2022 Huawei Global Analyst Conference 2022 year 4 month 26 day -27 day, the 19 The Huawei Global Analyst Conference was successfully held in Shenzhen. The global transition towards a low-carbon and digital society has become a major trend in future development. To assist with global sustainable development, Huawei shared its relevant plans at the Global Analyst Conference: In the future, Huawei will work with partners to help build a green, environmentally friendly, and intelligent world through digital means, and promote global sustainable development.   Frost & Sullivan Frost & Sullivan The analyst team from Frost & Sullivan's Greater China region was invited to attend this event. As a long-term strategic partner of Huawei globally, Frost & Sullivan will work with Huawei to help achieve the great goal of global sustainable development by helping enterprises transform and grow digitally. Hu Houkang, rotating chairman of Huawei Highlights of the conference   Seize the Two Major Opportunities of Green Intelligence   Mr. Zhou Hong, President of Huawei's Strategic Research Institute, kicked off the conference by sharing "Future-oriented Scientific Hypotheses and Business Visions". Humanity has gone through 18 The mechanized era of the century, 19 The electrical age of the century and 20 In the information age of the century, nowadays 21 The century belongs to the era of intelligence. Globally 233 Driven by the comprehensive needs of countries and regions, the growth rate of the global digital sector has been rapidly increasing exponentially, and it will far exceed current growth rates in the future.   Zhou Hong stated that on the path to realizing a digital and intelligent society, cutting-edge science and technology have not made significant breakthroughs in the past few decades and are at a bottleneck. However, driven by global demand, technological frontiers can seek technological breakthroughs in multiple fields such as artificial intelligence, biomedicine, software, communications, computing, materials, manufacturing, energy, and more.   Zhou Hong believes: 'Our current imagination about the future may be conservative, so we need to be braver. We hope to work with academia and industry to reconstruct fundamental theories, architectures, and software, and jointly explore and create the future.' Science and technology need to expand cognitive boundaries, including energy, matter, phenomena, and laws, as well as to push beyond the limits of human perception and explore new computational methods to transform 'cognition' into 'implementation'. Mr. Hua Houkang, the rotating chairman of Huawei, then delivered a speech on 'Continuous Innovation, Building a Green and Intelligent World'. Mr. Hua Houkang stated that Huawei will firmly seize the two major opportunities of intelligent development and a low-carbon society, continue innovation, and move towards the future society. The three main directions of Huawei's current development still mainly cover 'continuous innovation', 'deepening digitalization', and 'digital low-carbon'. Mr. Hu Houkang emphasized the importance of innovation for Huawei and society at the meeting, stating that 2021 The annual operating revenue has decreased by nearly 30% We continue to increase R&D investment under such circumstances. Mr. Hu Houkun stated, 'Only continuous innovation can bring about a never-ending source of development momentum, creating value for customers and society. We hope to work with more customers and partners to build a green and intelligent world.' Mr. Hu Houkang made a statement at the meeting regarding Huawei's current business situation, indicating that Huawei will survive with quality in a global business environment facing numerous severe tests. Huawei will prioritize ensuring customer service and product quality, do a good job in customer service, and at the same time, accept challenges from the future and human development while ensuring the quality of its R&D team and corporate operations. Huawei Cloud's strategic tenet of 'Everything is a Service' remains unchanged   Huawei Cloud Global Marketing At the meeting, Shi Jilin, President of Sales Services, stated that as of 2021 At the end of the year, Huawei Cloud has served 600 Multiple Government Clouds, China 6 Large countries have banks, major joint-stock commercial banks, and insurance companies. 30 Multiple smart airports, 40 Multiple Internet innovation centers, as well as 1.7 Ten thousand manufacturing enterprises have achieved digital transformation. Huawei Cloud is committed to building a multi-cloud ecosystem for governments and enterprises to meet the needs of different customers. During the meeting, the product department of Huawei Cloud further explained Huawei's global product layout and technical development direction, demonstrating that Huawei has always designed and developed products with "customer convenience" in mind to help customers better utilize cloud functions. 2022 In 2023, Huawei Cloud will continue its strategic tenet of 'everything is a service' and expand globally across regions and industries. Shi Jilin said: 'Huawei Cloud will build KooVerse A global network, building the best-in-class infrastructure as a service; focusing on four development production lines including digital content production and data governance; continuously deepening aPaaS Strategy: Open up more experiences and services; and through consulting services, work with enterprises to plan their cloud migration paths. At the same time, we will deepen innovation in cloud-cloud collaboration models to help enterprises create greater value; assist more Chinese companies in setting sail for overseas markets and exploring global opportunities. " Huawei Cloud Global Marketing Sales Services President Shi Jilin Based on the original intention of "Global Cloud", it builds a solid bridge for overseas enterprises.   The Frost & Sullivan team invited to participate in the conference had an in-depth discussion with Ms. Shi Jilin on global cloud overseas layout and the development of Chinese outbound enterprises at the meeting. 2017 year 3 Moonflower was established CloudBU Today, having become one of the five global clouds, Huawei Cloud's positioning as a 'global cloud' has never changed. Based on this original intention, Huawei Cloud adheres to the customer-first philosophy, deeply analyzes customer needs, and continuously increases R&D investment, using digital methods to explore an intelligent future for humanity. Ms. Shi Jilin further stated during the meeting that the global cloud's overseas layout is not limited to better assisting Chinese enterprises in going global, expanding their footprint, but rather to serve global customers more extensively and achieve deep cultivation globally. On this basis, Huawei will do its best to provide better services for Chinese enterprises going global, help them build good bridges, and ensure effective sharing between overseas branches and headquarters. For Chinese outbound enterprises, Ms. Shi Jilin also offered two suggestions on this occasion: 1 ) It is necessary to have a firm sustainability strategy and form its own operational model; 2 ) Make good market matching, comply with local regulations, protect corporate safety, and make good use of local resources. Ms. Shi Jilin said: 'The journey to go global sounds wonderful, but it is challenging to put into practice, yet it remains a very important path that must be taken. " Interpretation by Frost & Sullivan Analysts Regarding this Huawei Global Analyst Conference, the Frost & Sullivan team has the following views:   First, whether the company can firmly grasp the two major main avenues in the future is at the core of Huawei's construction of long-term competitiveness.   2021 In [year], although the smartphone business was affected by chip sanctions, net profit was able to show initial signs of recovery B The signs of stabilization in terminal businesses.   2022 In [year], Huawei needs to firmly grasp the two major opportunities for human social development: digitalization and low-carbonization, clarify its strategic direction, and build long-term core competitiveness to ensure stable net profit growth;   Second, 'technical intensity' + The improvement in talent concentration is expected to become a breakthrough strategy for Huawei's chip supply.   Due to the higher requirements for space volume and performance of mobile phone chips, Huawei's chip supply problem in the short term remains difficult to resolve. By focusing on technology and talent, it is expected to provide a certain degree of internal support for Huawei's chip supply chain;   Third, with a concentrated presence of senior executives, Huawei Cloud is priming itself for an explosive surge.   Currently, the digital transformation space in cloud industry ecosystems and sectors is far from reaching its peak. Many industries have just begun their digital transformation journey, leaving a vast global cloud service industry space. As an independent company operating Huawei Cloud, on one hand, it leverages its capabilities to internally connect various departments. On the other hand, it will continue to strengthen its presence in the global market from an external perspective. In the future, around Huawei Cloud CEO Zhang Ping'an's strategy of 'everything is a service' is reasonably expected to become an important highlight in Huawei Cloud's subsequent annual financial reports.

From the perspective of product strength, there are more and more enterprises with scientific and technological innovation capabilities. Technological innovation acts as a key driver for an industry, quietly changing the entire sector and potentially even subverting our lives in the future. This also marks the transition from 'Made in China' to 'Intelligently Made in China.' However, can new domestic products rest assured without core technology? How can they enhance their industrial influence after acquiring cutting-edge technologies and invention patents? Are new domestic products that lack core technology 'taking the lead' or 'copycatting'?   4 month 26 Today, Frost & Sullivan Frost & Sullivan, Dr. Wang Xin, Global Partner and President of Greater China at Frost & Sullivan, Founder of the original corporate in-depth research platform LeadLeo Technology Network, and a judge for the Golden Prize for Business Excellence, was invited to participate in the live broadcast room of 'The Golden Prize is Here'. Frost & Sullivan Wang Yuchuan, Chief Advisor for China and Chair of the Golden Prize for Technological Innovation Awards, joined forces with us to discuss the theme of 'Technological Innovation'. Starting from investment, they explored how to construct an innovative ecosystem in China and further integrate with advanced global technologies. Hello Dr. Wang Xin, we have watched one of your presentations where you interpreted the future from an industry perspective. 50 The development trends and opportunities for China's five core industries in the coming year, with consumption being at the forefront. You have presented a set of data: So far, approximately half of the people in China have never used an ordinary flush toilet. 10 Billions of people have never taken a flight. What do these numbers mean? Where do you think the core points lie in unlocking the potential of Chinese consumers and promoting consumption growth? Dr. Wang Xin: These figures indicate that there is still a broad potential consumer demand in China, and the future consumption market in China holds great potential, which is mainly reflected in the following aspects:   （ 1 China has a large consumer base and is 14 A super-large-scale market with hundreds of millions of people.   2021 China's GDP increased by [X]% year-on-year 8.1% The total economic volume reached 114.4 trillion yuan, accounting for more than 18% Chinese consumers have contributed more than 40% Electric vehicle sales 45% Fish and seafood sales 37% fresh meat sales 24% Wine sales.   In all consumer category markets globally, China's average share is close to 20% ;   （ 2 China has broad room for consumption growth.   2021 China's final consumption expenditure as a percentage of GDP GDP specific gravity is 54.5% , while the proportion in developed countries averages over 70% Among them, the United States and the United Kingdom accounted for more than 80% Therefore, China still has significant growth potential; 3 The momentum of consumption upgrading is strong.   2019 per capita in China in GDP It has exceeded 10,000 yuan, and consumption will enter a stage of rapid upgrading. At the same time, the development of urbanization has also given rise to new opportunities. The rural population accounts for about 40% of China's total population, but the proportion of rural consumption is still less than 15% . 2021 The urbanization rate of China's permanent population at the end of the year 64.72% For every one percentage point increase in urbanization rate, the urban population increases by approximately 1,400 Ten thousand people. If this 1,400 If the consumption per person increases by more than 10,000 yuan annually for every 10,000 people, total consumption can increase. 2,000 RMB 100 million or so, for just this one item in the future 10 In 2021, total consumption will increase by about 2 trillion yuan. To unleash the potential of Chinese consumers,   The core points for promoting consumption growth mainly lie in accelerating supply-side structural reforms, fostering the formation of new supply and industrial systems, to build a new development pattern where dual circulations promote each other, unleash the tremendous momentum of new consumption, and turn the potential for consumption growth into reality.   It can be implemented through the following three paths:       （ 1 ) Enhance innovation capabilities and boost new consumer demands.   Centering on consumer innovation trends such as new domestic products and new national trends, we are making significant investments in developing manufacturing. While continuously improving and enriching diverse service and industrial supply, we are further meeting the growing cultural, entertainment, leisure, and other new consumer demands of residents. This aims to expand the coverage of consumption areas in the new era and deepen the consumer base, thereby accelerating the release of tremendous consumer growth potential;       （ 2 ) Enhance technological capabilities and empower new consumption scenarios.   Promote the innovation of science and technology, realize digital empowerment of consumption channels, connect online and offline consumption methods, create new consumption formats, scenarios, and models, further integrate emerging technologies such as the internet, artificial intelligence, big data, and cloud computing with the consumer industry, and stimulate untapped consumption possibilities;   （ 3 ) Improve the urbanization rate and unleash new consumption potential.   Vigorously promote the improvement of a sound modern rural commercial system, perfect the construction of the agricultural product supply chain system, accelerate the pace of e-commerce entering rural areas, enhance the quality and scale of the rural consumer market, further promote the development speed of urbanization, and use a small step of urbanization to facilitate a big leap forward in Chinese consumption. Q You've made a prediction that by 2070 In [year], China will build the world's largest smart city cluster, integrating various industries with artificial intelligence to enhance productivity. In your opinion, which industries are already or will deeply integrate with artificial intelligence at present? Dr. Wang Xin: 2021 The year coincides with the global launch of Frost & Sullivan. 60 On our tenth anniversary, we held a celebration event in China. At the same time, as a token of gratitude to Frost & Sullivan 60 For the anniversary, we have prepared three white papers — "Leading Global Growth 60 Big Technology》, "Global Technology and Application Trends: Prospects and Outlook", and "China's Future 50 Annual Industry Trend Insights White Paper". "By 2070 In [a certain year], China will build the world's largest smart city cluster. This prediction is based on our China's Future 50 As mentioned in the 'White Paper on Industry Trend Insights for 2023'.   Artificial intelligence is an emerging strategic technology that leads the future, a crucial force driving a new round of scientific and technological revolution and industrial transformation, and an engine for the transformation and upgrading of China's economic structure and the shift of growth momentum.    As of 2021 At the end of the year, there were a total of 3322 Home received investment, accounting for the total financing of AI companies 55% , among which is smart finance 575 Home, intelligent robot 427 Home, Smart Transportation (Autonomous Driving) 420 Home ranks among the top three in the application layer.    It can be seen that the financial industry has been most extensively empowered by artificial intelligence technology.    This also reversely maps to the three basic elements of artificial intelligence technology:    Data, computing power, algorithms.    A large amount of high-quality data is the effective foundation for artificial intelligence models, while new algorithm iterations are relatively slower, and computing power improvements are more about breakthroughs at the physical level.   Therefore, whether artificial intelligence technology can be deeply integrated with a particular industry depends most importantly on whether the industry can generate or readily collect massive amounts of high-quality data. Of course, with the development of sensor technology, more industry data will enter algorithm training models in the future, leading to better prediction results. Overall, in addition to the further deepening of existing industry applications, we are also optimistic about the application of artificial intelligence in new drug research and development, basic scientific research, as well as important applications in the metaverse, digital twins, and other areas. Taking the metaverse as an example, the core of the metaverse lies in its ability to reflect and connect everything from the real world into the metaverse, as well as to enable interaction. In this process, artificial intelligence plays the role of connecting the real world with the virtual world. AI With breakthroughs in computing power, reconstructing and mapping the real world into the digital world, domestic SenseTime Technology has done very well in this area. SenseMARS It has become one of the largest metaverse empowerment platforms in Asia and is the first AI company to help mobile applications achieve interactive augmented reality and mixed reality effects. How does 'LeadLeo' achieve this? AI What about the application? Leveraging AI Technology allows us to acquire more knowledge in the shortest time, summarize this knowledge through big data, distill out many related contents, and form structured and standardized databases - what we call: ABCK （ AI-powered Blockchain-based KaaS ) cloud platform. On this basis, we have formed the final analysis data and report through the research and evaluation by professional analysts and a team. This can effectively improve the efficiency of knowledge generation and utilization, enabling analysts to transform from simple data transfer to more advanced research analysis and create greater value. Overall, against the backdrop of new technological and industrial transformations,   The deep integration of artificial intelligence with industries is an inevitable choice to unleash the digital multiplier effect, accelerate the development of strategic emerging industries, and build comprehensive competitive advantages.   Next, artificial intelligence will accelerate its penetration into various industries, promoting cross-border integrated development between emerging industries, between emerging and traditional industries, as well as between technology and society. Q There is a case that we care about particularly: 2018 In [year], Dr. Wang Xin became the world's first robot to obtain citizenship, produced by Hong Kong Hanson Robotics " Sophia " issued " Frost & Sullivan China New Economy Award " We are very interested in this event: " Sophia " What makes this robot special? What aspect of the robotics industry do you see as the most promising at that time? What role does China currently play in the field of robot design and manufacturing, and what unique advantages does it possess? Dr. Wang Xin:   First of all, we are very honored to be at 2018 In 2019, I got in touch with Hanson Robotics and presented to Sophia " Frost & Sullivan China New Economy Award    " .   2018    The year is auspicious    Frost & Sullivan enters the Chinese market 20 In that year, we held Frost & Sullivan 20 anniversary    At the celebration and customer appreciation event, Frost & Sullivan presented awards to many emerging economy companies at the banquet, with Hansen being one of the numerous award-winning enterprises.     As the world's first robot to obtain citizenship, Sophia's most distinctive feature lies in her ability to understand human emotions and form emotional interactions with them. Emotions are considered the highest level of artificial intelligence. Sophia can observe and identify information such as the movements and expressions of people around her through a camera, relying on machine vision, and respond accordingly, thereby mimicking the emotional resonance between humans. In addition, she can use bionic materials to create wrinkles by controlling components such as gears, achieving a facial expression that is highly similar to that of humans. Sophia is actually a microcosm of China's robotics industry. It can be said that China has the best robotics development environment in the world and is one of the leading players in the global robotics industry. In recent years, the demand for robotics in China has been growing rapidly. Taking industrial robots as an example, China is the leading country in the global industrial robotics market. 2013 Since the beginning of this year, it has been continuous 8 In 2021, it became the world's largest industrial robot market.   2021 In [year], China's industry The newly installed capacity of industrial robots exceeded 20 10,000 units, with a cumulative annual output reaching 36.6 10,000 units, with a year-on-year growth rate as high as 44.9% The world's largest robotics market - Asia market accounts for more than 2/3 .     Industrial robots come in a wide variety, characterized by high-risk operations, high production efficiency, strong stability, and high precision. With the introduction of various policies related to industrial robots and key special policies for intelligent robots, their application fields have continued to expand. For example, in the medical field, in recent years, Frost & Sullivan has served many medical robot companies that have successfully entered the capital market. Against the backdrop of an aging population leading to a significant increase in morbidity and surgical volume, China's current medical supply capacity cannot be rapidly and effectively enhanced in the short term. An effective means to solve the imbalance between medical supply and demand is to introduce surgical robots to improve surgical efficiency. Surgical robots can assist doctors in completing surgeries more efficiently and accurately, and they have advantages such as increasing the success rate of surgeries and reducing the area of trauma. "The difficulty and high cost of seeing a doctor" and the poverty caused or exacerbated by illness due to an obvious imbalance in China's medical resources have always been problems plaguing people. Combining virtual reality technology and surgical robot technology to achieve remote surgical treatment has become an effective way to solve this problem. Nowadays, utilizing intelligent sensing, human-computer interaction technology, and 5G Communication technology has gradually made it possible for doctors to perform precise remote surgeries and treatments on patients in distant locations. We know that the biggest difference between humans and machines lies in human perception, while the feedback generated by machine interaction is still not precise enough. In the future, research progress in human-machine interaction systems and intelligent sensing can further enhance the intelligence of surgical robots, which is beneficial for improving the operational precision of doctors during surgeries. In addition, robots have also played an important auxiliary role in remote office work, remote teaching, and remote production. For instance, in some 'dark factories', robots can operate continuously without lighting, saving energy and improving efficiency.    Therefore, I believe that robots will not take away jobs from humans, but rather replace repetitive and mechanical labor.    Once people's time is liberated, they will engage in more meaningful activities with higher added value.   China possesses more talent resources than other countries and regions around the world, and is also close to the world's largest robotics market. It has significant advantages in responding to customer needs and the completeness of its supply chain. China is continuously cultivating a large number of innovative talents for the robotics industry, and is promoting artificial intelligence with 5G We have made significant contributions to the integration and innovation of cutting-edge technologies such as big data, cloud computing, etc.   In the future, China will adhere to the principle of driving overall improvement through local advantages by focusing on key areas, and continue to promote the development of the robotics industry towards higher-end and intelligent technologies.   We will also serve as witnesses to the times, witnessing robots beginning to enter thousands of households. Q 2016 In VR The field has made predictions, “ VR The dawn is just ahead" VR Formal commercial products have been launched for over a decade, but no such " blockbuster " Birth. From your perspective, now is VR , metaverse, etc. " virtual world " Is it a good time? China does VR How can enterprises avoid something like VPL Companies are the same, with excellent creativity but 'born at the wrong time', suffering setbacks in commercialization? Dr. Wang Xin:   I want to achieve it VR The commercial development of devices cannot be achieved without a favorable technological environment and productivity. A mature application environment, an active user base, and a stable and efficient industrial chain all contribute to this. VR The development of the device has arrived at an appropriate timing. Overall, VR The equipment has initially acquired the technical and environmental conditions for use. 5G Networks, sensing technology, optical technology, etc., are VR The basic technology has been implemented, and a mature industrial chain ensures supply and low prices.   Web3.0 Build step by step, an active short-video and gaming industry, a booming metaverse social scene, home office work during the pandemic, VR The application scenarios of devices are gradually becoming richer, and the metaverse concept has received a boost in the capital market.    According to the calculation data in the 'Metaverse White Paper' jointly released by LeadLeo Research Institute and Tianfeng Securities, by 2025 year, China VR The market scale of devices will reach 479.9 RMB 10 billion, with an annual compound growth rate of 60.4%    , VR As an important cornerstone for the realization of the metaverse, devices are expected to become a popular consumer electronics product of the new generation. VR The upstream of the equipment industry chain is divided into 5 major sector 18 A key component of this segment is the chip and optical device. The localization level of the industrial chain is relatively high. 18 Among the sub-items 11 Each item has Chinese enterprises participating in the competition. High-quality domestic supplier companies have strong competitiveness in raw material supply. For example, Lianchuang Electronics, which has been successfully listed, is the world's largest sports camera lens supplier. 2020 The year has become internationally renowned VR The customer mass-produces and supplies projection lenses; Goertek has made long-term arrangements VR/AR Business, currently at the high-end VRAR The market share in the field of OEMs for complete sets of equipment is close to 80% . recent 5 over the years, globally VR The headset device market has shown a relatively rapid pace of market changes.   2017 In the year, the most in the market VR The device is a relatively low-end mobile phone case, all-in-one VR The proportion of devices is only 3.9% . 2018 Annual integration VR The proportion reached 26.2% , with a growth rate as high as 571.8% , and PC end VR Become the new market tyrant. 2019 In 2019, the basic market pattern remained unchanged. PC end VR The proportion is nearly 50% The all-in-one machine market has further expanded.   2020 In [year], with the phenomenon-level VR —— Oculus Quest2 With the launch, all-in-one computers have gradually demonstrated their superiority, with market share growing rapidly. 5 Looking at the data for the year, VR The equipment market is ever-changing, presenting both challenges and opportunities for enterprises. It is essential for companies to accurately capture industry dynamics in order to gain a foothold in market competition. Q Now, the term 'service' has gradually shifted from the traditional meaning of 'service industry' to the user experience brought about by services attached to goods. Teacher Wang Yucan mentioned an interesting phenomenon: Tesla currently provides complete vehicle support OTA The service value of the system and other services is one hundred thousand US dollars, and in the future, it will gradually account for a larger proportion of the vehicle price. This represents that the traditional manufacturing industry of automobiles is also gradually shifting its profit points from materials, manual labor, and technological accumulation to serving users. How do you view the increasing application of generalized services in physical goods? What are some specific cases of this trend? Dr. Wang Xin:   The apparent manifestation of the service-oriented transformation of manufacturing is the increasing application of generalized services in physical goods. The underlying reason is the significant trend towards ubiquitous devices. Ubiquitous computing, originally meaning that networks are everywhere, originated from the advancement of computer technology. Computers have fully integrated into people's lives, providing various services wherever they are. 2020 After a certain year, the connotation of ubiquitous computing continues to expand, referring to the ability for every visible object to be connected to the internet. From small items like light switches to large structures like reservoir dams, they play an increasingly important role under the influence of network connectivity. The service-oriented transformation of manufacturing accelerates, with significant effects from supply-side structural reforms. The industrial structure and product structure have been optimized, and both industrial quality and product quality have improved.   Consumption is gradually becoming a productive force, and the tertiary industry is GDP The contribution rate ranks first among the three major industries, indicating that it is an inevitable trend for manufacturers to increase the proportion of services in physical products. 2021 Year tertiary industry GDP The contribution rate to growth is as high as 53.9% .   As you mentioned OTA It's a typical case of service being applied to physical objects. In fact OTA Services were initially an important means for mobile phone manufacturers to enhance product competitiveness and profitability. Tesla was the first automaker to apply this concept to the automotive sector. OTA The value can not only be enhanced by upgrading to change the response speed of the car's on-board computer, but it can also increase the maximum range of pure electric vehicles to a certain extent and adjust the usage status of the car battery, thereby providing users with a better operational experience. Most importantly, automakers can also OTA Achieve differentiated features and pricing, build their own automotive brand ecosystems, enhance user stickiness, and increase the repurchase rate.   In the future, new energy vehicles will see increasingly smaller differences in range, acceleration, and even body design. Similar to how Apple's mobile phones rely on their app store to establish an unbreakable Apple ecosystem, manufacturers are increasing their efforts towards OTA The investment in system and ecosystem construction aims to enhance service value and build competitive barriers. Service applications in physical assets are not limited to the automotive industry but also occur during the transformation of other traditional manufacturing sectors. Taking Baosteel, a leading enterprise in the steel industry, as an example, Baoxin Software was initially its functional department providing information software services for automated production. With the advancement of automation and informatization in China, the demand from steel manufacturing enterprises has become increasingly strong. Baoxin Software was separated from the Baosteel department and operated independently. While serving within the Baosteel Group, it also provides services to other steel manufacturing enterprises.   Automated and information-based software services continuously create new profit points for them.

Frost & Sullivan's Insights The "Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a Unified National Market" released on April 10th once again clarify that it is necessary to improve the multi-level unified electricity market system and study the timely establishment of a national electricity trading center. The electricity market is an important part of building a new type of power system, and an effective price mechanism is at the core of the self-regulation and healthy operation of the electricity market. Is there room for improvement in the current electricity market price mechanism in our country? Due to the inverse distribution of large wind and photovoltaic bases and load centers, more and more new energy is being transported across provinces, which will significantly increase the transmission costs and system stability costs. How should these costs be managed? With the improvement of the electricity market price mechanism, will the full guarantee purchase method by grid companies become unsustainable? Xu Biao, Executive Director for Greater China at Frost & Sullivan (hereinafter referred to as "Frost & Sullivan"), was interviewed by China Energy News to discuss the "breakthrough point" for the construction of a unified electricity market China Energy News Core Reading: The increase in the penetration rate of new energy power generation brings about an increase in grid system costs. On one hand, grid companies have strong cost control capabilities, and some costs can be absorbed through potential tapping by grid companies to better position the pipeline platform for power transmission; on the other hand, according to the principle of "whoever uses it shall bear the cost," scientifically and reasonably approved transmission and distribution prices to promote the transfer of auxiliary service fees to electricity market users.   The "Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a Unified National Market" released on April 10th once again clarify that it is necessary to improve the multi-level unified electricity market system and study the timely establishment of a national electricity trading center.   “Since 2021, a number of policies have been introduced to promote electricity market reform, which can be described as unprecedented. Whether from the perspective of building a new type of power system or constructing a unified national electricity market, it is necessary to further improve the price mechanism at the core of the electricity market.” Recently, a relevant person from a power generation enterprise told reporters.   In fact, with the increase in the proportion of new energy power generation, the hidden costs such as grid system regulation costs, reserve costs, and capacity costs will rise significantly. Currently, most of these costs are borne by coal-fired power companies or grid companies, and their rationality has sparked widespread debate. In the industry's view, only by improving the electricity market price mechanism can hidden costs be straightened out and help build a new type of power system.   The electricity market price mechanism still needs to be improved   Xu Biao, Executive Director for Greater China at Frost & Sullivan, believes that in the process of continuously advancing electricity market reform in our country, the improvement and optimization of the price mechanism are core tasks.   Xu Biao said that currently, the power reform still faces issues such as the inability to transmit fuel costs, the impact of the "dual-track system" on resource allocation efficiency, an imperfect market trading mechanism, and immature market entities. There is great room for improvement in the electricity market price mechanism.   For example, the tight power supply situation at the end of 2020 was caused by a significant increase in fuel costs for coal-fired generating units and the absence of a coal-fired cost transmission mechanism. In response, relevant government departments introduced a series of measures to promptly manage and solve the problem. In the view of Mr. Jin, the person in charge of a certain power generation enterprise, on one hand, there are bottlenecks in managing variable costs such as fuel costs, resulting in most coal-fired power plants being unable to calculate their economic accounts; on the other hand, the recovery mechanism for electricity auxiliary service costs is not yet perfect. “If reliable flexible sources like coal-fired power are still evaluated for grid connection based on zero-sum game thinking, it will be unsustainable in the long run.”   The principle of "whoever benefits shall pay" should run through the whole process Due to the inverse distribution of large wind and photovoltaic bases and load centers, more and more new energy is being transported across provinces, which will significantly increase the transmission costs and system stability costs. How should these costs be managed?   Xu Biao believes that the increase in the penetration rate of new energy power generation brings about an increase in grid system costs. On one hand, grid companies have strong cost control capabilities, and some costs can be absorbed through potential tapping by grid companies to better position the pipeline platform for power transmission; on the other hand, according to the principle of "whoever uses it shall bear the cost," scientifically and reasonably approved transmission and distribution prices to promote the transfer of auxiliary service fees to electricity market users. Mr. Jin also said that the management of electricity market prices should fully implement the principle of "whoever benefits shall pay," with users paying a price premium for green electricity and grid and users reasonably sharing auxiliary service costs. “However, it is important to do a good job in supervision, avoiding using grid connection assessment to suppress power generation enterprises and also avoiding hindering the role of microgrids due to cross-subsidies.”   Jia Yu, Deputy Director of the Distribution Center at the China Energy Research Society, believes that the consumption of new energy requires cross-provincial and cross-regional transmission, which will inevitably lead to a significant increase in system costs. Therefore, building a unified national electricity market can achieve the management and balance of electricity prices between the sending end and receiving end, as well as different power sources. Promote the consumption of new energy with the price mechanism In recent years, new energy has seen large-scale development, and some regions have reduced the minimum guaranteed utilization hours on their own to promote the participation of new energy power generation in market transactions.   For a long time, grid companies have been the only buyers of guaranteed new energy purchases, and the guaranteed power generation volume that ensures quantity and price cannot exceed the scale of electricity they represent and guarantee for users. With the improvement of the electricity market price mechanism, will this guaranteed purchase method disappear?   Xu Biao believes that China's priority power generation and purchase plans are formulated and strictly implemented after coordination by the National Development and Reform Commission with provincial (regional, municipal) government authorities, power generation, and grid companies. There is generally no significant mismatch between priority power generation and purchase volumes.   According to the "Notice on Organizing the Agency Purchase Work of Grid Companies" issued by the General Office of the National Development and Reform Commission, the guaranteed power generation volume that ensures quantity and price should not exceed the scale of electricity guaranteed for residential and agricultural users and agency industrial and commercial users purchased by local grid companies. The insufficient part shall be procured by grid companies through market-oriented methods. This move is precisely to encourage more power generation enterprises and industrial and commercial users to directly enter the electricity market. In Mr. Jin's view, whether the guaranteed purchase of new energy is cancelled depends on the development level of the electricity market. “The so-called full guarantee purchase is more aimed at power generation enterprises that do not directly participate in green electricity transactions, while grid companies have no such obligation for those participating in green electricity transactions.”   The industry generally believes that with the further improvement of the electricity price mechanism, the consumption method of new energy will become more market-oriented, consumption channels will become more diversified, and the dependence on guaranteed purchases will also decrease. *This article is reprinted from China Energy News, with reporter Han Yifei. The original article was titled "Our Country Once Again Clarifies the Improvement of the Multi-level Unified Electricity Market System - Improving the Price Mechanism Becomes the 'Breakthrough Point' for the Construction of a Unified Electricity Market."

On April 20th, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), stated that currently, the CSRC's requirement for disclosing ESG-related information is mainly based on a voluntary principle. Listed companies should actively disclose more ESG information. When the disclosed information is accurate and abundant, it is conducive to investors making an accurate judgment about the company's future development sustainability. Currently, what is the overall status of ESG information disclosure by listed companies in China? From the perspective of advancing the realization of the dual carbon goal, what is the significance of listed companies disclosing ESG information? Should ESG information be mandatory for listed companies? How should the ESG information disclosure system be further improved? Dr. Wang Xin, a global partner and President of Greater China at Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan'), was interviewed by Securities Daily to discuss the current situation of ESG information disclosure by listed companies in China and the future development of the ESG information disclosure system.   On April 20th, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), stated that currently, the CSRC's requirement for disclosing ESG-related information is mainly based on a voluntary principle. Listed companies should actively disclose more ESG information. When the disclosed information is accurate and abundant, it is conducive to investors making an accurate judgment about the company's future development sustainability. According to the 'White Paper on ESG Development of Listed Companies in China' jointly released by the China Securities Association and CSI Index Co., Ltd., from 2009 to 2021, the number of A-share listed companies disclosing ESG-related reports increased from 371 to 1112, with the initiative of ESG information disclosure rising year by year. The interviewed experts believe that in recent years, regulatory authorities have taken multiple measures, highlighting the achievements of listed companies in ESG information disclosure. However, there are also shortcomings such as inconsistent disclosure standards. Strengthening ESG information disclosure is conducive to improving corporate governance levels, enhancing sustainable development capabilities, and further accelerating the achievement of the dual carbon goals.   Leading enterprises have a strong awareness of ESG disclosure Since the establishment of the basic framework for ESG information disclosure at the end of September 2018, the development of ESG information disclosure has entered a fast track. In recent years, the awareness of ESG information disclosure among leading listed companies on the A-share market has significantly increased. According to the research report data from LeadLeo Research Institute, the disclosure rate of ESG reports by listed companies on the CSI 300 has been increasing year by year over the past decade, rising from 50.7% in 2011 to 83.3% in 2021, far higher than the overall disclosure rate of 25.3% for A-share listed companies. "Advocating ESG is actually about using market mechanisms to address the huge challenges posed by sustainable economic and social development, guiding enterprises to implement corresponding sustainable strategies and plans. At the micro level, while maximizing corporate interests, this will ultimately achieve national industrial and economic goals at the industry and macro levels," said Wang Xin, Global Partner and President of Frost & Sullivan Greater China, to a reporter from Securities Daily. However, there are also some urgent issues that need to be resolved in the development of ESG information disclosure. 'ESG investment is an important part of green finance. Compared with international mainstream information disclosure standards, China has not yet formed a unified ESG disclosure standard system for its overall ESG development. The main problems are reflected in imperfect legal regulations and non-uniform disclosure standards,' said Chen Li, chief economist and director of the research institute at Sichuan Finance Securities, to the Securities Daily reporter. In Wang Xin's view, there are mainly three deficiencies in the domestic ESG information disclosure: the information disclosure system is not unified and its quality varies widely. Third-party audits need to be improved, with a low coverage rate of indicators. ESG assessment ratings lack systematicness. In addition, regarding ESG information disclosure, A-share listed companies mainly disclose voluntarily. Whether mandatory disclosure will become a trend has sparked heated discussions in the market. 'At present, domestic ESG information disclosure mainly follows the principle of voluntariness and has not yet reached the level of synchronizing with international ESG standards or mandatory disclosure,' Chen Li said. Considering that the current domestic ESG information disclosure system is not yet perfect, ESG disclosure should rely more on market forces to encourage enterprises to better comply with sustainable development requirements, thereby enabling society to achieve sustainable development. "Compulsory ESG information disclosure will become an inevitable trend. The severe climate change situation and the increasing frequency of extreme weather events have promoted mandatory disclosure, with overseas ESG information disclosure already being a common mandatory requirement." Wang Xin cited an example, stating that Germany introduced mandatory ESG reporting regulations for large enterprises in 2016, requiring non-compliant companies to provide explanations. In 2021, the U.S. Securities and Exchange Commission (SEC) proposed mandatory disclosure recommendations for key ESG areas. In the Asia-Pacific region, listed companies in Singapore, Japan, Indonesia, and Hong Kong are all required to disclose ESG information compulsorily.   ESG Empowers Corporate Business Value Meanwhile, regulatory authorities continue to urge listed companies to strengthen ESG information disclosure in order to further improve the quality of listed companies and promote the achievement of the dual carbon goals. On April 15, the China Securities Regulatory Commission (CSRC) issued the 'Guidelines for Investor Relations Management of Listed Companies', which state that 'in accordance with the requirements of implementing new development concepts, ESG information on the environment, society, and governance of listed companies should be included in communication content.' Chen Li analyzed that strengthening ESG information disclosure is beneficial in two ways. On one hand, it helps to encourage enterprises to pay more attention to environmental protection and internal governance, assisting in optimizing their own business and development strategies, thereby enhancing medium- and long-term sustainable development capabilities. On the other hand, as ESG standards become an essential reference for investment decisions, ESG empowers corporate commercial value. Listed companies with better performance will receive long-term support from the capital market, thus accelerating their pace towards becoming stronger and more efficient. When discussing the necessity of strengthening ESG information disclosure, Wang Xin believes that firstly, it promotes the transformation of listed companies. Regular ESG information disclosure will facilitate the optimization of energy structures in industries such as petroleum and chemical engineering, drive their efforts towards low-carbon emissions, optimize production processes, improve energy efficiency, and reduce pollutant emissions. Secondly, it enhances the sense of responsibility of listed companies. ESG information disclosure has a two-way promoting effect on enterprises and stakeholders, helping companies establish a stable interest ecosystem, boosting high-quality development, and regular information disclosure can force companies to strengthen their sense of responsibility and mission, thereby indirectly promoting the achievement of the dual carbon goals. Regarding how to further optimize the ESG reporting system, Wang Xin stated that listed companies can provide investors with more effective ESG-related information by increasing the release of quantitative information and improving the quality of disclosed information; establishing ESG databases for more efficient collection and management of ESG information and data; when listed companies in related industries participate in carbon trading or engage in green finance, they need to increase the quantity and quality of information disclosure on carbon emission data in their annual and semi-annual reports. Chen Li suggests that regulatory authorities need to establish and improve the rules and standards for ESG information disclosure by financial institutions, construct an evaluation system for ESG information disclosure, and further strengthen supervision over information disclosure by financial institutions to promote a comprehensive improvement in the quality of information disclosure.   *This article is reprinted from 'Securities Daily', with reporter Xing Meng. The original article was titled 'The initiative of listed companies to disclose ESG information is increasing year by year, and experts believe mandatory disclosure is an inevitable trend'. We would like to thank Lou Lei, Executive Director for Greater China at Frost & Sullivan, and Jiang Yu, Analyst, for their support in this interview.   Frost & Sullivan Insight & Extended Reading Q: What is the overall status of ESG information disclosure by listed companies in China at present? What are the deficiencies? A: Current Situation: 1. The disclosure of ESG information by A-share listed companies has increased, with a stable disclosure rate and significant room for improvement. According to statistics from Shenwan Hongyuan, since 2014, the disclosure rate of ESG reports for A-share companies in China has remained stable at about 25%. The number of disclosures increased from around 615 in 2014 to 1,159 in 2021. According to Wind statistics, in 2021, A-share listed companies in China disclosed a total of 1,159 ESG reports, accounting for 24.74% of the total number of A-share listed companies in 2021 (4,684). Among them, the proportion of ESG disclosures by listed companies on the Shanghai Stock Exchange in 2021 was 33.56%, while that by listed companies on the Shenzhen Stock Exchange was 18.56%. According to Zhitong Finance, as of December 31, 2021, the proportion of H-share listed companies that independently published ESG reports was 52.2%; according to Shangdao Zhongheng, as of July 31, 2021, the proportion of companies that had disclosed ESG information on the Hong Kong Exchanges and Clearing (HKEX News) was 93.8%. 2. The industry distribution of ESG disclosure is uneven. According to Wind statistics, the top five industries in terms of the number of ESG reports released in 2021 are pharmaceuticals, power and public utilities, basic chemicals, power equipment, and new energy and electronics. The number of disclosed reports is 90, 79, 74, 63, and 62 respectively. The high number of disclosures in the pharmaceutical industry is mainly related to the pandemic, while others are mostly concentrated in high-emission industries. In contrast, industries such as finance, food and beverages, and light industry have fewer disclosures. Deficiencies: 1. Third-party audits need improvement, with low metric coverage. According to China's ESG research, as of May 2020, only 12% of the ESG reports released within the CSI 300 had undergone third-party auditing. At the same time, the coverage rate at the indicator level disclosed in these reports is low. In 2020, the disclosure rates for social indicators and environmental indicators were 35.4% and 49.2%, respectively, with most social disclosures being qualitative descriptions. 2. The ESG information disclosure system is not unified, and its quality varies widely. The naming conventions for various enterprises are not unified, such as corporate social responsibility reports, corporate sustainable development reports, corporate impact reports, etc. The disclosure forms are published separately in some cases and integrated into annual or quarterly reports in others. There is no clear ESG information disclosure system or framework. 3. The ESG assessment and rating lacks systematicness. Currently, many foreign institutions are researching and developing ESG indicator systems, such as the MSCI ESG series indices, FTSE4Good series indices, The Dow Jones Sustainability series indices, etc. However, most of the research results in China focus only on individual factors within environmental, social, and corporate governance, lacking a combination with national conditions. At the same time, the indicators and weight settings of various institutions are not the same.   Q: In recent years, regulatory authorities have promoted listed companies to strengthen ESG information disclosure. What is the positive significance of this for improving the quality of listed companies? A: The rise of ESG has profound socio-political reasons. It encourages enterprises to take on more social responsibilities on the premise of minimizing government intervention, and demonstrates that enterprises have complete and adequate response measures in the face of increasingly severe challenges such as climate change, environmental pollution, and wealth disparity. The purpose of the ESG evaluation system is to internalize the 'externalities' caused by enterprises during their pursuit of profit maximization into their costs as much as possible, essentially redefining the boundaries between enterprises and markets. Advocating for ESG is actually about using market mechanisms to solve the huge challenges brought about by the sustainable development of the economy and society, guiding enterprises to implement corresponding sustainable strategies and plans. At the micro level, while maximizing corporate interests, it aims to achieve national industrial and economic goals set at the industry and macro levels. The positive impact of a company's ESG information on the value of listed companies is reflected in reduced systematic risk (such as the relative decline in the β coefficient in the CAPM model) and improved non-systematic risk conditions (such as enhanced profitability). Although the ESG framework emphasizes creating sustainable financial performance to a large extent, it also drives investors and businesses to focus on clear predictive adjustments or scenario analysis. By identifying or quantifying potential financial and non-financial factors, it mitigates various risks in the future.   Q: From the perspective of advancing the realization of the dual carbon goal, should listed companies be required to disclose ESG information compulsorily? A: At present, the China Securities Regulatory Commission (CSRC) requires ESG disclosure on a voluntary basis and has not yet implemented mandatory disclosure. However, mandatory disclosure is an inevitable trend in the future. 1. Overseas ESG disclosure has become a mandatory requirement. Germany introduced mandatory ESG reporting regulations for large enterprises in 2016, requiring non-compliant companies to provide explanations. The US Securities and Exchange Commission (SEC) proposed mandatory disclosure recommendations on key ESG areas in 2021. The UK has stipulated that starting from April 2022, more than 1,300 large companies and financial institutions registered in the country must disclose climate-related financial information, becoming the first G20 group country to mandate large corporations to make climate disclosures according to TCFD. In the Asia-Pacific region, listed companies in Singapore, Japan, Indonesia, and Hong Kong are required to disclose ESG information compulsorily. The Hong Kong Exchanges require listed companies to compulsorily disclose ESG-related reports after July 2020. In 2021, the Hong Kong Exchanges revised the 'Corporate Governance Code' and related 'Listing Rules', focusing on the corporate governance section, which includes aspects such as board independence, diversity, and corporate anti-corruption. 2. The severe climate change situation and the increasing frequency of extreme climate events have promoted mandatory disclosure. According to the conclusions of the IPCC's sixth assessment report, climate warming is caused by human activities, and the global climate system is undergoing rapid and widespread changes, some of which are irreversible. Under all emission scenarios, global temperatures will rise by at least 1.5°C. This forces countries around the world to take global climate change more seriously and mandates companies to conduct ESG climate disclosures.

Frost & Sullivan insights On April 20th, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), stated that currently, the CSRC's requirement for disclosing ESG-related information is mainly based on a voluntary principle. Listed companies should actively disclose more ESG information. When the disclosed information is accurate and abundant, it is conducive to investors making an accurate judgment about the company's future development sustainability. Currently, what is the overall status of ESG information disclosure by listed companies in China? From the perspective of advancing the dual carbon goal, what is the significance of ESG information disclosure by listed companies? Should ESG information be compulsorily disclosed by listed companies? How should the ESG information disclosure system be further improved? Dr. Wang Xin, Global Partner and President of Greater China at Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan'), was interviewed by Securities Daily to discuss these issues together. The current status of ESG information disclosure by listed companies in China and the future development of the ESG disclosure system. Securities Daily On April 20th, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), stated that currently, the CSRC's requirement for disclosing ESG-related information is mainly based on a voluntary principle. Listed companies should actively disclose more ESG information. When the disclosed information is accurate and abundant, it is conducive to investors making an accurate judgment about the company's future development sustainability.   According to the 'White Paper on ESG Development of Listed Companies in China' jointly released by the China Securities Association and CSI Index Co., Ltd., from 2009 to 2021, the number of A-share listed companies disclosing ESG-related reports increased from 371 to 1112, with the initiative of ESG information disclosure rising year by year.   The interviewed experts believe that in recent years, regulatory authorities have taken multiple measures, highlighting the achievements of listed companies in ESG information disclosure. However, there are also shortcomings such as inconsistent disclosure standards. Strengthening ESG information disclosure is conducive to improving corporate governance levels, enhancing sustainable development capabilities, and further accelerating the achievement of the dual carbon goals.   Leading enterprises have a strong awareness of ESG disclosure Since the establishment of the basic framework for ESG information disclosure at the end of September 2018, the development of ESG information disclosure has entered a fast track.   In recent years, the awareness of ESG information disclosure among leading listed companies on the A-share market has significantly increased. According to research report data from LeadLeo Research Institute, the disclosure rate of ESG reports by listed companies on the CSI 300 has been rising year by year over the past decade, gradually increasing from 50.7% in 2011 to 83.3% in 2021, far exceeding the overall disclosure rate of 25.3% for all listed companies on the A-share market.   "Advocating ESG is actually about using market mechanisms to address the huge challenges posed by sustainable economic and social development, guiding enterprises to implement corresponding sustainable strategies and plans. At the micro level, while maximizing corporate interests, this will ultimately achieve national industrial and economic goals at the industry and macro levels," said Wang Xin, Global Partner and President of Frost & Sullivan Greater China, to a reporter from Securities Daily. However, there are also some urgent issues that need to be resolved in the development of ESG information disclosure. 'ESG investment is an important part of green finance. Compared with international mainstream information disclosure standards, China has not yet formed a unified ESG disclosure standard system for its overall ESG development. The main problems are reflected in imperfect legal regulations and non-uniform disclosure standards,' said Chen Li, chief economist and director of the research institute at Sichuan Finance Securities, to the Securities Daily reporter.   In Wang Xin's view, there are mainly three deficiencies in the domestic ESG information disclosure: the information disclosure system is not unified and its quality varies widely. Third-party audits need to be improved, with a low coverage rate of indicators. ESG assessment ratings lack systematicness. In addition, regarding ESG information disclosure, A-share listed companies mainly disclose voluntarily. Whether mandatory disclosure will become a trend has sparked heated discussions in the market. 'At present, domestic ESG information disclosure mainly follows the principle of voluntariness and has not yet reached the level of synchronizing with international ESG standards or mandatory disclosure,' Chen Li said. Considering that the current domestic ESG information disclosure system is not yet perfect, ESG disclosure should rely more on market forces to encourage enterprises to better comply with sustainable development requirements, thereby enabling society to achieve sustainable development.   "Compulsory ESG information disclosure will become an inevitable trend. The severe climate change situation and the increasing frequency of extreme weather events have promoted mandatory disclosure, with overseas ESG information disclosure already being a common mandatory requirement." Wang Xin cited an example, stating that Germany introduced mandatory ESG reporting regulations for large enterprises in 2016, requiring non-compliant companies to provide explanations. In 2021, the U.S. Securities and Exchange Commission (SEC) proposed mandatory disclosure recommendations for key ESG areas. In the Asia-Pacific region, listed companies in Singapore, Japan, Indonesia, and Hong Kong are all required to disclose ESG information compulsorily. ESG Empowers Corporate Business Value Meanwhile, regulatory authorities continue to urge listed companies to strengthen ESG information disclosure in order to further improve the quality of listed companies and promote the achievement of the dual carbon goals.   On April 15, the China Securities Regulatory Commission (CSRC) issued the 'Guidelines for Investor Relations Management of Listed Companies', which state that 'in accordance with the requirements of implementing new development concepts, ESG information on the environment, society, and governance of listed companies should be included in communication content.'   Chen Li analyzed that strengthening ESG information disclosure is beneficial in two ways. On one hand, it helps to encourage enterprises to pay more attention to environmental protection and internal governance, assisting in optimizing their own business and development strategies, thereby enhancing medium- and long-term sustainable development capabilities. On the other hand, as ESG standards become an essential reference for investment decisions, ESG empowers corporate commercial value. Listed companies with better performance will receive long-term support from the capital market, thus accelerating their pace towards becoming stronger and more efficient.   When discussing the necessity of strengthening ESG information disclosure, Wang Xin believes that first and foremost, it promotes the transformation of listed companies. Regular ESG information disclosure will facilitate the optimization of energy structures in industries such as petroleum and chemicals, drive their efforts towards low-carbon emissions, optimize production processes, improve energy efficiency, and reduce pollutant emissions. Secondly, it enhances the sense of responsibility of listed companies. ESG information disclosure has a two-way promoting effect on enterprises and stakeholders, helping them establish a robust interest ecosystem, boosting high-quality development, and regular information disclosure can force enterprises to strengthen their sense of responsibility and mission, thereby indirectly promoting the achievement of the dual carbon goals.   Regarding how to further optimize the ESG reporting system, Wang Xin stated that listed companies can provide investors with more effective ESG-related information by increasing the release of quantitative information and improving the quality of disclosed information; establishing ESG databases for more efficient collection and management of ESG information and data; when listed companies in related industries participate in carbon trading or engage in green finance, they need to increase the quantity and quality of information disclosure on carbon emission data in their annual and semi-annual reports. Chen Li suggests that regulatory authorities need to establish and improve the rules and standards for ESG information disclosure by financial institutions, construct an evaluation system for ESG information disclosure, and further strengthen supervision over information disclosure by financial institutions to promote a comprehensive improvement in the quality of information disclosure.   Frost & Sullivan Insight & Extended Readings   Q: Currently, what is the overall status of ESG information disclosure by listed companies in China? What are the deficiencies?   A: Current Situation: 1. The disclosure of ESG information by A-share listed companies has increased, with a stable disclosure rate and significant room for improvement. According to statistics from Shenwan Hongyuan, since 2014, the disclosure rate of ESG reports for A-share companies in China has remained stable at about 25%. The number of disclosures increased from around 615 in 2014 to 1,159 in 2021. According to Wind statistics, in 2021, A-share listed companies in China disclosed a total of 1,159 ESG reports, accounting for 24.74% of the total number of A-share listed companies in 2021 (4,684 companies). Among them, the proportion of ESG disclosures by listed companies on the Shanghai Stock Exchange in 2021 was 33.56%, and that by those on the Shenzhen Stock Exchange was 18.56%. According to Zhitong Finance, as of December 31, 2021, the proportion of H-share listed companies that independently published ESG reports was 52.2%; according to Shangdao Zongheng, as of July 31, 2021, the proportion of companies that had disclosed ESG information on the Hong Kong Exchanges and Clearing (HKEX News) was 93.8%.   2. The industry distribution of ESG disclosure is uneven. According to Wind statistics, the top five industries in terms of the number of ESG reports released in 2021 are pharmaceuticals, power and public utilities, basic chemicals, power equipment, and new energy and electronics. The number of disclosed reports is 90, 79, 74, 63, and 62 respectively. The high number of disclosures in the pharmaceutical industry is mainly related to the pandemic, while others are mostly concentrated in high-emission industries. In contrast, industries such as finance, food and beverages, and light industry have fewer disclosures.   Deficiencies: 1. Third-party audits need improvement, and the metric coverage rate is low. According to China's ESG research, as of May 2020, only 12% of the ESG reports released within the CSI 300 had undergone third-party auditing. Additionally, the coverage rate at the indicator level in disclosed reports is low; in 2020, the disclosure rates for social indicators and environmental indicators were 35.4% and 49.2%, respectively, with most social disclosures being qualitative descriptions.   2. The ESG information disclosure system is not unified, and its quality varies widely. The naming conventions for various enterprises are not unified, such as corporate social responsibility reports, corporate sustainable development reports, corporate impact reports, etc. The disclosure forms are published separately in some cases and integrated into annual or quarterly reports in others. There is no clear ESG information disclosure system or framework.   3. The ESG assessment and rating lacks systematicness. Currently, many foreign institutions are researching and developing ESG indicator systems, such as the MSCI ESG series indices, FTSE4Good series indices, The Dow Jones Sustainability series indices, etc. However, most of the research results in China focus only on individual factors within environmental, social, and corporate governance, lacking integration with national conditions. At the same time, the indicators and weight settings of different institutions vary.   Q: In recent years, regulatory authorities have promoted listed companies to strengthen ESG information disclosure. What is the positive significance of this for improving the quality of listed companies?   A: The rise of ESG has profound socio-political reasons. It encourages enterprises to assume more social responsibilities on the premise of minimizing government intervention, and demonstrates that enterprises have complete and adequate response measures in the face of increasingly severe challenges such as climate change, environmental pollution, and wealth disparity. The purpose of the ESG evaluation system is to internalize the 'externalities' caused by enterprises during their pursuit of profit maximization into the costs of the enterprises as much as possible. Essentially, it is redefining the boundary between enterprises and the market. Advocating for ESG is actually about using market mechanisms to address the huge challenges brought about by the sustainable development of the economy and society, guiding enterprises to implement corresponding sustainable strategies and plans. At the micro level, while enterprises maximize their interests, they achieve the industrial and economic goals set by the state at the industry and macro levels.   The positive impact of a company's ESG information on the value of listed companies is reflected in reduced systematic risk (such as the relative decline in the β coefficient in the CAPM model) and improved non-systematic risk conditions (such as enhanced profitability). Although the ESG framework emphasizes creating sustainable financial performance to a large extent, it also drives investors and businesses to focus on clear predictive adjustments or scenario analysis. By identifying or quantifying potential financial and non-financial factors, it mitigates various risks in the future.   Q: From the perspective of advancing the realization of the dual carbon goal, should listed companies be required to disclose ESG information compulsorily?   A: At present, the China Securities Regulatory Commission (CSRC) requires ESG disclosure on a voluntary basis and has not yet implemented mandatory disclosure. However, mandatory disclosure is an inevitable trend in the future.   1. Overseas ESG disclosure has become a mandatory requirement. Germany introduced mandatory ESG reporting regulations for large enterprises in 2016, requiring non-compliant companies to provide explanations. The US Securities and Exchange Commission (SEC) proposed mandatory disclosure recommendations on key ESG areas in 2021. The UK has stipulated that starting from April 2022, more than 1,300 large companies and financial institutions registered in the country must disclose climate-related financial information, becoming the first G20 group country to mandate large corporations to make climate disclosures according to TCFD. In the Asia-Pacific region, listed companies in Singapore, Japan, Indonesia, and Hong Kong are required to disclose ESG information compulsorily. The Hong Kong Exchanges require listed companies to compulsorily disclose ESG-related reports after July 2020. In 2021, the Hong Kong Exchanges revised the 'Corporate Governance Code' and related 'Listing Rules', focusing on the corporate governance section, which includes aspects such as board independence, diversity, and anti-corruption within the company.   2. The severe climate change situation and the increasing frequency of extreme climate events have promoted mandatory disclosure. According to the conclusions of the IPCC's sixth assessment report, climate warming is caused by human activities, and the global climate system is undergoing rapid and widespread changes, some of which are irreversible. Under all emission scenarios, global temperatures will rise by at least 1.5°C. This forces countries around the world to take global climate change more seriously and mandates companies to conduct ESG climate disclosures.   *This article is reprinted from 'Securities Daily', with reporter Xing Meng. The original article was titled 'The initiative of listed companies to disclose ESG information is increasing year by year, and experts believe mandatory disclosure is an inevitable trend'. We would like to thank Lou Lei, Executive Director for Greater China at Frost & Sullivan, and Jiang Yu, Analyst, for their support in this interview.

Frost & Sullivan Insights On April 11th, a press release titled "A single dose of human papillomavirus (HPV) vaccine can effectively prevent cervical cancer" published on the official website of the World Health Organization (WHO) attracted attention. Affected by the news, on April 14th, related stocks fluctuated and fell. The stock prices of Zhifei Biotech, which mainly acts as an agent for Merck & Co.'s HPV vaccine, the first domestic manufacturer of HPV vaccine, and Watson Biotech, whose bivalent HPV vaccine was just approved in March this year, dropped by 14.19%, 9.46%, and 3.08% respectively. Will this incident change China's HPV vaccination plan? What impact will it have on related enterprises and industries? Currently, the National Health Commission is conducting a comprehensive study on including HPV vaccination in the national immunization program and gradually promoting HPV vaccination among eligible populations. Once included in the free program, will HPV face a sharp drop in price, affecting corporate profits? Yang Tianxin, a healthcare industry analyst at Frost & Sullivan (hereinafter referred to as "Frost & Sullivan") for Greater China, was interviewed by Blue Whale Finance to discuss the future development of the HPV track. HPV vaccine only requires one dose? The protection efficacy has been proven, but behind the supply shortage lies a popular track , Frost & Sullivan , 8 minutes Blue Whale Finance On April 11th, a press release titled "A single dose of human papillomavirus (HPV) vaccine can effectively prevent cervical cancer" published on the official website of the World Health Organization (WHO) attracted attention.   As the incident escalated, affected by the news, on April 14th, related stocks fluctuated and fell. The stock prices of Zhifei Biotech, which mainly acts as an agent for Merck & Co.'s HPV vaccine, the first domestic manufacturer of HPV vaccine, and Watson Biotech, whose bivalent HPV vaccine was just approved in March this year, dropped by 14.19%, 9.46% and 3.08% respectively. As of the close on April 18th, Zhifei Biotech continued its decline by 2.16%, Wanta Biotech rose by 2.18%, and Watson Biotech rose by 8.72%.   Will China's HPV vaccination plan change? What impact will it have on related enterprises and industries? Can HPV vaccine be given only once? The incident originated from a press release published on the WHO official website on April 11th, which pointed out that from April 4th to April 7th, the WHO Strategic Advisory Group of Experts on Immunization (SAGE) held a meeting to review the evidence for a single-dose human papillomavirus (HPV) vaccination. The conclusion was that a single dose of HPV vaccine can provide reliable protection, with effects comparable to those of two or three doses.   SAGE recommended the following immunization schedule: women aged 9 - 14 years (the priority population) receive one or two doses; women aged 15 - 20 years receive one or two doses; women over 21 years old receive two doses (at intervals of 6 months).   However, the press release also pointed out that SAGE's new recommendations are based on concerns about the slow introduction of HPV vaccines into the immunization program and low coverage rates among the general population, especially in poorer countries. Single-dose vaccination is less costly, occupies fewer resources, and is easier to manage.   WHO Assistant Director-General Nono Simelela pointed out, "I firmly believe that eliminating cervical cancer is possible. In 2020, the WHO launched the Cervical Cancer Elimination Initiative, and this single-dose recommendation may enable us to achieve our goal of vaccinating 90% of girls before the age of 15 by 2030 more quickly."   The possibility of implementing single-dose HPV vaccination in China may be relatively low Will WHO's recommendations on HPV affect the vaccination of HPV vaccines in China? In this regard, Wei Lihui, a professor of obstetrics and gynecology at Peking University People's Hospital, pointed out, "The vaccination of HPV vaccines in China has just begun, and the current coverage rate is not high. Currently, there are only data from clinical trials, and there is a lack of real-world research data in China. As there is evidence-based recommendation for only one dose of HPV vaccine globally, I think more evidence is needed before recommending its implementation in China."   According to Wei Lihui, currently, we still recommend the three-dose vaccination schedule according to the vaccination plan approved in the instructions of the National Medical Products Administration. The domestic bivalent vaccine is administered in two doses for children aged 9 - 14 years.   A research report from Pacific Securities pointed out, "The possibility of implementing single-dose HPV vaccination in China is very small."   The research report pointed out that the possibility of the domestic single-dose method being accepted by the drug regulatory authorities is relatively low. Judging from the historical adoption of WHO's recommendations on HPV by the domestic national drug regulatory authorities, the low acceptance possibility of the single-dose method is mainly due to the lack of sufficient proof of its protection efficacy. Historically, after GlaxoSmithKline and Merck & Co. launched two HPV vaccines, WHO recommended using persistent infection data to replace cervical precancerous lesion grade II (CIN II) as the clinical endpoint. The purpose of the recommendation was to reduce the time of HPV vaccine clinical trials. However, considering safety and protection efficacy, the Chinese drug regulatory authorities adhere to CIN II as the clinical endpoint (bivalent HPV), thus effectively ensuring the protective effect of the vaccine. From this perspective, the possibility of the single-dose method being accepted is low. Yang Tianxin, an analyst at Frost & Sullivan for Greater China Healthcare Industry Yang Tianxin, an analyst at Frost & Sullivan, said that the immunization schedule of vaccines requires a large amount of long-term clinical trial data as support. Any change means that clinical trials, data analysis, and registration procedures need to be carried out again, which will take a lot of time. Before that, each HPV vaccine will continue to be vaccinated according to the currently approved immunization schedule. However, in the future, it is not excluded that existing manufacturers may change the immunization schedule or new manufacturers may be approved with a reduced number of doses for marketing. In response to this incident, Wanta Biotech announced: Under the current national drug regulatory policies, if changes such as the number of vaccination doses are made, a series of clinical, data support, and registration change procedures need to be fulfilled, which takes a certain amount of time and has no significant impact on the company's operating performance in the short term.   Zhifei Biotech also said that the current immunization schedule for the four-valent and nine-valent HPV vaccines marketed in China is three doses, and this plan is based on the indications approved from domestic clinical research data.   Currently, there is an insufficient supply of HPV vaccines As of now, there are a total of 5 HPV vaccines marketed in China, namely GlaxoSmithKline's bivalent HPV vaccine, Merck & Co.'s quadrivalent and nonavalent HPV vaccines, Wanta Biotech's bivalent HPV vaccine, and Watson Biotech's bivalent HPV vaccine. The latter two enterprises are local Chinese companies. And Zhifei Biotech is the exclusive domestic agent for Merck & Co.'s quadrivalent and nonavalent HPV vaccines.   “Currently, the Chinese HPV vaccine market is in a state of supply falling short of demand. In other words, even if we calculate only one dose for eligible women, the current vaccine supply is still seriously insufficient, and this does not take into account men.” Yang Tianxin said. According to a research report by Guosen Securities, there are approximately 360 million eligible women aged 9 to 45 years old in China (about 120 million urban eligible women). Since the introduction of HPV products into China in 2017, the total number of batches issued is about 65 million, equivalent to about 20 million doses, and the overall population penetration rate is about 5.5% (the urban eligible female penetration rate is about 16.5%), which is at a low level.   Yang Tianxin pointed out, “The single-dose method” does not deny that the effect of three doses is stronger than one dose. Therefore, even if a reduced number of doses are approved for marketing in the future, some eligible people will still choose to get vaccinated with three doses, just as the bivalent HPV vaccine can already prevent 70% of cervical cancers, but most eligible people are still willing to get vaccinated with the nonavalent HPV vaccine. Therefore, the “single-dose method” has limited impact on the production capacity layout and planning of enterprises. Each enterprise still needs to increase its production capacity as much as possible to meet the huge market demand. Entering the immunization program helps quickly boost corporate revenue It is worth noting that in February last year, the National Health Commission's “Reply to Proposal No. 8996 of the Third Session of the 13th National People's Congress” mentioned that it would conduct a comprehensive study on including HPV vaccination in the national immunization program and gradually promote HPV vaccination among eligible populations.   Some market participants are worried that once included in the free program, will HPV face a sharp drop in price, affecting corporate profits?   In fact, since 2021, more and more cities and provinces have introduced policies related to free vaccination of domestic bivalent HPV vaccines (Xinkening from Wanta Biotech in Xiamen), including Ordos in Inner Mongolia, Xiamen in Fujian, Chengdu in Sichuan, Jinan in Shandong, Wuxi in Jiangsu, Guangdong, and the whole province of Hainan. According to the relevant financial reports of vaccine provider Wanta Biotech, Xinkening's sales revenue in 2020 was only 870 million yuan, but it grew rapidly in 2021, reaching 5.75 billion yuan.   Yang Tianxin pointed out, “Judging from the current situation of supply falling short of demand for HPV vaccines in China, as long as the production capacity of enterprises keeps up, entering the immunization program will not affect the profit of enterprises but can quickly boost corporate revenue.”   “The starting point of WHO SAGE (Strategic Advisory Group of Experts on Immunization) proposing the ‘single-dose method’ is more about allocating limited production capacity to more women and promoting the global HPV vaccination process. This also reflects WHO's emphasis on HPV vaccines.” Yang Tianxin believes that based on this, the HPV track will still be one of the popular tracks in the future, and there is an urgent need for more enterprises that can provide HPV vaccines to join together to increase production capacity and benefit those who need vaccination in China and even globally. *This article is reprinted from Blue Whale Finance, authored by Tu Jun, with the original title "HPV vaccine only requires one dose? The protection efficacy has been proven, but behind the supply shortage lies a popular track".

Insights from Frost & Sullivan Recently, the National Tobacco Monopoly Administration issued the "Measures for the Administration of Electronic Cigarettes" (hereinafter referred to as the "Measures"), clearly stating that "the sale of flavored electronic cigarettes other than tobacco-flavored ones and those with self-addable atomizers is prohibited." The "Measures" will come into effect on May 1, 2022. Along with the "Measures," the National Tobacco Monopoly Administration also released the national standard for "electronic cigarettes" (second draft for soliciting opinions). On April 8th, People's Daily published an article to strengthen regulatory control over electronic cigarettes. What impact will strict compliance requirements have on the short-term and long-term development of the industry? Will the regulation of electronic cigarettes as tobacco-related products affect the expansion of offline specialty stores by major companies? The second draft for soliciting opinions has clear restrictions on nicotine content and concentration. Will such restrictions help improve companies' R&D capabilities? Frost & Sullivan's (Frost & Sullivan, abbreviated as "Frost & Sullivan") Greater China Executive Director Xiang Wei recently interviewed with Tobacoo Journal International (TJI) to discuss the future development direction of the electronic cigarette industry under strong regulation.   International Tobacco Magazine Q: The two recent solicitation drafts aimed at regulating the electronic cigarette industry. What impact will strict compliance requirements have on the short-term and long-term development of the industry? For startups, will it lead to increased difficulty in financing?   Xiang Wei: In the short term, the impact of strict compliance requirements on the industry is mainly reflected in the following aspects:   1) Tax growth leads to increased costs for electronic cigarette companies, raising the industry entry threshold Firstly, China's tobacco industry generates nearly one trillion in tax each year. If electronic cigarettes are taxed like cigarettes, their costs will significantly increase, with some of the cost increases being passed on to consumers, potentially leading to higher terminal prices for electronic cigarettes. Secondly, before the industry regulations were introduced, electronic cigarettes were only taxed as ordinary consumer goods, resulting in a lower burden from taxes. In the future, the compliance of electronic cigarettes will pose significant challenges for small-scale practitioners, as taxes will raise the industry entry threshold and capital requirements.   2) Standardization of offline stores has a significant impact on offline channels in the short term Before the introduction of electronic cigarette regulatory regulations, most e-cigarette store owners did not obtain tobacco sales licenses, making it difficult to effectively supervise e-cigarette offline sales. In the short term, the new regulations increase the uncertainty of e-cigarette brand channel development, possibly leading to a large number of offline stores closing down for rectification, which could have a short-term impact on the domestic e-cigarette market. In the future, under the guidance of the new regulations, e-cigarette sales stores will operate more standardly.   3) Small players in the industry will be eliminated, increasing technical barriers; leading companies begin to expand into more overseas markets The domestic e-cigarette industry has developed rapidly in the past two years, with unclear regulatory regulations, low entry thresholds, and many industry players. The quality of products from non-leading companies varies widely. In the short term, a large number of small-scale and unregulated enterprises will be phased out, and the introduction of policies will inevitably accelerate the elimination of small brands. The market's demand for product technical barriers has significantly increased, and it will also prompt some leading e-cigarette industry companies to try to open up more overseas markets.   In the medium to long term, the proposal of electronic cigarette regulatory regulations plays a positive role in establishing a healthy industry development mechanism and promoting the orderly development of the e-cigarette industry. The environment of China's e-cigarette industry needs to be regulated and standardized, and the chaos brought about by wild development will change under the influence of policies. Non-compliant products and brands will be accelerated in elimination, ultimately contributing to the long-term development of China's e-cigarette industry. As e-cigarette policy supervision steadily progresses, the industry will enter a period of rapid growth, which can not only protect the health of minors and ensure national tax revenue but also maintain China's international competitiveness in this field.   Electronic cigarettes have their particularities, and regulatory policies are only meant to regulate the industry and not to stifle the entire industry; on the contrary, they will promote healthy development of the industry. China has about 300 million smokers, but in 2020, the penetration rate of e-cigarettes in China was only about 2.1%, indicating that there is still huge investment potential in the e-cigarette industry in China. The introduction of electronic cigarette regulatory policies is an inevitable measure to regulate the healthy development of the industry and enhance healthy competition. For emerging companies seeking financing, investors will also discover the market prospects from a sustainable development perspective. Companies with R&D capabilities, stable product supply capabilities, compliance, and product layout advantages will attract more capital. Q: Will the regulation of electronic cigarettes as tobacco-related products affect the expansion of offline specialty stores by major companies?   Xiang Wei: Currently, sellers of electronic cigarettes do not need to obtain a tobacco monopoly license. However, according to the Tobacco Monopoly Law, if they do not have a tobacco monopoly license, they cannot engage in tobacco business or sales. The extent to which the expansion of offline specialty stores is affected will depend on the scope of implementation of electronic cigarette regulatory policies.   Currently, the offline channels of major companies are relatively complete, and in the future, the e-cigarette sales network is expected to further expand to major supermarkets, tobacco hotels, and other stores with tobacco business licenses for unified distribution and sales. At that time, the offline e-cigarette market will be reshuffled, and non-compliant private sellers will be eliminated from the market.   Q: The second draft for soliciting opinions on the national standard for electronic cigarettes has clear restrictions on nicotine content and concentration. Will such restrictions help improve companies' R&D capabilities?   Xiang Wei: We learned that the second draft for soliciting opinions on the national standard for electronic cigarettes has restricted the nicotine content and concentration in atomizers. The nicotine (nicotine) concentration should not exceed 20 mg/g, and the total nicotine (nicotine) content should not exceed 200 mg. Currently, a certain proportion of electronic cigarette products on the domestic market exceed the concentration limits in the draft. In the short term, stricter control over the nicotine content in electronic cigarettes will inevitably eliminate a series of products with substandard concentrations.   Therefore, the restriction on nicotine content in e-liquid will increase the requirements for companies' supply chain and production cost control. Upstream supply chain management and production quality assurance systems will become one of the core competencies of new tobacco companies in the future. This will further encourage companies to improve their own R&D capabilities, and those that prioritize e-liquid technology will have greater advantages.   Q: Many electronic cigarette companies in Shenzhen do not operate domestically. Will the introduction of Chinese regulations also affect their business?   Xiang Wei: As a world base for electronic cigarettes, Shenzhen currently produces and OEMs more than 90% of the global electronic cigarette industry. Europe, America, and South Korea are the largest e-cigarette markets in the world and also the main export destinations for Shenzhen's e-cigarette OEM factories. Currently, foreign e-cigarette regulatory policies are becoming increasingly strict, and Shenzhen's e-cigarette companies will have to apply for relevant certifications and raise product standards to cope with different national regulatory policies. The introduction of Chinese regulations has limited impact on Shenzhen's e-cigarette companies that mainly focus on overseas markets. On March 11th this year, the National Tobacco Monopoly Administration issued the "Measures for the Administration of Electronic Cigarettes," stipulating that starting from May 1st, the sale of flavored electronic cigarettes other than tobacco-flavored ones and those with self-addable atomizers is prohibited. This means that China's e-cigarette industry is facing strong regulation, with fruit-flavored e-cigarette products exiting the market, and the market will undergo further integration in the future.   The introduction of Chinese regulations has brought the stable development of the e-cigarette industry onto a legal and standardized track. Major countries and regions with a large global share of electronic cigarettes, including Europe, America, and South Korea, have issued clear policy guidelines and regulatory measures for electronic cigarettes. With the later implementation of the second draft for soliciting opinions on the national standard for electronic cigarettes, it will be beneficial for e-cigarette companies that focus on product quality. In the future, e-cigarette companies will compete in terms of compliance and technology.

Frost & Sullivan Insights From April 6th from 00:00 to 24:00, there were 1,284 new confirmed COVID-19 cases and 21,711 new asymptomatic infections in China. Among them, Shanghai added 322 new local confirmed cases and 19,660 asymptomatic infections; as of now, the cumulative number of positive infected individuals reported for this round of the epidemic in Shanghai has exceeded 100,000. In response to the high incidence of this round of the epidemic in China, it is urgent to develop antiviral drugs that can combat COVID-19. Xu Chao, a pharmaceutical industry analyst at Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') for Greater China, was interviewed by CBN to discuss the research and development status of COVID-19 drugs by major pharmaceutical companies. CBN On April 5th, the number of new COVID-19 infections in China exceeded 20,000 for the first time, including 1,383 new confirmed cases and 19,089 new asymptomatic infections.   On the same day, the number of new COVID-19 infections in Shanghai approached 20,000; since March, the number of reported infected individuals in Shanghai is about to exceed the 100,000 mark (latest data: already exceeded 100,000).   In response to the high incidence of this round of the epidemic in China, it is urgent to develop antiviral drugs that can combat COVID-19. On April 6th, Kuaipo Pharmaceutical announced the global multi-center clinical data results of its oral COVID-19 drug Pekluram for treating mild to moderate COVID-19 cases, bringing hope to the research and development of small molecule drugs for COVID-19 in China.   As of the close on April 6th, the Hong Kong stock price of Kuaipo Pharmaceutical rose by more than 100%; the Hong Kong stock prices of Tengsheng Bio and Clover Biopharmaceutical also rose by more than 10%. From the key data results of the Phase III global multi-center clinical trial of Pekluram announced by Kuaipo Pharmaceutical, for 730 patients who received at least one day of treatment, Pekluram reduced the risk of hospitalization or death by 50% compared to the control group; for 693 patients who received more than seven days of treatment, Pekluram reduced the risk of hospitalization or death by 100% compared to the control group.   However, the above research data are still relatively preliminary and face challenges such as insufficient sample size for clinical research data. Kuaipo Pharmaceutical responded to CBN reporters by saying: 'Detailed data are being compiled and will be disclosed through publishing articles or conference submissions.' Xu Chao, Analyst at Frost & Sullivan Greater China Pharmaceutical Industry 'Pfizer's Paxlovid and Merck's Molnupiravir have been successively approved, and we look forward to domestic oral COVID-19 drugs benefiting patients as soon as possible. Currently, Lianhua Qingwen Capsules and Jinhua Qinggan Granules in China can be used for COVID-19 treatment. The antiviral drug Remdesivir/Alberta Ferrovir (RBAF) combination therapy from Tengsheng Bio has been approved, and several neutralizing antibody therapies and oral COVID-19 treatment drugs are in clinical trial stages.' said Xu Chao, an analyst at the research institution Frost & Sullivan for the pharmaceutical industry to CBN reporters. In the 'Diagnosis and Treatment Protocol for Novel Coronavirus Pneumonia (Trial Version 9)', Pfizer's small molecule oral COVID-19 drug Paxlovid and Tengsheng Bio's monoclonal antibody RBAF/Remdesivir injection have been included. Currently, biotech companies including Junshi Biosciences are also developing related COVID-19 antibody drugs and seeking clinical trials and marketization in China.   Yu Zilong, Partner at PwC China Life Sciences, told CBN reporters that there are currently three main technical routes for COVID-19 drug research and development, including drugs that block the virus from entering cells (mostly antibody drugs), drugs that inhibit viral replication (mostly small molecule drugs), and drugs that regulate the human immune system (traditional Chinese medicine formulas, etc.). Kuaipo Pharmaceutical's oral drug Pekluram belongs to small molecule drugs.   'With the launch of Pfizer's small molecule oral COVID-19 drug Paxlovid in China, small molecule drugs continue to heat up, which will drive the development of various emerging technologies in this field in the long run, including artificial intelligence, PROTAC, molecular adhesives, etc.' Yu Zilong told CBN reporters.   Phase III clinical studies of domestic small molecule COVID-19 drugs are also underway. Last month, the Phase III clinical trial of VV16, a COVID-19 antiviral small molecule drug developed by Junshi Biosciences, was initiated among subjects with moderate to severe COVID-19, and the first patient enrollment and dosing have been completed.   'The subsequent large number of production orders brought about by COVID-19 drug research and development pose higher requirements for capacity.' Yu Zilong told CBN reporters, 'Benefiting from the rapid production of CDMO companies, the time required to successfully develop a drug can be significantly shortened compared to the past, bringing opportunities for humanity to resist diseases. Therefore, in the near future, the CDMO business model is expected to be promising.'   He also said that in the long run, continuous improvement in local production technology brought about by COVID-19 will enable stronger adaptability, a more stable supply chain system, and more efficient delivery efficiency in global emergencies. *This article is reprinted from 'CBN', authored by Qian Tongxin, with the original title 'Domestic Local Daily New Infections Exceed 20,000, Multiple Routes of COVID-19 Drug Development Accelerate'.

Global Conference on Protective Gloves Industry and Upstream and Downstream Supply and Demand Exchange   In 2024, the global market share of protective gloves is still in a turbulent period, with risks of corporate market manipulation still present. How to maintain existing market shares, strive for cost reduction and efficiency improvement to ensure the continuity of new customer orders, while enhancing product quality, cost-price control, and diversification of products into key competitive factors for enterprises.   Against this backdrop, from March 20th to March 21st, the Global Conference on Protective Gloves Industry and Upstream and Downstream Supply and Demand Exchange, hosted by Longzhong Information, was successfully held in Zibo, Shandong. The conference gathered over a hundred protective gloves-related enterprises, providing an industry supply and demand exchange platform for protective glove products, authoritative technical experts sharing, and multi-dimensional analysis of the entire industry's development situation. Focusing on industry hotspots, assessing industry trends, and jointly seeking a healthy development path for the industry.   Ms. Miao Qidi, a consulting advisor at Frost & Sullivan (Frost & Sullivan, abbreviated as "Frost & Sullivan") Greater China, was invited to attend the conference and delivered a speech on "The Current Situation and Development Trends of Disposable Gloves Market." Ms. Miao Qidi, Consulting Advisor at Frost & Sullivan Greater China   Ms. Miao Qidi briefly analyzed the global market, export markets, and production and sales environment for disposable gloves. She stated that the continuously mutating strains during the pandemic have led to repeated COVID-19 outbreaks, significantly increasing the demand for disposable gloves used for long-term care and emergency rescue. After changes in epidemic prevention and control policies, market demand has relatively weakened but shown long-term growth. It is expected that future supply and demand contradictions will ease with the release of production capacity, market prices will return to rationality, and sales revenue will remain optimistic in the long term.   Regarding the domestic market, as the impact of COVID-19 gradually subsides, the revenue and net profit margins of leading Chinese disposable medical glove companies led by Innovent Biomedical, Lanfan Medical, and Zhonghong Medical have been affected in the short term, and the supply and demand relationship in the medical glove market has gradually stabilized.   With the launch of innovative products, the improvement of residents' health and self-protection awareness, and the expansion of application scenarios, disposable gloves will embrace new growth opportunities. First, leading companies are building global R&D systems, collaborating with hospitals and other institutions to overcome new material and technology challenges, launching continuously iterating innovative products to tap into more market space, and creating a high-end, differentiated product system and matrix. Then, during the pandemic era, influenced by residents' enhanced health and self-protection awareness, market education, and other factors, the incremental demand is expected to settle into long-term increments over the next few years. At the same time, the rising demands for safety and cleanliness in food safety and high-precision manufacturing industries will also lead to widespread application of disposable gloves in these fields.   Looking globally, with the increasing demand for disposable medical gloves, global prices reached a peak in the first quarter of 2021. Among them, Malaysia is the main producer of disposable gloves globally and the largest exporter of rubber gloves. From 2022 to 2023, starting from December 1st, 2021, the United States imposed a 7.5% tariff on Chinese imports of medical gloves and a 28% tariff on non-medical gloves, leading to continuous growth in Malaysia's disposable glove sales. However, under the backdrop of fierce market competition in the later stages of the pandemic, Chinese manufacturers impacted the production and operation levels of Malaysian leading companies with their cost production and supply chain advantages. At the same time, Chinese manufacturers have significant advantages in technical level and product qualification certification, which is conducive to capturing more global market shares in the future.   From the perspective of global demand, the disposable glove market still has good growth potential. The outbreak of COVID-19 brought about a short-term surge in disposable glove demand. Then, during the pandemic era, the glove market experienced a short adjustment period. Global demand for disposable gloves declined compared to 2021 and 2020 in 2022, and is expected to resume positive growth around 2023. In addition, there is still significant room for development compared to overseas markets in the domestic glove market. Currently, the per capita glove consumption in China is far lower than the global average level. The annual per capita use of medical gloves in China is only 9 pairs, while the Netherlands, which has the highest per capita glove usage globally, can reach up to 317 pairs per person per year, about 35 times that of China, reflecting the inequality in global glove consumption. With strong economic development, population growth, and increasing awareness of the importance of hygiene, developing countries such as the Philippines, China, and Indonesia are expected to make increasingly greater contributions to the growing global glove consumption in the medium to short term.   Ms. Miao Qidi pointed out that China is in a stage of rapid growth in the disposable glove industry. Exporting to international markets is conducive to driving regional and full industrial chain development, aligning with the country's "Healthy China" top-level design, facilitating domestic and international dual circulation, and improving the global value chain position. On one hand, the prospects for the glove industry are still promising. After the adjustment of epidemic prevention and control policies in 2022, demand from overseas markets remained unchanged, and the export volume of nitrile gloves was several times that before the pandemic. Through policy encouragement, technological iteration, etc., the glove industry has become a regional supporting industry, driving the development of the entire industrial chain. On the other hand, there is a significant advantage in the export price of domestic nitrile gloves compared to Malaysia's glove prices. Leading companies have established raw material supply bases at home and abroad, connected the industrial chain to form stable raw material supply, and further strengthened their international competitive edge through a complete manufacturing system and rich and affordable product system, promoting the new development pattern of domestic and international dual circulation and playing a crucial role in the world competition pattern.   In the past three years, global health incidents have led to explosive growth in people's demand for disposable gloves. With rising raw material prices and lack of production capacity, the average selling price of disposable gloves soared. As global epidemic prevention enters normalization, the once tight supply of disposable gloves has gradually improved, starting a new situation where supply exceeds demand. After the average selling price of disposable gloves hit a record high, it has gradually returned to a rational range. Ms. Miao Qidi believes that due to capacity expansion and gradual stabilization of demand, the glove market faces a phase of supply exceeding demand, and currently some channel sales prices are close to pre-pandemic levels. The relative stability of raw material prices this year is also conducive to the control of production costs and the continuous stability of profit levels for global glove enterprises.

Huawei held its annual report press conference for 2021 on March 28, 2022, in Shenzhen. Analysts from Frost & Sullivan's Greater China region participated as special invitees. According to Huawei's 2021 annual report, the company's overall operations were stable, achieving global sales revenue of 636.8 billion RMB and net profit of 113.7 billion RMB, a year-on-year increase of 75.9%. Looking ahead, Huawei continues to increase investment in research and development, reaching 142.7 billion RMB in 2021, accounting for 22.4% of the annual revenue, with cumulative R&D expenses exceeding 845 billion RMB over ten years. Image source: Huawei official website   Guo Ping, rotating chairman of Huawei, pointed out: 'The overall business situation of the company meets expectations, with stable operator services, robust enterprise growth, rapid development of new industries in terminal services, and accelerated ecological construction.' Meng Wanzhou, CFO of Huawei, stated: 'Our scale has reduced, but our profitability and cash flow generation capabilities have both been enhanced, and the company's ability to cope with uncertainties is continuously improving.' Thanks to the improvement in the profitability of its main business, Huawei's operating cash flow increased significantly in 2021, reaching 597 billion RMB; the asset-liability ratio dropped to 57.8%, and the resilience and elasticity of the overall financial structure have been strengthened.   Image source: Huawei official website   In 2021, Huawei achieved sales revenue of 281.5 billion RMB in the operator business sector. Huawei helped global operators deploy leading 5G networks, and third-party reports show that in 13 countries including Switzerland, Germany, Finland, the Netherlands, South Korea, and Saudi Arabia, Huawei's built 5G networks provide the best user experience. Huawei has signed over 3,000 commercial contracts for 5G industry applications with operators and partners, and 5G has been commercially deployed in industries such as manufacturing, mining, steel, ports, and healthcare. Under the wave of digital transformation, Huawei's enterprise business has achieved rapid growth, achieving sales revenue of 1024 billion RMB. For key industries such as government, transportation, finance, energy, and manufacturing, Huawei has released 11 scenario-based solutions, established coal mines, smart highways, customs, and port armies, and integrated resources to efficiently serve customers. More than 700 cities around the world and 267 Fortune Global 500 companies have chosen Huawei for digital transformation, with the number of service and operational partners increasing to over 6,000. Terminal services adhere to a consumer-centric approach, building a global ecosystem that connects everything intelligently and billions of devices, bringing full-scenario smart life experiences to consumers worldwide, achieving sales revenue of 2434 billion RMB. Smart wearables, smart screens, TWS headphones, and consumer cloud services have all continued to grow, with wearable device and smart screen services growing by more than 30% year-on-year. Huawei devices equipped with HarmonyOS exceed 220 million units, becoming the fastest-growing mobile operating system in the world. In the past year, Huawei has adhered to the concepts of openness, collaboration, and altruism, focusing on building prosperous ecosystems for Euler, Ascend, and HarmonyOS, with over 8 million developers adopting Huawei's open platform, open-source software, and rich development tools to explore innovative business scenarios and models.   Interpretation by Frost & Sullivan analysts 1. Huawei's revenue in 2021 was 636.8 billion RMB, a year-on-year decrease of 28.6%, but net profit reached 113.7 billion RMB, a year-on-year increase of 75.9%. On one hand, Huawei's smartphone business was affected by chip sanctions, resulting in nearly half a reduction in consumer business revenue. On the other hand, Huawei has basically stabilized its B-side business, and after selling its Honor terminal business in 2021, its net profit actually increased. In 2022, on the premise that smartphones cannot recover, Huawei needs to make more efforts to ensure stable profit growth. 2. Huawei's overseas revenue still accounted for about 35.1% of its total turnover in 2021, Considering that Huawei's smartphone business is actually basically unable to operate overseas, its enterprise and operator businesses may actually be growing. 3. Huawei's chip supply chain capability can currently maintain the operation of its B-side business well, but it still has difficulty solving the problem of mobile phone chips with higher space volume and performance requirements in the short term. Huawei's R&D investment in 2021 was about 142.7 billion RMB, ranking second globally, and we can reasonably infer that there is a large amount of R&D investment related to chips, aiming to solve chip supply problems in all aspects in the long term.