Gold Cup Electric 2019 Summary Commendation Conference

Being Inheritor, Striver Of GOLD CUP And Cultivator Of Our Employees

Gold Cup Electric 2019  Summary Commendation Conference

Chairman Wu Xueyu

January 19, 2020

Dear Colleagues:

Good afternoon!

2019 is the 70th anniversary of the founding of PRC, and it’s also an important year during the development history of GOLD CUP ELECTRIC APPARATUS CO., LTD.. It has been 20 years since I joined the cable industry and became a real industrial person. Gold Cup has been specializing in R&D and manufacturing electromagnetic wire for over 20 years, Tapai cable has been passed down for 80 years, the Gold Cup cable has been passed down for 67 years, and Feihe Cable has been passed down for 61 years. In the historical changes and the opportunities of China's Reform and Opening, we have seized every opportunity, such as state-owned enterprise reform, equity reform, capital market development, and shared the investment bonus of national infrastructure. We are fortunate to be the successors of these time-honored brands, so we also shoulder the responsibilities to carry forward the shining brands.

In 2019, I would like to thank all employees for their hard work and concerted efforts to build a beautiful answer sheet under the leadership of the company's management. Both scale and benefit of wires and cables sector exceeded the target; the scale of new energy sector exceeded 1 billion Yuan, and the after-market services doubled in profit; Winner No.1 with features of both manufacturing and service is expected to further join in the professional operation market. Hereby, on behalf of the board of directors and the management, I express my sincere thanks and New Year’s greetings to every member of GOLD CUP, my heartfelt congratulations to teams and colleagues with great progress of each unit in the year 2019, and also my great respects to the seasoned employees who have been witnessing and accompanying GOLD CUP’s development.

In 2019, affected by the trade war between China and the United States, China’s GDP totaled 99,086.5 billion Yuan with the economic growth of 6.1%. China carried out a lot of tax and fee reduction policies involving all the industries and the main players of the diversified markets. China’s national taxes and fees were reduced by 2,360 billion Yuan in 2019. China’s manufacturing industry and relevant links accounted for nearly 70% of VAT reduction and the inclusive tax reduction of small and micro enterprises totaled about 250 billion Yuan. China was determined firmly to stabilize the economic growth. In the view of China’s market demand, the wires and cables market scale, which decreased in 2018, recovered the growth in 2019 to some extent, and will have a growth in 2020 under the stable growth policies implemented by our country. In the long run, the wires and cables business has entered a phase of fixed consumption amount competition, industry merger and growing concentration. The surviving enterprises may rank top 10 of the wires and cables industry of China.

Tesla is developing at an amazing speed in China. The localized mass production of Tesla new-energy vehicles in China is good for Chinese consumers to know the electric vehicles and beneficial for the development of upstream and downstream chains in China, and will activate the catfish effect on China’s consumption market of new-energy vehicles. The new-energy vehicles are greatly needed by online, logistic, public transportation and governments’ vehicles. Although GOLD CUP has withdrawn from the new-energy vehicle manufacturing sector in which GOLD CUP is of no advantage, GOLD CUP has a promising future on the wide service market.

The cold chain industry has been being at a rapid growth stage in recent three years. Enterprises of origin all over the world wish to sell their foods directly to Chinese end consumers through the cold supply chain. China is actively promoting the food safety policies especially after the outbreak of swine fever in 2019. The inter-provincial transport of live pigs is forbidden in China. The circulation of pork must be supported by the cold-chain storage and transportation conditions and more imported foods have been entered into Chinese market. GOLD CUP also provided its employees with the affordable pork from USA and Germany as annual benefits last year. All of those foods need the support of cold chain. In the view of downstream market, the internet is transparent and the consumers are increasingly willing to purchase cheaper, fine and personalized foods from the upstream market to meet their health requirements. The cold chain food and logistical market in China is of huge development opportunities.

For the year 2020, the work report presented by President Zhou Zuqin mentioned the need to continue to consolidate our wires and cables business base. In this phase, GOLD CUP’s main body - wires and cables business depends on the followings: customer service, occupying market and striving for best quality and moderate price through the long-term accumulated strengths of cost, quality and delivery term; our own characteristics in some segmented market areas and products with core value of GOLD CUP to serve national-level customers and projects; breaking through the barriers among our business units and expanding the cooperation effect by adjusting our organization structure, performance evaluation system and resource allocation mode; attracting more excellent resources for external cooperation through our ability to replicate the management system. For two wings of new energy and cold chain, we should be of a deep understanding of the two industries’ characteristics, make full use of platform resources, attract outstanding talents, make effective use of the resources, integrate operative flexibility and craftsperson spirit to build the core competitiveness gradually and join in the professional market precisely and deeply. In the New Year 2020, under the leadership of the headquarters and each business unit, we are required to unswervingly implement the work requirements of the 2020 work report.

Hereby, I present three expectations for our management:

I. Act out as GOLD CUP’s Inheritor. Inheriting and carrying forward brands is the responsibility given to us by history. As industrial participants, we shall not only forecast the future, but also come down to the earth. The long value of GOLD CUP to resist the market risk depends on our market position, product quality, cost control ability, lean service and cash flow control. As the inheritor, we shall be of the honest craftsperson spirit to strengthen our enterprise, and thus expand the scale and multiply the benefits. Xie Liangqiong, a director of GOLD CUP, as a deputy of Hunan Provincial People’s Congress, has proposed Hunan provincial government for setting up “Hunan Craftsperson Day” and the year 2020 as “Hunan Craftsperson Cultivation Year”. In my opinion, GOLD CUP can get this done first, positioning 2020 as the cultivation year of GOLD CUP and set the “GOLD CUP Craftsperson Day” to further strengthen our industrial foundation, improve the manufacturing level, and well inherit our core wires and cables business. We shall also consider the cognition of brand connotation by the new customers in the new age, and the well narration of brand stories to vitalize the brand culture and attract more young consumers.

II. Act out as GOLD CUP’s Striver. “Join hands with Gold Cup and share development together” is our mission, and has been insisted by us over the years. What we are doing together is a cause, not a job. GOLD CUP is thinking how to inspire the motivation and creativity of its staff, and implementing many incentive measures including but not limited to equity incentive, partnership scheme, technical innovation reward, management innovation reward, cost improvement reward, cash flow reward, skill allowance reward and apprenticeship reward. Those who will be motivated are GOLD CUP’s strivers, not the freeloaders, muddling or lazy ones. GOLD CUP is thinking of allowing the value strivers to get more benefits and share more achievements. Any member of GOLD CUP, who hopes to become a qualified striver, must share the same fate with GOLD CUP, combine the personal target with GOLD CUP’s target, be of the senses of responsibility, mission, belief and hardworking, respect his/her job, do the simple and ordinary work outstandingly, be able to create the constant value for GOLD CUP, take delight in cooperation, dare to undertake the responsibilities, and be of remarkable courage to meet challenges and achieve self-transcendence constantly.

III. Act out as Cultivator of Our Employee. After entering the year 2020, the employees born in 1990s are 30s, and more and younger colleagues join in GOLD CUP. 61% of GOLD CUP’s employees are 35 years old or younger. Talent is the core resource of GOLD CUP. Young colleagues are especially concerned about their platform for progress and growth in GOLD CUP. The middle and senior management staff shall think more about the cultivation of reserve forces, behave as model, take positions as the cultivation platform, and well instruct the subordinate staff. GOLD CUP has been thinking about proper ways to cultivate our employees. GOLD CUP’s talents’ inventory of the year 2019 is to sort out our backup team, and clarify the capability standards of middle and senior personnel through the leadership model, and optimize the growth path of technical personnel through the evaluation and recruitment channels for technical engineers. The skill improvement of front-line workers is promoted by the creation of GOLD CUP crafts persons and star-level staff.

The New Year 2020 is coming. I wish all GOLD CUP staff achieve breakthrough and obtain brilliant performances under the leadership of our management team. “Deliberate more sophisticated and work harder no matter how high the position is.” We are of reasons to believe that “10-Billion GOLD CUP” is coming, and “Centenary GOLD CUP” must pass on from generation to generation. GOLD CUP will be better in the future.