Xiangyang Changyuan Donggu Industrial Co., Ltd.

2020 Annual Report on the Performance of Duties by Independent Directors

2020 Throughout the year, all of the company’s independent directors strictly complied with the provisions of relevant laws and regulations, including the Company Law and the Securities Law, as well as the requirements set forth in the Articles of Association and the Rules for the Work of Independent Directors. Diligently perform one’s duties and conscientiously fulfill responsibilities. We have diligently exercised the rights granted by law, promptly obtained information on the company’s production and operations, closely monitored the company’s development, actively attended relevant meetings convened by the company, carefully reviewed proposals at board meetings, and expressed independent opinions with due care. These efforts have effectively ensured the reasonableness and fairness of the company’s operations and have safeguarded the overall interests of the company and the legitimate rights and interests of all shareholders, particularly small and medium-sized shareholders. At the same time, the company has provided strong support for the work of the independent directors, and no circumstances have arisen that would impede their independence. We now report on our performance as independent directors for the year 2020 as follows:

I. Basic Information on Independent Directors

The current independent directors on the company’s third board of directors are Mr. Wang Hong, Mr. Peng Quanchun, Mr. Yu Jingzhong, and Ms. Pan Hong. Mr. Wang Hong serves on the Board’s Strategy Committee and Audit Committee; Mr. Peng Quanchun serves on the Nomination Committee, Strategy Committee, and Compensation and Assessment Committee; Mr. Yu Jingzhong serves on the Audit Committee; and Ms. Pan Hong serves on the Nomination Committee and Compensation and Assessment Committee.

As independent directors of the company, we hold no positions other than that of independent director, nor do we serve in any capacity at entities affiliated with the company’s shareholders; accordingly, there are no circumstances that could compromise our independence.

II. Overview of Independent Directors’ Annual Performance of Duties

As independent directors of the company, we have strictly adhered to applicable laws and regulations in participating in major corporate decision-making. We have carefully reviewed materials for board meeting agendas, proactively consulted with management on industry trends and the company’s operational status, actively engaged in discussions, and offered well-reasoned recommendations and opinions from our respective professional perspectives. We have paid close attention to several key matters concerning the company’s production, operations, and management decisions. We voted in favor of all relevant proposals considered by the Board of Directors and its specialized committees, and there were no instances where an independent director was unable to express a view.

During the reporting period, in accordance with the Company’s Articles of Association and relevant working rules, we faithfully discharged our respective duties with a conscientious, diligent, and trustworthy attitude. Our operations were conducted in compliance with established procedures, and we effectively fulfilled our roles. To better perform our duties, the independent directors not only actively attended each board meeting and specialized committee meeting to gain insight into the company’s operations and management but also promptly obtained updates on the company’s operational status and other pertinent industry information. We maintained regular communication with the company through various channels, including email, telephone, and online platforms, raising relevant questions and requesting supporting documentation as needed. By gathering information on the company’s operations and management through multiple avenues, we gained a clearer understanding of how board decisions were being implemented, thereby providing a solid basis for the board’s subsequent decision-making on major matters, the mitigation of significant operational risks, and the enhanced performance of our independent director responsibilities.

During the reporting period, the Company convened five Board of Directors meetings, including two regular meetings and three ad hoc meetings. It also held three Shareholders’ General Meetings, five Audit Committee meetings, one Strategy Committee meeting, and one Remuneration and Assessment Committee meeting, with no instances of unjustified absence. The key matters deliberated at these meetings included periodic reports, the reappointment of the accounting firm, profit distribution, and the implementation of information disclosure, among others. We believe that all meetings were duly convened in accordance with statutory procedures, and that major decisions underwent the requisite approval processes, in compliance with applicable laws, regulations, and the Company’s Articles of Association.

III. Status of Key Matters Focused on by Independent Directors in Their Annual Performance of Duties

(1) Related Party Transactions

During the reporting period, no related-party transactions occurred.

(II) External Guarantees and Use of Funds by Related Parties

During the reporting period, the company did not enter into any external guarantees. Upon verification, as of December 31, 2020, no guarantees had been provided to shareholders, actual controllers, or other related parties. The company has no instances of funds being misappropriated by its controlling shareholder or related parties.

(III) Use of Funds Raised

During the reporting period, the Company used the proceeds from the fundraising in accordance with the provisions and requirements of applicable laws, regulations, and normative documents, and promptly disclosed the use of these funds. There were no violations in the use or management of the raised capital.

(4) Appointment or replacement of the accounting firm

During the reporting period, the company did not change its accounting firm. Zhongshen Zhonghuan Certified Public Accountants (Special General Partnership), in providing audit services to the company, adhered to the Chinese Code of Ethics for Certified Public Accountants and performed all audit procedures with due diligence and care, issuing independent audit opinions that were objective and impartial. All of our independent directors unanimously agreed to re-appoint the firm as the company’s annual auditor.

(5) Cash Dividends and Other Investor Return Information

During the reporting period, our Board of Directors reviewed the proposed profit distribution plan for the first half of 2020 and determined that it was in compliance with the Company’s Articles of Association and aligned with actual circumstances. Accordingly, we approved submitting this proposal to the shareholders’ meeting for consideration. On August 25, 2020, the proposal was duly approved by the Company’s shareholders’ meeting.

(6) Fulfillment of Commitments by the Company and Shareholders

During the reporting period, all commitments made by the company and its shareholders were strictly adhered to, and no instances occurred in which the company, the actual controller, or senior management violated any relevant commitments.

(7) Implementation of Information Disclosure

We oversaw the Company’s information disclosure for the year 2020 and concluded that all such disclosures complied with the provisions of the Articles of Association and the Information Disclosure Management System, and that the requisite approval and reporting procedures were duly followed. The disclosures were true, accurate, complete, and timely, with no false records, misleading statements, or material omissions.

(8) Implementation of Internal Controls

During the reporting period, with the full support of the company’s Board of Directors and Supervisory Board, internal control efforts were effectively advanced, management experience was continuously accumulated, and the internal control system was steadily improved in accordance with internal control standards and disclosure requirements.

(9) Operations of the Board of Directors and its subordinate special committees

During the reporting period, the Company’s Board of Directors established four specialized committees: the Strategy Committee, the Audit Committee, the Remuneration and Assessment Committee, and the Nomination Committee, with at least one independent director serving on each. In accordance with the rules of procedure for each committee, these specialized committees reviewed matters such as the Company’s business strategy, financial reporting, and employee compensation, and actively provided recommendations and advice, thereby fully leveraging their professional expertise in the Company’s management.

IV. Overall Assessment and Recommendations

As independent directors of the company, in 2020 we acted with diligence and a sense of responsibility, fulfilling our duties in accordance with applicable laws and regulations. We played an active role in ensuring the company’s compliant operations, strengthening its corporate governance structure, improving its internal control system, mitigating operational risks, and making decisions on major projects, thereby effectively safeguarding the legitimate rights and interests of all shareholders, particularly small and medium-sized shareholders.

2021 This year, we will continue to diligently and responsibly fulfill our duties as independent directors, safeguarding the legitimate rights and interests of all investors, particularly small and medium-sized investors. We will strengthen our professional knowledge and deepen our understanding of the company’s actual operations, continuously enhancing our ability to perform our duties. In doing so, we aim to offer more constructive advice for the company’s development, provide valuable input for board decision-making, and improve both the quality of corporate decisions and operational performance.

The foregoing is the 2020 Annual Report on the Performance of Duties by the Company’s Independent Directors, and is submitted for the review of the Company’s shareholders.

Independent Directors: Wang Hong, Peng Quanchun, Yu Jingzhong, Pan Hong

March 22, 2021