Sustainability

Supply Chain Management

With over 54% of our footwear and 87% of our apparel production outsourced, suppliers are a crucial part of the Group's operations. To ensure that our suppliers' capability in delivering quality products that meet the Group's standards, we have a dedicated team responsible for monitoring suppliers' production qualities. We care about the business conducts of our suppliers and have developed detailed policies and procedures to effectively manage their environmental and social performance and responsibilities.

When we consider collaborating with a new supplier, we perform a thorough assessment of their capability and performance before accepting them as a qualified supplier of the Group. As the first step, we would perform an initial screening on suppliers' compliances and certifications regarding quality, environmental and human rights issues. Suppliers who pass the initial screening are then subject to an on-site assessment which consist of the research and development capability, quality management, production management, and their environmental and human rights compliance status. Only suppliers with an on-site assessment score of 60 or above can be introduced to our list of qualified suppliers and collaborate with the Group.

Our suppliers are required to comply with our Supplier Code of Conduct (the "Code") which outlines our requirements regarding a supplier's capability, product quality, compliance and qualifications. The Code requires that part of the prerequisite of our contract with the suppliers, the suppliers shall continue to comply with the Code's requirements during our collaboration. The Code concerns the environmental and social performance and responsibilities of suppliers, and list out our requirements on topics including environmental compliance, labour standards, employee welfare and human rights. For example, it is stated in the Code that employees of our suppliers can only work for maximum of 10.5 hours per day. Every quarter, our procurement, legal and human resources department would perform assessments on the suppliers' compliance with the Code. Any violation of the Code will be handled in accordance to our internal policies and guidelines, which may lead to warning or fines for minor violations and disqualification of suppliers for major violations.

In addition to our quarterly assessments, suppliers are also subject to the supervision of the local governmental departments including the Ecology and Environment Bureau and the Human Resources and Social Security Bureau. We would refer to the assessment reports of the local governmental departments on the human rights and environmental performance of suppliers, and take action when violations are observed.

To encourage and support our suppliers in developing environmentally friendly production facilities and a fair working environment, we provide regular training to our suppliers. We provide support to suppliers who are interested in upgrading their management system, but lack the resources and experience required to do so. During the Year, we supported the suppliers of adult shoes and apparel to develop their ISO9001 quality management system by providing training. In 2019, we will continue to support our tier-one and tier-two suppliers to develop their quality management system and enhance their quality assurance capabilities.

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