Corporate Social Responsibility Report of Shanghai Mechanical & Electrical

Industry Co., Ltd.

Year of 2016

Important Reminder

The Company’s Board of Directors and all the directors guarantee that this report does not have any false

records, misleading statement or significant omission, and individually and collectively undertake the

responsibility for the correctness, accuracy and completeness of its content.

Notes on the Report

This report is made in reference to Shanghai Stock Exchange’s guidelines on preparing "Corporate Social

Responsibility Report", combined with the Company’s actual situation.

This report is the 9th CSR report issued by the Company, reviewing and disclosing the tenet, practice and

achievement in its sustainable development in 2016. The data as shown in the report will mainly cover

2016 and extend forward modestly.

This report is related to the head office, holding company(ies) and partial non-holding companies of

Shanghai Mechanical & Electrical Industry Co., Ltd. Unless otherwise indicated, "Shanghai Mechanical &

Electrical Industry Co., Ltd", "Shanghai M & E", " M & E Co., Ltd" and "the Company" in this report all mean

Shanghai Mechanical & Electrical Industry Co., Ltd. In this report, "Electric Group" means Shanghai Electric

(Group) Corporation.

This report communicates openly and transparently to the public the Company’s responsibility fulfillment

on community, environment, customers, employees, and partners so as to improve understanding and

contact between society and the Company.

Contents

I. About Shanghai M & E

1.1 Company Profile

1.2 Reform and Development

1.3 Business Performance

II. Environmental Responsibility

2.1. Energy Saving and Emission Reduction

2.2 Green Manufacturing

III. Employee Responsibility

3.1 Rights and Interests Protection

3.2 Personnel Development

3.3 Professional Training

3.4 Cultural Construction

IV. Corporate Responsibility

4.1 Product Quality

4.2 Safety in Production

4.3 Internal Control

4.4 Honest and Self-disciplined

4.5 Shareholders’ Rights ans Interests

4.6 Cooperation and Double Win

V. Harmonious Society

5.1 Public Welfare Undertaking

5.2 Community Construction

VI. Responsibility Outlook

I. About Shanghai M & E

1.1 Company Profile

Shanghai M & E is a listed company issuing A and B shares, with business mainly involving the

manufacturing of elevators, air conditioning equipment, hydraulic products, welding equipment, wood

based panel manufacturing machinery, engineering machinery and motors.

2016 is a key year in which the Company planned its development during "the 13th Five-Year Plan". In that

year, the Company actively adapted to the new normality of economic development, carried forward the

development strategy characterized by high-end technologies, light structure, intelligent products and flat

management, being customer value oriented and focusing on innovation and development; always

assuming the social responsibility of "Caring about the staff, the ecology, partners and the society", it

strives for producing more efficient, economical and greener electromechanically integrated products and

a more harmonious living space.

The Company owned 29 holding and non-holding companies, including 18 Sino-foreign joint ventures, and

7,415 employees in 2016.

1.2 Reform and Development

The Company actively conducted exploration to strengthen the competitive industry, and Shanghai

Mitsubishi Electric Elevator Co., Ltd. (hereinafter called as "Shanghai Mitsubishi Co.") under it has

completed the delivery of the 600,000th elevator. The Company sped up the establishment and

development of new industries, steadily pushed ahead with joint venture cooperation in the

manufacturing of precision speed reducers with Japan Nab and cooperation with Clean Technology

Universe AG to accelerate the development in robot and environmental protection industries; it actively

pressed ahead with the reform, and Shanghai Electric Group Printing and Packing Machinery Co., Ltd. and

Shanghai Electric Hydraulics & Pneumatics Co., Ltd. (hereinafter called as "Hydraulics & Pneumatics Co."),

two of its subsidiaries, increased the productivity by downsizing. The Company sped up industrial

restructuring, completing equity disposition for Shanghai Faiveley Railway Technology Co., Ltd. and

transfer of 10% of shares of Shanghai Ri Yong-JEA Gate Electric Co., Ltd. (hereinafter called as "Yong-JEA

Co.") as per the annual plan to guarantee healthy development of industries.

1.3 Business Performance

Amid the downward pressure on economy in 2016, we always kept our spirit high and made concerted

efforts, pressing ahead with both reform and development. We achieved every target set by the Board of

Directors at the beginning of the year. For 2016, Shanghai M & E had total assets of RMB 31.741 billion

and net assets of RMB 11.59 billion, increasing by 6.33% and 10.53% respectively as compared with the

same period of last year; realized an operating income of RMB 18.939 billion, down by 1.85% against the

same period of last year; net profits attributable to the parent company of RMB 1.449 billion, decreasing

by 20.99% against the same period of last year.

II. Environmental Responsibility

2.1. Energy Saving and Emission Reduction

Shanghai M & E always follows national plan for energy conservation and emission reduction, bringing

down per unit use of resources and energy and decreasing waste emission; meanwhile, it continues to

strength energy conservation promotion and education to achieve an increased level of enterprise energy

utilization.

Shanghai Mitsubishi Co. under the Company sticks to the idea of green production and has improved

energy efficiency.

1. Environmental protection investment by Shanghai Mitsubishi Co.

Category Items Data for 2016

Environmental

Protection

Responsibilities

Environmental pollution cases investigated by the

environmental protection authority within the year

0

Annual total amount of energy expenditure (e.g. for water,

electricity, gas, oil, etc.)

RMB 39.71

million

Capital amount invested into energy conservation and

emission reduction, environmental protection product

development, etc. within the year

RMB 4.95 million

2. Main energy and resource consumption indexes of Shanghai Mitsubishi Co. for the last three years

Environmental

Protection & Energy

Conservation Items

Organization 2014 2015 2016

Energy consumption indexes

Comprehensive

energy

consumption

Tons of standard

coal

13324 13887 13856

Comprehensive

energy

consumption per

104 Yuan of output

value

Tons of standard

coal/104 Yuan

0.0076 0.0075 0.0075

Specific energy consumption

Natural gas 104 m3 88.77 93.71 79.21

Gasoline Tons 59.98 55.51 48.42

Diesel Tons 59.75 50.91 41.48

Lube Tons 96.84 79.21 96.53

Electricity 104 kilowatt-hour 3952.59 4124.37 4186.38

Water resource consumption

Water consumption Tons 139778 125309 125209

Solid wastes

Sludge Tons 5.14 2.46 1.94

Waste printed

board

Tons 1.39 2.14 1.22

Goss Graphic Systems (China) Co., Ltd. (“Goss China”) of the Company built its new plant completely

according to green and intelligent requirements. The company considerably reduced energy consumption

by using the BA and EMS systems for energy management (intelligent energy monitoring systems used in

buildings and plant); it pays attention to cultivating the consciousness of environmental protection and

energy saving in daily work, employing automatic induction switches in all water systems to control water

flow, and changing the water supply system for landscaping from tap water into automatic water supply

from catch basin; energy saving lamps are used in the office area; the office automation management

system has been fully implemented and the paperless office concept has been advocating.

Shanghai Electric Carrier Energy Engineering Co., Ltd., an enterprise focusing on building energy efficiency,

provides customers with energy saving equipment sales, energy conservation plan design, energy

conservation project execution, air conditioning equipment trust, energy performance contracting and

other services for the purpose of energy consumption reduction, energy conservation and emission

reduction. In "Sauer Factory Central Air Conditioning Energy Saving Reformation", the original two 1150

kw steam lithium bromide absorption chillers cost 329 Yuan per hour when running. In the transformation

plan the latest variable frequency screw chiller 23XRV from Carrier and more efficient water pumps were

used, which together with the original cooling tower resulted in a reduction in operating cost per hour by

65% and that 516,000 Yuan was saved in relation to energy consumption in the year.

2.2 Green Manufacturing

The Company achieved the industrialization of many high-tech projects through high-end manufacturing.

Holding on to the development strategy combining introduction of technologies and independent

development, Shanghai Mitsubishi Co. under the Company has developed a technological innovation

system with "producing one generation, developing one generation, and studying one generation in

advance" as the objective, through which to accelerate the industrialization of scientific and technological

achievements and optimization and upgrading of product structure. According to the market demand

and development trend, the company developed a new generation of energy efficient and environment

friendly elevator with completely independent intellectual property rights, the LEHY-III mini machine room

passenger elevator, by using a series of core innovative technologies such as reversible rectifier energy

feedback and back-up power operation control. This elevator ranked 12th among the top 100 high-tech

achievement transformation projects in 2015, and won the third prize of Shanghai Scientific and

Technological Progress Award in 2016.

As the special construction equipment for underground diaphragm walls, SG series hydraulic diaphragm

wall grabs of Shanghai Jintai Engineering Machinery Co., Ltd of the Company have abandoned mud

circulation in the traditional wet method and have many advantages such as convenient and fast

movement, comfortable operation, stable performance, efficient construction, producing high quality

walls with less mud for dadoes. They have been extensively used in the construction of subway stations,

reservoir dams, high speed railways, high-rise buildings, and foundation pit supporting, especially suitable

for the construction in areas with high population density and adjacent building areas. SG70 hydraulic

diaphragm wall grabs won the title of "Quality Machine" in Chinese machinery industry in 2016.

Goss China of the Company began to implement the "industrialization of WS-D series books and

periodicals printers" project in 2016, resulting in high-end and intelligent upgrading and reconstruction of

the original WS-C series printers, including the folding machines; new printers are more humanized and

meet customers' needs. 6 patents have been used in the actual production.

III. Employee Responsibility

The Company persists in starting from "People-oriented and talent is the first productive force" and

effectively safeguard the rights and interests of employees and improve their quality.

3.1 Rights and Interests Protection

The Company persists in protecting employees' lawful rights and interests mainly by implementing the

employee representative meeting system and publicly disclosing factory affairs; it gives full play to

democratic management and supervision of employee representative meetings. Major reform plans of

the Company, especially major issues in relation to immediate interests of employees, such as Collective

Contract, Employee Manual, Wage Adjustment Plans, were submitted to the employee representative

meeting for review, to ensure that employees have the right to know, review, decide and monitor major

issues regarding reform and development of the Company.

The occupational health and safe construction system was improved, employees were equipped with

protective equipment against occupational hazards meeting national standards and received more pre-job

and in-service occupational health training. Employees received pre-job physical examinations and

examination for occupational hazards. Publicity of occupational health and safety knowledge was done in

various forms, and protective measures for occupational diseases were developed and improve to

guarantee the health-related rights and interests of employees.

In accordance with the Labor Law, the Labor Contract Law, and other relevant national laws and

regulations, the Company signs labor contracts with its employees, and pays the basic retirement

insurance, basic medical insurance, unemployment insurance, industrial injury insurance, maternity

insurance, and housing accumulation fund for its employees, which cover 100% of its employees. Some

companies established the accumulation fund and enterprise annuity supplement system based on their

business conditions, and paid accident and major disease medical insurances for their employees, sharing

the results of reform and development with employees.

The communication channel is free of obstruction. Employees are informed of current situations and tasks

of the enterprise at the "Annual Meeting regarding Notification of Company Information" and the

"Bimonthly Communication Meeting" so that a consensus about reform and development can be reached.

Activities to obtain reasonable suggestions are organized, through which to give full play to the initiative

and creativity of employees and enable more employees to participate in the improvement of enterprise

management. Democratic appraisal of leadership work is done at the employee representative meeting,

and relevant written materials are sent to members of the leading group, enabling good communication

between the management and employees.

3.2 Personnel Development

Employees' career planning and personal development are directed and supported based on the modern

human resource management concept of "making good use of talent, inspiring them and enabling them to

grow". In 2016, emphasis was placed upon further construction of the talent supply chain. The

preliminary establishment of the talent supply chain management system for the Company was conducted,

mainly including the talent echelon construction in key positions based on talent review, the leadership

promotion of senior and middle managers, and the establishment of performance evaluation system.

Meanwhile, the implementation of training plans for successors of key positions in different departments

was organized to further improve the key-position talent echelon management system.

3.3 Professional Training

A closed-loop training management system including plan making, implementation, tracking and control,

assessment and evaluation has been established and improved gradually on the basis of enterprise actual

conditions and employees' needs, really deeming staff training as the key factor influencing the

improvement of enterprise comprehensive competitiveness. Internal and external training was combined

to make full use of public training resource and employees of different levels received targeted training.

Yong-JEA Co. under the Company completed 53 training projects of all sorts in 2016, including 37

scheduled ones and 16 unplanned ones. The annual plan implementation rate was 92%, 1075 employees

were trained, 8.8 h per person. A series of training courses involving brushless motor production lines,

forklifts, Six Sigma and standardization were offered, putting emphasis on product research and

development, quality assurance, and job skills. As a result, the comprehensive quality, professional ability

and job skills of relevant personnel were improved.

3.4 Cultural Construction

Oriented around staff 's needs, Shanghai Mechanical & Electrical Industry Co., Ltd. carried out cultural and

sports activities for many years. "Welcome New Arrival Cup" staff chess and card contest, staff

badminton team contest, and Shanghai M & E "Marathon Cup" staff hiking were carried out in 2016,

nearly 600 staff members participated in them. With "Making achievements by young employees"

as the key point, the League Committee of Shanghai M & E deepened the "Chinese Dream, Electrical

Dream and Youth Dream" theme-focused education and looked for "the most beautiful young staff

employees" and warm response was received. Through recommendation by the organization, young

employees and via internet, 10 young employees were finally chosen as the most beautiful young

employees and another 10 as the most excellent young employees, and they show themselves by giving

lecture, which set a good example for other young employees.

IV. Corporate Responsibility

4.1 Quality Assurance

Shanghai Mitsubishi Co. won the second China Quality Award nomination

Shanghai Mitsubishi Co. has been in pursuit of an excellent dynamic quality management mode. It won

the second China Quality Award nomination after reviewed by China Quality Award Review Committee,

approved by China Quality Award Selection and Commendation Committee, and agreed by State Council

following submission by General Administration of Quality Supervision.

20.5 m/sec - The highest elevator speed record occurred in Shanghai Tower

Shanghai Mitsubishi under the Company installed the 20.5 m/sec super high speed elevator in Shanghai

Tower, the new landmark. This elevator uses a new-technology control cabinet, new safety devices

including a new speed governor, brake, and buffer as well as advanced devices including an active guide

roller, a strong wind control device and a wind cover. The utilization of these technologies resulted in the

highest level of safety, comfort, quietness and energy efficiency in the world. On December 8, 2016, this

elevator was affirmed to set three new Guinness World Records, the elevator with the highest speed and

the maximum lifting height, and the double car elevator with the hiest speed.

The AF series compact actuators developed and produce by

Shanghai Nabtesco Motion-equipment Trading Co., Ltd. won

"China's Robot Key Components Goldfinger Award" during

the first China international robot annual selection due to

space saving, improved quality and no need for seal; the

creation of the award was aimed to summarize what has

been achieved in China's robot industry in terms of

technological innovation and market application in the

previous year to direct the development of robot products

and related core technologies.

4.2 Safety in Production

The safety in production plays an important role in enterprise development and is also an important

concept always carried by the Company in production and management. The Company stepped into a new

stage of safety in production in 2016.

1) Signing Work Safety and Environmental Protection Agreement. In January 2016 the Company signed

the Work Safety and Environmental Protection Agreement with legal representatives from 15

companies directly under it, through which the tasks and requirements in respect to safety and

environmental protection were further defined; safety- and environmental protection-related

responsibilities were put in place at different levels by signing a contract to ensure that safe

production and environmental protection shall involve any working team or group without any

"vacuum zone".

2) Regularly holding Safety and Environmental Protection Committee meeting. The Safety and

Environmental Protection Committee carefully discussed the existing problems, checked the situations

of each piece of work, and made arrangements for the next-stage work based on the features of safety

work of each quarter.

3) Carrying out a "Safety Day" activity once a month. Under the leadership of leaders of the Company,

hidden danger was eliminated by inspection; on-the-site communication with employees was done to

identify and solve any problem and make work conditions better.

4) All investment in work safety put in place. In 2016, the Company's subsidiaries made a total

investment of RMB 37.9564 million in safety, including special worker training, labor protection

equipment, inspection of special equipment, waste water/waste gas/noise monitoring, investment in

health check and safety facilities and renovation thereto, etc.

4.3 Internal Control

Shanghai M & E established internal systems at different levels to obtain a sound system of enterprise

management and mutual restriction to protect the enterprise development.

1) Improving internal control systems and prepare personalized internal control manual. In 2016

main holding companies of the Company developed detailed work plans and internal control

standards to strength work progress and quality tracking. All companies completed the preparation of

the internal control manual as scheduled during the report period.

2) Organizing internal control inspection to promote continuous optimization and upgrading of

internal control. Focusing on high-risk companies and business, the Company and 7 companies under

it carried out self assessment of internal control using internal control inspection cards. The inspection

processes consist of 14 key processes, including funds management, inventory management, tax

management, etc. The total assets and operating income of companies under evaluation

respectively accounted for 81% and 99% of those as shown in the Company’s consolidated financial

report, indicating an almost complete coverage.

3) Strengthening audit rectification to improve audit efficiency. The Company attaches great

importance to the audit work, implementing one by one responsibilities for rectification of defects in

the audit rectification notice and defining the responsible person and rectification completion time. A

total of 44 internal control defects were planned to be rectified in 2016, and actually all of them were

rectified in that year. The Internal Control Department of the Company follows up rectification on a

regular basis, and includes rectification results in the management assessment system.

4) Organizing risk identification and assessment to increase the awareness of risk prevention.

The Company carried out risk recognition and assessment in it and its holding companies in 2016. The

initiating meeting and training meeting were held, at which risk management purposes, functions,

working methods and requirements were publicized. Risk management leadership teams were set up

in all companies; Party and Government heads were personally involved to increase the ability to

identify, prevent and handle risks.

4.4 Honest and Self-disciplined

Anti-corruption and the construction of a clean and honest party underway

1) Implementing entity responsibility by the Company's Party Committee. By Party committee central

group studies, subject-based organizational meetings and other means, Honest and Self-disciplined

Guiding Principles for Chinese Communist Party (Guiding Principles) and Chinese Communist Party

Disciplinary Regulations (Regulations) were carefully studied and implemented to ensure that the

Party disciplines and regulations have been disseminated and implemented in place; responsibilities in

relation to the construction of a clean and honest party were stressed, and the system of

"Commitment to Be Honest and Self-disciplined by Leaders of Shanghai M &E" was faithfully

implemented to regulate the conduct of leaders of Shanghai M &E and its subordinate state-owned

enterprises and Chinese executives designated by Non-holding Joint Ventures; based on requirements

for improving the Group management, systems for preventing operation and corruption risks were

further improved to strengthen risk control in key areas and processes and at key points.

2) Implementing supervision responsibilities by the Company's Discipline Inspection Commission.

According the unified deployment of the Group's Discipline Inspection Commission, special

supervision and inspection of the implementation of "two responsibilities" was carried out, problems

identified were addressed immediately, and the implementation of rectification measures was urged.

Against the requirements in the Guiding Principles and the Regulations, daily supervision of Party

members and leading cadres were further strengthened. Any tendency to violation was handled in a

timely manner. Strictly following the Eight Rules of the Party Central Committee, special examination

of leaders' service remuneration and business expenses was done and any violation was handled

immediately.

4.5 Shareholders’ Rights ans Interests

Adhering to the principle of being transparent and open, and strictly following Regulation Rules for Listed

Companies, Shanghai M & E strives for a better corporate governance structure, attaches importance to

the exploration and establishment of the corporate governance mechanism and decision-making

mechanism, and persists in standard operation to constantly enhance the Company's core

competitiveness and create values for shareholders. In accordance with Circular on Further Implementing

Cash Dividend Distribution by Listed Companies from China Securities Regulatory Commission, the

Company has implemented its cash dividend allocation policy over seventeen consecutive years, sharing

out dividends of RMB 2.647 billion in total, and the cumulative allocable profits being RMB 9.741 billion.

4.6 Cooperation and Double Win

Moving around the Company's strategies, Shanghai M & E looks for and cooperates with high quality

suppliers to achieve effective cost reduction, and shares information, jointly makes plans and seeks

common development with suppliers. Companies under it have become excellent suppliers by virtue of

their high quality products and services, thus giving birth to a "double win" supplier management model.

Shanghai Mitsubishi Co. under the Company pressed ahead with on-site supplier management in an

all-round way in 2016, and 33 suppliers carried out star-class assessment of on-site management. After

optimization and improvement, many companies have their own good practices in terms of positioning

management, equipment maintenance and working position apparatus. The company helps suppliers with

the formulation of standard rules and regulations. Strict controls on supplier quality supervision was

imposed. Lean management improvement projects were carried forward among suppliers. As a result, 63

projects around the improvement of scheduling mode, production process, logistics route and other

aspects were submitted by suppliers successively, which served as a guarantee that components and parts

provided by suppliers will meet quality and technique requirements of Shanghai Mitsubishi Co.

Yong-JEA Co. under the Company participated in the series activities of

best choices of the year of China auto motor, electric and electronic

industry in which more than 300 companies were present, and was

titled "2016 Top 10 motor producer in China auto motor, electric and

electronic industry"; once again titled "19th excellent SAIC-GM

supplier" and granted the 2015-2017 FAW-Volkswagen Class A Supplier

certificate. Mr. Ma Baofa, the general manager, was awarded the title

of "Businessman of 2016 in China auto motor, electric and electronic

industry".

By carrying out D-KPI, Gemba Walk and other activities in 2016, Shanghai Marathon-Gexin Electric Co.,

Ltd of the Company had better process capability in each workstation from

supply chain optimization to production process, and its delivery

punctuality was further improved through optimization of the safety stock;

meanwhile, it provided technical training and engineering support for

customer groups and perfected pre-, in- and after-sale services, thus

increasing increase customer satisfaction. In September, the company

negotiated long- and middle-term strategies with Weichai Power Co., Ltd.,

one of its major customers, and provided the latter with the most

high-quality products, services and technical support. In December, the

company became the only "Excellent Supplier for 2016" of Weichai Power

due to its outstanding performance (quality, speed, service, cost and

response), once again being awarded that title!

Welding equipment products of Shanghai CIMIC Welding Consumables Co., Ltd. have the characteristics

of industrial consumables and 90% of them were sold in outlets. After 2 new outlets were added, the total

number of outlet across the country reached 36. Communication with outlet vendors were strengthened

in various forms. In January, a key outlet customer forum was held, at which 15 suggestions regarding how

to strengthen brand promotion, website construction, packaging improvement, dealer system

improvement, and on-site management; 2 months later, a meeting for all outlet customers was held to

discuss annual marketing strategies, new production development direction, production improvement

requirements, after-sales support, etc. A good cooperation mechanism has been established between the

company and its outlets, and it had more market shares and reached a win-win state.

V. Social Responsibility

5.1 Public Welfare Undertaking

The Company takes initiative to fulfill its social responsibility, actively taking part in social welfare activities

to arouse the awareness of social responsibility from enterprise staff members and make contributions to

the construction of a harmonious society.

Shanghai Mitsubishi Co. serviced the G20 Hangzhou Summit

In September 2016 the G20 Summit attracting worldwide attention was held in

Hangzhou. To guarantee safe operation of its products in multiple venues in

Hangzhou International Expo Center, the main meeting place for the Summit, the

company made great efforts to provide service assurance. It held a mobilization

meeting to make overall personnel arrangements, sending 5 experts and over 60

support staff members. Strict management and control was done in terms of safety

assurance, quality test, and service management. 244 elevators of various types

were monitored and maintained, and the high quality service the company offered

was highly praised.

Actively Participating in Green Bud Action

Carrier Air Conditioning Sales & Services (Shanghai) Co., Ltd under the Company carried out "2016 Green

Bud Action" in Hongmei Primary School, Minhang, Shanghai, involving 310

students. More than 60 staff members of Environment, Control and Safety

Protection of United Technologies from Asia-Pacific and China participated in

the activity as volunteers. Students' awareness of environmental protection

and safety was enhanced through the construction of teaching facilities and

libraries, mutual education, etc., and excellent students were awarded

certificates of merit and scholarship.

5.2 Community Construction

The Company conscientiously fulfills its social responsibilities and contributes to civilization construction

of surrounding communities. By means of one-for-one assistance activities, it offered services to the

community where the enterprise is located, forming a interconnected, complementary and interactive

work pattern and effectively promoting the construction of a harmonious society.

Shanghai Mitsubishi Co. under it participated in the "Learning from Lei Feng,

Hand in Hand "voluntary serving-the-old activity. Volunteers from the

sheet-metal workshop visited the elders in the gerocomium at Huaping Road,

Jiangchuan Street. They brought gifts and well prepared programs, and talked

heartily with the old people. Volunteers have visited the gerocomium for 7

consecutive years. Fulfillment of the mini-CSR will be continued.

Hydraulics & Pneumatics Co. under the Company took part in "3.5 Public Welfare

Carnival" held by regional Party Website Coalition in Meilong to inherit the spirit of

Lei Feng and contribute to regional harmony, and it solved 5 problems of the

citizens. Additionally, resource sharing for jointly building of Li Bin Brand was

discussed, and the Honors Room was visited.

VI. Responsibility Outlook

In 2017, Shanghai M & E will stick to the principle of steady and healthy development. Moving around the

Group's strategies, it will further advance reform and adjustment, strengthen risk management and

control, and put management integration in place; give play to technical and resource advantages of

partners, explore new industry growth points, and strengthen management of and control over Joint Stock

Companies.

In this year, we will never forget where our happiness came from, keep a positive mental state, adhere to

the development philosophy of reform, green and sharing, and create a better future together with

creators.

Board of Directors of Shanghai Mechanical & Electrical Industry Co., Ltd.

March 15th, 2017