Integration and Innovation for Leapfrog Development — Work Report by Jangho Group CEO Xu Xingli at 2018 Annual Meeting of Jangho Group

Dear Chairman Liu, distinguished guests, colleagues of Jangho Group,
Good afternoon!
I am pleased to join in the annual meeting of Jangho Group by the beautiful Yanqi Lake. Last year, under the leadership of Chairman Liu, Jangho Group achieved remarkable progress in all business sectors, with a substantial increase in operating efficiency and good prospects for development. First of all, I would like to review the major work and highlights in 2017.
I. Architectural decoration business has maintained steady growth and achieved remarkable performance.
In 2017, Jangho Group’s architectural decoration business grew slightly while maintaining a steady momentum of development. Its performance was improved significantly, and is better than ever. Over the past year, we have won the bidding of a large number of influential landmark projects at home and abroad, including A1, A2 and C2 of Beijing Sub-center, Kunming Henglong Plaza, Qingdao Haitian Hotel and Indonesia Twin Towers. We won the bidding of 4 projects with a height of 300m and above, making a total of more than 40; we won the bidding of 12 projects with a height of 200m and above, making a total of more than 160; 8 projects were granted Luban Award, making a total of 68; and more than 105 patents were awarded, making a total of over 500. Thus, Jangho Group becomes a leader in the industry, widening the gap between it and the second echelon of competitors and significantly enhancing its reputation and popularity.
I would like to elaborate on the architectural decoration business by brands. All subsidiaries of Jangho Curtain Wall achieved sound overall performance, with a steady increase in terms of order in hand, output and operation performance. In early 2017, Sundart Beijing was recombined into Sundart Group, and the business scale and performance were improved, accomplishing the major targets concerning profit and cash flow. Sundart Hong Kong safeguarded its honor as the Asia-Pacific premium brand in Hong Kong, Macao and Mainland China, as evidenced by a steady growth of business and slight improvement in economic benefit. As a result of a change in the leadership in the middle of 2017, Gangyuan Decoration has further boosted its team morale, enhanced cohesion and maintained a steady growth of business, accomplishing major targets regarding profit and realizing a profit rebound. In the meanwhile, due to a change in the leadership, Gangyuan Curtain Wall has maintained a significant growth in business scale and operation performance, gradually transforming itself from a dark horse to a leading player among the second echelon in the industry. Most of SLD’s divisions have realized profit. Gangyuan Design Institute, which was recombined into SLD late last year, has also performed well, completing tasks and targets concerning bidding and profit. This further enhances SLD’s influence and Mr. Steve Leung’s status as a top-level designer. II. Our health care business has been consolidated step by step, and is ready for remarkable performance.
In 2017, despite its seemingly tepid performance, Jangho Group’s health care business sector was busy making plans to gain momentum. Its third-party testing businesses at home and abroad as well as relevant capital operations are being advanced as planned in accordance with the national policies. Internationally, the Vision Eye Institute (Vision) has grown slightly while maintaining a steady momentum of development, and it is now operating 30 eye hospitals across Australia. Domestically, Nanjing Zeming Eye Hospital has achieved a fast growth of revenue. Among its subsidiaries, Fuyang Zeming Eye Hospital stood out with a significant increase in revenue and profit. In the past year, Nanjing Zeming Eye Hospital acquired 3 hospitals, including Jingjiang Guangming Eye Clinic and Dongtai Guangzheng Eye Hospital, and established Changzhou Zeming Eye Hospital. As of now, Jangho Group’s health care business owns 7 eye hospitals across the country.
 
III. Our property business has expanded across China, with a view to creating a promising future.
In 2017, Jangho Group’s property business sought to purchase high quality land across the country, and achieved fruitful results in this regard. At present, we have made 5 investments in Beijing and Hunan, including CITIC Project, Auto City Project and Jangho Yijing City Project. Regarding our land holdings, the floor area totals around 600mu, the development area totals 1.76 million m², and total investment amounts to more than CNY 13 billion. This lays a solid foundation for Jangho Property’s development in the coming years. In addition, Jangho Property established a property management company in 2017, thus further improving Jangho Group’s capacity for integrated property service.
IV. Emerging business models reinforce each other to help Jangho Group realize its ambition.
Over the past year, Jangho Group has made targeted efforts in the field of emerging business, innovated its business development model and achieved outstanding performance. At the end of 2017, as part of its efforts to enter the field of clean energy, Jangho Group acquired CCE Oasis Technology Corporation, making a firm step towards sustained benefits for mankind, environment and society. At the end of last year, Jangho Group also set up Nengyun Data Science and Technology Co., Ltd., a data center business company which is primarily engaged in data storage, operation and maintenance. In the future, we will promote the coordinated development of data centers and new energy, and work for the development of a new energy data harbor.
V. Transformation and upgrading of operation and management has been further elevated.
In the past year, Jangho Group’s headquarters and its businesses, in keeping with the annual target of transformation and upgrade, actively promoted the transformation and upgrading of its business structure, internal management and team building, and made self-innovation and self-breakthrough efforts, thus elevating the level of operation and management.
 
VI. Our image as a role model in the industry has been enriched.
In terms of corporate image, Jangho Group was once again included in 2017 China Top 500 Private Enterprises, 2017 China Top 500 Listed Companies and National Intellectual Property Demonstration Enterprises. Jangho Group now owns 8 high-tech enterprises. SLD, a subsidiary of Jangho Group, ranked Top 1 in the “Residential Category” of “Top 100 Giants Research” by the magazine Interior Design, and Mr. Steve Leung, its founder, was elected as the first Chinese chairman of International Federation of Interior Designers/Architects (IFI). 
In terms of fulfilling its social responsibilities, Jangho Group continued to fund its hope primary school in Ya’an, Sichuan. Guangzhou Jangho Curtain Wall launched a poverty alleviation activity themed Caring for Students and Supporting Rural Education. SDL awarded the Steve Leung Travelling Scholarship 2015-2016, and launched the Charitable Road 2017 of C-Foundation. Fuyang Zeming established a charitable fund named “Supporting Patients with Eye Diseases” to provide financial aid for 1400 patients with eye diseases to seek medical advice. All these have further enhanced Jangho Group’s reputation as a role model in the industry.
★Major Problems under Current Circumstances★
At present, we are facing problems in two major aspects: On the front of macro-economic situation, first, with tight global liquidity, monetary squeeze, rising financial cost and ever tighter control over foreign exchange, we are under huge cash or foreign exchange pressure when it comes to domestic business and cross-border mergers; second, the domestic supply side reform, which focuses on maintaining steady growth and making structural adjustment as well as cutting excess inventory and overcapacity and deleveraging, increases competition in traditional industries, while creating opportunities for new sectors; third, with the slowdown of economic growth at home and abroad, we are under a downward pressure in terms of investment in real industries and fixed assets; fourth, with ever tighter regulation over domestic property market, especially in first- and second-tier cities, relevant sectors are in a dilemma of development; fifth, consumption upgrade and expanding pie of consumption presents enterprises with opportunities.
On the front of internal management, I would like to point out the following issues: first, with the expanding business scope of Jangho Group, the management and operation power is being delegated to the lower levels gradually, which means stricter requirements for the leaders at all levels. However, some people rest on their past achievements and fail to catch up with the Group’s development; second, we are in need of pioneering and integrated leaders as well as young ones; third, some managers just stick to the prescribed order, rather than make progress; fourth, there are such issues as management fault and internal friction due to poor communication and asymmetric information; fifth, the management tends to make poor decisions due to the lack of tenacity and flexibility; sixth, a standard management system with well-defined rules is yet to be established, thus undermining implementation; seventh, some companies fail to implement the internal mechanism of market-based operation properly, and such implementation is not effective in other cases.
 
★Work Guideline and Major Targets for 2018★
In 2018, we will follow the guidance of the annual theme of “integrated innovation”, strength the integration of all business units in terms of culture, strategy, resource and team, and make continuous efforts for innovation in business model, product and management, with a view to building Jangho Group into an invincible cluster of companies. We should focus on the following aspects:
First, we should stay committed to the people-center approach, step up teaming building, and remain committed to taking leadership building as one of our priorities.
Second, we should focus on benefit, implement the internal market-based management evaluation mechanism effectively, and deliver more benefits to our employees.
Third, we should adhere to the concept of professional and dedicated operation, and encourage all business units to conduct business in line with their respective key business and major targets.
Fourth, we should strengthen system building, formulate a set of management principles and foster our core competitiveness.
Fifth, we should continue with integration and innovation, encourage all business units to embrace greater integration and self-innovation, and maintain Jangho Group’s defining features of inclusiveness and entrepreneurship, so as to achieve leapfrog development.
In the next 3-5 years, under the guidance of the above-mentioned work guidelines, all business sectors and business units should march towards and stay in the frontier of their respective sectors. Then, who will seize the key opportunity? In 2018, let us work hand in hand to realize our objects one by one towards the general direction of development!
(●Transcribed by the Planning Department based on recording)