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Supplier Classification and Grading

To provide principles for the operations such as the development, evaluation and approval of material suppliers, and properly keep track of the quality and timeliness as confirmed by the suppliers to leverage the effectiveness of supplier cultivation, E Ink has, based on the material properties and in consideration of the difficulty levels and risks of acquisition and supply, classified the direct materials on the Bill Of Material (BOM) into three categories: general material, non-critical material and critical material. This is helpful for us to enter into cooperation agreements with the suppliers, evaluate the suppliers, and manage the suppliers.

Furthermore, the definition of critical supplier grading is annually reviewed. FPL materials and Sole Source materials are planned to be included into the scope of critical materials in 2022.

Evaluation and Audit of New and Existing Suppliers

The Company has been duly managing its new and existing suppliers with standardized evaluation and selection processes, creating a reliable basis for operations such as supplier development, supplier evaluation and supplier approval. In terms of existing suppliers, we will carry out annual supplier audit (which covers seven main audit items of social responsibilities) and quarterly evaluation to enhance the suppliers' manufacturing technologies, quality and management capabilities. This also helps reduce the costs, ensure the steady supply of the materials needed by E Ink, and develop a win-win partnership.

Moreover, we encourage our critical suppliers to get the RBA certification to make sure that our partners in the supply chain provide safe work environment, treat all employees with dignity and respect, and take environmental responsibilities during the production process. As of 2021, 2 suppliers in the supply chain have received the RBA certification.

In 2021, 22 new and existing suppliers were audited. As the impact of COVID-19 continued, we have opted to implement online and written application reviews instead of onsite evaluations for some suppliers to complete our evaluation of new suppliers. In 2021, the average score of supplier audits was 87.8, and 100% of new suppliers have passed the standard screening. However, two new suppliers were Conditionally Approved; the Company will provide guidance for them and list them as the first suppliers to be evaluated next time to ensure smooth material supplies.

Clean Transaction Commitment

Starting from 2018 onward, E Ink has been exchanging information with other competitors to review our operating status. We have thus revised and updated our Clean Transaction Commitment terms and requested all our suppliers (including suppliers of our subsidiaries) to sign the new Clean Transaction Commitment.

The key points of our Clean Transaction Commitment are as follows:

Suppliers shall abide by pertinent laws, regulations and administrative regulations set forth for the industry by the government
Suppliers shall endeavor to engage in integral cooperation and fair competition.
Suppliers shall not request for or offer illegal or undue benefits from/to E Ink employees.
Suppliers shall comply with all applicable anti-corruption laws and regulations currently in place and in the future. Suppliers shall also comply with relevant regulations applicable to counterparts in transactions established by E Ink and agree not to request, promise, accept or offer bribes and other undue or improper benefits from/to personnel and related parties or designated parties of E Ink.
Suppliers shall actively support any relevant investigations carried out by E Ink by revealing the facts and providing relevant information.
Suppliers are obliged to report or inform E Ink should they discover any E Ink personnel from taking bribery, accepting inappropriate benefits, or engaging in any other unethical conduct.

Supply Chain Risk Assessment

Before accepting a new supplier, the Company will first gather its information and perform a risk assessment to determine the quality and timeliness as confirmed by the supplier in order to leverage the effectiveness of supplier cultivation. We will then assess if the supplier in question can be recognized and accepted as a qualified supplier for us, and the outcome of the assessment will serve as a basis of consideration for other units in future procurements. As for the existing supplier assessment, we regularly conduct the "supplier risk assessment" for the material suppliers that have specific business dealings with us. By 2021, 77 suppliers had completed the "supplier risk assessments," and the result showed that 99% of the suppliers were classified in Level A.

E Ink Actions｜E Ink ESG Website

Management

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Supplier Classification and Grading

Evaluation and Audit of New and Existing Suppliers

Clean Transaction Commitment

Supply Chain Risk Assessment