Integrity is essential for the development of individuals and the survival of a business. Setting integrity as the centerpiece of talent cultivation, Yili Group has fostered a clean, clear, and convenient work environment so that our employees concentrate on their work and advance their careers. In addition, we have created a fair, equitable, and open playing field for all partners, which protects the interests of our partners and promotes win-win cooperation.

Yili Group has built up a full-cycle defense system against fraud. With a focus on prevention, supervision, and punishment, we demand that managers at all levels play the role of a lighthouse, put an accent on anti-fraud work, lead by example, practice integrity, refine their management approach continously to create a clean work environment and practical business environment.

Yili Group maintains a zero-tolerance policy to any practices that fall into the “Yili’s Off-limits Area”. We have handled all cases based on facts with forceful measures and in accordance with relevant regulations and laws. In 2021, Yili Group, based on the Group’s strategies and plans, fostered a clean workplace by carrying out regular inspections and adopting precautionary measures as deterrence and punitive measures as punishment. We fulfilled our legal obligation as we facilitated judicial investigation and held relevant people accountable. Here, we would also like to call on all partners to abide by the rules and join Yili to shape a business ecology featuring integrity, cleanness, and self-discipline.

In 2021, Yili Group found seven cases of violations, resulting in the dissolution of labor contracts with 11 employees, six of which were prosecuted by judicial authorities for criminal liability in accordance with the law. Meanwhile, four external partners suspected of criminal violation were prosecuted by judicial authorities for criminal liability in accordance with the law. The four cases sentenced in the second half of 2021 are as follows:

Former Yili employee Zhang *ning violated relevant regulations of Yili Group by taking advantage of his post to earn RMB 515.500 from selling products redeemed with credit codes in complicity with another individual. Yili Group dissolved the labor contract with him. The above-mention two were prosecuted for crime of duty encroachment under the Criminal Law.

Former Yili employee Yu * hui violated relevant regulations of Yili Group by taking advantage of his post to encroach up RMB 102.800 of Yili Group’s property through the forgery of bills. Yili Group dissolved the labor contract with him. He was prosecuted for crime of duty encroachment under the Criminal Law.

Former Yili employee Xiang * violated relevant regulations of Yili Group by taking advantage of his post to misappropriate RMB 89.200 of Yili Group’s property. Yili Group dissolved the labor contract with him. He was prosecuted for crime of duty encroachment under the Criminal Law.

Former cooperative distributor of Yili Group, Henan Hanpeng Business and Trade Co. was guilty of contract fraud for swindling RMB 428.500 of Yili Group’s property by means of false closure of cases. Yili Group terminated its cooperation with the company. Distributors Lu* and Wan* were prosecuted for criminal liability for committing contract fraud.

In the aforementioned cases, former Yili Group employees were prosecuted for criminal liability for taking advantage of their posts to misappropriate company properties and gain personal profits, and former external partners were blacklisted by Yili Group for them swindling Yili Group’s property to gain illegitimate interests.

Newly-added Entities to the Backlist in the Second Half of 2021:

Shanghai Zhongchengwei Security Services Group Co. Wuhan Branch

Henan Hanpeng Business and Trade Co.

Taiyuan Younuo Times Culture and Communication Co.

To build a sound business ecology featuring integrity and self-discipline requires the concerted efforts of employees, suppliers, and business partners to fight against corruption. For any corruption, bribery, and fraud, employees, suppliers, and business partners are obliged to stop it or report it to the Group via phones, mail, or letter. Once confirmed, cases will be made public and offenders will be severely punished.

E-mail: yljw@ynlady.com；yilijubao@163.com

Telephones: 0471-3357805

Mail Address: Inner Mongolia Autonomous Region, Hohhot, Jinshan Development Zone, Jinshan Street No. 1 Inner Mongolia Yili Industrial Group Corporation Discipline Inspection Committee Office

Yili Group Auditing Department

January 2022