On the afternoon of December 20, 2019, Jiangsu FAW Foundry Co., Ltd. (hereinafter referred to as "FAW Foundry"), a wholly-owned subsidiary of the company, held a special meeting on deepening mechanism reform. The meeting was chaired by Mr. Huang Bin, Chairman of Tianqi Automation, and attended by some members of Tianqi Automation's management team and the management team of FAW Foundry.

During the meeting, the management team of FAW Foundry provided Chairman Huang Bin with a detailed report on the company’s plan to deepen institutional reforms. By establishing a leading group for institutional reform, specialized reform teams, and an assessment and supervision team, the team formulated reform objectives and incentive schemes targeting three key areas: the company’s management mechanism, operational mechanism, and incentive mechanism.

The establishment of specialized reform teams has broken down administrative barriers between departments, and by introducing incentive measures to align departmental interests, it will greatly enhance management efficiency and optimize management processes. FAW Foundry’s deepening reform objectives for 2020 are as follows: 1. For the casting business, continuously increase production capacity through improvements in technology, construction processes, and optimization of operational procedures; set aggressive capacity targets and develop corresponding incentives. 2. For the castings processing business, first, continuously innovate internal processes to boost capacity; second, expand externally by providing management services and optimizing supporting resources, thereby ensuring the completion of the annual processing targets. 3. For the painting business, each work section will serve as a contracted entity, adopting a corporate-style operation model and signing contract agreements to achieve cost reductions and capacity enhancements. 4. Reduce production costs by implementing measures such as lowering material consumption and optimizing tooling and molds. 5. Shorten production cycles and reduce overall inventory turnover. 6. Strengthen comprehensive quality management, reducing defect rates while increasing rewards for employees who produce qualified products.

Meanwhile, FAW Foundry has refined its mechanism reform plan by establishing assessment criteria and incentive mechanisms for each functional department, clearly defining the key tasks and requirements for each department, thereby providing comprehensive support for the company to achieve its business objectives. The incentivized departments include the Procurement Department, Administration Department, Finance Department, Production Department, Sales Department, Planning Department, Quality Department, and Technology Department.

After carefully listening to the special report presented by FAW Casting, Mr. Huang Bin, Chairman of Tianqi Automation, fully endorsed its plan for deepening institutional reform and offered valuable suggestions and countermeasures regarding specific targets and measures. At the same time, enhancing production capacity and operational efficiency should be the company’s top priority for reform. By continuously learning and improving, the company should seize opportunities in industry development, strengthen its competitiveness, and commit to fostering the common growth of both the company and its employees.

Chairman Huang Bin has repeatedly emphasized in both senior and mid-level meetings that, in the face of the current challenging situation in both domestic and international markets, we should actively promote continuous improvements in our corporate industrial layout and market development to cultivate new growth drivers. At the same time, internally, we must persist in driving management innovation, continuously enhancing our enterprise’s profitability, and extending the previous performance assessment system for executive teams to cover mid- and lower-level management teams as well. This will enable us to comprehensively advance and deepen institutional reforms and incentive mechanisms. As of now, two of the company’s subsidiaries have preliminarily completed reforms aimed at incentivizing mid-level managers. Judging from the results achieved in just over two months since implementation, there has been significant improvement in areas such as the number of new business orders and the operational status of project funds. The incentive effects of these reforms are already beginning to show tangible results.

The diversified reform of this incentive model will be the key focus of Tianqi Automation's work in recent years. We hope that all subsidiary companies will actively learn from and draw inspiration from leading organizations, promote the optimization and enhancement of internal management, achieve a win-win situation for both corporate benefits and employee interests, and put into practice the corporate spirit of "Integrity, Diligence, Cooperation, and Win-Win."