Sustainability reporting on the year 2011 · Founded in 1954, Foshan Xinguang Knitting Co. Ltd is a...

￥￥￥￥￥￥￥￥

Sustainability reporting on the year 2011

FOSHAN XINGUANG KNITTING CO.,LTD.

GRI Report

Sustainability reporting on the year 2011 About this Report

II

About this Report Reporting period

This report primarily focuses on thinking, efforts and accomplishments of Xinguang Knitting Co,Ltd. for fiscal

year 2011, the period from January 1, 2011 to December 31, 2011, with the data reflecting the actual results for

that period.

The report also includes the thinking, approaches and data prior to January 1, 2011.

Reporting cycle

This report is Xingguang Knitting Co.,Ltd’s second GRI report. The report is published annually.

Reporting boundary

In principle, this report covers the wholly owned operations of Xinguang Knitting Co.,Ltd, while the

environmental sections cover the printing and dyeing supplier that has formed water recycle system in conjunction

with Xingguang Knitting Co.,Ltd.

Please note that this report generally uses the term “Xinguang” to indicate the Xinguang Knitting Co, Ltd. Our

sustainability report publishes once a year.

Process for defining report content

Adhering to importance, integrity and comparability about GRI and principle of stakeholder participation, the

development of criteria for materiality and selection of priorities for reporting have been based on Xinguang’s

experience of many years with respect to sustainability topics, complemented by analyses of corporate

development strategies, differentiation of key topics and comprehensive dialogues with stakeholders.

Written standard

In the present GRI report of 2011, through the voluntary application of G3.1 Guidelines which was written by GRI

(Global Reporting Initiative), we believe our information disclosure reaches B level.

Data Source and Measurement

All data concerning KPIs source from Xinguang’s official files and statistical reports. During the period of

selecting indicators which are published in this report, Xinguang mainly thinks over the relevance, materiality and

availability of different concrete indicators.

Sustainability reporting on the year 2011 Content

III

Content

Cover Page

About this Report ............................................ II

Message from the chairman ........................... 1

Organizational Profile ..................................... 2

Corporation Introduction ........................... 2

Organizational Structure ............................ 2

Awards ......................................................... 2

Social Responsibility Sense ...................... 2

Corporation Governance ................................ 5

Member of governance body ..................... 5

Compensation mechanism ........................ 5

Communication mechanism ...................... 5

Conflicts of interest avoiding mechanism

............................................................................. 5

Risk management ....................................... 5

External charts endorsed .......................... 6

Membership in association ....................... 6

Engagement with stakeholders ................. 6

Economic ......................................................... 7

Product safety management ..................... 8

Production process reconstruction .......... 8

Quality control ............................................ 9

Capability of self-testing ............................ 9

Environment ..................................................10

To perfect regulatory system,

strengthen routine monitoring ................ 10

Actively to build green supply chain...... 10

Water ......................................................... 10

Energy consumption ............................... 12

GHG Emissions, effluent and waste ....... 13

Labor .............................................................. 16

Principle of non-discrimination .............. 16

Focusing on job training ......................... 17

Communication from the heart ............... 18

Human Rights ................................................ 19

Democratic managment .......................... 19

Reinforcing propaganda of human

rights ................................................................. 19

Prevention of child labor, forced and

compulsory labor ..................................... 20

Society ........................................................... 21

Integrity management and fair

competition ...................................................... 21

Anti-corruption ......................................... 21

Community ................................................ 21

Outlook 2012 ................................................. 23

GRI Content Index ........................................ 24

B level: Self declaration ............................... 30

Feedbacks ..................................................... 31

Sustainability reporting on the year 2011 Message from the chairman

1

Message from the chairman

An enterprise’s sustainable development requires itself to alter its

development mode radically, to have foresight of scientific

development and production concept of making overall plans and

taking all factors into consideration. However, nowadays there are

still numerous enterprises which ignore environment, community

and impair staff’s interest to maximize their own profits. As we know, all things in the world are in

relation with each other, so this kind out-dated, unilateral development mode will make it difficult

for an enterprise and its surroundings to form a sustainable development circle, which means that an

enterprise will court death eventually.

In recent years, stagnating of the global economy due to Euro-debt crisis and decreasing demands of

western economy have led to a decrease of production orders in global factories, which

consequently made numerous enterprises close down. Our enterprise confronted with all the

difficulties and transformed the crisis into an opportunity, while most enterprises were pessimistic

and disoriented about future. We seized the opportunity brought by enlarging domestic demand and

expanded domestic marketing portion and made the whole saleroom in an increase state. Seizing

both foreign market and domestic market, we kept promoting technology innovation, developing

new products and producing low-price products with high quality. Having had a long history of 60

years and gone through all kinds of setbacks, our enterprise has had a solid foundation. Faced with

the trend of enterprises closing down, we should never get disoriented but keep sober. We should

establish and hold the policy of sustainable development, thus we have made a strategy plan of the

following five years.

Our Corporation

CO2 Electricit Water Waste Steam

-25%

-25%

-25%-25%

-25%

Sustainability reporting on the year 2011 Organizational Profile

2

Organizational Profile

Corporation Introduction

Founded in 1954, Foshan Xinguang Knitting Co. Ltd is a historic factory, reconstructing from stated-owned

Foshan Pioneer Knitting Manufacturer to Sino-foreign joint ventures limited liability company in 1999. Due to

urban rectification and environment protection, the company has realized an integral moving from Chancheng

District to Xiqiao Science and Technology Industrial Park, Nanhai District, where is famous for fabrics.

Company’s existing plant area is 30,000m2, and its main products include series of children and adults’ fashion

made from knitting fabrics of different structures. The company processes and manufactures apparel productions

for international famous brands, such as Puma, Reebok, Dunlop, Redwood, Stussy, Obey, Cygele, Unedfeated,

Gotzburg and so on.

Organizational Structure

Awards

In Nov.2010, awarded Chinese Science and Technology Contribution Award in Knitting Industry

In May 2011, awarded Creditable Corporate in Guangdong Province

Social Responsibility Sense Enterprise vision

Foshan Xinguang, to become prior in knitting profession, and to be one of National Top 500 knitting enterprises;

To respect and value staff and to assure employee’s individual growing up and developing with Xinguang;

To maximize profits for shareholders and to pay back society positively.

Chainman

General

Manager

Vice General

Manager

Garment Operate

Department

Union

President

Purchase

Department

Administrative

Office

Warehouse Garment

Factory

A.Q.L.

Team

Interior

Department

HR

department

Facility

Department

Finance

Department


3

Core values

Build a world-famous brand with best quality.

Make perfection more perfect with best service.

Boost enterprise benefits with fine workmanship.

Produce Eco-textiles to fulfill social responsibility.

CSR strategy

Xinguang has established a social responsibility management system, covering responsibilities of economy, safety

production, products quality, environment, human rights and society aspects. We promise and execute strictly

moral norms, laws and regulations. We also care about and respond to expectations of relevant interest parties to

undertake the responsibilities for economy, environment and society. Through these efforts, we will realize a

win-win among government, staff, society and environment and hold sustainable development.

Figure 1 Frame of CSR Responsibility


4

CSR action plan

In recent years, we vigorously carried out enterprise’s social responsibilities. During the process, we gradually

realized that although we had certain achievement, as we can see the GRI Report of Xinguang in 2010/2011, the

awareness of social responsibilities of staff and even the whole supply chain should be improved. Therefore, we

need to improve from the following aspects:

Firstly, we should promote the staff’s awareness of social responsibilities and create a cultural atmosphere brave

enough to undertake social responsibilities. We will embark from enterprise management and make the staff

realize the importance of taking social responsibilities from top to down. We will radicate an example enterprise

and organize management to learn the concept and method of it.

Secondly, we should deepen the alteration cooperation of energy conservation and emission reduction with

suppliers. Since the year before last year, water consumption of toilets in workshop was replaced with rinse water

provided by printing and dyeing supplier, which achieved a win-win. We will promote cooperation and

communicate practical experience of energy conservation and emission reduction. We will make efforts together to

create green production environment and achieve the goal of ecological knitting.

Sustainability reporting on the year 2011 Corporation Governance

5

Corporation Governance

Member of governance body Table 1 Member of management

Management Responsibility

Chairman

LU Mingkeng

Be responsible for enterprise’s financial affairs.

General Manager

Li Lichang

Be responsible for enterprise’s overall operation and actualize annual business plan and

investment projects, emphasizing on promote enterprise’s economic profits.

Vice General Manager

Huang Weiming

Be responsible for enterprise’s administration operation, function division and appointing and

removing of middle management; representative of quality management system; and be

responsible for human right affairs.

Vice Party Secretary

Chen Zhengnan

chairman of Labor Union

Huang Jianchang

Give a training for new employees about enterprise’s basic situation and security education;

check all sanitation, security, and fireproofing regularly and assure working environment

meets products’ fabricating requirement.

Compensation mechanism To make personal goal of high management comply with the middle and long-term strategy of realizing enterprise

achievements, signing a prosecution contract and share plan is essential to confirm high management’s salary. On

the basis of signing prosecution contract and setting annual goal, we decide salary of each director and

management.

Communication mechanism To enhance staff’s participation of enterprise management, we set up communication mode at each administrative

level. There are mainly vertical communication, including congress of workers and staff, internal website, email,

monthly staff suggestion consult and advice mail box in workshop, and so on. Therefore, management can have a

perspicuity of staff’s interest requirement, indicating our valuing and respecting staff’s rights and interest.

Conflicts of interest avoiding mechanism Controlling beforehand is an important system of settling conflict of interest among directors. We employ high

management strictly and they must sign Foshan Xinguang appointment contract, which clearly regulates post

qualifications, function purview and payment and welfare. As with important operational decision-making, we

convene a directorate meeting and adopt an open vote system to make the decision.

Risk management We set up risk management system, and strengthen risk warning and prevention and value cultural construction of

risk management. We also help staff to set up a concept of “whenever and wherever here is risk”, and cultivate

favorable ability of managing risks. Through overall risk identification, our risks are mainly market risk and

production safety risk. In allusion to the former, we hold a production meeting among middle and high

management weekly and order quantity estimating meeting monthly, and discuss future market demand and price

change and corresponding action we should take. As with production safety risk, morning meeting in workshops

can awake staff to pay attention to production safety all the time and we hold fire drill yearly to strengthen staff’s

Sustainability reporting on the year 2011 Corporation Governance

6

warning awareness of safety production.

External charts endorsed By far, we haven’t yet attended or supported convention, tenet, or other proposition about economy, environment,

and society launched by external individual or organization.

Membership in association China Textile Enterprises League

China Knitting Association

Guangdong Province Textile Profession League

Foshan Textile Fashion Trade Association

Xiqiao Textile Association

Xiqiao Chamber of Commerce

Engagement with stakeholders The stakeholders are in accordance with the first GRI report issued by our enterprise. But this report we add

expectations and requirements of relevant interest parties when exposing relevant interest parties. It is summarized

through communication forms such as emails, phones, enquiries, daily communication, and speaking face to face.

Table 2 Engagement with stakeholders

Stakeholders Basis for identification and selection Key topics Approaches to stakeholder engagement

Shareholders Being the owner of enterprise To maximize the profit Monthly office meeting/annual shareholder

convention

Customers Being the source of enterprise value To supply super quality

products with best price Email/interview/telephone conference

Staffs Being the bedrock of value creation To ensure stable employment

and rights protection

By signing labor contract/advice mail

box/monthly staff suggestion consult

Suppliers Being the strategic partner To maintain long term

cooperation Email/interview

Government Being the law maker and defender of

lasting peace & stability

To comply with the laws, to

pay tax

Interview/policy execution and acceptation of

supervision

Community Being the provider of public service To support the community

development Interview/ participant in management

Sustainability reporting on the year 2011 Economic

7

Economic

900900900900

1100110011001100

0

200

400

600

800

1000

1200

2010 2011

Basic￥wage￥level￥in￥Foshan

China￥CPI￥in￥2011

4.60

4.90 4.90

5.40 5.305.50

6.40 6.50

6.20 6.10

5.50

4.20 4.10

0.50.50.50.5

11111.21.21.21.2

-0. 2-0. 2-0. 2-0. 2

0.10.10.10.1 0.10.10.10.10.30.30.30.3

0 .50 .50 .50 .50 .30 .30 .30 .3

0.50.50.50.5

0.10.10.10.1

-0.2-0.2-0.2-0.2

0 .30 .30 .30 .3

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

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20

11 F

eb

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ar

A

pr

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un

J

ul

A

ug

S

ep

O

ct

N

ov

D

ec

Year￥on￥year %

Month￥on￥month %

Xinguang all along maintains competitive advantages by best quality with best price, although the ever increasing

competitive pressure of cost from Southeast Countries. In 2011, the business volume with existing customers

boosts and developed new ones. The turnover in 2011 keeps an upward tendency. However, the profit has been

squeezed by the growing increased operational cost. The profit dropped by 26.45%.

In 2011, we contributed tax of RMB7.29 millions with down 11.14%. Even so, we are still one of top 20, whose

payment to government ranges from RMB 5 million to RMB 10 million.

Turnover

8695.82

13013.62

02000400060008000

100001200014000

2010 2011Year

/10,000

Turnover by customer

48.52 0 36.9

5411.79

3560.23

1586.982454.62

8431.18

179.2 160.8

0100020003000400050006000700080009000

Puma Obey Asobio Russell Others Customer

/10,000)

2010

2011

Operation Cost

72474.7

109236.3

0

20000

40000

60000

80000

100000

120000

2010 2011Year

/10,000

Payment of Workshop Employee Wages

857.86

700.49

2.59

1.7

0100200300400500600700800900

1000

2010 2011 Year

/10,000

0

0.5

1

1.5

2

2.5

3

Annual wage per capita

Workshop EmployeeWages

Annualwage per capita

Tax payment

728.76

809.93

680

700

720

740

760

780

800

820

2010 2011 Year

/10,000

Profit

41.89

30.81

05

10

15202530

354045

2010 2011 Year

/10,000

To do what is best for shareholder s


8

Product safety management We strictly comply with the Basic Safety Technology Prints, General Specification for Eco-Textiles and advocate

green production. Along with our textiles has passed the authorization of Oeko-tex 100, our productions has

become environmentally confidence textiles exempted from inspection.

To make garment metal-free prior to delivery is our product safety management principle. We have purchased

metal detectors NCA made in Japan to have every garment to passed through it, starting from all accessories and

trims to the bulk. For management, meanwhile, we developed “One Person, One Needle” Policy. All sewing

workers must be familiar with Needle Replacement Procedures before starting sewing; new needles are only

handed out when the damaged needle or all needle parts of a broken needle are returned to nominated person: If all

parts of broken needles can not been found out, the sewing garment need to pass through the metal detector. Only

the garment without broken needles can the employee get the new needle. All broken needles (all parts) must be

taped on the broken needle report, which can guarantee the sewing garment without needles as well as manage the

needle stock control.

Under above stringent product safety management, significant fines for non-compliance with laws and regulations

concerning the provision and use of products and services never occur in Xinguang.

Production process reconstruction As we can see from below chart, we only assigned one nominated worker to examine cutting panels and printings.

And only after sending panels to have printed in printing factory can the worker examined the printings.

Intermittent working caused is common as well as losing panels easily. But through improving process, we divide

the panel checking and printing checking, that is for both are done by two nominated person. And the checking

work must been done immediately once the cutting was finished. Now the production fluency has been greatly

advanced, lowering the losing panels and stimulating workers’ production enthusiasm. Currently, the daily panel

checking quantities jump to around 4,000 pieces, up 50% than before.

* Pattern:the template of cutting fabric.

Figure 2 Reconstruction of cutting procedure

Approve

pattern

Approve

pattern

Spread

fabric

Cut fabric Panel check Print check

Before

Cut fabric Panel check& Print

check

After

Spread

fabric


9

Quality control Xinguang gradually formulates the systematic quality control

process:Inline—Endline—ZDC—A.Q.L. and trains qualified QC personnel. On

every control process we collect the daily/weekly/monthly/quarterly defects

statistics, compared with the defective rates benchmark. The comparison analysis

can statistically support how to lower the defects rate at weekly quality control

meeting. Now the production defective rate in Xinguang is down to 5%.

Capability of self-testing To save time and fee of regular fabric and garment testing, our inhouse-lab has

been accredited by SGS to do the normal testing items from 2010. The inhouse-lab

has helped us to cut down the cost greatly. The average monthly testing fee has

declined to RMB 30,000-50,000 from RMB 100,000-200,000 and 1 working days

we only take but 7-8 working days on SGS side. Nevertheless the testing items in

our testing room have not been added since 2010. So we should equip the testing

room more and thus keep ongoing improving the capability of self testing.

Sustainability reporting on the year 2011 Environment

10

Environment

Xinguang strictly implements domestic environmental law, such as Environment Protection Law of People’s

Republic of China and Energy-Saving Law of People’s Republic of China. At the end of 2010, Xinguang tried to

introduce environmental managing system ISO14001. Unfortunately, it didn’t pass the authentication. The main

reason was that our employees didn’t attach great importance to environment protection and their awareness of

environment protection was weak. But we didn’t give up and continued to perform the standard environmental

management system and made it specified. In order to make the employees and top level of management familiar

with Xinguang environmental policy and advantages of environment protection on company’s economic interest,

we held all kinds of environmental awareness trainings for all staff.

To perfect regulatory system, strengthen routine monitoring Our enterprise has gradually formed a work team led by deputy general manager, coordinated by GM office,

equipment department, logistic department and financial department, etc. to manage, fulfill, and supervise

environment protection. Its work contains the designation of social responsibility management, implementation of

social responsibility practice (statistics), communication about social responsibility and compiling of social

responsibility reports. Among them, daily supervision to collect, count and analyze energy consumption data are

critical. It is beneficial to promote energy conservation by collecting, analyzing and contrasting energy utilization

and consumption between offices and workshop.

Figure 3 Routine Monitoring System

Actively to build green supply chain Confronted with frequent “green bulwarks” built by western developed countries and continuously atrophied

consumer confidence due to poisonous and harmful food, our enterprise clearly realized it’s quite necessary to

build a green supply chain in the long term. The green supply chain requires that the design of the products’ whole

lifecycle layout should be done from the perspective of environment protection and ecological consideration,

including green design, green material, green production, green purchasing, packaging and transportation.

Certainly the applying of concept of green supply chain also spread among our relevant interest parties including

suppliers and clients. Therefore, our enterprise integrates the layout of products’ green lifecycle step by step

combing with our own reality.

Water

The water consumption source is mainly from the water supplying system planned by industrial park committee,

which does not make great impact on the surface water, ground water, lakes and rivers. During our production

process, it rarely involves water for industry. Instead, water for life is dominating supply for our office toilets and

workshop toilets. Our water-saving plans combine management and technological reformation of energy

conservation and emission reduction, inclusive of water statistic, water reusing, publicity and education of

water-saving, routine inspection of water-pipes.

Equipment Dept.

Financial Dept.

Logistic

Dept.

KPI

Report Administ-

Rative Office

Water & Energy Management

Waste, Capacity, fuel fee

Vice

G.M.


11

� Water used in office building

The toilets of office building have been installed squatting pans with tank of 6l water, which can help us to reduce

water consumption by 1020l per day while compared with the squatting pans with tank of 9l—there are usually 68

staff in our office and it is estimated one person go to the toilet 5 times. In addition, the water tap on the 3th floor

are sensor controlled, which get rid of the bad habits of leaving with turning off the tap.

Water tap of sensor controlled Squatting pans with tank of 6l water

� Water used in workshop

The workshop toilets make full use of the rinse water produced by HengHui Dyeing factory. The factory has a

system for shunting of dyeing water. The dirty water will be shunted to waste water treatment plant, and clean

water will be shunted the underground cistern for reuse. We save 6-7 tons water per day as a result.

Water for life t

48446

45651

4400044500450004550046000465004700047500480004850049000

2010 2011 Year

Water for life t

23.0522.14

0

5

10

15

20

25

2010 2011 Year

Water for lifeconsumption t

Water for lifeconsumption pergarment t/pic

� Retrieving steam condensate in printing and dyeing factories

Henghui printing and dyeing factory is our important fabric dyeing supplier. However, printing and dyeing factory

is high energy-consuming enterprises and consumes a lot of steam during the process of fabric rinsing, desizing,

steaming, and drying, etc. It is calculated that a large and medium-sized enterprise produces tons of steam

condensate and quantities of redundant steam. However, enthalpy in the water pipe is as high as 600 to 800kj/kg,

which obviously a resource of great value to be utilized. Since the steam condensate recovery machine put into use,

the factory has retrieved substantive redundant steam and heat. As a result, we have eliminated tail steam emission

and formed a virtuous circle of steam condensate retrieving. The use ratio of heat energy in the factory has

increased by 50% with 200m3 steam condensate recovery. The water temperature of it is about 50 to 60℃, which

decreases electricity consumption of heating up water leading to a 20% to 30% decrease of electricity

consumption.


12

Energy consumption � Electricity

Table 3 lists in 2011 the energy-saving management and initiatives we launched, whose effects are notable.

Xinguang saw electricity consumption a drop to 0.2179 kw/h per piece garment, reaching the 5 years’ goal. It

might also note that the off-peak power consumption management implemented by industrial park plays an

important role. Thus, we are still prudent to the consumption reduction of electricity.

Table 3 Electricity Management& transformation

Office

Toilet lighting transformation Change the switches into Acousto-optic induction switches; The lights are up when

people come and the lights go out when people leave.

Computer management

transformation Employees have to turn off the monitor power if they leave more than 10 minutes.

Workshop

Installation of servo direct drive

on sewing machines

Partly install the servo motors which adopt electronic servo control on old sewing

machines.

Lighting switches modification The lighting switches in workshops have been changed to parallel circuit to reduce

useless lighting.

� Diesel and gasoline

The diesel consumption and gasoline consumption lay on the business cars and trucks in Xinguang. We finished

installing GPS monitoring system in business cars, which can effectively measure mileage and track refueling. For

the trucks, we issued concrete measures to improve vehicle using .Those projects have successfully brought us an

expense reduction by around RMB60,000-70,000 as well as the decrease amount of burning fuel.

� Steam

Steam consumption in Xinguang mainly is to iron ready garment in the ZDC. We enhanced trainings for

garments-ironing workers in 2011(as included in 2010 GRI report). Compared with 2010, we not only

strengthened the training, but also transformed regular training into monthly training. In addition, we avoided

steam waste by setting a standard process of ironing clothes.


13

19164

21081

18000

18500

19000

19500

20000

20500

21000

21500

2010 2011

Gasoline￥Consumption l

0.0100

0.0093

0.0088

0.0090

0.0092

0.0094

0.0096

0.0098

0.0100

0.0102

2010 2011

Gasoline￥Consumption￥per￥garment l/pic

GHG Emissions, effluent and waste

� Waste water

Our production procedures include cutting, sewing, packing, which don’t produce industrial sewage. Therefore,

the source of our sewage comes from drainage of offices and workshop toilets. It is non-poisonous and harmless,

belong to ordinary domestic sewage. Since we pave waste pipes complying with arrangement and management of

industrial zone, which are directly connected to sewage disposing factory, there don’t exist a problem of

disordered draining or secret draining. We are informed by the sewage disposing factory that the total discharge of

our living sewage in 2011 is 45,651 tons, decreasing by 5.77% compared with 2010.


14

� Waste

Papers

We have realized a 100% recovery of paper scraps since we

moved to new plant in 2008. Paper scraps produced in working

process occupied a great percentage. Therefore, we implemented

several management measures, including: documents used for

interior circulating except official ones printed both sides,

reducing copy amount by passing along documents as many as

possible, promoting paperless office, and making full use of

enterprise’s email, etc.. Meantime, we placed a paper-retrieving

carton beside copying machine to remind staff of saving paper.

Paper used classification Paper-retrieving cartons

Non-paper scraps

Non-paper scraps are mainly package poly bags for garments.

Before 2011, there were repeatedly poly bag orders because of

oversight during poly bag purchasing. Withal, we strengthen

approval management of poly bag purchasing. We require that

the purchasing is effective unless directors approved and signed

for affirmation.

Abandoned panels

Abandoned strips are mainly from cutting workshop. In2011,the

abandoned panels has decreased by 3.12%. The main reasons of

abandoned strips decrease is: on one hand, we bought more

computer cutting beds; on the other hand, we improved fabric

spreading management (two fabric spread workers account, sign

and fill in layers of spreading fabric.) In consequences, the

veracity of quantities of cutting slice improved, thus decreased unnecessary waste during cutting.


15

� CO2 Emission

It is known that CO2 emissions are directly linked with the energy consumption. Based on above energy reduction,

the sum of CO2 emissions accordingly reduced.

0.2876

0.2724

0.2500

0.2600

0.2700

0.2800

0.2900

0.3000

0.3100

0.3200

2010 2011

CO2￥Emission￥per￥garment kg/pic

CO2￥Emission￥in￥Enablon￥report kg/pic

*According the carbon calculation of BP China

1gasoline(L )=2.3 CO2(kg)

1 diesel(Kg )=3.06 CO2(kg)

1 electricity(kw/h )=0.997 CO2(kg)

Sustainability reporting on the year 2011 Labor

16

Labor

Xinguang strictly obeys the labor contract law of People’s republic of China. Sign contracts with our employees

legally and the rate of contract-signing reaches to 100%. We always pay salary to employees punctually and

respect their privacy. In 2011, there is no significant labor dispute arising in Xinguang.

We emphasize production safety management. New employees must receive 3-Tiers Safety Education. And we

edited employee handbook for new employees, which makes them know about enterprise’s regulations and

systems. Manufacturing workers must wear protection equipments before beginning their online work and all the

cutting tools must be placed together. Now the risk of staff casualty has been decreased to lowest since we have

computer automatic cutting bed. In 2011, the rate of industrial injury, occupational diseases and work delay is 0.

In 2011, we still faced up hardship on recruitment. The total workforce by the end of 2011 is down 52.22%

compared to a year earlier with the manufacturing moving westward.

The turnover in 2011 is 138 in total, and the turnover rate approached 27.6%. The high staff leaving rate

demonstrates the necessary of improving the labor management.

Our employees are legally covered social comprehensive insurance and entitled to the mandatory holidays.

However, some employees reject enrolling in the social insurance program because of deduction from income.

Only 172 employees were covered in 2011 and the rate is 63.7%. We will intensify education to the importance of

social insurance known to them. By 2013, least 80% employees are insured by the social insurance.

Benefit List

Meal allowance Free body check

Free shuttle Birthday gifts

Attendance bonus Seniority wage

Principle of non-discrimination

Xinguang performs “Equal, Non-discrimination” recruiting policy, resisting racial discrimination, gender

discrimination, age discrimination, region discrimination and so on. There is no discrimination case at Xinguang in

2011. “Equal Opportunity, Competing for Job” is our employing principle. We firmly set the same level of basic

salary for same job. At the end of 2011, the work force distributions are as follows:

By gender, the ratio of men to women is basically same as last year.

By region, the ratio of other province except Guangdong slightly declines because of the change of national

policies and growing increase of the living standard in coastal cities.

By age, our employees are comparatively young. Mostly are below 35.


17

Gender

32%

68%

Male

Female

Region

55%

45%

Guangdong

Except￥Gusngdong

Age

63%

28%

9%

18-35

36-45

>45

Focusing on job training

Xinguang is exploring the win-to-win development between employees and company. We overall plan employees’

vocational skills and company’s development program through monthly employees’ opinions consulting meeting.

And we always hold the training for our employees, about occupational health and safety, labor laws, production

skills and management knowledge. We hold 50 occupation trainings in 2011, including physical testing trainings

for inhouse-lab workers, fixing operation skill trainings for ZDC workers, quality requirement trainings for all

staff, lectures of strengthening the cohesive force. The average time per training is 1.5 hours and all staff benefit

from these meetings.

By the end of each month and year, Xinguang will hold the competition of “Process Star”. The awardee can gain

bonuses, which increases the employees’ motivation. For example, annual garment capability for one employee is

increased from 5100pcs in 2010 to 7600pcs in 2011.

Table 4 Comparison of production efficiency

Content 2010 2011

Total workforce 411 270

Capacity(in 10,000 pieces 210.16 206.24

Capacity per capita in 10,000 pieces 0.51 0.76

process star of ironing competition of ironing garment competition of stiching garemnt

garment(front centre)


18

Communication from the heart

To enhance staff’s participation of enterprise management, Xinguang set up all kinds of communication methods:

congress of workers and staff, internal website, email of high directors, monthly staff suggestion consult and

advice mail box in workshop, and so on.

In summer of 2011, we received complaint about the high temperature in workshop from the advice mail box. Our

managers quickly responded to this matter by installing cooling spray devices by the end of 2011. This year, the

workers reflected the cooling system is helpful to prevent the high temperature.

Advice-mail box in workshop Cooling-temperature machine

Sustainability reporting on the year 2011 Human Rights

19

Human Rights

Continuous improving is the guideline of developing human rights work and respecting staff’s legitimate interest

is the core. We emphasize humane care, as presented in 5.1 in our first GRI report. We respect staff’s material and

mental demands, create equal and fair opportunity of business development. We also exert staff’s creativity,

enhance their loyalty, thus improve product efficiency and strengthen enterprise’s competitiveness.

Democratic managment

Xinguang has established congress of workers and implemented democratic management for over 20 years

according to Trade Union Law and Union Rule to work independently. The labor union in Xinguang still worked

according to daily procedures and completed the 2011 working plan step by step, including:

We adopted the advice made on staff suggestion consult that company provided herbal tea for free and offered

herbal tea and soup for free in the canteen.

The labor union went to visit Zhanghuijuan who was in hospital because of nephropathy and Liqiaoyi whose hand

bone had a fracture and got to know their family and living condition.

In the Women’s Day activities, we invited Doctor Li to have physiological hygiene lessons for female workers and

held activity of visiting the park.

We insisted on safety education and fire drill for employees.

Since the level of minimum wage has been raised, labor union conferred with the enterprise and strived for

employees’ lawful rights and interests.

As for migrant employees visiting family during Spring Festival, company gave a fare reimbursement. Besides,

company holds annual staff dining together.

Annual staff dining Kick off meeting of safety production Knowledge forum at Women’s day

The coverage of employees participating in collective bargaining agreement is 100%. On the basis of national

laws and regulations, staff representatives conferred with company about working hours, holidays, wages,

mandated welfares and festival activities, etc and signed collective contracts in the end. On Dec. 28th, the

Collective Bargaining Agreement was approved on the labor union presented by employee representatives and

company representatives. Employee representatives signed on it and it was valid from then.

Reinforcing propaganda of human rights

Xinguang specializes in OEM, accordingly requiring production workers to assemble with little knowledge. They

have weak awareness of protecting their rights. Based on this, Xinguang holds all kinds of trainings one or two

times each year, aiming at enhancing employees’ awareness of human right and right protection. In addition, we

intensify education of human right for employees by pasting propaganda material on spare area in public places in

company.


20

Prevention of child labor, forced and compulsory labor

The number of child labor and forced and compulsive labor in Xinguang in 2011 is 0, the same as in 2010. This is

because Xinguang always strictly controls workers employing. Since company has bought the ID card, check

pseudo system, entering new recruits’ ID information into the system, we can read new recruits’ real ID

information, such as name, household register and age, etc, which can help us to confirm recruits’ real ID.

As with avoiding forced employment and compulsive labors, signed labor contract has a provision that employees

must apply for resign a month in advance.

As for avoiding child labor, company also use visual inspection, making a careful comparison to see if the

employee is in accordance with what ID card says. By doing this, we can avoid employ workers with false ID

card.


21

Society

You are what you done for society----the citizen image

Integrity management and fair competition

Xinguang is mainly engaged in export-oriented economy, which requires us to not only obey domestic laws and

regulations, but also understand and execute law requirement of import countries. Integrity is a basic principle of

marketing economy. Based on this, we establish and carry out standard system of stocking and shipment

inspection and our products pass rigorous commodity quality supervision conducted by circulating field. We

obtain clients’ favor by developing new fabrics continuously, adopting new craft and providing products of super

quality but not by advertising, slandering competitors or aimlessly following price war. Xinguang has never been

sanctioned for violating laws and regulations as well as significant fines.

Anti-corruption

Combating corruption and upholding integrity in Xinguang is always limited to the education of party members in

party organization. By far, we haven't set up a set of complete system of internal investigation, anti-corruption and

anti-commercial-bribe in the whole company. This is the exact place where Xinguang should improve in later

management.

In 2011, Xinguang educated the warehousing department, purchasing department, and financial department

how to reject the counterfeit invoices and reimbursement slips. And one customer required us to conclude Vendor

Incorruptibility Convention, which had great enlightenment significance to Xinguang. In this respect, Xinguang

will establish an incorruptibility convention fit for Xinguang and encourage staff to study and get trained. We will

standardize the procedures of purchasing and financial staff’s transacting note cancelling and set up

incorruptibility gradually. In consequence, we will perfect our rules and regulations about anti-corruption and

anti-commercial-bribe.

Community

Committed to the community development

Community is one of our important stakeholders. Dedicating our

efforts to build harmonious community relation is the goal of Xinguang

to propel community development. As for relevant community parties,

we have local government and management committee of science and

technology industrial park. We set labor union chairman and deputy

general manager as main contact persons, hammering at complying

with local community’s management methods and existing principles,

eradicating things that damage community, and set up a good image of

serving the community. The two main contact persons are active to

participate in community administration, care community environment

protection, carry out community public security, and pursue safety

production. Meanwhile, Xinguang responds positively to the “Do Good

to Xiqiao” activity held by local government, contributing to eliminate

Sustainability reporting on the year 2011 Society

22

community poverty. In 2011, Xinguang took part in community

activities about 13 times. They mainly are:

Charity activity held by the government

The whole employees in Xinguang donated 11,755.4yuan in total. We

organized over 40 persons to participate the charity activity, indicating

the determination of Xinguang to eliminate community poverty and

build harmonious community.

Tree planting

Xinguang responded actively to the industrial park’s call about planting

trees on Tree Planting Day. On that day, top level management and staff

representatives participated planted 6,000 saplings. The participants

included chairman, secretary of party committee, deputy general

manager and HR manager, etc.

Fun sports

The industrial park committee holds fun sport activities in March every

year. And all large and middle-sized enterprises send a team to take part

in it. In 2011, Xinguang sent a team of 11 persons and gained an excellent grade of ranking 8th.

Sustainability reporting on the year 2011 Society

23

Outlook 2012

Being the first year of our five-year strategic plan, the year of 2011 is of special

significance to whether we can realize sustainable development. Review the

development process of the enterprise on all sides, we had certain achievements, for

example, the goal of energy consumption to decrease by 25% by 2015(i.e., yearly

decreasing rate being 5% at least compared with the consumption amount of energy

2010) was achieved. However, we noticed that performance assessment might differ

because GRI report was lack of consolidated date collection and caliber. Even so, we

were still keeping improving as we could, and finding an approach that could unify

economic benefit, environmental benefit and social benefit. Standing in the new

development beginning, we would plan as a whole on the basis of scientific outlook

on development and firmly inherit the concept of “Quality supreme, security first,

innovation bold, people oriented and production clean”. In addition, we would tamp

our foundation and seek for progress in a stable condition to enhance abilities of

sustainable development on all sides, including business operation, environment, and

society.

Sustainability reporting on the year 2011 Outlook 2012

24

GRI Content Index

Section Description Chapter in Xinguang

Sustainability Report

Page

Strategy and Analysis

1.1 Statement from the most senior

decision-maker of the organization

Message from the chairman 1

1.2 Description of key impacts, risks, and

opportunities.

Message from the chairman 1

￥￥￥￥

Organizational Profile

2.1 Name of the organization. Corporation Introduction 2

2.2 Primary brands, products, and/or services. Corporation Introduction 2

2.3 Operational structure of the organization,

including main divisions, operating

companies, subsidiaries, and joint ventures.


2

2.4 Location of organization's headquarters. Corporation Introduction 2

2.5 Number of countries where the organization

operates, and names of countries with either

major operations or that are specifically

relevant to the sustainability issues covered in

the report.


2

2.6 Nature of ownership and legal form. Corporation Introduction 2

2.7 Markets served (including geographic

breakdown, sectors served, and types of

customers/beneficiaries).


2

2.8 Scale of the reporting organization. Economic, Labor 7, 16

2.9 Significant changes during the reporting

period regarding size, structure, or ownership.

Corporation Introduction 2

2.10 Awards received in the reporting period. Awards 2

￥￥￥￥

Report Parameters

3.1 Reporting period (e.g., fiscal/calendar year)

for information provided.

About the report II

3.2 Date of most recent previous report (if any). About the report II

3.3 Reporting cycle (annual, biennial, etc.) About the report II

3.4 Contact point for questions. Feedbacks 31

3.5 Process for defining report content. About the report II

3.6 Boundary of the report (e.g., countries,

divisions, subsidiaries, leased facilities, joint

About the report II

Sustainability reporting on the year 2011 GRI Content Index

25

ventures, suppliers).

3.7 State any specific limitations on the scope or

boundary of the report (see completeness

Principle for explanation of scope).

About the report

II

3.8 Basis for reporting on joint ventures,

subsidiaries, leased facilities, outsourced

operations, and other entities that can

significantly affect comparability from period

to period and/or between organizations.

About the report

II

3.9 Data measurement techniques and the bases

of calculations, including assumptions and

techniques underlying estimations applied to

the compilation of the Indicators and other

information in the report.

About the report

II

3.10 Explanation of the effect of any re-statements

of information provided in earlier reports, and

the reasons for such re-statement (e.g.,

mergers/acquisitions, change of base

years/periods, nature of business,

measurement methods).

About the report

II

3.11 Significant changes from previous reporting

periods in the scope, boundary, or

measurement methods applied in the report.

About the report

II

3.12 Table identifying the location of the Standard

Disclosures in the report.

GRI content Index 24-29

3.13 Policy and current practice with regard to

seeking external assurance for the report.

About the report II

￥￥￥￥

Governance, Commitments and Engagement￥￥￥￥

4.1 Governance structure of the organization,

including committees under the highest

governance body responsible for specific

tasks, such as setting strategy or

organizational oversight.

Organizational Structure,

CSR strategy,

Member of governance

body

2,3,5

4.2 Indicate whether the Chair of the highest

governance body is also an executive officer.

Organizational Structure 2

4.3 For organizations that have a unitary board

structure, state the number and gender of members of the highest governance body that

are independent and/or non-executive

members.


2

4.4 Mechanisms for shareholders and employees

to provide recommendations or direction to

Communication mechanism 5


26

the highest governance body.

4.5 Linkage between compensation for members

of the highest governance body, senior

managers, and executives.

Compensation mechanism

5

4.6 Processes in place for the highest governance

body to ensure conflicts of interest are

avoided.

Conflicts of interest

avoiding mechanism 5

4.7 Process for determining the composition,

qualifications and expertise of the members of

the highest governance body and its

committees, including any consideration of

gender and other indicators of diversity.

Member of governance

body

5

4.8 Internally developed statements of mission or

values, codes of conduct, and principles

relevant to economic, environmental, and

social performance and the status of their

implementation.

Enterprise vision,

Core values

2-3

4.9 Procedures of the highest governance body

for overseeing the organization's identification

and management of economic, environmental,

and social performance, including relevant

risks and opportunities, and adherence or

compliance with internationally agreed

standards, codes of conduct, and principles.

CSR strategy

3

4.10 Processes for evaluating the highest

governance body's own performance,

particularly with respect to economic,

environmental, and social performance.

CSR action plan

3-4

4.11 Explanation of whether and how the

precautionary approach or principle is

addressed by the organization.

Risk management

5

4.12 Externally developed economic,

environmental, and social charters, principles,

or other initiatives to which the organization

subscribes or endorses.

External charts endorsed

6 ￥￥￥￥

4.13 Memberships in associations (such as industry

associations) and/or national/international

advocacy organizations.

Membership in association

6

4.14 List of stakeholder groups engaged by the

organization.

Engagement with

stakeholders 6

4.15 Basis for identification and selection of

stakeholders with whom to engage.

Engagement with

stakeholders 6

4.16 Approaches to stakeholder engagement,

including frequency of engagement by type

Engagement with

stakeholders 6


27

and by stakeholder group.

4.17 Key topics and concerns that have been raised

through stakeholder engagement, and how the

organization has responded to those key

topics and concerns, including through its

reporting.

Engagement with

stakeholders

6

￥￥￥￥

Economic

EC1 Direct economic value generated and

distributed, including revenues, operating

costs, employee compensation, donations and

other community investments, retained

earnings, and payments to capital providers

and governments.

Economic

7-8

￥￥￥￥

Environmental

Energy

EN3 Direct energy consumption by primary energy

source.

Energy consumption 12-13

EN4 Indirect energy consumption by primary

source.


EN5 Energy saved due to conservation and

efficiency improvements.


EN6 Initiatives to provide energy-efficient or

renewable energy based products and

services, and reductions in energy

requirements as a result of these initiatives.

To perfect regulatory

system, strength routine

monitor,

Actively to build green

supply chain,

Energy consumption

10-13

EN7 Initiatives to reduce indirect energy

consumption and reductions achieved.


Water

EN8 Total water withdrawal by source. Water 10-11

EN10 Percentage and total volume of water recycled

and reused.

Water used in office

building, Water used in

workshop; Retrieving steam

condensate in printing and

dyeing factories

11

Emission, Effluent and waste

EN16 Total direct and indirect greenhouse gas

emissions by weight.

CO2 Emission 15

EN21 Total water discharge by quality and Waste water 13


28

destination.

EN22 Total weight of waste by type and disposal

method.

Waste Management 14-15

￥￥￥￥

Labor

Employment

LA1 Total workforce by employment type,

employment contract, and region broken

down by gender.

Labor

16-17

LA2 Total number and rate of new employee

Hires and employee turnover by age, gender,

and region

Labor

16-17

￥￥￥￥

Labor/management relations

LA4 Percentage of employees covered by

collective bargaining agreements.

Labor 16

LA7 Rates of injury, occupational diseases, lost

days, and absenteeism, and number of

work-related fatalities by region and gender.

Labor

16

Training and education

LA10 Average hours of training per year per

employee by gender and by employee

category.

Focusing on job training

17

Equal remuneration for women and men

LA14 Ratio of basic salary of men to women by

employee category.

Principle of Non-

discrimination 16

￥￥￥￥

Human Rights

Non-discrimination

HR4 Total number of incidents of discrimination

and corrective actions taken.

Principle of Non-

discrimination 16

Freedom of association and collective bargaining

HR5 Operations and significant suppliers identified

in which the right to exercise freedom of

association and collective bargaining may be

at significant risk, and actions taken to

support these rights.

Democratic

Management

19

Child labor


as having significant risk for incidents of

child labor, and measures taken to contribute

to the elimination of child labor.

Prevention of child labor,

forced and compulsory labor 20

Forced and compulsory labor


29


as having significant risk for incidents of

forced or compulsory labor, and measures to

contribute to the elimination of all forms of

forced or compulsory labor.

Prevention of child labor,

forced and compulsory labor

20

Remediation ￥￥￥￥￥￥￥￥

HR11 Number of grievances related to human rights

filed, addressed, and resolved through formal

grievance mechanisms.

Communication from the

heart 18

￥￥￥￥

Society

Local communities

SO1 Percentage of operations with implemented local

community engagement, impact assessments, and

development programs.

Community

21

Corruption

SO2 Percentage and total number of business units analyzed

for risks related to corruption.

Anti-corruption 21

SO3 Percentage of employees trained in organization's

anti-corruption policies and procedures.

Anti-corruption 21

SO4 Actions taken in response to incidents of corruption Anti-corruption 21

Compliance

SO8 Monetary value of significant fines and total number of

non-monetary sanctions for non-compliance with laws

and regulations.

Integrity management and

fair competition 21

Product

PR5 Practices related to customer satisfaction, including

results of surveys measuring customer satisfaction.

Production process

reconstruction,

Quality control,

Capability of self-testing

8-9

PR9 Monetary value of significant fines for non-compliance

with laws and regulations concerning the provision and

use of products and services.

Product safety management

8-9

Sustainability reporting on the year 2011 B Level: Self declaration

30

B level: Self declaration

A supplementary GRI Report also presents the fundamental information for especially interested parties in the

sequence of the GRI indicators. The Xinguang Sustainability Report 2011 comply with the GRI G3.1 guidelines at

the “B level” from the graduated GRI reporting system (see following chart). Application level B, which Xinguang

has achieved, requires the most comprehensive coverage of all requirements. Information concerning about 20

Performance Indicators contained in the GRI guidelines must be disclosed. This concerns the report profile (points

1.1-4.17), as well as management approaches and performance indicators in terms of economic (EC), environment

(EN), labor (LA), human rights (HR), society (SO) as well as product responsibility (PR).

Sustainability reporting on the year 2011 Feedbacks

31

Feedbacks

Distinguished readers, we are particularly grateful for you to read the Xinguang Knitting Co, Ltd. Sustainability

Report of 2011. If you have found any mistakes, please feel free to fill in the form below and e-mail to

[email protected] or fax to 0757-81258826.

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