492                          44,318,492
                                                                                           stocks

Description for affiliated relationship or concerted action among the top 10 shareholders holding tradable stocks
without trading restriction conditions and between the top 10 shareholders holding tradable stocks without trading None
restriction conditions and the top 10 shareholders

Description of the participation in margin trading business of the top
                                                                         None
10 common shareholders (if any) (see Note 4)


2. Information of the controlling shareholders of the Company

Nature of the controlling shareholder: Local state-owned holding
Type of the controlling shareholder: Legal person

                               Legal
       Name of the of      representative/          Date of
                                                                   Organization code            Principal business
 controlling shareholder     Person in        establishment
                               charge

                                                                                       Investment and asset management;
                                                                                       enterprise management service,
Zhuhai Gree Group Co.,                       December 15,
                           Zhou Lewei                          914404001925371865 enterprise planning; other
Ltd.                                         1990
                                                                                       commercial services (excluding any
                                                                                       licensed business items)




                                                              60
                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                        Annual Report 2016



Information regarding holding equity interests of other domestic and
oversea listed companies by controlling shareholders during the         None
Report Period


3. Information of the actual controllers of the Company

Nature of the actual controller: Local state-owned assets management institution Type of the actual controller: Legal
person

                                       Legal
                                                           Date of
Name of the actual controller representative/P                           Organization code           Principal business
                                                      establishment
                                  erson in charge

State-owned Assets
Supervision and
                                                    November 30,                               Fulfill responsibilities of the
Administration Commission         Wu Aicun                             71924557-8
                                                    2004                                       state-owned assets investor
of Zhuhai Municipal People's
Government

Information regarding equity
of other domestic and             At the end of the Report Period, the State-owned Assets Supervision and Administration
oversea listed companies          Commission of Zhuhai Municipal People's Government also controlled Zhuhai League
controlled by the actual          Stock Co., Ltd., Zhuhai Huafa Industrial Co., Ltd., Zhuhai Port Co., Ltd., Gree Real Estate
controller during the Report      Co., Ltd., Zhuhai Holdings Investment Group Limited and iOne Holdings Limited.
Period

Change in the actual controller in the Report Period
□ Applicable √ Not applicable
The actual controller of the Company did not change in the Report Period.
Block diagram of property right and control relationships between the Company and actual controller




            Zhuhai Municipal State-owned Assets Supervision and Administration Commission



                                                           100%



                                         Zhuhai Gree Group Co., Ltd.



                                                           18.22%


                           GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI




                                                                61
                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                Annual Report 2016



The actual controller controlled the Company through trust or other asset management modes
□ Applicable √ Not applicable

4. Other corporate shareholders holding more than 10% of shares

□ Applicable √ Not applicable

5. Restricted share reduction of controlling shareholders and actual controllers, restructuring
party and other commitment subjects

□ Applicable √ Not applicable




                                                        62
                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI   Annual Report 2016




             Section VII Related Information of Preferred Stock

□ Applicable √ Not applicable
The Company did not have any preferred stock in the Report Period.




                                                         63
                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                    Annual Report 2016




          Section VIII Directors, Supervisors, Senior Management

                                        Personnel and Employees

I. Shareholding changes of directors, supervisors and senior management
personnel

                                                                                                  Number     Number

                                                                                                   of held   of held
                                                                                   Stocks held                           Other      Stocks
                                                                                                   stocks    stocks
                                                      Commencem      Termination      at the                            increase/ held at the
                              Tenure                                                              increased reduced
   Name              Title              Gender Age ent of term of     of term of   beginning of                         decrease end of the
                               status                                                              in the     in the
                                                         office          office    the Period                           changes     Period
                                                                                                   current   current
                                                                                    (shares)                            (shares)    (shares)
                                                                                                   period    period

                                                                                                  (shares)   (shares)

Dong         Chairman &
                             Incumbent F         62 May 25, 2012 May 31, 2018       43,820,492     498,000                         44,318,492
Mingzhu      President

Ye Zhixiong Director         Incumbent M         59 June 1, 2015 May 31, 2018

             Director &

Huang Hui    Executive Vice Incumbent M          52 May 25, 2012 May 31, 2018        7,375,000                                      7,375,000

             President

Zhang
             Director        Incumbent M         56 May 25, 2012 May 31, 2018
Jundu

Xu Zifa      Director        Incumbent M         62 June 1, 2015 May 31, 2018          200,000 1,403,300                            1,603,300

Wang         Independent
                             Incumbent M         52 May 20, 2014 May 31, 2018
Ruzhu        Director

             Independent
Lu Xin                       Incumbent F         53 June 1, 2015 May 31, 2018
             Director

             Independent
Guo Yang                     Incumbent F         58 June 1, 2015 May 31, 2018
             Director

             Chairman of
                                                      September
Xu Chuzhen Board of          Incumbent M         58                 May 31, 2018
                                                      24, 2013
             Supervisors

Guo
             Supervisor      Incumbent M         60 May 25, 2012 May 31, 2018
Shuzhan

             Staff                                    October 15,
Wang Liqin                   Incumbent F         40                 May 31, 2018
             Supervisor                               2014

Zhuang Pei Vice President Incumbent M            51 May 25, 2012 May 31, 2018        5,955,202                                      5,955,202




                                                                    64
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                                                                                                      Number     Number

                                                                                                       of held   of held
                                                                                      Stocks held                               Other      Stocks
                                                                                                       stocks    stocks
                                                       Commencem       Termination       at the                                increase/ held at the
                               Tenure                                                                 increased reduced
   Name          Title                   Gender Age ent of term of      of term of    beginning of                             decrease end of the
                                status                                                                 in the     in the
                                                          office           office     the Period                               changes     Period
                                                                                                       current   current
                                                                                       (shares)                                (shares)    (shares)
                                                                                                       period    period

                                                                                                      (shares)   (shares)

            Vice President,

Wang        Finance Chief,
                              Incumbent M         46 May 25, 2012 May 31, 2018              728,874    155,800                              884,674
Jingdong    Board

            Secretary

Chen                                                   September 3,
            Vice President Incumbent M            44                  May 31, 2018
Weicai                                                 2013

                                                       August 31,
Liu Jun     Vice President Incumbent M            40                  May 31, 2018           12,000                                          12,000
                                                       2015

Meng                                                                  November
            Director          Resigned   M        55 May 20, 2013                            17,000                                          17,000
Xiangkai                                                              22, 2016

Total               --            --         --   --          --             --        58,108,568 2,057,100                0              60,165,668



II. Changes in the directors, supervisors and senior management personnel

√ Applicable □ Not applicable

           Name                                   Title                              Type                                  Date

Meng Xiangkai                    Director                                   Resigned                 November 22, 2016


III. Positions of directors, supervisors and senior management personnel


Professional background, major work experience and current main responsibilities in the

Company of the current directors, supervisors and senior management personnel of the
Company

Dong Mingzhu, female, a master, incumbent Chairperson & President of the Company

Since she joined the Company in 1990, she has served as sales manager, vice director

and director of Sales Department, manager, vice general manager, general manager and

vice chairperson of sales company; she has served as President of the Company since

April 2001, and Chairperson of the Company since May 2012. At present, she concurrently

serves as chairperson of Gree Hefei, Gree Wuhan, and Gree Zhengzhou. Since August


                                                                      65
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2012, she has served as non-executive director of Kingdee International Software Group

Company Limited; She consecutively served as deputy to the tenth, eleventh and twelfth

National People's Congresses and concurrently serves as a member of the Central

Committee of China Democratic National Construction Association and the tenth Executive

Committee of the All-China Women's Federation, UNDP’s "messenger of sustainable

urban development", director of Board of Directors of China Social Economic Investigation

Research Center, member of Executive Committee of Guangdong Provincial Women's

Federation,   vice   chairperson   of   Guangdong     Province   Association   of   Women

Entrepreneurs, chairperson of Zhuhai Municipal Association of Women Entrepreneurs and
honorary president of Zhuhai Red Cross Society.

She was successively engaged by Northwest University, College of Management of Sun

Yat-sen University and Shandong University as a part-time professor, engaged by School

of Management, Nanjing University of Technology as "MBA off-campus tutor", and

engaged by School of Management, University of Science and Technology of China as

MBA "Course Professor". She was engaged by Beijing Normal University Zhuhai Campus

and University of International Business and Economics as visiting professor, part-time

professor of Zhongnan University of Economics and Law and member of MBA Education

Advisory Committee. She was invited to be an instructor of Summer Davos Forum 2014,

engaged by the School of Entrepreneurship & Innovation, SJTU as a member of Advisory

Committee of Strategic Experts, engaged by the National Development and Reform

Commission as a member of Expert Committee for the thirteenth five-year development

planning, engaged by Guangdong Provincial Government as an entrepreneurs consultant

and member of the government decision-making advisory committee and engaged by

Hefei municipal government as a consultant of (household electric appliances) industrial

development, etc. In 2016, she was awarded a founding member of Advisory Committee of

the United Nations Development Programme by the UN General Administration and

included in the list of world's most influential businesswomen of Fortune for 10 consecutive
years.




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Ye Zhixiong, male, a master, incumbent director of the Company

Mr. Ye Zhixiong served as a member of Zhuhai Municipal Committee of the CPC, and the

chairman, secretary of the Party committee and legal representative of Zhuhai Gree Group

Co., Ltd. from May 2004 to August 2006; a member of Zhuhai Municipal Committee of the

CPC, and the chairman, general manager and legal representative of Municipal Urban

Asset Management and Operation Corporation from August 2006 to June 2009, and the

secretary of the Party committee in September 2006; the chairman, general manager,

legal representative and secretary of the Party committee of Zhuhai Urban Construction

Group Co., Ltd. from June 2009 to January 2013; and the chairman, legal representative

and secretary of the Party committee of Zhuhai Urban Construction Group Co., Ltd. from
January 2013 to date. Since June 2015, he has served as a director of the Company.

Mr. Huang Hui, male, a master, incumbent Director, Executive Vice President and Chief
Engineer of the Company.

Since August 2000 to May 2014, he has served as vice president of the Company; since

2014, he has served as executive vice president of the Company; since May 2007, he has

served as chief engineer of the Company; since May 2012, he has served as director of

the Company, and concurrently as chairman of Zhuhai Gree Dakin Device Co., Ltd.,

director of Chinese National Engineering Research Center of Green Refrigeration
Equipment, part-time instructor of School of Energy and Power Engineering of Huazhong

University of Science and Technology, member of Commission B2 of the International

Institute of Refrigeration, vice president of Chinese Association of Refrigeration, member

of the ninth council of China Quality Association, member of National Technical Committee

for Standardization of Household Appliances, vice chairman of Industry Household

Appliance Branch of China Electrical Equipment Industrial Association, expert of

Guangdong Province Science and Technology Consultant Experts, vice president of

Guangdong Provincial Institute of Refrigeration, vice chairman of Guangdong Light

Industry Association, member of Technical Committee of Guangdong Provincial Institute of

Standardization, member of Zhuhai Municipal Mayor Quality Award Evaluation Committee,




                                            67
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member of Zhuhai municipal Mayor Quality Award Evaluation Committee, deputy director

of the editorial board of Electrical Appliances, and editorial board member of Journal of
Refrigeration.

Zhang Jundu, male, with a college degree, incumbent Director of the Company.

Since September 1999, he has served as chairman of Zhejiang Tongcheng Gree Electric

Appliances Co., Ltd. Since August 2012, he has concurrently served as general manager

of Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. Since May 2012, he has served as
director of the Company.

Xu Zifa, male, with a bachelor degree, incumbent Director of the Company.

He worked as the general manager of Hebei Xinxing Gree Electric Appliance Sales Co.,

Ltd. from July 1999 to June 2011; the general manager of Hebei Shengshi Xinxing Gree

Trading Co., Ltd. from July 2011 to date, and the director of Hebei Jinghai Guaranteed

Investment Co., Ltd. from 2006 to date. Since June 2015, he has served as a director of
the Company.

Wang Ruzhu, male, doctor, incumbent Independent Director of the Company

Since December 1994, Mr. Wang Ruzhu has served as a professor of Shanghai Jiao Tong

University and director of the Institute of Refrigeration and Cryogenic Engineering. Since

2008, he has served as the director of the Solar Power Generation and Refrigeration

Project Research Center under Ministry of Education. Since 2012, he has worked as the

vice president of Chinese Association of Refrigeration. Since May 2014, he has served as
an independent director of the Company.

Guo Yang, female, doctor, incumbent Independent Director of the Company

Ms. Guo Yang served as the general counsel of Chinese law at Hong Kong Pengli

Insurance Co., Ltd. and chief representative at its representative office in Beijing from 1995

to 1998; the assistant vice president of Pacific Century Insurance Holdings Ltd. and chief

representative at the representative office of Pacific Century Insurance Holdings Ltd. from

1999 to 2008; the chief representative at the representative office of Holland Ageas

Insurance International Inc. from 2008 to 2009; an associate professor at the College of



                                              68
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Finance, Capital University of Economics and Business from 2010 to 2012; a director of
the Company since June 2015 to date.

Lu Xin, female, doctor, incumbent Independent Director of the Company

Ms. Lu Xin has served Jinan University since January 2004. Now, she works as a

professor at the Department of Accounting of the School of Management, Jinan University

and deputy director at the Management Accounting Research Center of Jinan University.

Concurrently, she is a deputy of the 12th National People’s Congress, member of the

Central Committee at Taiwan Democratic Self-Government League, vice chairman of

Guangdong Provincial Party Committee at Taiwan Democratic Self-Government League,

special auditor of Guangdong Audit Office, as well as an independent director of TCL

Corporation and Kingfa Sci. & Tech. Co., Ltd. She has served as an independent director
of the Company since June 2015.

Xu Chuzhen, male, with a bachelor degree, Chairman of Board of Supervisors of the
Company.

From May 1999 to May 2011, Mr. Xu Chuzhen served as the managing director of League

Stock Co., Ltd. From 2002 to May 2011, he concurrently served as the managing director

and vice chairman of Zhuhai League Environmental Protection Co., Ltd.; from August 2009

to May 2011, he concurrently served as the chairman of Zhuhai League Investment Co.,

Ltd. From May 2011 to May 2012, he served as a vice chief engineer of Zhuhai Water

Group Co., Ltd. During this period, he also served as a director of League Stock Co., Ltd.

During this period, he also served as a director of League Stock Co., Ltd. Since May 2012,

he has served as a full-time director and supervisor of Zhuhai SASAC. During this period,

he also served as the chairman of the board of supervisors of Zhuhai Port Holdings Co.,

Ltd, chairman of the board of supervisors of Zhuhai Port Co., Ltd, director of Zhuhai

League Stock Co., Ltd, chairman of the board of supervisors of Zhuhai Investment

Holdings Co., Ltd, and director of Zhuhai Duty Free Enterprises Group Co., Ltd. Since

September 2013, he has concurrently served as the chairman of the board of supervisors
of the Company.




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Guo Shuzhan, male, with a college degree, incumbent Supervisor of the Company

Since August 2006, he has served as chairman of Hebei Jinghai Guaranteed Investment

Co., Ltd. Since August 2012, he has served as general manager of Henan Shengshi

Xinxing Gree Trading Co., Ltd. From May 2012 up to now, he has served as supervisor of
the Company.

Wang Liqin, female, with a bachelor degree, incumbent Staff Representative Supervisor.

From April 2004 to July 2010, Ms. Wang Liqin served as the HR supervisor of HR

Department of GREE Electric Appliances Inc. of Zhuhai. Since August 2010, she has

served as the head of HR Department of GREE Electric Appliances Inc. of Zhuhai. Since
October 2014, she has served as the staff representative supervisor.

Zhuang Pei, male, with a bachelor degree, incumbent Vice President of the Company.

From 2002 to April 2003, he served as assistant president of the Company. From April
2003 up to now, he has served as vice president of the Company.

Wang Jingdong, male, a master, incumbent Vice President, Finance Chief, Board
Secretary.

From November 2002 to April 2006, he served as head of financial department, head of

purchase department and chief of Audit Department. From April 2006 to September 2009,

he served as assistant president of the Company. From January 2008 up to now, he

served as finance chief of the Company. From July 2009 up to now, he served as board

secretary of the Company. From October 2009 up to now, he has served as vice president,
finance chief and board secretary of the Company.

Chen Weicai, male, a master, incumbent Vice President of the Company.

From July 1993 to April 2008, he served as clerk, staff member, senior staff member,

deputy director and director of Huale Police Station in Dongshan District (Yuexiu District) of

Bureau of Public Security in Guangzhou. From July 2005 to April 2008, he served as

deputy secretary (concurrent) of Huale Street Party Committee in Dongshan District

(Yuexiu District) in Guangzhou. From April 2008 to July 2013, he served as deputy director

and director of personnel department of Bureau of Public Security in Guangzhou. From



                                              70
                                        GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                      Annual Report 2016




October 2008 to February 2012, he served as direction of office of Guangzhou Police’s

Foundation (concurrent). Since September 2013, he has served as vice-president of the
Company.

Liu Jun, male, with a bachelor degree, incumbent Vice President of the Company.

Mr. Liu Jun was an employee of the Company from July 1998 to October 2001. He

successively served as the assistant director and factory deputy director of the controller

factory of the Company, factory deputy director and factory director of the Incoming

Materials Inspection Factory, and the deputy head and head of the Supply Department

from October 2001 to August 2006; the assistant president of the Company, director of the

Materials Purchasing Center and director of the Logistics Distribution Center from August
2006 to July 2015. He has served as a vice president of the Company since August 2015.

Information of positions in shareholders
√ Applicable □ Not applicable

                                                                                                          Remuneration
   Name of                                                 Position at the       Commencement of         and allowance
                            Name of shareholder
  incumbent                                                    shareholder          term of office        received from
                                                                                                         the shareholder

                Hebei Jinghai Guaranteed Investment    Chairman and legal
Guo Shuzhan                                                                     August 1, 2006          Yes
                Co., Ltd.                              representative

                Hebei Jinghai Guaranteed Investment
Xu Zifa                                                Director                 August 1, 2006          Yes
                Co., Ltd.

                State-owned Assets Supervision and
                                                       Full-time director and
Xu Chuzhen      Administration Commission of Zhuhai                             May 1, 2012             Yes
                                                       full-time supervisor
                Municipal People's Government

Information of positions in other companies
√ Applicable □ Not applicable

                                                                                                          Remuneration
   Name of                                                  Position at other     Commencement of        and allowance
                        Names of other companies
  incumbent                                                     companies            term of office       received from
                                                                                                        other companies

                                                       Chairman, legal
                Zhuhai Urban Construction Group Co.,   representative and
Ye Zhixiong                                                                      January 1, 2013        Yes
                Ltd.                                   secretary of the Party
                                                       committee

Zhang Jundu     Zhejiang Tongcheng Gree Electric       Chairperson               September 1, 1999 Yes




                                                          71
                                       GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                   Annual Report 2016



                                                                                                      Remuneration
   Name of                                                Position at other   Commencement of        and allowance
                      Names of other companies
  incumbent                                                  companies           term of office       received from
                                                                                                    other companies

               Appliances Co., Ltd.

               Zhejiang Shengshi Xinxing Gree
Zhang Jundu                                           General Manager         August 1, 2012        Yes
               Trading Co., Ltd.

               Hebei Shengshi Xinxing Gree Trading
Xu Zifa                                               General Manager         July 1, 2011          Yes
               Co., Ltd.

Lu Xin         TCL Corporation                        Independent Director    September 1, 2014 No

Lu Xin         Kingfa Sci. & Tech. Co., Ltd.          Independent Director    May 21, 2014          No

               Henan Shengshi Xinxing Gree Trading
Guo Shuzhan                                           General Manager         August 1, 2012        Yes
               Co., Ltd.

Xu Chuzhen     Zhuhai League Stock Co., Ltd.          Director                May 20, 2014          Yes

                                                      Chairman and legal
Dong Mingzhu Zhuhai Landa Compressor Co., Ltd.                                May 10, 1985          No
                                                      representative

                                                      Chairman and legal
Dong Mingzhu Hefei Landa Compressor Co., Ltd.                                 December 7, 2009      No
                                                      representative

                                                      Chairman and legal
Dong Mingzhu Zhengzhou Landa Compressor Co., Ltd.                             March 2, 2011         No
                                                      representative

                                                      Chairman and legal
Dong Mingzhu Chongqing Landa Compressor Co., Ltd.                             May 23, 2011          No
                                                      representative

                                                      Chairman and legal
Dong Mingzhu Wuhan Landa Compressor Co., Ltd.                                 May 17, 2011          No
                                                      representative

               Zhuhai Kaibang Motor Manufacture Co., Chairman and legal
Dong Mingzhu                                                                  April 18, 2003        No
               Ltd.                                   representative

               Hefei Kaibang Motor Manufacture Co.,   Chairman and legal
Dong Mingzhu                                                                  December 9, 2009      No
               Ltd.                                   representative

               Henan Kaibang Motor Manufacture Co., Chairman and legal
Dong Mingzhu                                                                  August 4, 2011        No
               Ltd.                                   representative

               Chongqing Kaibang Motor Manufacture Chairman and legal
Dong Mingzhu                                                                  August 31, 2011       No
               Co., Ltd.                              representative

               Hong Kong Gree Electric Appliances
Dong Mingzhu                                          Chairperson             June 21, 2005         No
               Sales Co., Ltd.

               GREE (Zhongshan) Small Home            Chairman and legal
Dong Mingzhu                                                                  April 3, 2009         No
               Appliances Co.                         representative

               Gree Electric Appliances (Zhengzhou)   Chairman and legal
Dong Mingzhu                                                                  August 26, 2010       No
               Co., Ltd.                              representative




                                                        72
                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                      Annual Report 2016



                                                                                                        Remuneration
  Name of                                                  Position at other    Commencement of        and allowance
                      Names of other companies
  incumbent                                                   companies            term of office       received from
                                                                                                      other companies

               Gree Electric Appliances (Wuhan) Co.,   Chairman and legal
Dong Mingzhu                                                                    August 30, 2010       No
               Ltd.                                    representative

               Shijiazhuang Green Resources            Chairman and legal
Dong Mingzhu                                                                    December 1, 2011      No
               Recycling Co., Ltd.                     representative

                                                       Chairperson, legal
               Zhengzhou Gree Green Resources
Dong Mingzhu                                           representative and       August 26, 2010       No
               Recycling Co., Ltd
                                                       general manager

               Tianjin Green Energy Resource           Chairman and legal
Dong Mingzhu                                                                    March 13, 2013        No
               Recycling Co., Ltd.                     representative

               Hunan Green Resources Recycling Co., Chairman and legal
Dong Mingzhu                                                                    November 2, 2010      No
               Ltd                                     representative

               Gree Electric Appliances (Chongqing)    Chairman and legal
Dong Mingzhu                                                                    July 19, 2001         No
               Co., Ltd.                               representative

               Gree (Shijiazhuang) Small Home          Chairman and legal
Dong Mingzhu                                                                    March 21, 2011        No
               Appliances Co., Ltd.                    representative

               Gree Electric Appliances (Wuhu) Co.,    Chairman and legal
Dong Mingzhu                                                                    March 29, 2011        No
               Ltd.                                    representative

               Wuhu Green Resources Recycling Co., Executive director and
Dong Mingzhu                                                                    March 29, 2011        No
               Ltd.                                    legal representative

               Zhuhai Gree Group Finance Company       Chairman and legal
Dong Mingzhu                                                                    May 29, 1995          No
               Limited                                 representative

               Gree Electric Appliances (Shijiazhuang) Chairman and legal
Dong Mingzhu                                                                    May 23, 2011          No
               Co., Ltd.                               representative

               Zhuhai Ligao Precision Manufacturing    Chairman and legal
Dong Mingzhu                                                                    October 14, 2013      No
               Co., Ltd.                               representative

               Zhuhai Gree TOSOT Life Electric         Chairman and legal
Dong Mingzhu                                                                    April 12, 2013        No
               Appliances Co., Lid.                    representative

               Changsha Gree HVAC Equipment Co.,       Executive director and
Dong Mingzhu                                                                    April 14, 2014        No
               Ltd.                                    legal representative

                                                       Chairman and legal
Dong Mingzhu Zhuhai HVAC Equipment Co., Ltd.                                    March 6, 2013         No
                                                       representative

                                                       Chairman and legal
Dong Mingzhu Wuhu Precision Manufacturing Co., Ltd.                             November 20, 2014 No
                                                       representative

               Gree TOSOT (Suqian) Home                Chairman and legal
Dong Mingzhu                                                                    September 29, 2014 No
               Appliances Co., Ltd.                    representative




                                                         73
                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                         Annual Report 2016



                                                                                                           Remuneration
  Name of                                                  Position at other       Commencement of        and allowance
                      Names of other companies
  incumbent                                                   companies               term of office       received from
                                                                                                         other companies

                                                       Executive director, legal
               Gree Electric Appliances (Hefei) Co.,
Dong Mingzhu                                           representative and          December 19, 2006 No
               Ltd.
                                                       general manager

               Zhuhai GREE Intelligent Equipment Co., Chairman and legal
Dong Mingzhu                                                                       September 15, 2015 No
               Ltd.                                    representative

               Zhuhai GREE Intelligent Equipment       Chairman and legal
Dong Mingzhu                                                                       December 29, 2015 No
               Technology Research Institute Co., Ltd. representative

               Gree HVAC Equipment (Wuhan) Co.,        Chairman and legal
Dong Mingzhu                                                                       December 30, 2015 No
               Ltd.                                    representative

               GREE Intelligent Equipment (Wuhan)      Chairman and legal
Dong Mingzhu                                                                       December 30, 2015 No
               Co., Ltd.                               representative

               Zhuhai Hengqin GREE business            Chairman and legal
Dong Mingzhu                                                                       December 28, 2015 No
               factoring Co., Ltd.                     representative

                                                       Chairman and legal
Dong Mingzhu Zhuhai Gree Electrical Co., Ltd.                                      July 13, 1992         No
                                                       representative

               Zhuhai Gree Xinyuan Electronics Co.,    Chairman and legal
Dong Mingzhu                                                                       May 30, 2016          No
               Ltd.                                    representative

Dong Mingzhu Zhuhai Gree Precision Mold Co., Ltd.      Chairperson                 January 23, 2016      No

Dong Mingzhu Zhuhai Gree New Material Co., Ltd.        Chairperson                 March 17, 2016        No

               Zhuhai Gree Energy Environment
Dong Mingzhu                                           Chairperson                 May 11, 2016          No
               Technology Co., Ltd.

Dong Mingzhu Gree Precision Mold (Wuhan) Co., Ltd.     Chairperson                 January 26, 2016      No

               Gree Electric Appliances (Hangzhou)
Dong Mingzhu                                           Chairperson                 April 15, 2016        No
               Co., Ltd.

                                                       Executive director, legal
               Gree Green Refrigeration Technology
Huang Hui                                              representative and          December 28, 2009 No
               Center Co., Ltd. Of Zhuhai
                                                       general manager

                                                       Chairman and legal
Huang Hui      Zhuhai Gree Dakin Device Co., Ltd.                                  March 10, 2009        No
                                                       representative

               Zhuhai IVP Information Technology Co., Chairman and legal
Huang Hui                                                                          April 29, 2014        No
               Ltd.                                    representative

Huang Hui      Zhuhai Landa Compressor Co., Ltd.       Director                    May 10, 1985          No

Huang Hui      Hefei Landa Compressor Co., Ltd.        Director                    December 7, 2009      No

Huang Hui      Zhengzhou Landa Compressor Co., Ltd. Director                       March 2, 2011         No




                                                         74
                                    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                       Annual Report 2016



                                                                                                       Remuneration
  Name of                                                  Position at other   Commencement of        and allowance
                    Names of other companies
 incumbent                                                    companies           term of office       received from
                                                                                                     other companies

Huang Hui    Chongqing Landa Compressor Co., Ltd. Director                     May 23, 2011          No

Huang Hui    Wuhan Landa Compressor Co., Ltd.          Director                May 17, 2011          No

             Hefei Kaibang Motor Manufacture Co.,
Huang Hui                                              Director                December 9, 2009      No
             Ltd.

             Henan Kaibang Motor Manufacture Co.,
Huang Hui                                              Director                August 4, 2011        No
             Ltd.

             Chongqing Kaibang Motor Manufacture
Huang Hui                                              Director                August 31, 2011       No
             Co., Ltd.

             Gree Electric Appliances (Zhengzhou)
Huang Hui                                              Director                August 26, 2010       No
             Co., Ltd.

             Gree Electric Appliances (Wuhan) Co.,
Huang Hui                                              Director                August 30, 2010       No
             Ltd.

             Shijiazhuang Green Resources
Huang Hui                                              Director                December 1, 2011      No
             Recycling Co., Ltd.

             Zhengzhou Gree Green Resources
Huang Hui                                              Director                August 26, 2010       No
             Recycling Co., Ltd

             Gree (Shijiazhuang) Small Home
Huang Hui                                              Director                March 21, 2011        No
             Appliances Co., Ltd.

             Gree Electric Appliances (Wuhu) Co.,
Huang Hui                                              Director                March 29, 2011        No
             Ltd.

             Zhuhai GREE Intelligent Equipment Co.,
Huang Hui                                              Director                September 15, 2015 No
             Ltd.

             Zhuhai GREE Intelligent Equipment
Huang Hui                                              Director                December 29, 2015 No
             Technology Research Institute Co., Ltd.

             GREE Intelligent Equipment (Wuhan)
Huang Hui                                              Director                December 30, 2015 No
             Co., Ltd.

             Gree HVAC Equipment (Wuhan) Co.,
Huang Hui                                              Director                December 30, 2015 No
             Ltd.

Huang Hui    Gree Precision Mold (Wuhan) Co., Ltd.     Director                January 26, 2016      No

Huang Hui    Zhuhai Gree Precision Mold Co., Ltd.      Director                January 23, 2016      No

             Gree Electric Appliances (Hangzhou)
Huang Hui                                              Director                April 15, 2016        No
             Co., Ltd.

Zhuang Pei   Hefei Landa Compressor Co., Ltd.          Director                December 7, 2009      No

Zhuang Pei   Zhengzhou Landa Compressor Co., Ltd. Director                     March 2, 2011         No




                                                         75
                                    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                        Annual Report 2016



                                                                                                        Remuneration
  Name of                                                  Position at other    Commencement of        and allowance
                    Names of other companies
 incumbent                                                    companies            term of office       received from
                                                                                                      other companies

Zhuang Pei   Chongqing Landa Compressor Co., Ltd. Director                      May 23, 2011          No

Zhuang Pei   Wuhan Landa Compressor Co., Ltd.          Director                 May 17, 2011          No

             Zhuhai Kaibang Motor Manufacture Co.,
Zhuang Pei                                             Director                 April 18, 2003        No
             Ltd.

             Henan Kaibang Motor Manufacture Co.,
Zhuang Pei                                             Director                 August 4, 2011        No
             Ltd.

             Chongqing Kaibang Motor Manufacture
Zhuang Pei                                             Director                 August 31, 2011       No
             Co., Ltd.

             Gree Electric Appliances (Zhengzhou)
Zhuang Pei                                             Director                 August 26, 2010       No
             Co., Ltd.

             Gree Electric Appliances (Wuhan) Co.,
Zhuang Pei                                             Director                 August 30, 2010       No
             Ltd.

             Shijiazhuang Green Resources
Zhuang Pei                                             Director                 December 1, 2011      No
             Recycling Co., Ltd.

             Zhengzhou Gree Green Resources
Zhuang Pei                                             Director                 August 26, 2010       No
             Recycling Co., Ltd

             Tianjin Green Energy Resource
Zhuang Pei                                             Director                 March 13, 2013        No
             Recycling Co., Ltd.

             Hunan Green Resources Recycling Co.,
Zhuang Pei                                             Director                 November 2, 2010      No
             Ltd

             Gree Electric Appliances (Chongqing)
Zhuang Pei                                             Director                 July 19, 2001         No
             Co., Ltd.

             Gree (Shijiazhuang) Small Home
Zhuang Pei                                             Director                 March 21, 2011        No
             Appliances Co., Ltd.

             Gree Electric Appliances (Wuhu) Co.,
Zhuang Pei                                             Director                 March 29, 2011        No
             Ltd.

             Wuhu Green Resources Recycling Co.,
Zhuang Pei                                             Director                 March 29, 2011        No
             Ltd.

             Gree Electric Appliances (Shijiazhuang)
Zhuang Pei                                             Director                 May 23, 2011          No
             Co., Ltd.

Wang         Zhuhai Gree Electric Appliances Sales     Executive director and
                                                                                September 17, 2008 No
Jingdong     Co., Ltd.                                 legal representative

Wang
             Hefei Landa Compressor Co., Ltd.          Director                 December 7, 2009      No
Jingdong




                                                         76
                                    GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                       Annual Report 2016



                                                                                                       Remuneration
  Name of                                                  Position at other   Commencement of        and allowance
                    Names of other companies
 incumbent                                                    companies           term of office       received from
                                                                                                     other companies

Wang
             Zhengzhou Landa Compressor Co., Ltd. Director                     March 2, 2011         No
Jingdong

Wang
             Chongqing Landa Compressor Co., Ltd. Director                     May 23, 2011          No
Jingdong

Wang
             Wuhan Landa Compressor Co., Ltd.          Director                May 17, 2011          No
Jingdong

Wang         Hefei Kaibang Motor Manufacture Co.,
                                                       Director                December 9, 2009      No
Jingdong     Ltd.

Wang         Henan Kaibang Motor Manufacture Co.,
                                                       Director                August 4, 2011        No
Jingdong     Ltd.

Wang         Chongqing Kaibang Motor Manufacture
                                                       Director                August 31, 2011       No
Jingdong     Co., Ltd.

Wang         Tianjin Green Energy Resource
                                                       Director                March 13, 2013        No
Jingdong     Recycling Co., Ltd.

Wang         Hunan Green Resources Recycling Co.,
                                                       Director                November 2, 2010      No
Jingdong     Ltd

Wang         Zhuhai Gree Daikin Precision Mold Co.,
                                                       Director                March 10, 2009        No
Jingdong     Ltd.

Wang
             Zhuhai Gree Dakin Device Co., Ltd.        Director                March 10, 2009        No
Jingdong

Wang         Wuhu Green Resources Recycling Co.,
                                                       Director                March 29, 2011        No
Jingdong     Ltd.

Wang         Zhuhai Gree Group Finance Company
                                                       Director                May 29, 1995          No
Jingdong     Limited

Wang         Gree Electric Appliances (Shijiazhuang)
                                                       Director                May 23, 2011          No
Jingdong     Co., Ltd.

Wang         Zhuhai Gree TOSOT Life Electric
                                                       Director                April 12, 2013        No
Jingdong     Appliances Co., Lid.

Wang
             Zhuhai HVAC Equipment Co., Ltd.           Director                March 6, 2013         No
Jingdong

Wang         Gree TOSOT (Suqian) Home
                                                       Director                September 29, 2014 No
Jingdong     Appliances Co., Ltd.

Wang         Zhuhai Hengqin GREE business
                                                       Director                December 28, 2015 No
Jingdong     factoring Co., Ltd.

Wang         Zhuhai Landa Compressor Co., Ltd.         Supervisor              May 10, 1985          No



                                                         77
                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                       Annual Report 2016



                                                                                                        Remuneration
   Name of                                                  Position at other   Commencement of        and allowance
                     Names of other companies
  incumbent                                                    companies           term of office       received from
                                                                                                      other companies

Jingdong

Wang          Zhuhai Meilingda Refrigeration
                                                        Supervisor              July 2, 2002          No
Jingdong      Technology Co., Ltd.

Wang
              Zhuhai Meiling General Motors Co., Ltd. Supervisor                June 27, 2002         No
Jingdong

Wang
              Zhuhai Gree Electrical Co., Ltd.          Supervisor              July 13, 1992         No
Jingdong

Wang          Zhuhai Kaibang Motor Manufacture Co.,
                                                        Supervisor              April 18, 2003        No
Jingdong      Ltd.

Wang          Gree Electric Appliances (Zhengzhou)
                                                        Supervisor              August 26, 2010       No
Jingdong      Co., Ltd.

Wang          Gree Electric Appliances (Wuhan) Co.,
                                                        Supervisor              August 30, 2010       No
Jingdong      Ltd.

Wang          Shijiazhuang Green Resources
                                                        Supervisor              December 1, 2011      No
Jingdong      Recycling Co., Ltd.

Wang          Zhengzhou Gree Green Resources
                                                        Supervisor              August 26, 2010       No
Jingdong      Recycling Co., Ltd

Wang          Gree Electric Appliances (Chongqing)
                                                        Supervisor              July 19, 2001         No
Jingdong      Co., Ltd.

Wang          Gree (Shijiazhuang) Small Home
                                                        Supervisor              March 21, 2011        No
Jingdong      Appliances Co., Ltd.

Wang          Gree Electric Appliances (Wuhu) Co.,
                                                        Supervisor              March 29, 2011        No
Jingdong      Ltd.

Wang          Zhuhai Gree Xinyuan Electronics Co.,
                                                        Supervisor              April 25, 1988        No
Jingdong      Ltd.

              Zhuhai GREE Intelligent Equipment Co.,
Liu Jun                                                 Director                September 15, 2015 No
              Ltd.

              Zhuhai GREE Intelligent Equipment
Liu Jun                                                 Director                December 29, 2015 No
              Technology Research Institute Co., Ltd.

              Zhuhai Hengqin GREE business
Liu Jun                                                 Director                December 28, 2015 No
              factoring Co., Ltd.

              GREE Intelligent Equipment (Wuhan)
Liu Jun                                                 Director                December 30, 2015 No
              Co., Ltd.

              Gree HVAC Equipment (Wuhan) Co.,
Liu Jun                                                 Director                December 30, 2015 No
              Ltd.




                                                          78
                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                      Annual Report 2016



                                                                                                        Remuneration
   Name of                                                  Position at other   Commencement of        and allowance
                        Names of other companies
  incumbent                                                    companies           term of office       received from
                                                                                                      other companies

Liu Jun         Zhuhai Gree Precision Mold Co., Ltd.    Director                January 23, 2016      No

Liu Jun         Gree Precision Mold (Wuhan) Co., Ltd.   Director                January 26, 2016      No

                Gree Electric Appliances (Hangzhou)
Liu Jun                                                 Director                April 15, 2016        No
                Co., Ltd.

Punishments given by the securities regulatory institution to the incumbent directors, supervisors and senior
management personnel or those who resigned in the Report Period in the recent three years
□ Applicable √ Not applicable


IV. Remunerations of the directors, supervisors and senior management personnel

Decision making procedures, determination basis, and actual payment regarding the remunerations of
directors, supervisors and senior management personnel

Within the Report Period, the Board of Directors of the Company conducted the

performance review of the achievements and performance of duties of the senior

management personnel and implemented the assignment assessment system regarding

the working results in ethic, competence, diligence and achievement. The Company

adhered to the principle of rationality, fairness and justice and laid emphasis on

combination of material incentive and spiritual incentive. As for the material incentive, the

Company paid attention to reasonably controlling reward grade and properly opening the

reward gap and emphasized the time and frequency of reward. As for the spiritual

incentive, the Company paid attention to combining the corporate objectives with the spirit

of dedication, sense of social responsibility and career achievement of the senior

management personnel.

Remunerations of the directors, supervisors and senior management personnel in the Report Period




                                                          79
                                             GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                Annual Report 2016



                                                                                                         Unit: RMB 10,000

                                                                                       Total amount of
                                                                                                           Remuneration
                                                                                           pre-tax
                                                                             Tenure                       received from a
        Name                         Title                Gender   Age                  remuneration
                                                                             status                       related party of
                                                                                       received from
                                                                                                           the Company
                                                                                       the Company

Dong Mingzhu      Chairman & President                    F             62 Incumbent           619.83 No

Ye Zhixiong       Director                                M             59 Incumbent                   0 No

Huang Hui         Director & Executive Vice President     M             52 Incumbent           433.88 No

Zhang Jundu       Director                                M             56 Incumbent                   0 No

Xu Zifa           Director                                M             62 Incumbent                   0 No

Wang Ruzhu        Independent Director                    M             52 Incumbent                 12 No

Guo Yang          Independent Director                    F             58 Incumbent                 12 No

Lu Xin            Independent Director                    F             53 Incumbent                 12 No

Xu Chuzhen        Supervisor                              M             58 Incumbent                   0 No

Guo Shuzhan       Supervisor                              M             60 Incumbent                   0 No

Wang Liqin        Staff Supervisor                        F             40 Incumbent              75.15 No

Zhuang Pei        Vice President                          M             51 Incumbent           216.94 No

                  Vice President, Finance Chief, Board
Wang Jingdong                                             M             46 Incumbent           297.52 No
                  Secretary

Chen Weicai       Vice President                          M             44 Incumbent           133.26 No

Liu Jun           Vice President                          M             40 Incumbent           247.93 No

Meng Xiangkai     Director                                M             55 Resigned                       No

Total                                 --                      --   --          --             2,060.51           --

Equity incentives granted to the directors and senior management personnel in the Report Period
□ Applicable √ Not applicable


V. Employees of the Company

1. Number of employees and their specialties and education level


Number (person) of on-the-job employees of the parent
                                                                                                                      26,505
company

Number (person) of on-the-job employees of the main
                                                                                                                      45,105
subsidiaries

Total number (person) of on-the-job employees                                                                         71,610

Total number (person) of employees receiving salaries in
                                                                                                                      71,610
the current period




                                                              80
                                        GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                      Annual Report 2016



Number (person) of retired employees for whom the parent
                                                                                                                        290
company and main subsidiaries need to bear expenses

                                                     Formation of Specialties

              Category of formation of specialties                     Number (person) of employees in the formation

Manufacturing Personnel                                                                                            58,323

Sales Personnel                                                                                                        1,749

Technicians                                                                                                            7,729

Financial Personnel                                                                                                     473

Administrative Personnel                                                                                               3,336

Total                                                                                                              71,610

                                                        Education Level

Education level category                                         Number (person) of employees

Bachelor Degree or above                                                                                               9,814

College Degree                                                                                                         9,186

Technical Secondary School Education and below                                                                     52,610

Total                                                                                                              71,610


2. Remuneration policy


The Company provides employees with competitive salary level in the industry and region
according to the macroeconomic environment and its business benefits. Besides, the
Company established standardized and systematized salary management system in
accordance with the national laws and regulations and actual conditions of the enterprise
to provide a guarantee for obtaining legal and due labor remuneration by employees. To
share the innovative achievements of the Company with general employees and improve
employee well-being, the Company decided to add RMB1000 to the salary of each
employee per month in November 2016, which played an important role in talent
introduction and talent motivation. Meanwhile, to realize rapid and standard training of
talents and give full scope to the talents and appoint competent employees in relevant
positions, the Company comprehensively consolidated and promoted the work of skill
grade evaluation by focusing on skilled positions, made great efforts to promote the
professional technical grade evaluation mechanism for technical positions, offered the
skilled and technical talents who are competent and have good performance multi-ways



                                                               81
                               GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI      Annual Report 2016




occupational development path and comprehensively built the employing mechanism
attracting, retaining and inspiring talents in 2016.

3. Training plan


The transformation breakthrough of manufacturing inevitably requires upgrading and
development of the talent team. In 2016, the talent training and cultivation work of Gree
followed the core thoughts of "whole staff learning, transformation support; intelligent
manufacturing inheritance, development assistance" to promote the development and
innovation of various businesses.
① Putting a different emphasis on each level and carrying out the whole staff learning (four
levels) development plan
In 2016, the Company promoted the whole staff learning plan of "accelerated
learningtransformation breakthrough" to forge and consolidate the four level learning plan
system consisting of the company level, department level, section level and individual
learning plan, and the plan system with complementary layers specified different
responsibilities and key requirements of the learning subject at each level to fulfill the
learning and development goals of "connecting to the strategy in the upstream and
connecting to the performance in the downstream". The company implemented the whole
staff learning development plan to mobilize the learning enthusiasm of all staff, attracted
60000 employees to participate in the series of platforms of promoting learning by
competition such as the labor skill competition called "Build Dreams with Originality",
product creative design competition and the contest called "Intelligent Manufacturing
InheritanceGree Excellent Lecturers" organized by the Company, and dug the learning
benchmarks and post elites such as "Gree Top 500 Skilled Workers", "Top 50 in Product
Innovation" and "Gree Top 30 Good Lecturers".
At the same time, the Company supported and supervised all the units in setting up a
complete talent training mechanism by facing all the bases and sales companies of the
group to achieve talent training support of the whole industry chain. In 2016, the sales
companies organized level-2 and level-3 after-sales technical training for 80000
employees. To achieve effective coverage of whole staff learning, the Company


                                               82
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independently developed a "PDA" mobile learning platform to send the after-sales and
terminal learning materials to the frontline directly so as to meet the quick and efficient
learning requirements of the frontline personnel. There were 300,000 registered users for
"PDA", and more than 40000 persons downloaded learning materials each month.
② Focusing on strategy to support training and cultivation of new businesses and key
groups
According to its diversified development layout, the Company put an emphasis on the
talent transformation support and cultivation topic in the new businesses and new fields
such as intelligent equipment, moulds and mobile phones, and irregularly organized and
implemented more than 30 lectures of technology frontier experts with 3000 attendants in
the fields such as communication technology, information technology, quality technology,
and innovative technology in 2016.
According to the Company's automation development plan, the transformation and
upgrading cultivation work of skilled workers was organized and carried within the group to
cultivate 1000 special talents of automation skill workers in robot integrated application for
the Company in the whole year of 2016.
The Company carried out 12 terms of special training camps for the key groups such as
middle level cadres, supervisors and team leaders in the year, and totally 500 cadres at
the middle level and basic level participated in the camps. Comprehensive means such as
pre-training assessment, special training, management salon, action practice, and joint
performance of growth were adopted for the training camps according to characteristics of
different management positions in different stages of development to systematically boost
the actual management capabilities of the management at the basic and medium levels.
③ Helping the frontline sales and service personnel to boosting levels in the market-
oriented manner
To further enhance the terminal sales capacity, the Company further promoted construction
of the sales company terminal training system in 2016. The Company organized and
implemented the "Pearl Blooming" shopping guide development plan to provide
development platform and resource support to terminal shopping guides, and organized
the "Pearl" guide training camp activities to boost the sales level of shopping guide


                                              83
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comprehensively.
In 2016, Gree comprehensively strengthened the professional construction of grassroots
after-sales team, and started the after-sales skill training camp of 2016 "Travel of top
quality products and professional construction of the future" for household and commercial
products. The training camp adopted the modes such as nationwide tour and HQ
assemble for training to enhance the personnel skills and service level comprehensively
and has trained 45000 persons in total.
To enhance the sales ability of overseas market, Gree strengthened overseas customer
product training and technical support in an all-round way, and conducted special activities
such as "Global Gree Centralized Training and Global Tour" throughout the year, with the
training activities covering nearly 1200 customers from 30 countries in the four continents,
in the hope of passing the voice of Gree to the world and making the world love products
made in China.

4. Labor outsourcing

□ Applicable √ Not applicable




                                                 84
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                             Section IX Corporate Governance


I. Basic conditions of corporate governance

In strict accordance with the Company Law, Securities Law and other relevant national
laws and regulations and Instructions on Standardized Operation of Companies Listed
on the Main Board of Shenzhen Stock Exchange, the Company establishes normative
corporate governance structure and rules of procedure for the General Meeting of
Shareholders, Board of Directors and Board of Supervisors, clarifies the responsibilities
and authorities in decision-making, performance and supervision, forms effective division
of responsibilities and balance mechanism, continuously promotes the level of normal
operation and safeguards the interests of investors and the Company.

The corporate governance conforms to the Company Law and requirements of CSRC for
governance of listed companies.
Great differences exist between the actual corporate governance and the normative document related to listed
company governance published by the CSRC
□ Yes       √ No


II. Independence of the Company relative to the controlling shareholder in the
aspects such as business operation, personnel, assets, organization and finance


The Company has a sound corporate governance structure and completely separates
from Gree Group as the controlling shareholder in business operation, personnel, assets,
organization and finance, and the Company has independent and complete business
operation and independent management capability.

III. Horizontal competition

□ Applicable √ Not applicable




                                                    85
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IV. Convening of the annual general meeting of shareholders and interim general
meeting of shareholders during the Report Period

1. General meetings of shareholders during the Report Period

                                                    Proportion of
     Session of meeting           Type of meeting   participating   Date of meeting Date of disclosure    Disclosure index
                                                      investors
                                                                                                         Announcement on
                                                                                                         Resolutions of the
                                                                                                         General Meeting of
                                  Annual general
2015 annual general                                                                                      Shareholders for
                                  meeting of                0.21% May 19, 2016      May 20, 2016
meeting of shareholders                                                                                  the Year 2015
                                  shareholders
                                                                                                         published on
                                                                                                         www.cninfo.com.cn,
                                                                                                         etc.
                                                                                                         Announcement on
                                                                                                         Resolutions of
                                                                                                         Convening the First
                                                                                                         Interim General
The first interim general   Interim general
                                                                    October 28,                          Meeting of
meeting of shareholders for meeting of                      1.55%                   October 31, 2016
                                                                    2016                                 Shareholders for
the year of 2016            shareholders
                                                                                                         the Year 2016
                                                                                                         published on
                                                                                                         www.cninfo.com.cn,
                                                                                                         etc.


2. Convening of an interim general meeting of shareholders requested by the preferred
shareholders whose voting rights have been restored

□ Applicable √ Not applicable


V. Performance of duties by independent directors during the Report Period

1. Attendance of independent directors at meetings of the Board of Directors and general
meetings of shareholders

                         Attendance of independent directors at meetings of the Board of Directors
                        Number of
                      meetings of the                                                                           Failed to
                          Board of                      Times of                                               personally
      Name of                            Times of                     Times of
                          Directors                  attendance in                            Times of         attend the
    independent                       attendance on                attendance by
                          requiring                    the way of                             absence        meeting for two
       director                            site                        proxy
                       attendance in                communication                                             consecutive
                        the Report                                                                                times
                           Period
Wang Ruzhu                              6               2                4               0                 0 No
Guo Yang                                6               2                4               0                 0 No
Lu Xin                                  6               1                5               0                 0 No
Number of attendance of
independent directors at the general                                                                                         2
meetings of Shareholders
Description about the failure to personally attend the meeting of the Board of Directors for two consecutive times
None




                                                             86
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2. Objection raised by independent directors to relevant issues of the Company

Independent directors raised objection to relevant issues of the Company
□ Yes      √ No
The independent directors didn’t raise any objection to relevant issues of the Company.


3. Other descriptions for performance of duties by independent directors

Whether the relevant suggestions on the Company by independent directors were adopted
√ Yes □ No
Description about the relevant suggestions on the Company by independent directors that were adopted or not
adopted

Within the Report Period, the independent directors of the Company were able to act in
the best interest of the Company and its shareholders, faithfully perform their own duties
in accordance with the relevant provisions, attend the meetings of the Board of Directors,
review and discuss various proposals carefully, fully express their suggestions and
opinions for the operation and management of the Company, play an active role in
making correct decisions, improving management level and standardizing business
operations by the Board of Directors of the Company, and practically safeguarding the
interests of minority stock holders.

VI. Performance of duties by special committees under the Board of Directors
during the Report Period

1. Performance of duties by audit committee under the Board of Directors

According to the Rules of Procedure of Audit Committee, the audit committee was mainly
responsible for communication, supervision and check for internal and external audits:

   (1) The audit committee carried out full communications with the accounting firm
responsible for the annual audit of the Company in respect of audit plan, engagement
letter and risk and control, etc.

   (2) Before the annual audit certified public accountants accessed to the site, the audit
committee reviewed the preliminarily prepared financial statements of the Company and
held that these statements reflected the present financial position of the Company in all
major aspects.

   (3) After the annual audit certified public accountants issued preliminary opinions, the
audit committee reviewed financial statements of the Company, communicated with the



                                                          87
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accounting firm in respect of material particulars and significant accounting estimates,
audit adjustments and significant accounting policies which might have potential
influence on the financial statements and held that the financial statements of the
Company gave a true, accurate and complete view of the whole position of the Company
and agreed to prepare the annual report for the year 2016 on the basis of these financial
statements.

  (4) The audit committee reviewed the financial statements for the year 2016 which had
been audited by the auditors and held that these financial statements gave a fair view of
the financial position of the Company ended 31 December 2016 and operating results
and cash flows for the year 2016 in all major aspects and agreed to submit them to the
Board of Directors for deliberation.

  (5) The audit committee summarized and evaluated the audit work for this year as done
by Union Power CPAs Co., Ltd. and held that the annual audit certified public accountants
performed their audit work in strict accordance with the Independent Auditing Standards for
Chinese Certified Public Accountants and suggested the Company re-engage Union Power
CPAs Co., Ltd. as the audit institution for the year 2017.

2. Performance of duties by the remuneration and appraisal committee under the Board
of Directors

The remuneration and appraisal committee under the Board of Directors carried out the
work in accordance with the Rules of Procedure of the Remuneration and Appraisal
Committee, reviewed the annual remunerations disclosed by the directors, supervisors
and senior management personnel of the Company according to the Trial Measures for
Annual Salary System of Managers, and upon review held that the annual remunerations
disclosed by the directors, supervisors and senior management personnel of the
Company were consistent with those received actually by them from the Company. The
remunerations of the directors, supervisors and senior management personnel of the
Company were paid according to the provisions for wages management of the Company.




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3. Nomination committee

The nomination committee under the Board of Directors carried out the work in
accordance with the Rules of Procedure of the Nomination Committee, during the Report
Period, it deliberated the proposals on appointment of directors and checked the
qualifications of related persons.

VII. Work of the Board of Supervisors

The Board of Supervisors found whether there are risks in the supervision during the Report Period.
□ Yes √ No
The Board of Supervisors had no objection to the supervision during the Report Period.


VIII. Appraisal and incentive for senior management personnel

Within the Report Period, the Board of Directors of the Company conducted the
performance review of the achievements and performance of duties of the senior
management personnel and implemented the assignment assessment system regarding
the working results in ethic, competence, diligence and achievement. The Company
adhered to the principle of rationality, fairness and justice and laid emphasis on
combination of material incentive and spiritual incentive. As for the material incentive, the
Company paid attention to reasonably controlling reward grade and properly opening the
reward gap and emphasized the time and frequency of reward. As for the spiritual
incentive, the Company paid attention to combining the corporate objectives with the
spirit of dedication, sense of social responsibility and career achievement of the senior
management personnel.

IX. Internal control

1. Details about major defects found in internal control in the Report Period

□ Yes        √ No

2. Internal control self-evaluation report

Full disclosure date of the internal control evaluation report       April 27, 2017
Full disclosure index of the internal control evaluation report      www.cninfo.com.cn
Proportion of the total amount of unit assets included in the
evaluation scope to the total amount of assets in the consolidated   99.00%
financial statements of the Company
Proportion of the unit operating income included in the evaluation   99.00%
scope to the unit operating income in the consolidated financial



                                                             89
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statements of the Company
                                                Defect identification standard
                Category                                  Financial report                         Non-financial report
                                                                                         For details, see the Internal Control
                                           For details, see the Internal Control Self-
                                                                                         Self-evaluation Report of Gree
                                           evaluation Report of Gree Electric
                                                                                         Electric Appliances, Inc. of Zhuhai for
Qualitative standard                       Appliances, Inc. of Zhuhai for the Year
                                                                                         the Year 2016 disclosed on
                                           2016 disclosed on www.cninfo.com.cn by
                                                                                         www.cninfo.com.cn by the Company
                                           the Company on 27 April.
                                                                                         on 27 April.
                                                                                         For details, see the Internal Control
                                           For details, see the Internal Control Self-
                                                                                         Self-evaluation Report of Gree
                                           evaluation Report of Gree Electric
                                                                                         Electric Appliances, Inc. of Zhuhai for
Quantitative standard                      Appliances, Inc. of Zhuhai for the Year
                                                                                         the Year 2016 disclosed on
                                           2016 disclosed on www.cninfo.com.cn by
                                                                                         www.cninfo.com.cn by the Company
                                           the Company on 27 April.
                                                                                         on 27 April.
Number of major defects in the financial
                                                                                                                               0
report
Number of major defects in the non-
                                                                                                                               0
financial report
Number of important defects in the
                                                                                                                               0
financial report
Number of important defects in the non-
                                                                                                                               0
financial report


X. Internal control audit report

                               Deliberation opinion section in the internal control audit report
We hold that Gree Electric Appliances, Inc. of Zhuhai has maintained effective internal control of financial reports in
accordance with the Basic Rules for Internal Control of Enterprises and relevant regulations.
Disclosure of internal control audit report   Disclosed
Full disclosure date of the internal control
                                             April 27, 2017
audit report
Full disclosure index of the internal control
                                              www.cninfo.com.cn
audit report
Type of internal control audit report
                                              Standard without reserved opinion
opinions
Major defects found in the non-financial
                                              No
report
The accounting firm issued the internal control audit report of non-standard opinions
□ Yes √ No
The internal control audit report issued by the accounting firm is consistent with the self-evaluation report opinion of the
Board of Directors
√ Yes □ No




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                                   Section X Financial Report


I. Audit report

Audit opinion type                                       Standard without reserved opinion
Signing date of the audit report                         April 26, 2017
                                                         Union Power Certified Public Accountants (Special General
Name of the audit institution
                                                         Partnership)
Audit Report Doc No.                                     Union Power Audit No. (2017) No. 050018
Name of the certified public accountant                  Wang Bing and He Li


                                               Audit report
                                                                 Union Power Audit No. (2017) No. 050018



All shareholders of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI:

We have audited the accompanying financial statements of GREE ELECTRIC
APPLIANCES, INC. OF ZHUHAI (hereinafter referred to as "your company"), including
the consolidated and parent company's balance sheets ended 31 December 2016 and
consolidated and parent company's income statements, consolidated and parent
company's cash flow statements and consolidated and parent company's statements of
changes in owners' equity and notes to financial statements for the year 2016.

1. Responsibility of management for financial statements

Preparing and fairly presenting these financial statements are the responsibilities of the
management of your company. These responsibilities include: (1) Preparing these
financial Statements in accordance with the Accounting Standards for Business
Enterprises and enabling them to achieve a fair reflection; (2) designing, implementing
and maintaining the necessary internal control to make these financial statements free of
any material misstatement resulting from cheating.

2. Responsibility of certified public accountants

Our responsibility is to express an opinion on audit of these financial statements on the
basis of implementation of audit work. We have conducted our audit work according to



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the provisions of Audit Standards for Certified Public Accountants of China. The Audit
Standards for Certified Public Accountants of China require us to observe the code of
professional ethics for Chinese certified public accountants and plan and implement audit
work so as to reasonably assure the financial statements free of material misstatement.

Our audit work involves implementation of audit procedures to obtain the audit evidences
relating to amount and disclosure of financial statements. The selection of audit
procedures depends on judgment of certified public accountants, including the appraisal
of material misstatement risk of the financial statements resulting from cheating or errors.
During the execution of risk appraisal, the certified public accountants have considered
the internal control relating to preparation and fair presentation of financial statements to
design proper audit procedures. The audit work also includes appraising whether the
management applied proper accounting policy and made reasonable accounting
estimate and appraising the overall presentation of these financial statements.

We believe the audit evidences obtained by us are sufficient and proper and shall
provide the basis for expressing our audit opinion.

3. Audit opinion

In our opinion, these financial statements of your company have been prepared in all
material aspects in accordance with the Accounting Standards for Business Enterprises
and fairly reflected the consolidated and parent company's financial position of your
company ended 31 December 2016 and consolidated and parent company's operating
results and cash flows for the year 2016.


  Union Power Certified Public                           Chinese CPA: Wang Bing
  Accountants (Special General
  Partnership)                                           Chinese CPA: He Li




        Wuhan, China                                          26 April 2017




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                                          Consolidated Balance Sheet
                                                                 December 31, 2016

Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                               Unit: RMB Yuan
                                                                                              Balance at the end of the
                                Assets                                            Note                                        Beginning Balance
                                                                                                      period
Current assets:
Monetary capital                                                          7 (1)                        95,613,130,731.47            88,819,798,560.53
Settlement Reserves
Lending funds
Financial assets measured at their fair values and of which the changes
are recorded into the current profits and losses
Derivative financial assets                                               7(2)                            250,848,418.63
Bills receivable                                                          7(3)                         29,963,355,478.45            14,879,805,537.96
Accounts receivable                                                       7(4)                          2,960,534,651.37             2,879,212,111.93
Prepayment                                                                7(5)                          1,814,945,790.78               847,929,149.71
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserve
Interests receivable                                                      7(6)                          1,045,542,563.43             1,109,776,449.77
Dividends receivable
Other receivables                                                         7(7)                           244,984,154.67                254,016,643.00
Buying back the sale of financial assets                                  7(8)                                                       1,000,000,000.00
Inventories                                                               7(9)                          9,024,905,239.41             9,473,942,712.51
Assets classified as held for sale
Non-current assets due within one year
Other current assets                                                      7(10)                        1,992,536,503.43             1,684,833,479.54
                           Total current assets                                                      142,910,783,531.64           120,949,314,644.95
Non-current assets:
Disbursement of loans and advances                                        7(11)                         4,737,184,235.79             7,872,619,001.46
Available-for-sale financial assets                                       7(12)                         1,384,303,560.40             2,704,719,177.56
Held-to-maturity investment
Long-term receivables
Long-term equity investment                                               7(13)                           103,913,171.51                95,459,187.55
Investment real estate                                                    7(14)                           597,736,633.95               491,540,849.66
Fixed assets                                                              7(15)                        17,681,655,478.06            15,431,813,077.20
Construction in Progress                                                  7(16)                           581,543,756.84             2,044,837,830.02
Project goods and materials
Fixed assets in liquidation                                                                                36,949,646.14                22,010,122.57
Productive biological assets
Oil and gas assets
Intangible assets                                                         7(17)                         3,355,276,284.72             2,656,143,811.74
Development expenditures
Business reputation
Long-term deferred expenses                                                                                1,051,286.89                 8,182,375.95
Deferred income tax assets                                                7(18)                        9,667,717,152.15             8,764,376,136.27
Other non-current assets                                                  7(19)                        1,311,590,311.26               657,000,100.13
                         Total non-current assets                                                     39,458,921,517.71            40,748,701,670.11
                                Total assets                                                         182,369,705,049.35           161,698,016,315.06


Legal representative:                          Responsible person in charge of accounting work:           In-charge person of accounting institution:




                                                                            93
                                             GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                            Annual Report 2016




                            Consolidated Balance Sheet (Continued)
                                                                       December 31, 2016

Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                          Unit: RMB Yuan
           Liabilities and Owners' (or Shareholders') Equity                          Note           Ending Balance         Beginning Balance
Current liabilities:
Short-term borrowing                                                       7(20)                       10,701,081,645.32        6,276,660,136.03
Borrowings from the central bank                                           7(21)                            4,274,000.00            8,000,000.00
Deposits from customers and interbank                                      7(22)                          145,241,859.45          566,612,235.82
Loans from other banks
Financial liabilities measured at their fair values and of which the
changes are recorded into the current profits and losses
Derivative financial liabilities                                           7(23)                          394,763,490.33        1,189,028,366.37
Bills payable                                                              7(24)                        9,127,336,849.68        7,427,635,753.74
Accounts payable                                                           7(25)                       29,541,466,861.10       24,794,268,372.47
Advances from customers                                                    7(26)                       10,021,885,515.93        7,619,598,042.86
Financial assets sold for repurchase
Handling charges and commissions payable
Payroll payable                                                            7(27)                         1,702,949,427.06       1,697,282,605.51
Taxes payable                                                              7(28)                         3,126,302,754.29       2,977,801,480.55
Interests payable                                                          7(29)                            41,781,977.25          48,386,709.75
Dividends payable                                                          7(30)                            87,732,811.56             707,913.60
Other payables                                                             7(31)                         2,222,613,974.82       2,607,601,936.21
Reinsurance accounts payable
Insurance contract reserves
Customer brokerage deposits
Securities underwriting brokerage deposits
Liabilities classified as held for sale
Non-current liabilities due within one year                                7(32)                                                2,403,745,557.37
Other current liabilities                                                  7(33)                       59,758,848,571.94       55,007,851,867.48
                           Total current liabilities                                                  126,876,279,738.73      112,625,180,977.76
Non-current liabilities:
Long-term borrowing
Bonds payable
Including: Preferred stock
            Perpetual bond
Long-term payables
Long-term payroll payable                                                  7(34)                           117,732,064.00         127,518,492.00
Special payables
Accrued liabilities
Deferred income                                                            7(35)                           172,081,044.75         134,571,708.03
Deferred income tax liabilities                                            7(18)                           280,009,411.36         244,136,559.35
Other non-current liabilities
                        Total non-current liabilities                                                     569,822,520.11          506,226,759.38
                                Total liabilities                                                     127,446,102,258.84      113,131,407,737.14
Owners' equity (or Shareholders' equity):
Paid-up capital (or stock capital)                                         7(36)                         6,015,730,878.00       6,015,730,878.00
Other equity instruments
Including: Preferred stock
            Perpetual bond
Capital reserves                                                           7(37)                           183,400,626.71         185,950,626.71
Less: Treasury stock
Other comprehensive income                                                 7(38)                          -177,172,013.61        -124,928,526.03
Special reserves
Surplus reserve                                                            7(39)                        3,499,671,556.59       3,499,671,556.59
General risk provisions                                                    7(40)                          267,370,640.37         207,764,066.72
Undistributed profit                                                       7(41)                       44,074,949,590.07      37,737,187,489.78
          Total owners' equity attributable to parent company                                          53,863,951,278.13      47,521,376,091.77
Minority equity                                                                                         1,059,651,512.38       1,045,232,486.15
                            Total owners' equity                                                       54,923,602,790.51      48,566,608,577.92
                    Total liabilities and owners' equity                                              182,369,705,049.35     161,698,016,315.06

Legal representative:                             Responsible person in charge of accounting work:   In-charge person of accounting institution:




                                                                              94
                                          GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                  Annual Report 2016




                                  Balance Sheet of Parent Company
                                                                December 31, 2016

Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                             Unit: RMB Yuan
                                Assets                                           Note            Ending Balance             Beginning Balance
Current assets:
Monetary capital                                                                                    94,358,894,092.06             88,680,099,321.27
Financial assets measured at their fair values and of which the changes
are recorded into the current profits and losses
Derivative financial assets                                                                            250,848,418.63
Bills receivable                                                                                    28,681,394,851.75             13,754,447,428.79
Accounts receivable                                                     18 (1)                       1,029,622,972.59              3,416,105,149.73
Prepayment                                                                                           7,336,373,722.28              3,634,956,003.75
Interests receivable                                                                                 1,289,154,900.73              1,477,241,737.32
Dividends receivable
Other receivables                                                       18 (2)                         848,175,367.89                574,622,000.79
Inventories                                                                                           7,847,311,118.65             8,670,596,377.12
Assets classified as held for sale
Non-current assets due within one year
Other current assets                                                                                   101,558,124.83                43,205,378.75
                           Total current assets                                                    141,743,333,569.41           120,251,273,397.52
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term receivables
Long-term equity investment                                             18 (3)                        7,713,333,058.50             6,854,879,074.54
Investment real estate                                                                                   30,324,919.33                31,569,857.77
Fixed assets                                                                                          3,482,273,291.47             3,986,232,943.74
Construction in Progress                                                                                 92,157,312.16                45,748,249.58
Project goods and materials
Fixed assets in liquidation                                                                             28,267,150.92                  8,704,526.44
Productive biological assets
Oil and gas assets
Intangible assets                                                                                      526,591,622.40                223,794,602.31
Development expenditures
Business reputation
Long-term deferred expenses
Deferred income tax assets                                                                           9,063,947,017.39             8,077,471,456.41
Other non-current assets                                                                               243,648,986.71               363,632,959.20
                         Total non-current assets                                                   21,180,543,358.88            19,592,033,669.99
                                Total assets                                                       162,923,876,928.29           139,843,307,067.51


Legal representative:                         Responsible person in charge of accounting work:          In-charge person of accounting institution:




                                                                          95
                                           GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                             Annual Report 2016




                    Balance Sheet of Parent Company (Continued)
                                                                   December 31, 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                         Unit: RMB Yuan
          Liabilities and Owners' (or Shareholders') Equity                       Note             Ending Balance          Beginning Balance
Current liabilities:
Short-term borrowing                                                                                   7,136,785,600.00        2,675,363,200.00
Financial liabilities measured at their fair values and of which the
changes are recorded into the current profits and losses
Derivative financial liabilities                                                                          32,218,000.00           91,071,099.06
Bills payable                                                                                         10,045,470,518.12        7,237,386,266.55
Accounts payable                                                                                      41,793,337,033.46       40,616,067,475.26
Advances from customers                                                                               14,791,379,086.59        7,427,598,204.97
Payroll payable                                                                                          733,818,959.96          875,567,613.73
Taxes payable                                                                                          1,875,319,977.49        2,507,553,404.63
Interests payable                                                                                         43,053,052.94            8,418,174.57
Dividends payable                                                                                            602,881.87              602,881.87
Other payables                                                                                           560,376,207.04          610,537,718.98
Liabilities classified as held for sale
Non-current liabilities due within one year                                                                                   2,403,745,557.37
Other current liabilities                                                                             60,107,149,647.50      55,170,845,529.23
                          Total current liabilities                                                  137,119,510,964.97     119,624,757,126.22
Non-current liabilities:
Long-term borrowing
Bonds payable
Including: Preferred stock
            Perpetual bond
Long-term payables
Long-term payroll payable                                                                                117,732,064.00          127,518,492.00
Special payables
Accrued liabilities
Deferred income                                                                                          130,349,609.28          113,796,827.32
Deferred income tax liabilities                                                                          232,395,962.90          221,586,260.60
Other non-current liabilities
                       Total non-current liabilities                                                    480,477,636.18          462,901,579.92
                               Total liabilities                                                    137,599,988,601.15      120,087,658,706.14
Owners' equity (or Shareholders' equity)
Paid-up capital (or stock capital)                                                                     6,015,730,878.00        6,015,730,878.00
Other equity instruments
Including: Preferred stock
            Perpetual bond
Capital reserves                                                                                         190,973,495.25          190,973,495.25
Less: Treasury stock
Other comprehensive income                                                                               -18,336,753.00          -54,758,221.50
Special reserves
Surplus reserve                                                                                       3,497,114,024.31        3,497,114,024.31
Undistributed profit                                                                                 15,638,406,682.58       10,106,588,185.31
            Total owners' equity (or shareholders' equity)                                           25,323,888,327.14       19,755,648,361.37
    Total liabilities and owners' equity (or shareholders' equity)                                  162,923,876,928.29      139,843,307,067.51


Legal representative:                           Responsible person in charge of accounting work:    In-charge person of accounting institution:




                                                                          96
                                            GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                    Annual Report 2016




                                       Consolidated Income Statement
                                                                    For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                                 Unit: RMB Yuan
                                                                                                   Amount for the current     Amount for the previous
                                        Item                                                Note
                                                                                                          period                      period
1. Total operating revenues                                                                            110,113,101,850.23           100,564,453,646.56
Including: Operating Revenue                                                            7(42)          108,302,565,293.70            97,745,137,194.16
Interest revenue                                                                        7(43)            1,809,581,651.68             2,816,215,388.45
Earned premium
Fee and commission income                                                                                      954,904.85                  3,101,063.95
2. Total operating costs                                                                                91,529,379,824.61             86,134,609,086.80
Including: Operating Cost                                                               7(42)           72,885,641,217.00             66,017,353,745.09
Interest expense                                                                        7(43)               93,317,462.31                652,352,307.92
Handling charges and commission expenses                                                                       333,542.60                    399,791.57
Refunded premiums
Net payments for insurance claims
Net provision for insurance contracts
Expenditures dividend policy
Amortized reinsurance expenditures
Taxes and surcharges                                                                    7(44)            1,430,404,246.95                751,894,199.95
Sales expense                                                                           7(45)           16,477,265,963.04             15,506,341,694.21
Overhead Expense                                                                        7(46)            5,488,955,551.20              5,048,746,635.48
Financial expense                                                                       7(47)           -4,845,546,598.04             -1,928,797,250.18
Asset impairment loss                                                                   7(48)                 -991,560.45                 86,317,962.76
Add: Profits or losses on the changes in fair value (losses expressed with "-")         7(49)            1,093,332,134.65             -1,010,322,499.17
Income from investments (losses expressed with "-")                                     7(50)           -2,221,356,324.55                 96,654,919.95
Including: Investment incomes from joint venture and partnership                                             8,034,445.96                  3,246,089.30
3. Operating profit (losses expressed with "-")                                                         17,455,697,835.72             13,516,176,980.54
Add: Non-operating revenues                                                             7(51)            1,096,234,774.23              1,404,291,659.85
Including: Gains from disposal of non-current assets                                    7(51)                2,838,642.05                  1,039,883.33
Less: Non-operating expenses                                                            7(52)               20,742,533.35                 11,049,178.36
Including: Losses from disposal of non-current assets                                   7(52)               15,083,762.45                  9,118,859.43
4. Total profit (total losses expressed with "-")                                                       18,531,190,076.60             14,909,419,462.03
Less: Income tax expenses                                                               7(53)            3,006,555,172.73              2,285,686,841.81
5. Net profit (net loss expressed with "-")                                                             15,524,634,903.87             12,623,732,620.22
Net profit attributable to owners of parent company                                                     15,420,964,990.94             12,532,442,817.66
Minority interest income                                                                                   103,669,912.93                 91,289,802.56
6. Net of tax of other comprehensive income                                                                -54,469,476.32               -139,722,316.44
Net of tax of other comprehensive income attributable to owners of parent
                                                                                                            -52,243,487.58              -142,675,233.57
company
(1) other comprehensive income not to be reclassified to profit or loss in
                                                                                                             -8,412,589.00               -17,952,049.00
subsequent periods
1. Changes due to remeasuring and redefining net liabilities or net assets of the
                                                                                                             -8,412,589.00               -17,952,049.00
benefit plan
2. Shares enjoyed in other comprehensive income not to be reclassified to profit or
loss in the invested entity under the equity method
(2) Other comprehensive income to be reclassified to profit or loss in subsequent
                                                                                                            -43,830,898.58              -124,723,184.57
periods
1. Shares enjoyed in other comprehensive income to be reclassified to profit or
loss in the invested entity under the equity method
2. Gains and losses from changes in fair value of financial assets available for sale                       -67,430,700.38              -230,765,894.39
3. Gains and losses from held-to-maturity investments reclassified as financial
assets available for sale
4. Effective part of cash flow hedging gains and losses                                                      44,834,057.50                 5,565,251.27
5. Difference arising from translation of financial statements in foreign currency                          -21,234,255.70               100,477,458.55
6. Others
Net of tax of other comprehensive income attributable to minority shareholders                              -2,225,988.74                  2,952,917.13
7. Total comprehensive income                                                                           15,470,165,427.55             12,484,010,303.78
Total comprehensive income attributable to owners of parent company                                     15,368,721,503.36             12,389,767,584.09
Total comprehensive income attributable to minority shareholders                                           101,443,924.19                 94,242,719.69
8. Earnings per share:
(1) Basic earnings per share                                                            19(2)                         2.56                          2.08
(2) Diluted earnings per share                                                          19(2)                         2.56                          2.08

Legal representative:                           Responsible person in charge of accounting work:            In-charge person of accounting institution:




                                                                             97
                                           GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                    Annual Report 2016




                               Income Statement of Parent Company
                                                                   For the Year 2016

Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                                Unit: RMB Yuan
                                                                                                   Amount for the current      Amount for the previous
                                       Item                                           Note
                                                                                                          period                      period
1. Operating revenues                                                                18(4)              100,196,022,986.24           93,603,741,139.75
Less: Operating Cost                                                                 18(4)               74,157,492,256.23           72,014,671,656.89
Taxes and surcharges                                                                                        775,947,515.17              432,775,315.43
Sales expense                                                                                            15,982,757,141.77           16,128,392,011.95
Overhead Expense                                                                                          2,018,741,946.11            2,132,369,143.60
Financial expense                                                                                        -5,474,190,948.12           -3,317,674,713.24
Asset impairment loss                                                                                            99,779.73               -3,691,215.17
Add: Profits or losses on the changes in fair value (losses expressed with "-")                             316,201,517.69             -175,248,617.29
Income from investments (losses expressed with "-")                                  18(5)                3,133,375,724.41              171,438,245.76
Including: Investment incomes from joint venture and partnership                                              8,034,445.96                3,246,089.30
2. Operating profit (losses expressed with "-")                                                          16,184,752,537.45            6,213,088,568.76
Add: Non-operating revenues                                                                                  96,856,023.21              136,619,359.37
Including: Gains from disposal of non-current assets                                                            496,921.55                   85,349.79
Less: Non-operating expenses                                                                                    681,502.47                  399,008.88
Including: Losses from disposal of non-current assets                                                           150,495.17                  370,704.12
3. Total profit (total losses expressed with "-")                                                        16,280,927,058.19            6,349,308,919.25
Less: Income tax expenses                                                                                 1,725,512,243.92              933,478,997.61
4. Net profit (net loss expressed with "-")                                                              14,555,414,814.27            5,415,829,921.64
5. Net of tax of other comprehensive income                                                                  36,421,468.50              -12,386,797.73
(1) other comprehensive income not to be reclassified to profit or loss in
                                                                                                              -8,412,589.00             -17,952,049.00
subsequent periods
1. Changes due to remeasuring and redefining net liabilities or net assets of the
                                                                                                              -8,412,589.00             -17,952,049.00
benefit plan
2. Shares enjoyed in other comprehensive income not to be reclassified to profit
or loss in the invested entity under the equity method
(2) Other comprehensive income to be reclassified to profit or loss in subsequent
                                                                                                              44,834,057.50               5,565,251.27
periods
1. Shares enjoyed in other comprehensive income to be reclassified to profit or
loss in the invested entity under the equity method
2. Gains and losses from changes in fair value of financial assets available for
sale
3. Gains and losses from held-to-maturity investments reclassified as financial
assets available for sale
4. Effective part of cash flow hedging gains and losses                                                       44,834,057.50               5,565,251.27
5. Difference arising from translation of financial statements in foreign currency
6. Others
6. Total comprehensive income                                                                            14,591,836,282.77            5,403,443,123.91


Legal representative:                           Responsible person in charge of accounting work:           In-charge person of accounting institution:




                                                                            98
                                           GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                     Annual Report 2016




                                  Consolidated Cash Flow Statement
                                                                   For the Year 2016

Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                                 Unit: RMB Yuan
                                                                                                       Amount for the current   Amount for the previous
                                         Item                                                   Note
                                                                                                              period                    period
1. Cash flows from operating activities:
Cash received from sale of goods or rendering of services                                                  69,896,621,293.21         110,918,320,884.07
Net increase in deposits and due from banks                                                                  -421,370,376.37            -239,900,888.66
Net increase in borrowings from central bank                                                                   -3,726,000.00              -9,457,000.00
Net increase in placements from other financial institutions
Cash received from original insurance contracts
Net increase received from reinsurance business
Net increase in deposits from the insured and investment
Net increase for disposal of financial assets measured at their fair values and of
which the changes are recorded into the current profits and losses
Cash received from interests, fees and commissions                                                           1,965,747,102.22          2,793,577,944.23
Net increase in placements from other financial institutions
Net increase in repurchase business capital                                                                                             -586,000,000.00
Refund of tax and levies                                                                                    1,139,337,699.60           1,237,326,987.91
Other cash received relating to operating activities                                    7(54)               2,938,826,213.65           4,682,640,196.09
Sub-total of cash inflows from operating activities                                                        75,515,435,932.31         118,796,508,123.64
Cash payments for goods acquired and services received                                                     40,478,783,811.27          42,541,255,260.22
Net increase in loans and advances to customers                                                            -4,216,183,377.63           2,465,300,268.21
Net increase in deposits with central bank and other financial institutions                                -1,064,180,189.98          -1,050,510,263.03
Cash paid for indemnity of original insurance contract
Cash paid for interests, fees and commissions                                                                   94,593,790.43            662,494,322.97
Cash paid for policy dividends
Cash paid to and on behalf of employees                                                                     5,657,046,182.44           5,590,514,442.03
Payments of all types of taxes                                                                             11,333,898,757.72          13,773,887,181.66
Other cash paid relating to operating activities                                        7(54)               8,371,524,851.14          10,435,185,083.90
Sub-total of cash outflows from operating activities                                                       60,655,483,825.39          74,418,126,295.96
Net cash flows from operating activities                                                                   14,859,952,106.92          44,378,381,827.68
2. Cash flows from investing activities:
Cash received from recovery of investments                                                                   3,142,289,553.35            950,000,000.00
Cash received from return of investments                                                                       264,728,491.86             84,643,291.79
Net cash received from disposal of fixed assets, intangible assets and other long-
                                                                                                                27,196,374.80              1,228,803.43
term assets
Net cash received from disposal of subsidiaries and other business units
Other cash received relating to investing activities                                    7(54)                    6,500,000.00            143,435,881.62
Sub-total of cash inflows from investing activities                                                          3,440,714,420.01          1,179,307,976.84
Cash paid for purchase and construction of fixed assets, intangible assets and other.
                                                                                                             3,276,936,026.68          2,884,513,074.71
long-term assets
Cash paid for investments                                                                                    1,496,403,698.86          2,832,663,335.62
Net increase in pledge loans
Net cash paid for acquisition of subsidiaries and other business units
Other cash paid relating to investing activities                                        7(54)               17,913,927,388.57            175,286,430.99
Sub-total of cash outflows from investing activities                                                        22,687,267,114.11          5,892,462,841.32
Net Cash Flow from Investment Activities                                                                   -19,246,552,694.10         -4,713,154,864.48
3. Cash flows from financing activities:
Cash received from absorbing investment
Including: Cash received from minority shareholder investment by subsidiary
Cash received from borrowings                                                                              12,382,413,204.61          10,096,926,967.84
Cash received from bond issue
Other cash received relating to financing activities                                    7(54)               2,110,522,945.98           1,257,485,012.71
Sub-total of cash inflows from financing activities                                                        14,492,936,150.59          11,354,411,980.55
Cash repayments of amounts borrowed                                                                        11,054,156,840.31           9,512,423,538.15
Cash paid for dividend and profit distribution or interest payment                                          9,180,067,571.71           9,525,010,447.46
Including: Dividends and profits paid to minority shareholders by subsidiaries
Other cash paid relating to financing activities                                                               10,271,924.02
Sub-total of cash outflows from financing activities                                                       20,244,496,336.04          19,037,433,985.61
Net Cash Flow from Financing Activities                                                                    -5,751,560,185.45          -7,683,022,005.06
4. Effect of foreign exchange rate changes on cash and cash equivalents                                     4,094,503,950.24           1,876,340,773.99
5. Net increase in cash and cash equivalents                                                               -6,043,656,822.39          33,858,545,732.13
Add: Beginning balance of cash and cash equivalents                                                        77,365,016,845.22          43,506,471,113.09
6. Ending balance of cash and cash equivalents                                                             71,321,360,022.83          77,365,016,845.22

Legal representative:                           Responsible person in charge of accounting work:            In-charge person of accounting institution:




                                                                            99
                                     GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                       Annual Report 2016




                        Cash Flow Statements of Parent Company
                                                                For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                            Unit: RMB Yuan
                                                                                                  Amount for the current   Amount for the previous
                                    Item                                            Note
                                                                                                        period                    period
1. Cash flows from operating activities:
Cash received from sale of goods or rendering of services                                             73,772,247,201.55        100,825,366,279.54
Refund of tax and levies                                                                                 892,479,335.10          1,159,795,819.86
Other cash received relating to operating activities                                                   2,776,455,975.16          3,402,282,409.75
Sub-total of cash inflows from operating activities                                                   77,441,182,511.81        105,387,444,509.15
Cash payments for goods acquired and services received                                                47,666,643,016.88         48,637,706,510.04
Cash paid to and on behalf of employees                                                                2,461,753,957.31          2,254,402,964.71
Payments of all types of taxes                                                                         7,790,647,525.17          9,328,346,895.14
Other cash paid relating to operating activities                                                       7,822,012,647.53          8,274,660,258.70
Sub-total of cash outflows from operating activities                                                  65,741,057,146.89         68,495,116,628.59
Net cash flows from operating activities                                                              11,700,125,364.92         36,892,327,880.56
2. Cash flows from investing activities:
Cash received from recovery of investments
Cash received from return of investments                                                                                             28,941,374.91
Net cash received from disposal of fixed assets, intangible assets and other
                                                                                                            2,817,038.00                154,720.00
long-term assets
Net cash received from disposal of subsidiaries and other business units
Other cash received relating to investing activities                                                        6,500,000.00            143,435,881.62
Sub-total of cash inflows from investing activities                                                         9,317,038.00            172,531,976.53
Cash paid for purchase and construction of fixed assets, intangible assets
                                                                                                         487,437,576.81           1,005,797,949.58
and other. long-term assets
Cash paid for investments                                                                                850,419,538.00             220,000,000.00
Net cash paid for acquisition of subsidiaries and other business units
Other cash paid relating to investing activities                                                      24,401,261,166.04
Sub-total of cash outflows from investing activities                                                  25,739,118,280.85           1,225,797,949.58
Net Cash Flow from Investment Activities                                                             -25,729,801,242.85          -1,053,265,973.05
3. Cash flows from financing activities:
Cash received from absorbing investment
Cash received from borrowings                                                                          8,351,424,680.00           8,361,061,000.00
Other cash received relating to financing activities                                                   2,110,522,945.98           1,257,485,012.71
Sub-total of cash inflows from financing activities                                                   10,461,947,625.98           9,618,546,012.71
Cash repayments of amounts borrowed                                                                    6,765,973,061.39           7,098,162,324.08
Cash paid for dividend and profit distribution or interest payment                                     9,108,489,378.90           9,444,887,252.27
Other cash paid relating to financing activities                                                          10,271,924.02
Sub-total of cash outflows from financing activities                                                  15,884,734,364.31          16,543,049,576.35
Net Cash Flow from Financing Activities                                                               -5,422,786,738.33          -6,924,503,563.64
4. Effect of foreign exchange rate changes on cash and cash equivalents                                4,034,988,007.34           1,733,758,931.75
5. Net increase in cash and cash equivalents                                                         -15,417,474,608.92          30,648,317,275.62
Add: Beginning balance of cash and cash equivalents                                                   81,020,140,360.98          50,371,823,085.36
6. Ending balance of cash and cash equivalents                                                        65,602,665,752.06          81,020,140,360.98

Legal representative:                          Responsible person in charge of accounting work:               In-charge person of accounting
institution:




                                                                     100
                                                                                                                      GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                      Annual Report 2016




                                              Consolidated Statement of Changes In Owners' Equity
                                                                                                    For the Year 2016

Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI                                                                                                                                                          Unit: RMB Yuan
                                                                                                            Amount for the current period
                                                                          Shareholders' equity attributable to the parent company
         Item                                 Other equity instruments                      Less:       Other
                        Paid-up capital                                                                           Special                          General risk                            Mino