Modern Dairy Code of Ethics

Dear colleagues,

The dairy industry is an indispensable industry for building a “Healthy China” and enhancing the national physique. As a leading enterprise in the industry, Modern Dairy is committed to promoting the high-quality development of the dairy industry, proposing a “dual strategy” development model, advancing the five-year leading plan, building the industry leader position, setting the benchmark for the industry culture construction, and achieving the rapid development of the company’s whole industry chain.

For this the company has integrated the wisdom of all parties, established a corporate culture system that fits the development of the dairy industry, and reached a consensus on the cultural core that we need to abide by together, that is, our vision is: to layout the industry chain, innovate with data and intelligence, and become a global leader in the dairy industry. Our mission is: to raise healthy cows and protect every drop of good milk. Our four core values are: safety and health first, high standards and efficient execution, let cow people shine, integrity and honesty, as our common code of ethics, to unify our thoughts, consensus, and actions.

According to the vision and core values, we have compiled the Code of Ethics for employees from the following eleven dimensions, guiding us to do the right thing. Modern Dairy, as a people-oriented, ambitious, and goal-oriented company, advocates the business philosophy of win-win between the company and employees, leads by culture, and provides us with a bigger and better career development platform, allowing cow people to achieve greater achievements at work.

Finally, thank you for your loyalty and dedication to Modern Dairy. We adhere to the work atmosphere of letting cow people shine, being good at empowering, and achieving each other, making Modern Dairy a leader in the industry.

1. Our Commitment

1.1 Cultural Core

1.2 About the Code

To standardize the daily work and cooperation behavior of all long-term employees, part-time employees, shareholders, etc., the relevant reward and punishment standards are clearly stipulated, the normal production and work order are maintained, the relevant parties abide by the legal and ethical norms and can implement the company’s policies and standards in accordance with the law and regulations, ensuring the effective operation and long-term development of the company.

1.3 Employee Responsibility

The code of conduct for all employees of the company is based on ten advocacies and ten prohibitions as the basic code of conduct. Those who perform the advocated behaviors will be rewarded according to the situation; those who violate the prohibited behaviors will be punished according to the situation. We need all employees to actively practice the values and fulfill their job responsibilities.

1.4 Ethical Decision-making

In the work process, if there is a situation that damages the company’s interests and violates the company’s prohibited behavior norms, the values should be placed as the first consideration, and self-reminder and early warning should be made. When necessary, seek relevant departments to provide guidance and counseling.

2. How to Report Concerns

In the process of enterprise operation, if there is any violation of the relevant business code and integrity construction requirements, all employees have the obligation to safeguard the company’s interests and image. Please provide feedback through the following channels and correct them in time:

Communicate with your direct supervisor or the first person in charge of the department.
Contact the Discipline Inspection Commission Office.

The violation allegations will be taken seriously, and we will promptly investigate all complaints. We will keep our investigation confidential to the extent reasonably possible and as required by the company’s investigation report matters and the law and protect anyone who reports in good faith.

Any employee who retaliates against anyone who participates in the report or participates in the report investigation will be subject to disciplinary action. If it constitutes a crime, it will be transferred to the judicial authorities for handling.

If the question I raised is about my direct supervisor-will I lose my job?
The best way to raise concerns is usually to communicate with your direct supervisor or the first person in charge of the department, but because the concern is related to the behavior of your direct supervisor or the first person in charge of the department, contacting the Discipline Inspection Commission Office is a good choice.

3. Mutual Respect

3.1 Equal Employment

We follow the principle of equal employment, adhere to gender equality and equal pay for equal work. We also value employee diversity and treat employees of different nationalities, races, ages, and cultural backgrounds fairly. We will actively create a harmonious, inclusive, equal, and caring organizational atmosphere.

We respect human rights, strive to eliminate discrimination, abuse, or inhumane treatment, prohibit restricting employees’ personal freedom, and protect employees’ rights and interests in a reasonable and legal manner.

3.2 Basic Rights Protection

Modern Dairy is committed to providing employees with all-round care, making Modern Dairy people full of happiness, sense of gain, and security, implementing the employee happiness care plan, allowing employees to strive for happiness, experience happiness, and always share happiness! Modern Dairy’s welfare benefits reach more than 20 items, of which statutory welfare items account for 10%, and non-statutory welfare items account for 90%. For example, children are insured with commercial supplementary insurance, accidental medical and serious illness medical protection, and assistance for employees in difficulty.

While encouraging employees to achieve the best performance output, Modern Dairy fully respects the employees’ right to rest, combines the company’s production and operation characteristics, arranges the working hours of employees reasonably according to the provisions of the “Labor Law” and the relevant provisions of the “Collective Contract”, and earnestly implements the national regulations. The system of paid holidays such as statutory holidays, marriage and funeral leave, maternity leave, home leave, annual leave, etc., fully guarantees the employees’ right to rest and vacation. Modern Dairy provides 14 types of holidays to meet the employees’ reasonable needs for holiday enjoyment. For example, statutory holidays, marriage and funeral leave, maternity leave, home leave, annual leave, etc.

Modern Dairy always adheres to the people-oriented concept, strives to promote employee co-prosperity, highly respects employee labor, and provides competitive remuneration. Every year, the company will implement differentiated salary increases based on the operating conditions and market conditions.

In terms of talent cultivation, Modern Dairy closely revolves around the goal of “building a first-class elite team”, adheres to the talent value proposition of “excellence in talent, wisdom in development, and success in excellence”, and drives talent development initiatives through the dual drive of talent recruitment system and talent development system. Select internal and external elite talents and strengthen the construction of talent supply chain.

Modern Dairy does not tolerate workplace violence. Modern Dairy is committed to prohibiting employees from working under the influence of alcohol, illegal drugs or abused controlled substances.

3.3 Workplace Safety

Modern Dairy attaches great importance to and protects the occupational health and safety of employees, strictly implements national laws and regulations, comprehensively carries out occupational health and safety management and control work, implements occupational hazard control and management from three aspects of hardware, software, and supervision methods, from environmental safety to occupational health and safety, from physical safety to human safety, and creates the safest development space and the healthiest living space for employees in all aspects.

4. Accurate Business Records

4.1 Records Retention

Modern Dairy’s financial books, records and accounts must be properly stored and retained in accordance with the laws and business requirements applicable to Modern Dairy. Employees who own Modern Dairy’s financial books, records or accounts are responsible for their security.

4.2 Accurate Business Records and Financial Reporting

The records we create and maintain are very important for the company’s continuous operation. Accurate records are the first prerequisite for the company to make correct business decisions. Shareholders, business partners and various government agencies also need to make wise decisions based on accurate business records and disclosures. Since all business records may be publicly disclosed through litigation, government investigations or media, employees must be clear, concise, true, and accurate when recording any information.

We must comply with the internal control requirements for accounting and financial reporting. Employees responsible for preparing this information must ensure that it is complete, fair, accurate, timely, easy to understand and transparent. All publicly disclosed information must comply with applicable laws, regulations, and professional standards.

5. Protect Our Assets

All employees have the obligation to protect the company’s assets from theft, loss, waste, damage, fraud or other improper use. Modern Dairy’s assets include all resources we use to perform our work duties.

5.1 Protect Our Information

One of Modern Dairy’s most valuable assets is information. Adhering to the concept of “protecting trade secrets, everyone is responsible”, all employees of Modern Dairy have the responsibility and obligation to keep and protect all kinds of information of the company, strictly establish the awareness of confidentiality red line, and shall not infringe the company’s information in any way or means, such as business strategy, process, plan, potential acquisition, etc.

All employees need to handle all information carefully, ensure information security, avoid discussing confidential information in public places (such as airplanes, elevators, and mobile phones), and protect themselves from network security intrusion.

Examples of our assets:

Biological assets: heifers, calves, dairy cows, bulls
Physical assets: equipment, inventory, supplies, credit cards, supplier samples
Technical assets: computer hardware, software and systems, mobile phones and tablets
Information/intellectual property rights assets: trademarks, copyrights and other confidential information

5.2 Protect the Welfare of the Herd

Modern Dairy, based on the farm resources and in accordance with the environmental protection requirements, from the selection of bedding materials, constant temperature design to ventilation management, fully improves the comfort of the cowshed, avoids the strict confinement and long-distance transportation of dairy cows, keeps the bedding dry and moderate, ensures the air circulation of the cowshed, and scientifically and reasonably manages the light intensity, reducing the energy loss caused by the uncomfortable sleeping environment of the cows.

Modern Dairy pays high attention to the equipment completeness, scientific and reasonable design and hygiene and safety within the range of cow activities, and as much as possible adapts to the natural habits of animals, implements management methods that conform to the habits of dairy cows.

Modern Dairy actively improves the epidemic prevention and control system, enhances the epidemic prevention technical level, and avoids the risk of cow epidemics. We adhere to the epidemic prevention concept of “prevention first, prevention is more important than treatment”, standardize and systematize the epidemic prevention work of dairy cows, effectively reduce the risk of epidemics, and improve the health level of dairy cows.

When providing information to the public (including media, analysts and shareholders) about Modern Dairy’s business plans or positions on public issues, we need a clear and consistent voice. Therefore, no employee shall disclose, reveal, or leak any non-public significant information to the media or other external personnel without authorization.

In addition, all requests from the media for information about Modern Dairy should be referred to the company’s public relations(PR) team; any requests from analysts or shareholders for financial or other business performance information should be forwarded to the investor relations team (info@moderndairyir.com).

Modern Dairy strictly prohibits employees from opening self-media accounts related to the industry in their own name, including but not limited to WeChat public accounts (including video accounts), Douyin, Xiaohongshu, Baijia, NetEase, Sohu, Tencent, Toutiao, etc. At the same time, without authorization, no department or individual shall publish or post any confidential information or use Modern Dairy’s trademarks related to Modern Dairy or its customers.

7. Gifts and Hospitality

Modern Dairy’s “Sunshine Agreement Implementation Measures” and anti-corruption system have clearly stipulated the relevant behaviors. In principle, no department or individual shall accept gifts or donations from business units or related individuals, nor shall they use reasons such as marriage, funeral, marriage, etc. to accept gifts or gifts from subordinates and cooperative units. When a department or individual receives a gift or cash from the other party, they should politely refuse. If they have already accepted the gift for various reasons and it is really impossible to return it, they must follow the “Gift Submission Registration Management System” and report to the same level or superior department in time and hand it in according to the actual situation.

8. Conflict of Interest

Modern Dairy requires all employees to make business decisions that are in the best interest of the company, and employees’ actions must be based on reasonable business judgment, not personal interest, and avoid conflicts between corporate and personal interests in the exercise of management power and business implementation. At the same time, Modern Dairy has established the “Regulations on the Appointment of Relatives and the Prevention of Conflicts of Interest” and the “Regulations on the Prohibition of Leading Cadres’ Spouses, Children and Their Spouses and Other Specific Related Persons from Engaging in Business and Running Enterprises in Violation of Regulations”. Some common situations that may cause conflicts of interest include:

8.1 Personal relationships

Employees must follow the principle of recusal regarding any business dealings between their relatives and Modern Dairy, as stipulated in the “Regulations on Enterprise Disciplinary Actions”.

8.2 Company opportunities

When opportunities arise, employees have the obligation to give priority to the interests of Modern Dairy, adopt the action program of personal interests subordinate to the interests of the company, and shall not use the property, information, or position of Modern Dairy to seek personal interests or compete with Modern Dairy.

8.3 Investment

If an employee himself/herself, spouse, children and their spouses or through other relatives, specific related persons have economic interests (or exercise control) in one of the business partners or competitors, or directly or indirectly own significant interests in any entity that has business dealings with Modern Dairy, seeks to do business with or competes with Modern Dairy, then the principle of avoidance shall be adopted and the company’s regulations shall not be violated.

8.4 External Employment

Modern Dairy’s human resources system clearly stipulates that employees are not allowed to take on other jobs or establish dual labor contracts outside the company during their employment period.

8.5 Disclosure Requirements

Employees have the obligation to disclose any potential conflicts of interest to their direct supervisors.

9. Conducting Business with Our Partners

Modern Dairy relies on solid relationships with our suppliers, distributors, and other business partners (collectively referred to as “partners”), who help us provide high-quality and high-value products and services that meet our customers’ needs. We rely on professional functions, procurement, and sales management teams to select and manage our partners, continuously empower them for business development and profitability enhancement, and create a win-win ecosystem with our partners.

9.1 Partner Sourcing

Modern Dairy adheres to the principles of openness, fairness, impartiality, and integrity, and uses digital media platforms to publish procurement information, integrate industry resources, and widely source and recruit thousands of suppliers to join and participate in different procurement projects and competitive negotiations, thereby selecting more high-quality partners.

To ensure the stability of the upstream core supply chain, Modern Dairy has maintained good cooperation with excellent enterprises in the industry chain and established strategic alliance partnerships with suppliers of key upstream materials.

9.2 Admission Review

According to the review standards of various materials, the supplier review team conducts admission review for new suppliers, following unified principles, and conducting strict audits on qualifications, resource allocation, management systems, etc. Among them, the admission standards for feed suppliers include supplier control, quality control management and traceability, production process control and traceability, recall and complaint handling, human resources and other environmental and social issues.

According to the quality risk level, supplier category, and material category, the suppliers are classified, and the cooperation scope and audit method are clarified during the admission process.

9.3 Integrity and Safety

Signing the “Sunshine Agreement” with the suppliers, actively maintaining fairness and impartiality in public bidding, price inquiry and comparison, business negotiation, mall procurement, and business cooperation, creating a law-abiding and honest cooperation atmosphere; conducting irregular integrity education and business management knowledge training for key material suppliers. At the same time, clarifying the responsibilities and requirements for safety production and management; ensuring that the suppliers purchase insurance for their employees as required, and ensuring that their certificates and insurance are complete; conducting hazard identification and safety production education and training for relevant suppliers.

9.4 Continuous Monitoring

Regularly conduct routine comprehensive reviews and audits of all suppliers, identify environmental and social risks in each link of the supply chain. Especially for the regular sampling of special materials, we will assess whether the supplier strictly complies with the “Supplier Code of Conduct”, whether the suppliers have environmental hazards such as excessive wastewater discharge during the supply process, or whether there is improper labor management or violation of relevant labor laws and regulations and complete the regular business review of the suppliers.

Implementing graded management for suppliers, conducting regular quality inspections and communication, and filling out the “Supplier Comprehensive Evaluation Scorecard”. Finally, according to the supplier evaluation, eliminate suppliers with repeatedly unqualified product quality and violations of laws and disciplines, and establish long-term cooperative relationships with high-quality suppliers.

9.5 Evaluation and Improvement

Setting up a special department to track the rectification of supplier audit issues, ensuring that unqualified items are effectively rectified; formulating strict one-vote veto management regulations, canceling cooperation with unqualified suppliers; encouraging partners to actively contribute ideas and suggestions through communication platforms, and laying a foundation for management improvement and enhancement.

10. Legal Operation

10.1 Compliance with Laws

Modern Dairy is committed to being a responsible corporate citizen and complying with the laws and regulations of each region where it conducts business. At the same time, employees have the obligation to familiarize themselves with and comply with the laws and regulations and Modern Dairy’s rules and regulations related to their work responsibilities. Any behavior that violates the laws and regulations, rules and regulations may trigger corresponding civil, administrative, or criminal liabilities. If employees have any questions or are unsure about the content and applicability of the laws and regulations, they can seek advice and explanation from the legal affairs department.

10.2 Anti-monopoly/Fair Competition

Modern Dairy follows the free and open market competition based on honesty and fair trade and will actively participate in market competition with its own product and service advantages under the premise of complying with market transaction rules, anti-monopoly and anti-unfair competition and other relevant laws and regulations. Any individual who has doubts about whether potential discussions, decisions, or actions may involve monopoly or unfair competition has the responsibility to consult and seek explanation from the legal affairs department before taking such actions.

10.3 Intellectual Property

Employees have the responsibility to respect and protect intellectual property rights and have the right to reasonably and legally use intellectual achievements protected by intellectual property rights. To avoid infringing the legal rights and interests of others protected by laws and regulations related to intellectual property rights, before using the rights and interests of others, they should legally obtain effective authorization or permission.

10.4 Insider Trading

Securities laws and Modern Dairy’s policies prohibit all employees from trading Modern Dairy’s stocks or other securities of other companies when they have access to internal information that is not disclosed to the public, or explicitly or implicitly suggesting others to trade Modern Dairy’s stocks or other securities of other companies based on such information. This type of illegal trading is called insider trading. For example, important information may include information about acquisitions, investments, or changes in business relationships, network security risks or events, sales or financial data, management changes, or any other information that may affect the prices of these securities. We call this information insider information. Before the insider information is disclosed, no employee shall share such information with others.

10.5 Business Ethics

Modern Dairy attaches great importance to anti-bribery and anti-corruption (“ABAC”) and establishes anti-corruption systems such as the “Regulations on Enterprise Disciplinary Actions”, sets up Discipline Inspection Commission Office, implements various requirements for anti-corruption and integrity work, strictly governs corruption issues, and ensures that every employee abides by the bottom line of business ethics. At the same time, it improves the ABAC policy, establishes the “Sunshine Agreement Implementation Measures”, promotes a fair and impartial good cooperation atmosphere with the cooperation units, establishes the “Sixteen Rules of Employee Integrity and Self-discipline”, prohibits employees from accepting any form of kickbacks, agency fees, and benefits, prohibits management from using their positions to seek personal benefits for relatives and specific related personnel, and eliminates conflicts of interest.

11. Being a Good Corporate Citizen

11.1 Commitment to the Community

Modern Dairy is committed to giving back to the communities where we work and encourages every employee to always uphold Modern Dairy’s values and interests and personally participate in the creation of happiness in their communities and benefit the communities where we work.

11.2 Commitment to Environmental Sustainability

Modern Dairy is committed to providing a healthy and attractive environment for all employees, customers, and their families. By seeking solutions that encourage long-term sustainable development, it strives to reduce its footprint.

Modern Dairy adheres to high ethical standards and expects employees to work for a sustainable tomorrow. To this end, Modern Dairy supports energy-saving and emission-reduction, resource utilization strategies, provides customers with choices to reduce environmental footprint, continuously evaluates operational performance, and sets goals to improve energy efficiency and reduce greenhouse gas emissions.

Modern Dairy has taken and will continue to take various steps to ensure that it achieves fruitful results in creating a more sustainable tomorrow and hopes that employees will do their part in promoting ecological protection.