Stock code: 600415 Stock short name: 小商品城

Zhejiang China Commodities City Group Co., Ltd. Semi-annual Report for 2026

Important Statements

• I. The Company's board of directors, directors, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report, ensuring there are no false records, misleading statements, or material omissions, and assume individual and joint legal responsibility.
• II. All directors of the Company were present at the board meeting.
• III. This semi-annual report is unaudited.
• IV. CHEN Dezhan, Head of the Company, BAO Hua, Principal in charge of accounting, and ZHAO Difang, Head of the accounting department (Accounting Manager), declare that they warrant the truthfulness, accuracy and completeness of the financial report in the semi-annual report.
• V. Plan for profit distribution or capital reserve into share capital for the current period approved by the board of directors

On August 24, 2026, the Company convened the 9th meeting of the 10th Board of Directors, which reviewed and approved the Proposal on the 2026 Mid-Term Profit Distribution Plan. The profit distribution plan: based on the total share capital on the dividend distribution equity registration date, a cash dividend of RMB 1.00 (tax inclusive) will be distributed for every 10 shares. Based on the Company's total share capital as of June 30, 2026, a total cash dividend of RMB 548,355,922.60 will be distributed. If there is a change in the total share capital of the Company before the equity registration date for equity distribution, it is proposed to maintain the per share distribution plan unchanged and adjust the total distribution amount accordingly.

• VI. Risk statement with forward-looking representations √Applicable □Not applicable

The forward-looking representations involved in this Report such as future plans and development strategies do not constitute the Company’s substantial commitments to investors. Investors should pay attention to investment risks.

• VII. Is the Company’s cash occupied by its controlling shareholder or any of the other affiliates for non-operational purposes? No

• VIII. Has the Company provided external guarantee in violation of the prescribed decision-making procedures? No
• IX. Whether there is a circumstance that more than half of the directors cannot guarantee the authenticity, accuracy and completeness of the semi-annual report disclosed by the Company No
• X. Reminder of major risks

During the reporting period, the Company did not have any significant risks that would affect its continued operations. The Company has provided a detailed description of the potential risks it may face in the "Potential Risks" part in Section III "Discussion and Analysis of Managers" of this report.

• XI. Other

□Applicable √Not applicable

Table of Contents

• SECTION I. DEFINITIONS...............................................................................................................5
• SECTION II. COMPANY PROFILE AND FINANCIAL HIGHLIGHTS.......................................6
• SECTION III. DISCUSSION AND ANALYSIS OF MANAGERS.................................................9
• SECTION IV. CORPORATE GOVERNANCE, ENVIRONMENT, AND SOCIETY................35
• SECTION V. SIGNIFICANT MATTERS........................................................................................ 37
• SECTION VI. CHANGES IN SHARES AND INFORMATION ON SHAREHOLDERS..........44
• SECTION VII. BONDS........................................................................................................................47
• SECTION VIII. FINANCIAL REPORT...............................................................................................51

Section I. Definitions

For the purpose of this Report, unless otherwise stated in the context, the following terms shall have the following meanings:

Section II. Company Profile and Financial Highlights

I. Company profile

II. Contact information

III. Introduction to changes in basic information

IV. Changes in information disclosure and filing place

V. Stock profile

VI. Other relevant information

□Applicable √Not applicable

• VII. Main accounting data and financial indicators of the Company

• （i） Main accounting data Unit: RMB

• （ii） Major financial indicators

Explanation of the company's main accounting data and financial indicators √Applicable □Not applicable

• 1. Operating revenue increased by RMB 2.569 billion compared to the same period of the previous year, mainly due to an increase in revenue of RMB 1.2 billion from the delivery of supporting office buildings and commercial streets of the global digital trade center in this period, as well as an increase in commodity sales revenue of RMB 918 million YoY.
• 2. The net cash flow from operating activities decreased by RMB 1.512 billion compared to the same period the previous year. This was primarily attributable to a YoY decrease of RMB 1.215 billion in the net cash received from sales of goods and provision of services, mainly driven by the collection of Global Digital Trade Center rental income in the prior year, alongside a YoY increase of RMB 133 million in taxes paid.

VIII. Differences in accounting data under domestic and foreign accounting standards

□Applicable √Not applicable

IX. Non-recurring gains and losses

√Applicable □Not applicable

Unit: RMB

For companies that recognize items not listed in the Explanatory Announcement No. 1 on Information Disclosure of Companies Issuing Securities to the Public - Non-recurring Profit and Loss as non-recurring profit and loss items with significant amounts, and for companies that define non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on Information Disclosure of Companies Issuing Securities to the Public - Non-recurring profit and loss items as recurring profit and loss items, the reasons should be explained.

□Applicable √Not applicable

X. Companies implementing equity incentive plans or employee stock ownership plans may elect to disclose net profit adjusted for the impact of share-based payments

□Applicable √Not applicable

XI. Other

□Applicable √Not applicable

Section III. Discussion and Analysis of Managers

• I. Description of the industry and the Company’s main business during the reporting period

(I) Industry Context of the Company

In accordance with the Guidelines for the Industry Classification of Listed Companies (2012 Revision) issued by the China Securities Regulatory Commission, the Company falls under the "Business Services" (L72) category within the broader "Leasing and Business Services" (L) industry.

As the world's small commodity trade hub, Yiwu Market consistently ranks among China's top comprehensive markets, backed by its massive scale, diverse product categories, and massive pool of Chinese and international purchasers. Leveraging robust industrial agglomeration and supply chain integration capabilities, Yiwu Market drives the development of 2.1 million micro, small and medium-sized enterprises, supports employment for 32 million industrial workers, and builds a solid industrial "moat". Its trade network covers 233 countries and regions worldwide, holding a core hub position in the global small commodity supply chain system, and providing critical support for China to foster the "dual circulation" development paradigm and promote high-quality trade growth.

1. Amplified Core Advantages and Rising Industry Value

• (1) Sustained Burst of Market Vitality. As a key window for China's opening-up and a

core global small commodity trade hub, Yiwu Market continues to play a vital role in trade aggregation, resource allocation and industrial driving, spurring coordinated development of over 20 industrial clusters across China. Talent and market resources are converging at an accelerated pace. In H1 2026, Yiwu newly recruited 40,700 college graduates, marking a 29.13% YoY increase. The total number of business entities in the city surpassed 1.28 million, ranking first among all county-level regions nationwide. Foreign visitors to the city reached 342,000, up 14.4% YoY and hitting a multi-year high. The city is now home to nearly 40,000 resident foreign merchants and 110,000 overseas Chinese entrepreneurs, with foreign-invested business entities exceeding 10,000. The market sees an average daily footfall of 294,000 (up 34%), including 12,000 visits by foreign buyers (up 30%). As global purchasers, entrepreneurs, and innovative resources continue to pour in, the driving forces behind the market's development are constantly strengthening.

• (2) Continuous Enrichment of Product Categories. As the world's largest small

commodity distribution center, Yiwu Market has further improved its business formats following the operation of the Global Digital Trade Center. It now encompasses 28 major categories and 48 industries, offering over 2.2 million types of products, thereby creating a more comprehensive product supply system. Meanwhile, in response to shifting consumer trends, the market leverages its robust capabilities in product innovation and supply chain integration to continuously cultivate new China Chic and creative products. Phenomenal bestsellers emerge

one after another. Its new product development and rapid response capabilities keep improving, enabling high-quality products to connect with global markets at a faster pace.

(3) Accelerated Emergence of New Business Formats. As a frontier for innovation in

trade models and business formats, the Yiwu market pioneered the "Market Procurement Trade" model, establishing a low-cost pathway for small and micro merchants to access overseas markets. After more than a decade of practice, this model has become a vital pillar of Yiwu's foreign trade development. It has driven an almost sevenfold increase in Yiwu's export volume, accounting for approximately 80% of the city's total export value, and has been replicated and promoted across 39 specialized markets in 22 provinces nationwide. While upgrading traditional trade models, Yiwu is accelerating the integration of digital technologies and physical markets, fostering booming new formats and scenarios including digital trade, nighttime live streaming, flexible supply chains and cross-border e-commerce. Drawing on its industrial foundation and trade advantages, Yiwu Market is rapidly expanding into new tracks such as drones, robots, smart wearable devices and IP trendy products, with active transactions and notable export growth, continuously expanding new technology-driven consumption scenarios in the market.

(4) Diversified Iteration of Trade Ecosystem. As a critical platform for global merchants

and enterprises to conduct small commodity trade, Yiwu Market is advancing in-depth comprehensive international trade reform, exploring breakthroughs in institutional innovation, digital trade, open platforms and other fields to continuously unleash reform dividends. In H1 2026, Yiwu CCC further promoted the integration of digital and real economy. Relying on the Global Digital Trade Center, it continuously enriched application scenarios such as digital technology-empowered products and digital technology-empowered trade, enhancing the market's capability to allocate digital resources. It also improved new-type trade service systems covering market procurement trade and cross-border e-commerce, boosting trade facilitation and supply chain collaboration. To date, the city has successfully implemented 21 pioneering reform achievements nationwide, recognized as the "first order," "first case," or "first initiative" of their kind.

1. Steady Growth with Strong Resilience and Sustained Industry Prosperity In the first half of 2026, Yiwu’s foreign trade continued its robust upward trajectory, with total import and export value reaching RMB 486.42 billion, up 19.9% YoY, as trade volume expanded further. Exports totaled RMB 420.72 billion, up 17.3%, while imports reached RMB 65.70 billion, up 39.1%, accounting for 18.6% and 9.3% of Zhejiang Province’s total respectively, up 1.4 and 0.4 percentage points from Q1 2026.

(1) Diversified Market Layout Strengthens Trade Resilience. In the first half of the year,

amid a complex and volatile global trade environment and persistent external uncertainties, Yiwu continued to demonstrate formidable trade resilience, underpinned by its globalized trade networks, well-developed industrial chains, and agile supply chain capabilities. Yiwu’s market

trade networks now span 233 countries and regions worldwide. While consolidating its traditional markets of strength, the city has accelerated expansion into emerging markets such as Africa, Southeast Asia, and Latin America, steadily optimizing its trade partner mix. This diversified market footprint has effectively cushioned the impact of trade environment fluctuations. Notably, in the first half of the year, Yiwu's total import and export volume with Africa, ASEAN, and the EU reached RMB 102.64 billion, RMB 78.21 billion, and RMB 45.81 billion respectively, up 42.7%, 63.5%, and 13.7% YoY.

(2) Market Procurement Trade Fuels Trade Growth. As a distinctive model for Yiwu's

foreign trade development, the market procurement trade model continued to unleash its growth potential. In the first half of the year, exports under this model reached RMB 347.25 billion, up 16.4% YoY, maintaining a high share of Yiwu’s total exports and continuing to anchor overall trade growth. Leveraging the clustering advantages of the Yiwu International Trade City platform, the market procurement model has effectively lowered the barriers for small and medium-sized enterprises to participate in international trade, enhanced trade facilitation, and enabled a wider range of distinctive small commodities to enter global markets efficiently. Meanwhile, with the continuous improvement of buyer resources, trade service systems, and logistics support capabilities, Yiwu has progressively built a comprehensive trade ecosystem integrating exhibition, procurement, payment, logistics, and services, further reinforcing the strengths of the market procurement model and consolidating Yiwu’s leading position in the global small commodities trade sector.

(3) Industrial Strengths Bolster Export Competitiveness. A well-developed industrial

chain system and robust supply chain coordination capabilities form the core foundation of Yiwu’s sustained trade growth. Anchored in a complete ecosystem spanning manufacturing, commodity distribution, trade services, and logistics, Yiwu has forged a development pattern of “small commodities, big industries, and large markets,” boasting abundant product supply capacity and strong market adaptability that enables rapid responses to shifting overseas demand. Drawing on its industrial cluster advantages and the digital capabilities of the "World Yiwu" Commercial Large Model, Yiwu enterprises are able to continuously track and swiftly capture global consumption trends, seizing market opportunities ahead of competitors. From Chinese-style summer cooling products that have become highly popular in Europe, to sports merchandise capitalizing on the hype of the FIFA World Cup in the US, Canada, and Mexico, and to seasonal categories like Christmas gifts, autumn/winter decorations, and outdoor gear that align with traditional overseas consumption cycles, these examples fully demonstrate the rapid adaptability of Yiwu's supply chain to global demand shifts, injecting strong momentum into the city's foreign trade growth.

(4) Digital Empowerment Opens Up New Growth Space. Digital transformation

continues to drive the upgrading of Yiwu’s trade model, with cross-border e-commerce and other new trade formats gradually becoming a key growth engine for foreign trade. On May 15,

2026, the Digital Trade Port at the Global Digital Trade Center officially commenced operations. By leveraging AI large models to unlock the value of trade data, and drawing on digital trade platforms, cross-border logistics systems, and overseas warehouse networks, the city is steadily helping Yiwu enterprises improve their efficiency in connecting with global markets, propelling the evolution of traditional small-commodity trade toward digitalization.

(II) Business Overview of the Company

1. Core Business

Aligned with the national strategy of building China into a trading power and advancing high-standard opening-up, the Company actively integrates itself into the “dual circulation” new development paradigm. Capitalizing on Yiwu's comprehensive international trade reform and Zhejiang's open economy advantages, the Company is committed to its strategic positioning as a "Famous Trade Service Platform." The Company is continuously advancing the construction of its trade service system and accelerating digital, platform-based, and international development.

The Company focuses on three core ecosystems: commodity display and trading, market support services, and trade fulfillment services, and continuously improves its digital trade infrastructure platform. Centered on reducing trade costs and enhancing trade efficiency, the Company drives innovation in market systems and upgrades to trade models, helping trade resources connect efficiently with global markets and achieving a leap from “trading nationwide” to “trading globally.” These efforts further strengthen the global influence and comprehensive service capabilities of Yiwu’s small-commodity trade, burnishing the city’s golden brand as the “World Capital of Small Commodities.”

Commodity Display and Trading Ecosystem: Encompassing market operation and self-operated trade; the core vehicle for the Company’s development.

Market Support Services Ecosystem: Encompassing conventions and exhibitions, hotels, and related businesses; a vital pillar underpinning trade development.

Trade Fulfillment Services Ecosystem: Encompassing the Chinagoods online service platform, overseas brand expansion services, warehousing and logistics, payments, credit reporting, and factoring, the critical chain link in trade services.

1. Principal Business Models

(1) Commodity Display and Trading Ecosystem

• 1) Market operation. The core revenue source is market booths, the ownership of which

rests with the Company. Under a paid booth-usage model, the Company signs contracts with merchants for terms of one to five years and collects the relevant fees in advance as stipulated in the contracts. During the contract term, merchants enjoy the right to use the booths and must conduct business in accordance with the agreed-upon purposes and may not change the designated use without authorization. The markets currently operated by the Company include First to Fifth Districts of the International Trade City, Huangyuan Market, the International Production Materials Market, and the Global Digital Trade Center.

• 2) Self-operated trade. The Company operates a new retail business with “ICMALL”

(Aiximao) as its core brand. Leveraging Yiwu market's abundant source goods and mature supply chain integration capabilities, the Company has curated over 10,000 imported premium products and trendy domestic goods across various consumer sectors, including home living

and beauty & skincare. This creates a supply chain channel brand that integrates "new fashion, new consumption, and new applications." Through proprietary trading, the Company further extends the upstream and downstream segments of the market's industrial chain. While maximizing platform resource advantages and brand influence, this approach promotes the synergistic development of trade operations and the market ecosystem, fostering a virtuous cycle.

(2) Market Support Services Ecosystem

• 1) Exhibition Business. The Company organizes self-operated exhibitions including the

China Yiwu International Commodities Fair, China Yiwu Import Goods Expo, and China Yiwu International Forest Products Expo, and operates the Yiwu International Expo Center and the Quzhou Living Room Exhibition Center. Through sustained cultivation, the exhibition segment has built an integrated business system spanning in-house exhibition organization, overseas exhibition participation, venue management, supporting services, and entrusted operations within the Group. The Company is actively exploring fusion models such as “exhibitions + cultural creativity,” “exhibitions + industries,” and “exhibitions + global expansion,” extending exhibition resources into industrial chains, supply chains, and trade chains, and continuously leveraging the role of exhibition platforms in facilitating trade exchange, serving industrial development, and promoting openness and cooperation.

• 2) Hotel Business. Through a combination of self-operation and entrusted management,

the Company runs ten hotels and serviced apartments, and owns two restaurant brands, Fingertip Canteen and Yandoo Café, building a comprehensive service system covering lodging, dining, meetings, leisure, and other diverse scenarios. Revenue streams span room sales, food and beverage sales, merchandise sales, and venue leasing, among other areas. Meanwhile, the Company continues to refine its multi-channel marketing system covering corporate accounts, conferences and wedding banquets, and online bookings, deepening digital empowerment and brand building to steadily enhance hotel operational capabilities and market competitiveness.

(3) Trade Fulfillment Services Ecosystem

• 1) Online Service Platform. Drawing on the resources of 80,000 physical market booths,

the Company continues to upgrade Chinagoods, its online comprehensive international trade service platform, serving 2.1 million small, medium, and micro enterprises along the upstream and downstream of industry chains worldwide. Driven by trade data integration, the platform links supply and demand, connects procurement, sales, marketing, and other trade links, and has built a B2B digital comprehensive trade service platform integrating membership-based essential services, customized services, AI value-added services, and digital advertising, advancing the digital upgrading of trade services and strengthening industry-chain resource integration and coordination.

• 2) Digital Finance Services. Relying on three major business qualifications, i.e., credit

reporting, factoring, and payment licenses, the Company has built a digital financial service system tailored to the small commodities trade ecosystem. It fully leverages the advantages of foreign exchange collection and settlement under the market procurement trade model, continuously enhancing the digital and intelligent service capabilities of the "Yiwu China Commodities Index." Based on its credit reporting business, the Company integrates and analyzes data accumulated during daily commercial transactions to form an intelligent credit evaluation system; through its factoring business, it provides convenient and efficient financing support for SMEs. Furthermore, the Company has innovated the "Yiwu Pay" brand and continuously improved its overseas payment channel layout. It has established a diversified payment and settlement system covering "cross-border RMB + cross-border foreign exchange + cross-border e-CNY," promoting the deep integration of digital finance and trade services, and constantly strengthening financial empowerment for market trade development.

• 3) Yiwu Market Project Services. The Company continues to advance its “1+5+2+M”

Yiwu Market Project strategy: with one overseas headquarters at the core, supported by five overseas expansion models, in coordination with two major categories of service providers (digital supply chains and digital finance) and connected with M global partners, deepening the implementation of China Commodities City’s Yiwu Market Project strategy. Through model innovation and service upgrades, the Company keeps pushing beyond the boundaries of traditional trade, transforming overseas operations from standalone exhibitions to “exhibition-and-sales hubs + warehouse-showroom synergy,” upgrading from traditional warehousing to a “global warehouse network + supply chain integration” model, and expanding from single-mode logistics to “trunk-and-feeder combined transport + warehouse-transportation coordination.” In doing so, it has architected a more precise, efficient, and multifunctional global trade service network, forming a differentiated overseas footprint of “one plan, one framework, and one portfolio per continent” and elevating its comprehensive international trade service capabilities.

• 4) Warehousing and Logistics Services. Centered on warehousing services and

oriented toward international trade service needs, the Company continues to refine its three-warehouse layout (domestic consolidation warehouses, overseas forward warehouses, and comprehensive bonded warehouses) while coordinating the development of its cross-border supply chain fulfillment system, creating a “two warehouses and one line” service model linking “domestic warehouses, international logistics lines and overseas warehouses.” Meanwhile, the Company is actively developing specialized fulfillment service platforms such as the international digital logistics market, cross-border e-commerce industrial parks, and cross-border e-commerce logistics parks, steadily enhancing its national logistics operations capability and warehouse resource integration. By introducing high-quality supply chain enterprise resources and leveraging its data-intelligent logistics system, the Company further

extends its trade service chain, reinforcing its supply chain service advantage of “global goods, consolidated in Yiwu, distributed worldwide.”

Description of significant non-core businesses newly added during the reporting period

□Applicable √Not applicable

• II. Discussion and Analysis of Operation The year 2026 marks the inaugural year of the “15th Five-Year Plan,” the 20th anniversary

of studying and applying the "Yiwu Development Experience", and an important starting point for Yiwu’s new journey of “building a model city and recreating past glory.” During the reporting period, the Company remained committed to its core strategy of “Becoming a Famous Trade Service Platform.” Driven by the new round of international trade reform and focused on creating a benchmark “Market of the Future,” the Company accelerated innovative practices under the “Yiwu Development Experience.” It continued to deepen the integration of digital and real economies, domestic-international coordination, and supply-demand alignment, propelling the market service system toward a leap to being “always available, everywhere present, and all-encompassing.”

In the first half of 2026, the Company recorded operating revenue of RMB 10.282 billion, up 33.30% YoY, and net profit attributable to shareholders of the listed company of RMB 1.979 billion, up 17.05% YoY, maintaining a steady development trajectory. During the reporting period, the Company continued to advance its international capital deployment, formally submitting an application for a listing of H shares to The Stock Exchange of Hong Kong Limited on May 29, 2026. This steadily advances the construction of its overseas capital platform, further diversifies its financing channels, and supports the realization of its “comprehensive international trade service provider” strategy.

(I) Continuous Physical Market Iteration, Sustained Dividend Release The Company has focused on strengthening its market development capabilities,

accelerating the transformation of the physical market from scale advantages into advantages in quality and efficiency.

1. Ushering in a New Chapter in Global Digital Trade

The Global Digital Trade Center, the flagship project of Yiwu’s sixth-generation market, saw its market section officially open in October 2025, while the Digital Trade Port and remaining functional sections were progressively put into operation by May 15, 2026. Significant improvements have been achieved in digital empowerment, expansion of market participants, diversification of business formats, buyer clustering, and supporting infrastructure. During the reporting period, the market’s fourth floor introduced two emerging categories: smart technology products and IP-driven trend merchandise. The Digital Trade Port, structured around three hubs (the Data Circulation Center, the Digital Trade Service Center, and the New Product Launch Center), has laid out 13 functional sections, including a comprehensive cross-border e-commerce service platform and an Africa digital trade service platform, driving digital technology empowerment across the full chain of commodities and trade. The Digital Trade Port’s IP Service Center has already gathered 185 renowned IP resources, including Disney and Sanrio, and more than 68% of merchants in the Global Digital Trade Center own proprietary brands or deal in IP products. On the supporting facilities side, the commercial streets have

attracted 115 commercial tenants, including several well-known restaurant brands and Michelin-starred establishments entering Yiwu for the first time. Since its opening, the Global Digital Trade Center has recorded average daily foot traffic of over 66,000 visits, including more than 7,000 daily visits by foreign merchants, demonstrating rapid growth momentum.

Figure 1: Dual-Layer Operational Architecture of the Digital Trade Port at the Global Digital Trade Center

2. Consolidating New Advantages for the Yiwu Market

In the first half of 2026, market trade sustained a steady upward trend, achieving synchronized growth in both volume and quality. All operational indicators continued to improve, with market transaction activity, merchant business confidence, and buyer agglomeration rising steadily. To attract incremental global buyers, the Company focuses on five primary traffic acquisition channels: new media, events, exhibitions, overseas expansion, and business travel. Our precise online new media marketing has reached over 200 million impressions. Offline, we hosted more than 100 exhibitions and trade promotion events, attracting a total of 1.2 million incremental buyers. These efforts have continuously consolidated and enhanced the market's core competitive advantage as a premier global sourcing hub. Furthermore, the AI navigation and shopping guide system has achieved full coverage across the International Trade City, accelerating the digitalization and intelligent transformation of our market services. Capitalizing on the communication impact of the CCTV Spring Festival Gala, we launched the "Shop Global Goods · Check-in for the Spring Festival Gala" campaign during the holiday. This attracted over 590,000 visitors, significantly boosting market consumption and brand influence.

The market's development resilience continues to strengthen. As the trade structure and business models undergo continuous optimization, the Yiwu market's ability to withstand external environmental shifts has been further enhanced. Despite external uncertainties, such

as geopolitical fluctuations in the Middle East, the Group has continuously reinforced its Yiwu Market Project. This is underpinned by Yiwu's distinct advantages, including diversified trade, comprehensive industrial and supply chains, and the rigid demand for small commodities. Market operators have proactively expanded into overseas markets and diversified their trade channel layouts, ensuring that the overall operations of the Yiwu market remain stable and positive.

The market's adaptability to evolving demands continues to improve. Market trade is increasingly characterized by small order sizes, diversification, and high flexibility. According to market census data, foreign trade orders valued under USD 10,000 currently account for 91.9%, an increase of approximately 3 percentage points compared to the average over the past three years. Trade channels continue to expand, with over 70% of merchants now participating in online trade, and more than 40% having achieved integrated online and offline operations. The digital transformation of the industry continues to deepen; notably, the hat industry now supplies goods for over 70% of national hat-related live-streaming sessions. In the ornaments and accessories sector, over 500 merchants have established long-term partnerships with universities. Additionally, more than 700 market operators at the Global Digital Trade Center conduct cross-border live streaming at night, continuously unleashing the market's vitality for innovation.

3. Creating New Space for Core Market Business

As a key strategic initiative to expand and upgrade the Company's core market business, the 5th District South Project at the International Trade City will further expand operational space and enhance the supply of market resources. Focusing on the development of a "3+1" trade system, the project will establish three core platforms: the "Import-Export-Transit" Integration Center, the "Trade-Industry-City" Service Center, and the "Culture-Business-Tourism" Experience Center. These platforms are designed to attract high-quality merchants and characteristic industries, optimize the market's functional layout, and continuously elevate its resource allocation and trade service capabilities. Furthermore, by introducing new business formats, innovating operational models, and upgrading supporting services, the project aims to increase output per unit area and overall operational efficiency. This will cultivate new avenues for future profit growth and inject fresh momentum into the sustainable development of the Company's core business.

(II) Robust Capacity Enhancement Driven by Upgrading of Digital Trade Fulfillment Services

The Company is deepening the integration of digital and physical realms, accelerating the comprehensive digital upgrading of trade processes, and building an efficient, collaborative new digital trade ecosystem.

1. Continuous Upgrading of the Chinagoods Platform

With trade data as its core element, the Chinagoods platform focuses on the efficient matching of supply and demand. It connects key links across the entire value chain, including product design, display and transaction, international logistics, overseas warehousing, and financial payments. This promotes the digital allocation of market resources and the collaborative optimization of trade processes, ultimately building a genuine, open, and integrated comprehensive digital trade service platform.

From January to June 2026, the Chinagoods platform added over 360,000 registered buyers, bringing the total to more than 5.86 million. This has achieved full service coverage for all market operators and continuously upgraded the platform's capabilities. The "World Yiwu" Commercial Large Model app has successfully passed the filing for both its dialogue algorithm and multi-modal content generation algorithm. It has attracted over 15,000 new users, reaching a total of more than 65,000 users. By constructing high-quality datasets and enhancing multi-modal capabilities, the platform fully supports the large-scale application of AI-driven businesses. A total of 11 new AI applications were launched, including "Data Insight," "E-Commerce Link," and "AR Space," bringing the total to 25. These AI products have served over 300,000 users in total, accelerating the fulfillment of core demands throughout the entire small commodities trade process.

In terms of digital-physical scenario implementation, the Chinagoods platform deepens the integration of AI technology with trade scenarios by launching the "Chinagoods AI Navigation" mini-program. Its service coverage spans Districts 1 through 5 of the Yiwu International Trade City and the Global Digital Trade Center. As the industry's first cross-building and cross-corridor navigation implementation, it enables intelligent location tracking across different regions and floors, improving store-finding efficiency by nearly 70%. The Company has opened up a full customer acquisition funnel spanning “targeted audience selection—content reach—online registration—arrival in Yiwu—user data accumulation,” achieving a total of 383,000 impressions for the Chinagoods platform and, through digital customer acquisition, precisely attracting 13,000 foreign buyers from target markets to the Yiwu International Trade City within 10 days.

Regarding digital channel empowerment, the Company actively integrates resources from e-commerce platforms, trade entities, and third-party service providers to build a comprehensive empowerment system of "training + service + resource docking." We have jointly conducted 13 cross-border e-commerce training sessions with platforms such as TikTok Shop, Xiaohongshu (RED), and Wildberries. Additionally, we hosted the E-Commerce Conference of the Global Digital Trade Center, inviting 20 mainstream platforms, including Amazon, DHgate, and Shein, to jointly launch the "Global Digital Trade Center E-Commerce Gravity Acceleration Plan 2.0." The Company has also deepened its “independent website + short-video platform” marketing model, creating 13 flagship independent website templates covering industries such as home goods, auto parts, fashion, jewelry and accessories, and

small home appliances, publishing 370 pieces of branded video content, and generating over 1 million total visits across social media accounts.

2. Enhanced Capacity and Efficiency of Digital Finance

As the core carrier of the Company's digital financial services, Yiwu Pay leverages the scenario advantages of Yiwu's cross-border trade to continuously promote cross-border financial innovation and service capacity building. We are deepening our global business layout and enhancing our digital payment service standards. To date, Yiwu Pay has established partnerships with hundreds of mainstream banks worldwide. Our business covers 179 countries and regions, supports international collection and payment in 29 mainstream currencies, and our cross-border payment service capacity continues to grow. From January to June 2026, the transaction volume of our cross-border payment business exceeded USD 2.51 billion.

During the reporting period, Yiwu Pay successfully obtained both the MSO (Money Service Operator) license and the TCSP (Trust or Company Service Provider) license in Hong Kong. The MSO license received its official business permit from the Hong Kong Customs and Excise Department in May, and we have completed direct interface connections with partner banks, further enhancing our cross-border payment capabilities. In June, Yiwu Pay jointly released the "E-CNY Cross-Border E-Commerce Payment Solution" with the Industrial and Commercial Bank of China (ICBC). This marked the first "E-CNY Arrival" business in a cross-border e-commerce scenario, significantly expanding the application scenarios for E-CNY in cross-border payments. Relying on the E-CNY system, this solution enables point-to-point direct connections for cross-border payments, effectively reducing intermediate links, improving fund settlement efficiency, and lowering transaction costs. Furthermore, by introducing the E-CNY umbrella wallet system, Yiwu Pay provides merchants with more standardized, transparent, and efficient fund management services, thereby enhancing the visibility of fund flows and strengthening risk control capabilities.

Figure 2: Yiwu Pay and ICBC Launch E-CNY Cross-Border E-Commerce Payment Solution

3. Expanding Coverage and Scale in Digital Logistics

The Company’s equity-invested entity, Zhijie Yuangang, is continuously enhancing its global logistics service capabilities centered around the construction of an international supply chain platform. It has built an end-to-end delivery system featuring "two warehouses and one line" (domestic warehouses + overseas warehouses + international logistics dedicated line). To date, the digital supply chain platform covers 160 countries and has served over 1,400 clients cumulatively. From January to June 2026, the platform completed a cargo shipment volume of 80,000 TEUs, an 11% YoY increase, bringing the cumulative total to over 400,000 TEUs.

During the reporting period, Zhijie Yuangang officially obtained the qualification for international liner shipping operations, becoming the first local cross-border supply chain enterprise in Jinhua to secure this qualification. This grants the Company full-process operational capabilities, including independently planning ocean shipping routes, coordinating vessel schedules, and filing maritime freight rates. Leveraging this qualification advantage, Zhijie Yuangang is further enhancing its cross-border logistics service capabilities. By integrating port and shipping resources to ensure stable cabin space and optimize transportation costs, the Company is helping small and medium-sized foreign trade enterprises reduce costs and increase efficiency, accelerating its transformation from a third-party logistics platform into a comprehensive maritime shipping service provider with independent routes and shipping capacity.

(III) Accelerating the "Trading Globally" Service Landscape The Company continues to expand its overseas resource layout, refine a global commodity

distribution network, and strengthen export supply chain security, thereby facilitating the quality improvement and scale expansion of "trading globally."

1. Extending the Chain and Building Networks for Brand Overseas Expansion

During the reporting period, the Company advanced its brand overseas expansion initiative in depth, accelerating the establishment of a global overseas trade service network. Tailoring to regional market characteristics, the Company finalized a pioneering layout plan for Europe and Africa, continuously refining its regionalized operational system and initially opening up digital channels for overseas expansion, aggregating over 22,000 SKUs in its digital product pool. From January to June 2026, the Company added 14 Yiwu Market projects, including 1 overseas sub-market, 6 FBC overseas warehouses, 2 overseas websites, 3 overseas showrooms, and 2 overseas exhibitions, continuously perfecting the overseas service network.

On July 22, 2026, the Tanzania Yiwu Market, co-built by the Company and Weihai Huatan Company, was officially unveiled at the East Africa Commercial and Logistics Center in Dar es Salaam. This further expands the overseas service system of the "Yiwu China Commodities City" brand. Relying on regional market resource advantages, this project will radiate to the Tanzanian market and surrounding countries, strengthening the linkage between overseas

markets and the Yiwu market. It provides robust support for merchants to expand into the East African market and promotes the global circulation of small commodities.

Figure 3: Inauguration Ceremony of the Tanzania Yiwu Market

2. Bonded Ecosystem Gathers Chain Clusters into Strong Momentum

As a key vehicle for trade fulfillment services, the Yiwu Comprehensive Bonded Zone operated by the Company has focused on cultivating “bonded +” industrial clusters, successfully attracting eight bonded processing projects covering beauty and personal care, health foods, and other categories, while continuously refining the industrial ecosystem. Centered on three strategic directions (mainstream cross-border e-commerce platforms, a “bonded + livestreaming” cross-border ecosystem, and brand-certified warehouses), the bonded zone is accelerating the construction of a full-chain “bonded + cross-border” industrial system. To date, 15 leading cross-border e-commerce players, including Tmall Global, Pinduoduo, and Douyin, have established operations there, achieving near-complete coverage of mainstream platforms and intensive operations under a “one warehouse for all platforms” model.

From January to June 2026, the Yiwu Comprehensive Bonded Zone (CBZ) achieved a total import and export value of RMB 45.304 billion, a YoY increase of 59.3%. Currently, the CBZ has accommodated 146 enterprises, with 541,500 square meters of bonded warehousing space put into operation. The zone is continuously advancing the establishment of import supply chain headquarters for leading enterprises and major central warehouses for large brands. To date, it has successfully attracted 15 brand central warehouses with import volumes exceeding RMB 100 million.

According to the 2025 National Comprehensive Bonded Zone Development Performance Assessment officially released by the General Administration of Customs, the Yiwu Comprehensive Bonded Zone ranked 35th (Category B) among the 161 participating CBZs across China, and 28th (Category B) in East China. This represents a significant rise of 31 places in the national ranking compared to the previous year, demonstrating a substantial enhancement in its comprehensive development capabilities and level of openness.

3. Enhancing Quality and Expanding Scope of the Positive List for Imports

As the sole whitelisted enterprise under the positive list for imports, the Company continues to drive the expansion of this management regime. We deliver high-quality management services for categories such as daily sundries and toys and have successfully onboarded Shenzhen Yiran E-commerce as a pilot enterprise for cosmetics, which is now fully operational. In the first half of 2026, 15 new models were added under the parallel import scheme for home appliances, generating 2,799 platform sales orders. By enhancing the testing and certification service system, strengthening the comprehensive quality and safety management of consumer products via digital platforms, and implementing full-process traceability for listed goods, the Company has further elevated its service capabilities for imported consumer goods, supporting the overall quality upgrading of the import trade ecosystem.

(IV) Enhanced Supporting Systems and Elevated Service Capabilities

Driven by a commitment to coordinated development, the Company has accelerated the expansion of its supporting service infrastructure, including exhibitions and hospitality. This has resulted in a comprehensive service ecosystem that seamlessly integrates market operations, trade services, and consumer experiences.

1. Exhibition Business. Adhering to the operating philosophy of "dual empowerment and integrated exhibition organizing," the Company’s exhibition segment continues to scale up and professionalize its domestic exhibitions while leveraging overseas resources to drive quality and efficiency improvements. This strategy has yielded steady enhancements in operational quality and returns. From January to June 2026, Yiwu China Commodities City Exhibition Co., Ltd. (“CCC Exhibition”) generated revenue of RMB 81.92 million, a YoY increase of 11.36%, and a net profit of RMB 24.85 million, surging 45.66% YoY.

During the first half of the year, over 30 exhibitions were hosted, including the China Yiwu Cultural and Tourism Products Trade Fair, China Yiwu Hardware & Electrical Appliances Trade Fair, and Yiwu International Fashion Jewelry Factory Exhibition. These events covered a total exhibition area exceeding 650,000 square meters, attracted over 1 million professional buyer visits, and facilitated intended transactions surpassing RMB 10 billion. Notably, the Yiwu International Fashion Jewelry Factory Exhibition continued to generate strong synergistic effects, attracting 278 industrial chain enterprises to establish operations in Yiwu. Additionally, the inaugural China Yiwu Cross-border Beauty Industry Expo brought together 316 companies showcasing products across the entire beauty industry chain. Concurrently, CCC Exhibition has

systematically advanced its preparations for a listing on the Beijing Stock Exchange, making steady progress on core criteria, including innovation attributes and industry standing.

1. Hotel Business. Guided by the strategy of "platform empowerment, ecosystem coordination, and brand upgrading," the Company’s hotel segment is accelerating the integration of its "accommodation + dining + supporting services" multi-format operations to simultaneously enhance service quality and operational performance. Focusing on core business lines such as guest rooms, dining, and events, the segment has implemented phased, precision marketing tailored to specific customer segments. It has upgraded its online operations system, strengthened channel management across OTA platforms, short-video platforms, and livestreaming, and significantly improved brand visibility and conversion rates.

Furthermore, the segment has deepened offline partnerships, introduced a "one-stop conference butler" service model, refined its comprehensive banquet service system, and expanded its base of contracted corporate clients. It continues to cultivate distinctive offerings, such as Yandoo Cafe and group catering, while strategically opening new outlets to drive multi-channel revenue growth. From January to June 2026, the Company’s self-operated hotel business achieved operating revenue of RMB 181 million, representing a 5.67% YoY increase.

(V) Expanding Capital Channels to Fuel Global Strategic Expansion

To further broaden its overseas financing channels and accelerate its strategic transformation into a "globally renowned comprehensive international trade service provider," the Company initiated the process for an IPO of overseas-listed foreign shares (H shares) and a listing on the Main Board of The Stock Exchange of Hong Kong Limited (HKEX) during the reporting period. The A1 Application Form was formally submitted to HKEX on May 29, 2026.

The H-share listing will facilitate the Company’s integration into international capital markets. By leveraging Hong Kong’s strengths as an international financial center, the Company aims to diversify its financing channels, optimize its capital structure, enhance resource integration capabilities, and accelerate its internationalization. Furthermore, capitalizing on this internationalization, the Company will deepen its "capital going global" strategic layout to attract top-tier talent and high-quality resources, thereby injecting fresh momentum into its long-term, sustainable development.

Significant Changes in the Company's Operations During the Reporting Period, as Well as Matters Occurring During the Reporting Period That Have or Are Expected to Have a Significant Impact on the Company's Operations

□Applicable √Not applicable

III. Analysis of core competitiveness during the reporting period

√Applicable □Not applicable

(I) Advantages of Trade Ecosystem Aggregation

In the early years of reform and opening-up, Yiwu pioneered the establishment of a small commodity market. Through six rounds of upgrading and thirteen rounds of expansion, the market has sustained transaction volumes that consistently rank among the top comprehensive markets nationwide, forging deep first-mover advantages. As the world's largest small commodity distribution hub, the Yiwu market now brings together 28 major categories and more than 2.2 million individual SKUs, enabling "one-stop sourcing" for global trade. Powered by smart operations and digital technology, vast flows of commerce, logistics, capital, and information have converged around the Yiwu market, building scale effects and resource barriers that are difficult to replicate and continuously consolidating Yiwu's position as the core hub of global small commodity trade.

(II) Advantages of Digital Integration

The Company owns the world's leading physical small commodity market. Leveraging its nearly 80,000 booths, it has established the Global Digital Trade Center (Digital Trade Port) as its latest digital integration platform, building a high-caliber digital trade hub structured around "full-chain sensing, intelligent decision-making and ecosystem coordination" and forming a digital leadership advantage that traditional markets cannot match. By digitally connecting the “full trade journey of a single commodity,” the Company achieves a closed loop spanning demand discovery, design and production, listing and display, order management, warehousing and logistics, and payment settlement, transforming "segmented operations" into “full-chain sensing” and accelerating product iteration. By aggregating and leveraging “the full spectrum of data elements in one hub,” it integrates trade, industry, and public data, turning “experience-based decisions” into “intelligent decisions” that drive precise analytics and ecosystem coordination. By integrating and optimizing the “full service ecosystem on one platform,” it accumulates massive trade data and consolidates diverse trade tools, replacing "scattered point-to-point connections" with one-stop “ecosystem coordination” that substantially enhances trade facilitation. This full-chain digital intelligence hub enables the Yiwu market to transcend the constraints of time and space, upgrading from the traditional "passive, fragmented, and inefficient" mode of operation to a high-caliber digital trade hub characterized by “full-scenario coverage, full-chain coordination, and full data connectivity,” truly realizing a new paradigm of digital trade that is “always available, everywhere present, and all-encompassing.”

(III) Advantages of International Brand

"Yiwu China Commodities City" is the first trademark in China's commodity trading market sector to be recognized as a well-known trademark by the former State Administration for Industry and Commerce of China, boasting outstanding brand value and high international recognition. Through project implementation, festival linkages, and global deployment, the Company continues to amplify its brand effect. In 2026, the CCTV Spring Festival Gala's Yiwu sub-venue made a stunning debut at the Global Digital Trade Center, and the city brand image of "Sincere and Loyal, Yiwu for the World" went viral across the internet, achieving a global reach of 1.2 billion impressions. The "Yiwu" brand is now inextricably linked to the image of the "World Capital of Small Commodities," with growing influence and leadership in global trade, continuously attracting quality merchants and buyers from around the world.

(IV) Advantages of Trade Supply Chain

• 1. Advantages in Logistics Coordination. As a designated national logistics hub city of the

trade-service type, Yiwu boasts a well-developed logistics network in which leading domestic and international express and logistics companies have all established regional distribution centers, forming an efficient global cargo transport and delivery system. In the first half of 2026, the city's express parcel volume reached 646 million, keeping it firmly among the top counties (cities, districts) in China, with outstanding comprehensive advantages in logistics cost and efficiency. Relying on the Zhijie Yuangang integrated logistics platform, the Company has moved beyond the traditional multi-layer freight forwarding model, compressing distribution chains and raising service standardization. Through its "dual warehouses, one trunk line" layout and smart operations, it achieves highly coordinated full-chain operations covering domestic consolidation, trunk transportation, overseas warehousing, and last-mile delivery, delivering significant competitive advantages over traditional foreign trade models in operating costs, fulfillment efficiency, and end-to-end controllability, thereby providing solid support for the smooth flow of global trade.

• 2. Advantages in Industrial Support. Driven by the Yiwu China Commodities City, a small

commodity industrial belt centered on Yiwu and covering Jinhua-Lishui-Quzhou, Hangzhou-Jiaxing-Huzhou-Shaoxing, and other areas, spanning nearly 10,000 square kilometers, has taken shape. Emerging industries attracted by the Global Digital Trade Center, such as drones and intelligent equipment, are rapidly clustering around Yiwu by leveraging the market's advantages. This deep linkage between the market and surrounding industrial clusters has built a virtuous "trade-industry linkage, coordinated development" mechanism, providing the market with stable sources of supply and robust industrial support.

• 3. Advantage in Exhibition Service. The Company's exhibition segment organizes multiple

UFI-approved events, including the China Yiwu International Commodities Fair and China Yiwu Import Goods Expo, while cultivating vertical trade shows in stationery, textiles, and other industries, forming professional and internationally recognized exhibition brands. These events

have become national-level platforms that lead industry development, consolidate the clustering of merchants and commodities, and facilitate trade matching and industrial upgrading.

(V) Advantages of Business Diversification

While deepening its core business, the Company has actively expanded into related fields, forming a diversified and synergistic group structure and profit model spanning "market operations + international trade + modern logistics + conventions and hotels + financial services + digital technology." The business segments share resources and develop in linkage, both strengthening the Company's resilience against risks and broadening its revenue streams, thereby safeguarding long-term sustainable development.

(VI) Advantages of Talent Management

As a leading enterprise in professional market operations, the Company has established a comprehensive management system and accumulated extensive experience in market operation and management. Over years of development, it has cultivated a management team with well-balanced knowledge structures, outstanding professional capabilities, and strategic vision — able to accurately grasp industry trends and efficiently advance project implementation and business innovation, providing core assurance for the Company's strategic execution and high-quality development. In recent years, with the expansion of digital technology, financial services, and global brand initiatives, a market-oriented, professional, and internationalized talent pool is progressively emerging as a new driving force for the Company's growth.

• IV. Operating status during the reporting period

• （i） Analysis of main business

• 1. Analysis of changes in the items of the financial statements Unit: RMB

Reasons for the change in operating revenue: Operating revenue increased by 33.30% compared to the same period the previous year, mainly due to an increase in revenue of RMB

• 1.2 billion from the delivery of supporting office buildings and commercial streets at the Global Digital Trade Center, as well as an increase of RMB 918 million in product sales revenue.

Reasons for the change in operating costs: Operating costs increased by 38.19% compared to the same period the previous year, mainly due to the recognition of delivery costs for supporting office buildings and commercial streets at the Global Digital Trade Center and the expansion of the product sales scale.

Reasons for the change in financial expenses: Financial expenses decreased by 100.74% compared to the same period the previous year, mainly due to a YoY reduction in interest-bearing liabilities.

Reasons for the change in research and development expenses: R&D expenses increased by 188.41% compared to the same period the previous year, mainly due to an increase in the Company's R&D investment.

Reasons for the change in net cash flow from operating activities: The net cash flow from operating activities decreased by RMB 1.512 billion compared to the same period the previous year. This was primarily attributable to a YoY decrease of RMB 1.215 billion in the net cash received from sales of goods and provision of services, mainly driven by the collection of Global Digital Trade Center rental income in the prior year, alongside a YoY increase of RMB 133 million in taxes paid.

Reasons for the change in the net cash flow from operating activities: Net cash flow from operating activities increased by RMB 594 million YoY, mainly due to a YoY increase of RMB

• 2.895 billion in net inflow from investments, while cash paid for the acquisition of fixed assets, intangible assets, and other long-term assets increased by RMB 2.306 billion YoY.

2. Details of material changes in the business types, the components or sources of profits of the Company in this reporting period

□Applicable √Not applicable

• （ii） Material changes in profits caused by non-main businesses

□Applicable √Not applicable

• （iii） Analysis of assets and liabilities √Applicable □Not applicable

• 1. Status of assets and liabilities Unit: RMB 10,000

Other notes None

• 2. Overseas assets √Applicable □Not applicable

(1) Scale of assets

Among them: overseas assets amounted to RMB 608 million, accounting for 1.41% of total assets.

(2) Explanation of the high proportion of offshore assets

□Applicable √Not applicable Other notes None

3. Encumbrances on major assets as of the end of the reporting period

√Applicable □Not applicable

Unit: RMB

For details regarding restrictions on assets, see Note VII.31, “Assets with Restricted Ownership or Usage Rights,” in Section VIII, “Financial Statements.”

4. Other notes

□Applicable √Not applicable

• （iv） Analysis of investments

1. Overall analysis of external equity investment √Applicable □Not applicable

As of the end of June 2026, the balance of external investments was RMB 9.1283481 billion (including trading financial assets of RMB 574.8511 million, long-term equity investments of RMB 6.4099942 billion, other equity instrument investments of RMB 568.1858 million, and other non-current financial assets of RMB 1.5753170 billion), a decrease of RMB 1.6587085 billion, compared to the balance of RMB 10.7870566 billion at the end of the previous year (including trading financial assets of RMB 2.0936406 billion, long-term equity investments of RMB 6.4367734 billion, other equity instrument investments of RMB 661.0021 million, and other non-current financial assets of RMB 1.5956405 billion), reflecting a decline of 15.38%. The main changes are as follows:

• I. As of the end of the reporting period, the trading financial assets decreased by RMB

1.5187895 billion compared to the end of the previous year, mainly due to a net decrease of RMB 1.6853583 billion in bank wealth management and structured deposits during the reporting period, and an increase of RMB 1.665688 billion in fair value changes.

• II. As of the end of the reporting period, long-term equity investments decreased by RMB

26.7792 million compared to the end of the previous year, mainly due to:

• 1. Investment costs decreased by RMB 5.3855 million, mainly due to the recovery of

investment principal amounting to RMB 5.2563 million from Yiwu Huishang Redbud Phase II Investment Partnership (Limited Partnership).

• 2. Accruals under the equity method decreased by RMB 21.3938 million, mainly due to the

investment income of RMB 104.6499 million recognized under the equity method during the reporting period, and cash dividends received amounting to RMB 126.0437 million.

• III. As of the end of the reporting period, investments in other equity instruments decreased

by RMB 92.8162 million compared to the end of the previous year, due to changes in the fair value of Shenwan Hongyuan shares during the reporting period.

• IV. As of the end of the reporting period, other non-current financial assets decreased by

RMB 20.3235 million compared to the end of the previous year, due to the recovery of investments in three companies, including Suzhou Xiangzhong Venture Capital Partnership (Limited Partnership), during the reporting period.

(1)Major equity investments

□Applicable √Not applicable

(2)Major non-equity investments

√Applicable □Not applicable

Unit: RMB 10,000

(3)Financial assets measured at fair value

√Applicable □Not applicable

Unit: RMB 10,000

Securities Investment √Applicable □Not applicable

Unit: RMB 10,000

Explanation of securities investment

□Applicable √Not applicable PE investment √Applicable □Not applicable

As of the end of this reporting period, the book value of private equity fund investments was RMB 1.3439447 billion, a decrease of RMB 20.3235 million from the balance of RMB 1.3642682 billion at the end of the previous year, due to the recovery of investments in three companies, including Suzhou Xiangzhong Venture Capital Partnership (Limited Partnership).

Derivatives investment

□Applicable √Not applicable

（v） Major sales of assets and equity

（vi） Analysis of major subsidiaries and associates

√Applicable □Not applicable Information on major subsidiaries and equity investees contributing more than 10% to the Company's net profit

• □Applicable √Not applicable Acquisition and disposal of subsidiaries during the reporting period √Applicable □Not applicable

Other notes

• □Applicable √Not applicable

（vii） Structured entities controlled by the Company

□Applicable √Not applicable

V. Other disclosure matters

• （i） Possible risks √Applicable □Not applicable

• 1. Risk of macroeconomic fluctuations. The profitability of the Company's main businesses including market operations, hotels, exhibitions, and

goods sales is significantly correlated with the macroeconomic cycle. If global economic growth weakens and trade volume shrinks, it may lead to a decrease in the overall prosperity of the Yiwu small commodity market, thereby adversely affecting booth leasing and related businesses.

• 2. Risk of insufficient talent reserves. With the acceleration of market transformation and the expansion of the Company’s business, and with the

expansion of international trade, warehousing and logistics, supply chain, overseas development, information data, industrial investment, and business operations, the Company may face the risk of insufficient reserves of professional talents and inter-disciplinary talents.

• 3. External uncertainty risks. Geopolitical conflicts have caused increased uncertainty in international trade, and the development of global market

trade is more complicated and severe than before; new technologies are accelerating to breed new opportunities, and new trade models and new formats are constantly emerging.

• （ii） Other disclosure matters

Section IV. Corporate Governance, Environment, and Society

• I. Changes in directors and senior management of the Company √Applicable □Not applicable

Changes in the Company's directors and senior management personnel

□Applicable √Not applicable

• II. Plan for profit distribution or capital reserve into share capital Plan for profit distribution or capital reserve into share capital made in the current period

• III. Incentive stock option plans, employee stock ownership plans and other employee incentives granted by the Company and the impact thereof

• （i） Related equity incentive matters that have been disclosed in the provisional announcement without progress or change in subsequent implementation

□Applicable √Not applicable

• （ii） Incentives that have not been disclosed in the temporary announcements or had further progress

Incentive stock option

• □Applicable √Not applicable Other notes
• □Applicable √Not applicable Employee stock ownership plans
• □Applicable √Not applicable Other incentives
• □Applicable √Not applicable

IV. Environmental information of listed companies and their principal subsidiaries included in the list of enterprises required by law to disclose environmental information

• □Applicable √Not applicable Other notes
• □Applicable √Not applicable

V. Status of consolidation and expansion of the results of poverty alleviation, rural revitalization and other specific work

□Applicable √Not applicable

Section V. Significant Matters

I. Fulfillment of commitments

（i） Commitments made by the actual controller, shareholders, affiliates and acquirer of the Company, the Company itself and other related parties during the reporting period or as of the reporting period

□Applicable √Not applicable

II. The Company’s funds occupied by its controlling shareholders or any of other affiliates for non-operational purposes during the reporting period

□Applicable √Not applicable

III. Illegal guarantees

□Applicable √Not applicable

IV. Information about audit on the semi-annual report

□Applicable √Not applicable

V. Changes and handling of matters involved in modified audit opinion in the previous year’s annual report

□Applicable √Not applicable

VI. Matters relating to bankruptcy and reorganization

□Applicable √Not applicable

VII. Material litigations and arbitrations

√ During the period, the Company had major litigations or arbitrations □ During the period, the Company did not have any major litigations or arbitrations

• （i） Litigations and arbitrations that have been disclosed in the temporary announcements and have had no further progress

□Applicable √Not applicable

（ii） Litigations and arbitrations that have not been disclosed in the temporary announcements or have had further progresses

√Applicable □Not applicable

Unit: RMB 10,000

（iii） Other notes

□Applicable √Not applicable

• VIII. Information of the listed company and its directors, senior management, controlling shareholder, and actual controller suspected of violations of laws and regulations, penalties and rectification

□Applicable √Not applicable

• IX. Credit standing of the Company and its controlling shareholder and actual controller √Applicable □Not applicable

There was no outstanding court judgment or overdue debt of a large amount involving the Company or its controlling shareholder or actual controller during the reporting period.

• X. Significant related transactions

• （i） Related transactions relating to regular corporate operation

• 1. Matters that have been disclosed in the temporary announcements and had no further progress or changes

□Applicable √Not applicable

• 2. Matters that have been disclosed in the temporary announcements but had further progress or changes

□Applicable √Not applicable

• 3. Matters that have not been disclosed in the temporary announcements

√Applicable □Not applicable

Unit: RMB

• （ii） Related transactions arising from asset acquisitions or equity acquisitions and sales

• 1. Matters that have been disclosed in the temporary announcements and had no further progress or changes

□Applicable √Not applicable

• 2. Matters that have been disclosed in the temporary announcements but had further progress or changes

□Applicable √Not applicable

• 3. Matters that have not been disclosed in the temporary announcements

□Applicable √Not applicable

4. If any agreement on the operating results is involved, the achievement of operating results during the reporting period shall be disclosed

• □Applicable √Not applicable

• （iii） Related transactions arising from joint investments in external entities

• 1. Matters that have been disclosed in the temporary announcements and had no further progress or changes

□Applicable √Not applicable

• 2. Matters that have been disclosed in the temporary announcements but had further progress or changes

□Applicable √Not applicable

• 3. Matters that have not been disclosed in the temporary announcements

□Applicable √Not applicable

• （iv） Credits and liabilities with related parties

• 1. Matters that have been disclosed in the temporary announcements and had no further progress or changes

□Applicable √Not applicable

• 2. Matters that have been disclosed in the temporary announcements but had further progress or changes

□Applicable √Not applicable

• 3. Matters that have not been disclosed in the temporary announcements

□Applicable √Not applicable

• （v） Financial business between the Company and the associated financial companies, the Company's holding financial company and the related parties

□Applicable √Not applicable

• （vi） Other significant related transactions

□Applicable √Not applicable

• （vii） Other

• □Applicable √Not applicable

XI. Significant contracts and their execution （i） Trusteeship, contracting and leases

□Applicable √Not applicable

（ii） Material guarantees fulfilled or not completely fulfilled in the reporting period

√Applicable □Not applicable

Unit: RMB 10,000

（iii） Other significant contracts

√Applicable □Not applicable

XII. Description of progress in the use of raised funds

□Applicable √Not applicable

XIII. Other significant matters

□Applicable √Not applicable

Section VI. Changes in Shares and Information on Shareholders

I. Changes in shares

• （i） Table of changes in shares

• 1. Table of changes in shares

During the reporting period, the total number of shares and the capital structure of the Company remained unchanged.

• 2. Explanation of changes in shares

□Applicable √Not applicable

• 3. The impact of share changes on financial indicators such as earnings per share and net assets per share during the period from the end of the reporting period to the disclosure date of the semi-annual report (if any)

□Applicable √Not applicable

• 4. Other matters the Company deems it necessary to disclose or required by the securities regulatory authority to be disclosed

□Applicable √Not applicable

• （ii） Changes in restricted shares

□Applicable √Not applicable

II. Information about shareholders

• （i） Total number of shareholders:

• （ii） Shareholdings of the top 10 shareholders and top 10 holders of tradable shares (or shareholders not subject to trading restrictions)

Unit: share

Participation of shareholders holding more than 5% of the shares, top ten shareholders, and top ten shareholders with non-restricted tradable shares in the lending of shares through refinancing

• □Applicable √Not applicable

Changes in the top ten shareholders and the top ten shareholders with non-restricted tradable shares compared to the prior corresponding period due to lending or return of shares through refinancing

• □Applicable √Not applicable

Number of shares held by the top 10 shareholders subject to trading restrictions and the trading restrictions

• □Applicable √Not applicable

• （iii） Strategic investors or general corporations becoming top ten shareholders due to placing of new shares

□Applicable √Not applicable

III. Directors and senior management

• （i） Changes in shareholding of current and resigning directors and senior management during the reporting period

• □Applicable √Not applicable Statement on other matters
• □Applicable √Not applicable

• （ii） Equity incentives granted to directors and senior executives during the reporting period

□Applicable √Not applicable

• （iii） Other notes

□Applicable √Not applicable

IV. Changes in controlling shareholder or actual controller

□Applicable √Not applicable

V. Preferred Shares

□Applicable √Not applicable

Section VII. Bonds

I. Corporate bonds (including enterprise bonds) and non-financial corporate debt financing instruments

√Applicable □Not applicable

• （i） Corporate bonds (including enterprise bonds) √Applicable □Not applicable

• 1. Basic information of corporate bonds Unit: RMB 100 million Currency: RMB

The Company’s mitigation measures against risks of bond delisting or de-registration

□Applicable √Not applicable

• 2. Triggering and execution of issuer or investor choice clauses and investor protection clauses

□Applicable √Not applicable

• 3. Changes in credit ratings

□Applicable √Not applicable Other notes

Shanghai New Century Credit Rating Investment Service Co., Ltd. issued the Zhejiang China Commodities City Group Co., Ltd. Credit Rating Report [XSJQP (2026) 020276] on June 26, 2026. According to the report, the Company's main credit rating is AAA, and the rating outlook is stable.

4. Changes, variations, and execution of guarantees, debt repayment plans, and other debt protection measures during the reporting period and their impacts

• □Applicable √Not applicable

• （ii） Fundraising through corporate bonds

• □ The Company's bonds involved the use or rectification of the raised funds during the reporting period√ All corporate bonds of the Company did not involve the use of raised funds or rectification during the reporting period

(1) Proceeds from fundraising are earmarked for specific projects

• □Applicable √Not applicable

• （iii） Other matters that should be disclosed for special bond varieties

□Applicable √Not applicable

• （iv） Important matters related to corporate bonds during the reporting period

• □Applicable √Not applicable

• （v） Non-financial corporate debt financing instruments in the interbank bond market √Applicable □Not applicable

1. Basic information of non-financial corporate debt financing instruments

Unit: RMB 100 million Currency: RMB

The Company's measures to deal with the risk of bond termination

• □Applicable √Not applicable Bonds overdue
• □Applicable √Not applicable

Explanation of bonds overdue □Applicable √Not applicable

2. Triggering and execution of issuer or investor choice clauses and investor protection clauses

□Applicable √Not applicable

3. Changes in credit ratings

□Applicable √Not applicable Other notes

Shanghai New Century Credit Rating Investment Service Co., Ltd. issued the Zhejiang China Commodities City Group Co., Ltd. Credit Rating Report [XSJQP (2026) 020276] on June 26, 2026. According to the report, the Company's main credit rating is AAA, and the rating outlook is stable.

4. Execution and changes of guarantees, debt repayment plans, and other debt protection measures during the reporting period and their impact

□Applicable √Not applicable Other notes None

5. Explanation of other situations regarding non-financial corporate debt financing instruments

□Applicable √Not applicable

• （vi） Consolidated loss of the reporting period over 10% of net assets as at the end of last year

□Applicable √Not applicable

• （vii） Violations of regulations and agreements

Violations of laws, regulations, self-regulatory rules, articles of association, information disclosure management systems, and breaches of covenants or commitments in the bond prospectus during the reporting period, and the impact of such circumstances on the rights and interests of bond investors

□Applicable √Not applicable

• （viii） Main accounting data and financial indicators

√Applicable □Not applicable

Unit: RMB 10,000

II. Convertible bonds

□Applicable √Not applicable

Section VIII. Financial Report

I. Auditor's Report

□Applicable √Not applicable

II. Financial statements Consolidated Balance Sheet

June 30, 2026 Prepared by: Zhejiang China Commodities City Group Co., Ltd.

Unit: RMB

Head of the Company: CHEN Dezhan, Principal in charge of accounting: BAO Hua, Head of the accounting department: ZHAO Difang

Parent Company Balance Sheet June 30, 2026

Prepared by: Zhejiang China Commodities City Group Co., Ltd.

Unit: RMB

Head of the Company: CHEN Dezhan, Principal in charge of accounting: BAO Hua, Head of the accounting department: ZHAO Difang

Consolidated Income Statement January to June 2026

Unit: RMB

In this period, if a business combination under common control occurs, the net profit realized by the transferred party before the combination was 0, and the net profit realized by the transferred party in the previous period was 0.

Head of the Company: CHEN Dezhan, Principal in charge of accounting: BAO Hua, Head of the accounting department: ZHAO Difang

Parent company income statement January to June 2026

Unit: RMB

Head of the Company: CHEN Dezhan, Principal in charge of accounting: BAO Hua, Head of the accounting department: ZHAO Difang

Consolidated Cash Flow Statement January to June 2026

Unit: RMB

Parent Company Cash Flow Statement January to June 2026

Unit: RMB

Consolidated Statement of Changes in Owners' Equity January to June 2026

Unit: RMB

Head of the Company: CHEN Dezhan, Principal in charge of accounting: BAO Hua, Head of the accounting department: ZHAO Difang

Statement of Changes in the Parent Company Shareholders' Equity January to June 2026

Unit: RMB

Head of the Company: CHEN Dezhan, Principal in charge of accounting: BAO Hua, Head of the accounting department: ZHAO Difang

III. Company profile

1. Company overview √Applicable □Not applicable

Zhejiang China Commodities City Group Co., Ltd. (hereinafter referred to as the "Company") was approved by Document ZG [1993] No. 59 of the Zhejiang Provincial Shareholding System Pilot Work Coordination Group and registered with the Yiwu Industrial and Commercial Administration of Zhejiang Province on December 28, 1993, obtaining the "Business License of Legal Entity" with registration number 14766708-8. The original registered name was Zhejiang Yiwu China Commodities City Co., Ltd. On September 26, 1995, the Company was renamed Zhejiang China Commodities City Group Co., Ltd. The Company currently holds a business license with the unified social credit code of 91330000147641689Y, with a registered capital of RMB 5,483,559,226.00 and a total of 5,483,559,226 shares (par value of RMB 1 per share). Among these, there are 5,483,559,226 A-shares that are not subject to selling restrictions (tradable shares). The Company's shares have been listed on the Shanghai Stock Exchange since May 9, 2002.

The company belongs to the market management service industry. The main business activities include industrial investment and development, investment management, market development and operation, market supporting services, sales of metal materials, building decoration materials, general merchandise, textiles, hardware, electrical and chemical products, office equipment and communication equipment (excluding wireless), mechanical and electrical equipment, provision of online trading platforms and services, online trading market development and operation, and information consulting services. Import and export business of goods within the scope of self-operated and domestically sold commodities. Engaged in processing with supplied materials and "processing with supplied materials, processing with supplied samples, assembling with supplied parts, and compensation trade" business, conducting countertrade and entrepot trade, including the business scope of subordinate branches.

IV. Basis for the preparation of consolidated financial statements

• 1. Basis of preparation The financial statements of the Company were prepared on a going-concern basis.
• 2. Operation as a going concern

√Applicable □Not applicable

The Company had no events or conditions that casted a major doubt about the going-concern ability of the Company within 12 months from the end of the reporting period.

V. Important accounting policies and accounting estimates

Reminders on specific accounting policies and accounting estimates: √Applicable □Not applicable

Based on its actual production and operational characteristics, the Company has formulated specific accounting policies and accounting estimates for transactions or events such as financial instrument impairment, inventories, depreciation of fixed assets, construction-in-progress, intangible assets, and revenue recognition.

1. Statement on Compliance with ASBE

The financial statements prepared by the Group comply with the requirements of the Accounting Standards, and truly and completely reflect the Company’s financial conditions, operating results, changes in shareholders’ equity, cash flows and other related information.

2. Accounting period

The fiscal year of the Group starts from January 1 and ends on December 31 of the Gregorian calendar.

3. Business cycle

√Applicable □Not applicable

Except for the real estate sector, the Company’s operating businesses have relatively short operating cycles; therefore, a 12-month period is adopted as the criterion for classifying assets and liabilities by liquidity. The operating cycle of the real estate industry from property development to sales realization generally exceeds twelve months; the specific duration is determined based on individual development projects and serves as the benchmark for classifying assets and liabilities according to liquidity.

4. Bookkeeping base currency

The Company and its domestic subsidiaries use the Renminbi (RMB) as their functional currency. Overseas subsidiaries, including Europe Huajie Development Co., Ltd. and Hong Kong Better Silk Road Co., Ltd., engaged in foreign operations select the currency of the primary economic environment in which they operate as their functional currency.

5. Method for determining importance criteria and selection basis √Applicable □Not applicable

6. Accounting methods for business combinations under common control and business combinations not under common control

√Applicable □Not applicable

The mergers of enterprises are divided into the mergers of the enterprises under common control and mergers of the enterprises not under common control.

Accounting treatment method for business combination under common control

The assets and liabilities acquired by the Company in a business combination are measured at their carrying amounts in the consolidated financial statements of the ultimate controlling party as of the merger date. The Company adjusts capital reserve based on the difference between the book value share of the owners' equity of the merged party in the consolidated financial statements of the ultimate controlling party and the book value of the merger consideration paid or the total par value of shares issued. If the capital reserve is insufficient to offset the difference, retained earnings are adjusted.

Accounting treatment method for business combination not under common control

On the purchase date, the Company recognizes the difference between the cost of the combination that is greater than the fair value share of the identifiable net assets of the acquiree obtained in the combination as goodwill; if the cost of the combination is less than the share of the fair value of the identifiable net assets of the acquiree acquired in the combination, First, review the acquired fair value of the acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of the combination cost. After the review, the combination cost is still less than the fair value share of the acquiree's identifiable net assets acquired in the combination, the difference is included in the current profit and loss.

7. Judgment criteria for control and preparation methods for consolidated financial statements

√Applicable □Not applicable Judgment criteria for control Control refers to the Company’s power over the investee. The Company enjoys variable

returns by participating in the investee’s related activities, and is able to apply the power to the investee to affect the amount of the returns.

Method for preparing consolidated financial statements

The parent company includes all subsidiaries under its control in the consolidation scope of the consolidated financial statements. The consolidated financial statements are prepared by the parent company based on the financial statements of the parent and its subsidiaries, in accordance with other relevant information and Accounting Standards for Business Enterprises No. 33—Consolidated Financial Statements.

8. Classification of joint arrangements and accounting treatment of joint operations

√Applicable □Not applicable Joint arrangements are divided into joint operations and joint ventures. When the Company is a joint operator in a joint operation, it recognizes the following items

related to its share of interests in the joint operation:

• (1) Confirm individually held assets and jointly held assets based on ownership shares;
• (2) Recognize individually assumed liabilities and jointly assumed liabilities based on

ownership share

• (3) Recognizing revenue generated from the sale of the Company's share in the output of

joint operations;

• (4) Recognition of income from jointly controlled operations' asset sales based on the

Company's ownership share;

• (5) Recognition of individually incurred expenses and expenses from jointly controlled

operations based on the Company's ownership share.

9. Criteria of cash and cash equivalents

Cash presented in the cash flow statement refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to investments held by a company with short maturities, strong liquidity, easy conversion to known amounts of cash, and minimal risk of value changes.

10. Foreign currency business and foreign currency financial statement conversion

√Applicable □Not applicable Foreign currency business translation In the initial recognition of a foreign currency transaction, the foreign currency amount is translated to a functional currency amount according to the spot exchange rate on the date of transaction. On the balance sheet date, foreign currency monetary items are translated using the spot exchange rate on the balance sheet date. Exchange differences arising from changes in exchange rates, except for those related to the principal and interest of foreign currency loans specifically borrowed for the acquisition or construction of assets that meet capitalization criteria, are recognized in the current period’s profit or loss. Foreign currency non-monetary items measured at historical cost are still translated using the spot exchange rate on the transaction date, and their RMB amounts remain unchanged. For foreign currency non-monetary items measured at fair value, the spot exchange rate on the date of fair value determination is used for translation, and the difference is recognized in the current period’s profit or loss or other comprehensive income.

Foreign currency financial statement translation

Assets and liabilities items in the balance sheet are translated at the spot exchange rate on the balance sheet date; owners' equity items except the "undistributed profit" item, other items are translated at the spot exchange rate on the transaction date; Income and expense items shall be converted at the spot exchange rate on the transaction date. The translation differences arising from the above conversion of foreign currency financial statements are recorded in other comprehensive income.

11. Financial instruments

√Applicable □Not applicable Classification of Financial Assets and Financial Liabilities Financial assets are classified into the following three categories upon initial recognition: (1)

financial assets measured at amortized cost; (2) financial assets measured at fair value through other comprehensive income; (3) financial assets measured at fair value through profit or loss.

Financial liabilities are classified into the following four categories upon initial recognition: (1) financial liabilities measured at fair value through profit or loss; (2) financial liabilities arising from transfers of financial assets that do not qualify for derecognition or continuing involvement in transferred financial assets; (3) financial guarantee contracts not falling under (1) or (2) above, and loan commitments not falling under (1) above that are made at below-market interest rates;

(4) financial liabilities measured at amortized cost.

Recognition Basis, Measurement Methods, and Derecognition Conditions for Financial Assets and Financial Liabilities

• (1) Recognition basis and initial measurement methods for financial assets and liabilities The Company recognizes a financial asset or financial liability at the time of becoming a party to a financial instrument contract. Financial assets and financial liabilities are measured at fair value upon initial recognition: in view of financial assets and financial liabilities measured at fair value through profit or loss, related transaction costs are directly recorded in the current profit or loss; in view of financial assets and financial liabilities of other categories, related transaction costs are recorded in the initially recognized amount. However, if the Company's initially recognized accounts receivable do not contain significant financing components or the Company does not consider financing components in contracts not exceeding one year, they are initially measured at the transaction price as defined in Accounting Standards for Business Enterprises No. 14 - Revenue.
• (2) Subsequent measurement methods for financial assets

• 1) Financial assets measured at amortized cost Subsequent measurement is carried out at amortized cost using the effective interest method. Gains or losses arising from financial assets measured at amortized cost that are not part of any hedging relationship are recognized in profit or loss upon derecognition, reclassification, amortization using the effective interest method, or impairment recognition.
• 2) Debt instrument investments measured at fair value through other comprehensive income

Subsequent measurement is carried out at fair value. Interest calculated using the effective interest method, impairment losses or gains, and exchange differences are recognized in profit or loss, while other gains or losses are recognized in other comprehensive income. Upon derecognition, the cumulative profit or loss previously recorded in other comprehensive income is transferred out from other comprehensive income and recorded in the current profit or loss.

3) Equity instrument investments measured at fair value through other comprehensive earnings

Subsequent measurement is carried out at fair value. Dividends received (excluding those representing recovery of investment cost) are recognized in current profit or loss, while other gains or losses are recognized in other comprehensive income. Upon derecognition, the cumulative profit or loss previously recorded in other comprehensive income is transferred out from other comprehensive income and recorded in the retained income. 4) Financial assets measured at fair value through profit or loss Subsequent measurement at fair value results in gains or losses (including interest and

dividend income) being recognized in current profit or loss, unless the financial asset is part of a hedging relationship.

(3) Subsequent measurement methods for financial liabilities

1) Financial liabilities measured at fair value through profit or loss Such financial liabilities include trading financial liabilities (including derivative instruments that qualify as financial liabilities) and those designated as measured at fair value through profit or loss. For such financial liabilities, fair value is used for subsequent measurement. Changes in the fair value of financial liabilities designated as measured at fair value through profit or loss due to changes in the Company's own credit risk are recognized in other comprehensive income, unless such treatment would create or enlarge an accounting mismatch in profit or loss. Other gains or losses arising from such financial liabilities (including interest expenses and fair value changes not due to changes in the Company's own credit risk) are recognized in current profit or loss, unless the financial liability is part of a hedging relationship. Upon derecognition, the cumulative profit or loss previously recorded in other comprehensive income is transferred out from other comprehensive income and recorded in the retained earnings.

(2) Financial liabilities arising from financial asset transfers that do not meet derecognition criteria or involve continued involvement in the transferred financial assets

Measurement shall be conducted in accordance with the relevant provisions of Accounting Standards for Business Enterprises No. 23—Transfer of Financial Assets.

3) Financial guarantee contracts not falling under 1) or 2) above, and loan commitments not falling under 1) above that provide loans at below-market interest rates.

After initial recognition, subsequent measurement is based on the higher of the following two amounts: ① the amount of loss allowance determined in accordance with the impairment provisions for financial instruments; ② the initial recognition amount minus the cumulative amortization determined in accordance with the relevant provisions of Accounting Standards for Business Enterprises No. 14—Revenue.

4) Financial liabilities measured at amortized cost Measured at amortized cost using the effective interest method. Gains or losses arising from financial liabilities measured at amortized cost and not part of any hedging relationship are recognized in current profit or loss upon derecognition or amortization using the effective interest method.

(4) Derecognition of financial asset and financial liabilities

1) A financial asset shall be derecognized when one of the following conditions is met:

• ①Termination of contract rights to collect cash flows of the financial assets;
• ② The financial asset has been transferred, and the transfer meets the derecognition

criteria for financial assets under Accounting Standard for Business Enterprises No. 23 Transfer of Financial Assets.

Where the current obligations of the financial liabilities (or part of them) have been extinguished, the Company derecognizes the financial liabilities (or the part of financial liabilities).

The recognition basis and measurement method for the financial asset transfer If the Company transfers substantially all the risks and rewards of ownership of the

financial asset, it derecognizes the financial asset and separately recognizes any rights and

obligations created or retained in the transfer as assets or liabilities; if it retains substantially all the risks and rewards of ownership, it continues to recognize the transferred financial asset. If a company neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, the following treatments should be applied according to different situations: (1) If the Company does not retain control over the financial asset, it should derecognize the financial asset and separately recognize the rights and obligations arising from or retained in the transfer as assets or liabilities. (2) If the Company retains control over the financial asset, it should recognize the relevant financial asset to the extent of its continued involvement in the transferred financial asset, and accordingly recognize the relevant liability.

If the entire transfer of a financial asset meets derecognition criteria, the difference between the following two amounts is recognized in profit or loss: (1) the carrying amount of the transferred financial asset on the derecognition date; (2) the sum of the consideration received for transferring the financial asset and the cumulative amount of fair value changes originally recognized in other comprehensive income attributable to the derecognized portion (for financial assets measured at fair value through other comprehensive income, such as debt instrument investments). If a portion of a financial asset is transferred and the transferred portion as a whole meets the derecognition criteria, the carrying value of the financial asset before the transfer is allocated between the derecognized portion and the continuing recognized portion based on their relative fair values on the transfer date, and the difference between the following two amounts is recognized in current profit or loss: (1) the carrying value of the derecognized portion; (2) the sum of the consideration received for the derecognized portion and the cumulative amount of fair value changes originally directly recognized in other comprehensive income that corresponds to the derecognized portion (for financial assets measured at fair value through other comprehensive income, such as debt instrument investments).

Determination method for the fair value of financial assets and financial liabilities

The Company uses valuation techniques that are appropriate in the current circumstances and for which sufficient data and other information are available to determine the fair value of relevant financial assets and financial liabilities. The Company classifies input values used in valuation techniques into the following hierarchy and applies them sequentially:

• (1) The first-level inputs are unadjusted quoted prices in active markets for identical assets

or liabilities that can be obtained on the measurement date.

• (2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are

observable for the asset or liability, either directly or indirectly, including: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs such as interest rates and yield curves observable at commonly quoted intervals; and market-corroborated inputs

• (3) Level 3 inputs are unobservable inputs for the relevant asset or liability, including

interest rates, stock volatility, future cash flows of abandonment obligations assumed in business combinations, and financial forecasts made using the Company's own data that cannot be directly observed or verified by observable market data.

Impairment of financial instruments The Company recognizes impairment and establishes loss allowances based on expected

credit losses for: financial assets measured at amortized cost, debt instrument investments measured at fair value through other comprehensive income, contract assets, lease receivables, loan commitments not classified as financial liabilities measured at fair value through profit or loss, and financial guarantee contracts that are not financial liabilities measured at fair value through profit or loss or do not meet the derecognition criteria for transferred financial assets or continue to be involved with the transferred financial assets.

Expected credit losses refer to the weighted average value of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contract cash flows receivable under the contract and all cash flows expected to be received, discounted by the Company at the original effective interest rate, that is, the present value of all cash shortages. Among them, the credit-impaired financial assets purchased or originated by the Company shall be discounted at the credit-adjusted effective interest rate of the financial assets.

For purchased or originated financial assets that have experienced credit impairment, the Company recognizes only the cumulative changes in expected credit losses over the entire life since initial recognition as loss provisions on the balance sheet date.

For lease receivables, receivables arising from transactions regulated by Accounting Standards for Business Enterprises No. 14—Revenue, and contract assets, the Company applies the simplified measurement method, measuring the loss allowance at an amount equal to the expected credit losses over the entire lifetime.

For financial assets not measured using the above methods, the Company assesses at each balance sheet date whether their credit risk has increased significantly since initial recognition. If the credit risk has increased significantly since initial recognition, the Company measures the loss allowance at the amount of expected credit losses over the entire lifetime; if the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at the amount of expected credit losses over the next 12 months for the financial instrument.

The Company uses available reasonable and evidence-based forward-looking information to determine whether the credit risk of financial instruments has been confirmed since initial recognition by comparing the risk of default of financial instruments on the balance sheet date with the risk of default on the date of initial recognition, has increased significantly.

At the balance sheet date, if the Company determines that a financial instrument has only low credit risk, it is assumed that the instrument's credit risk has not increased significantly since initial recognition.

The Company assesses expected credit risk and measures expected credit loss based on individual financial instruments or portfolios of financial instruments. When based on financial instrument portfolios, the Company classifies financial instruments into different portfolios based on shared risk characteristics.

The Company remeasures expected credit losses at each balance sheet date, with increases or reversals in loss allowances recognized as impairment losses or gains in current period profit or loss. For financial assets measured at amortized cost, loss allowances reduce the carrying amount of the financial asset presented in the balance sheet; for debt investments measured at fair value through other comprehensive income, the Company recognizes loss allowances in other comprehensive income without reducing the carrying amount of the financial asset.

Offset of financial assets and financial liabilities

In addition, financial assets and financial liabilities are recognized separately in the balance sheet and are not offset against each other. If the following conditions are met at the same time, financial assets and financial liabilities are listed in the balance sheet as the net amount after offsetting each other: (1) There is a legal right to offset the recognized amount, and the legal right is currently executable; (2) Netting settlement, or realizing the financial asset and paying off the financial liability at the same time.

For financial asset transfers that do not meet the derecognition criteria, the Company does not offset the transferred financial assets and related liabilities.

• 12. Notes receivable

√Applicable □Not applicable Combination classification and determination basis of combined provision for bad debt based on credit risk characteristics √Applicable □Not applicable

The Company assesses impairment and recognizes loss allowances for financial assets measured at amortized cost based on expected credit losses.

For accounts receivable that do not contain significant financing components, the Company measures loss reserves based on the expected credit loss amount equivalent to the entire duration.

For the financial assets not measured with the simplified method, the Company evaluates on each balance sheet date whether their credit risks have increased significantly since the initial recognition. If the credit risk of a financial asset has not increased significantly since the initial recognition, the asset is in the first stage and the Company will make provision for losses

based on the amount of expected credit loss within the coming 12 months and calculate interest income based on the book balance and effective interest rate; if the credit risk has increased significantly since the initial recognition, but credit has not been impaired, the asset is in the second stage and the Company will make provision for loss equivalent to the amount of expected credit loss during the entire term and calculate interest income based on the book balance and effective interest rate; if credit has been impaired after the initial recognition, the asset is in the third stage and the Company will make provision for loss equivalent to the amount of expected credit loss during the entire term and calculate interest income based on the amortized cost and effective interest rate.

The Group evaluates the expected credit losses of financial instruments on the individual and group bases. The Company considers the credit risk characteristics of different customers, evaluates the expected credit losses of accounts receivable based on grouping by aging, and determines the aging based on the invoicing date. Except for the aforementioned financial instruments that are evaluated for expected credit losses on a grouping basis, the Company assesses their expected credit losses on an individual basis.

The disclosure regarding the Company's criteria for determining a significant increase in credit risk and the definition of credit-impaired assets is as follows:

The factors reflected in the Company's method of measuring expected credit losses of financial instruments include: unbiased probability-weighted average amount determined by evaluating a series of possible outcomes; time value of money; no unnecessary additional cost or effort on the balance sheet date. Reasonable and evidence-based information that is readily available about past events, current conditions and forecasts of future economic conditions.

When the Company no longer reasonably expects to recover all or part of the contractual cash flows of a financial asset, it directly writes down the carrying amount of the financial asset.

Methods for calculating aging based on the credit risk characteristics combination confirmed by aging

□Applicable √Not applicable Judgment criteria for individual provision for bad debt based on individual provision √Applicable □Not applicable

For receivables and contract assets with credit risk significantly different from portfolio credit risk, the Company calculates expected credit losses on an individual basis.

13. Accounts receivable

√Applicable □Not applicable Combination classification and determination basis of combined provision for bad debt based on credit risk characteristics √Applicable □Not applicable

Please refer to Note V - Important Accounting Policies and Accounting Estimates - 12. Notes Receivable.

Methods for calculating aging based on the credit risk characteristics combination confirmed by aging

□Applicable √Not applicable Recognition criteria for individual provision of bad debt √Applicable □Not applicable

Please refer to Note V - Important Accounting Policies and Accounting Estimates - 12. Notes Receivable.

14. Receivables Financing

□Applicable √Not applicable

• 15. Other receivables

√Applicable □Not applicable Combination classification and determination basis of combined provision for bad debt based on credit risk characteristics √Applicable □Not applicable

Please refer to Note V - Important Accounting Policies and Accounting Estimates - 12. Notes Receivable.

Methods for calculating aging based on the credit risk characteristics combination confirmed by aging

□Applicable √Not applicable Judgment criteria for individual provision for bad debt based on individual provision √Applicable □Not applicable

Please refer to Note V - Important Accounting Policies and Accounting Estimates - 12. Notes Receivable.

• 16. Inventory

√Applicable □Not applicable Inventory category, valuation method for issuance, inventory system, amortization method for low-value consumables and packaging materials √Applicable □Not applicable

Classification of inventory Inventory includes raw materials, work-in-progress materials, finished goods, real estate

development costs and real estate development products.

Development costs refer to the properties that have not been completed and are developed for the purpose of being sold. Development products refer to the properties that have been completed and are ready for sale. The actual costs of real estate development costs and development products include the land acquisition cost, expenditures on construction and installation works, capitalized interest and other direct and indirect development expenses. The use right of the land for development purpose at the development of a project is amortized and recognized as the development cost of the project based on the site area of the development product, and the development cost will be transferred to development product after being completed.

Valuation method of issued inventory

• (1) During project development, land designated for development is allocated to the

project’s development costs based on the floor area occupied by the developed products.

• (2) Development products shipped are accounted for using the average method based on

gross floor area.

• (3)If the public auxiliary facilities are completed earlier than the related development

product, the facilities will be allocated to and recognized in the development cost of related development projects based on the floor space of the project after final accounting of the facilities upon completion; if the public auxiliary facilities are completed later than the related development product, they will be recognized in the development cost of related development project based on the predicted cost of the public auxiliary facilities.

Inventory system of inventory Hotel, catering and fresh goods inventories are subject to onsite inventory, while other

inventories are subject to perpetual inventory.

Amortization of low-value consumables and packaging materials

• (1) Low-value consumables Amortization is carried out according to the one-time write-off method.
• (2) Packaging Amortization is carried out according to the one-time write-off method.

Recognition criteria and provision methods for provision for inventory depreciation √Applicable □Not applicable

On the balance sheet date, inventories are measured at the lower of cost and net realizable value, and provision for inventory depreciation is made based on the difference between the cost and the net realizable value. For inventories directly used for sale, in the normal production and operation process, the net realizable value is determined by the estimated selling price of the inventory minus the estimated sales expenses and related taxes; for inventories that need to be processed, in the normal production and operation process, the net realizable value is determined by the estimated selling price of the finished products produced after deducting the estimated costs to be incurred upon completion, estimated sales expenses and relevant taxes and fees; on the balance sheet date, for inventory items where a portion has a contracted price and the remaining portion does not, the net realizable value is determined separately for each part. This value is then compared with the corresponding cost to separately determine the amount of provision for inventory write-down or the reversal thereof.

In principle, provision is made for individual inventory items; for inventories with large quantities and low unit prices, inventory write-downs are provided by category.

Combination classification and determination basis for combined provision for inventory depreciation, and determination basis for net realizable value of inventory of different categories

• □Applicable √Not applicable

Calculation methods and determination basis for the net realizable value of each inventory age combination based on inventory age confirmation

• □Applicable √Not applicable

17. Contract assets

□Applicable √Not applicable

18. Non-current assets or disposal groups held for sale

• □Applicable √Not applicable

Recognition criteria and accounting treatment methods for non-current assets or disposal groups classified as held for sale

• □Applicable √Not applicable Recognition criteria and reporting methods for termination of operations
• □Applicable √Not applicable

19. Long-term equity investment

√Applicable □Not applicable

Determination of joint control and significant influence

Joint control refers to the control jointly owned over some arrangement according to the related provisions, and the related activities of the arrangements must be decided after being agreed by the participant sharing control. A major impact means that the investor has the power to participate in decision-making of the investee’s finance and operation policies, but cannot control or jointly control with other parties the formulation of these policies.

Determination of investment cost

(1) Business combination under common control: If the Company pays cash, transfers non-cash assets or assumes debts, and issues equity securities as the combination consideration, it shall treat its share in the book value of the owner’s equity of the acquiree listed in the ultimate controlling party’s consolidated financial statements on the date of the combination as the initial investment cost of long-term equity investment. The difference between the initial investment cost of the long-term equity investment and the book value of the combined consideration paid or the total face value of the issued shares shall be adjusted to the capital reserve; if the capital reserve is insufficient to offset, the retained earnings shall be adjusted.

The Company determines whether the long-term equity investment formed through step-by-step transactions to achieve a business combination under common control constitutes a "package deal." For transactions classified as a "package deal," each transaction is accounted for as a single transaction to obtain control. For transactions not classified as "package deals," the initial investment cost is determined on the merger date based on the share of the net assets of the merged party in the consolidated financial statements of the ultimate controlling party that should be enjoyed post-merger. The difference between the initial investment cost of the long-term equity investment on the merger date and the sum of the carrying value of the long-term equity investment before the merger plus the carrying value of the new consideration paid for additional shares on the merger date is adjusted to capital reserve; if the capital reserve is insufficient to offset the difference, retained earnings are adjusted.

(2) For the merger of enterprises not under the same control, the fair value of the merger consideration paid on the purchase date shall be taken as its initial investment cost.

For long-term equity investments formed through step-by-step transactions achieving a business combination not under common control, the Company applies separate accounting treatments in individual financial statements and consolidated financial statements:

• 1) In separate financial statements, the initial investment cost under the cost method is calculated as the sum of the carrying amount of the originally held equity investment and the additional investment cost.
• 2) In consolidated financial statements, determine whether it constitutes a "package deal." For transactions classified as a "package deal," each transaction is accounted for as a single transaction to obtain control. For transactions not qualifying as "package deals," equity interests in the acquiree held prior to the acquisition date are remeasured at fair value on the acquisition date, with any difference between fair value and carrying amount recognized in current investment income. Other comprehensive income related to such equity interests accounted for under the equity method is reclassified to profit or loss in the period of acquisition. Except for other comprehensive income arising from the investee's remeasurement of defined benefit plan net liabilities or net assets.

(3) Other than those formed through business combinations: for those acquired by cash payment, the initial investment cost is based on the actual purchase price paid; for those acquired by issuing equity securities, the initial investment cost is based on the fair value of the equity securities issued; for those acquired through debt restructuring, the initial investment cost is determined in accordance with Accounting Standards for Business Enterprises No. 12—Debt Restructuring; for those acquired through non-monetary asset exchange, the initial investment cost is determined in accordance with Accounting Standards for Business Enterprises No. 7—Non-monetary Asset Exchange.

Subsequent measurement and recognition of profit and loss Long-term equity investments in controlled entities are accounted for using the cost method;

investments in associates and joint ventures are accounted for using the equity method.

Method for Step-by-Step Disposal of Subsidiary Investments Through Multiple Transactions Until Loss of Control

(1) Judgment principles for determining whether it constitutes a "package deal" For the step-by-step disposal of equity investments in subsidiaries through multiple transactions until control is lost, the Company determines whether the step-by-step transactions constitute a "package deal" by considering the terms of the transaction agreements for each step, the respective disposal considerations obtained, the parties to whom the equity is sold, the disposal methods, the timing of disposal, and other relevant information. When the terms, conditions, and economic effects of multiple transactions meet one or more of the following circumstances, it typically indicates that the transactions constitute a "package deal":

• 1) These transactions are entered into at the same time or taken into account the influence

of each other;

• 2) Only these transactions as a whole can achieve a complete commercial result;
• 3) The occurrence of one transaction depends on the occurrence of at least one other

transaction;

• 4) A transaction is uneconomical on its own, but it is economical when considered together

with other transactions.

(2) Accounting treatment for transactions not classified as "package deals"

• 1) Individual financial statements For the disposed equity, the difference between its carrying amount and the actual proceeds received is recognized in profit or loss. For the remaining equity, if it still has significant influence over the investee or is jointly controlled with other parties, it is accounted for using the equity method; if control, joint control, or significant influence over the investee can no longer be exercised, it is accounted for in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments."
• 2) Consolidated Financial Statements Before losing control, the difference between the disposal consideration and the share of the subsidiary's net assets attributable to the disposed long-term equity investment, calculated from the acquisition or merger date, is adjusted to capital reserve (capital surplus). If the capital surplus is insufficient, retained earnings are reduced.

When the control over a subsidiary is lost, the remaining equity interest is re-measured at its fair value on the date of losing control. The difference between the sum of the consideration obtained from the disposal of equity and the fair value of the remaining equity, and the share of the former subsidiary’s net assets calculated continuously from the acquisition date or combination date at the original shareholding ratio is included in the investment income in the period of loss of control. At the same time, goodwill is also written down. Other comprehensive income related to the equity investment of the original subsidiary shall be converted into investment income for the current period when the control right is lost.

(3) Accounting treatment for "package deals"

• 1) Individual financial statements Account for all transactions as a single transaction involving the disposal of a subsidiary and loss of control. However, the difference between each disposal consideration and the carrying amount of the corresponding long-term equity investment before loss of control is recognized in other comprehensive income in separate financial statements and transferred to profit or loss upon loss of control.
• 2) Consolidated Financial Statements Account for all transactions as a single transaction involving the disposal of a subsidiary and loss of control. However, any difference between the disposal consideration and the disposing party's proportionate share of the subsidiary's net assets prior to loss of control is recognized as other comprehensive income in the consolidated financial statements and subsequently reclassified to profit or loss upon loss of control.

• 20. Investment Property

(1) With the cost measurement model Depreciation or amortization method

The Company's investment property includes land use rights leased, land use rights held and ready to be transferred after appreciation, leased buildings, etc.

Investment real estate is initially measured at cost, followed by cost model, and is depreciated or amortized using the same method as fixed assets and intangible assets.

• 21. Fixed assets

• (1) Confirmation conditions

√Applicable □Not applicable

Property, plant and equipment refer to tangible assets held for the purpose of producing commodities, providing labor services, leasing or operating management, and with a service life of more than one fiscal year. Fixed assets are recognized when it is probable that economic benefits will flow in and the cost can be reliably measured.

• (2) Depreciation method √Applicable □Not applicable

22. Construction in progress

√Applicable □Not applicable

Construction in progress is recognized when it simultaneously meets the criteria that economic benefits are probable to flow in and costs can be reliably measured. Construction in progress is measured at the actual costs incurred before the asset reaches its intended usable condition.

When the construction in progress reaches the predetermined usable state, it shall be transferred to fixed assets according to the actual cost of the project. For those that have reached the expected usable state but have not yet handled the final settlement of the project, they shall be transferred to fixed assets at their estimated value. After the final settlement of the project has been handled, the original provisional estimated value will be adjusted according to the actual cost, but the depreciation that has been accrued will not be adjusted.

23. Borrowing costs

√Applicable □Not applicable

Principles for recognition on capitalization of borrowing costs

If the borrowing costs incurred by the Company can be directly attributable to the acquisition or production of assets qualified of capitalization, they shall be capitalized and included in the cost of the relevant assets; other borrowing costs shall be recognized as expenses based on the amount incurred when they are incurred and included in current profit and loss.

Period of capitalization of borrowing costs

• (1) Capitalization begins when the borrowing costs meet the following conditions at the

same time: 1) The asset expenditure has been incurred; 2) The borrowing costs have been incurred; 3) The purchase, construction or production necessary to make the asset ready for use or sale. The event has already started.

• (2) If an asset that meets the capitalization conditions is abnormally interrupted in the

process of acquisition, construction or production, and the interruption lasts for more than 3 consecutive months, the capitalization of borrowing costs shall be suspended; the borrowing costs incurred during the interruption period shall be recognized as current expenses until the acquisition, construction or production of the asset resumes.

• (3) When the acquisition or production of assets qualified of capitalization reaches the

intended usable or saleable state, the capitalization of borrowing costs shall cease.

Capitalization rate of borrowing costs and capitalized amount

If a special loan is borrowed for the purchase, construction or production of assets eligible for capitalization, the interest expense actually incurred in the current period of the special loan (including the amortization of discount or premium determined according to the effective interest rate method), minus the unused loan funds. The amount of interest income obtained by depositing in the bank or the investment income obtained from temporary investment shall be determined as the amount of interest that should be capitalized; if general borrowings are occupied for the purchase, construction or production of assets eligible for capitalization, the accumulated asset expenditure shall be the weighted average number of asset expenditures exceeding special borrowings is multiplied by the capitalization rate of occupied general borrowings to calculate and determine the amount of interest that should be capitalized on general borrowings.

• 24. Biological assets

□Applicable √Not applicable

• 25. Oil and gas assets

□Applicable √Not applicable

• 26. Intangible assets

• (1) Service life and its determination basis, estimated situation, amortization method or review procedure

√Applicable □Not applicable

Intangible assets, including land use rights, software and software copyright, data resources, etc., are initially measured at cost.

Intangible assets with limited service life shall be amortized systematically and reasonably within the service life according to the expected realization method of the economic benefits related to the intangible asset. If the expected realization method cannot be reliably determined, the straight-line method shall be used for amortization. Specific provisions are as follows:

• (2) The scope of R&D expenditure collection and related accounting treatment methods

√Applicable □Not applicable

Scope of R&D Expenditure Aggregation

(1) Personnel labor costs Personnel labor costs include salaries and wages of the Company's R&D personnel, basic pension insurance, basic medical insurance, unemployment insurance, work injury insurance, maternity insurance, and housing provident fund, as well as service fees for externally hired R&D personnel.

For R&D personnel serving multiple R&D projects simultaneously, labor costs are allocated proportionally among different R&D projects based on the working hour records provided by the Company's management department.

For personnel directly engaged in R&D activities and external R&D personnel who also engage in non-R&D activities, the Company allocates the actual incurred personnel costs between R&D expenses and production/operating expenses based on reasonable methods such as the proportion of actual working hours recorded for different positions.

(2) Direct input expenses Direct input costs refer to the actual expenses incurred by the Company for conducting research and development activities. It includes: 1) Directly consumed materials, fuel, and power expenses; 2) Molds, tooling development, and manufacturing costs for pilot testing and

product trial production, purchase costs of samples, prototypes, and general testing equipment that do not constitute fixed assets, and inspection fees for trial products; 3) Operation, maintenance, adjustment, inspection, testing, and repair expenses for instruments and equipment used in R&D activities.

(3) Depreciation expense and long-term prepaid expenses Depreciation expense refers to the depreciation of instruments, equipment, and buildings in

use for research and development activities.

For instruments, equipment, and in-use buildings used for R&D activities that are also used for non-R&D activities, the Company maintains necessary records of their usage and allocates the actual depreciation expenses between R&D expenses and production/operating expenses based on factors such as actual working hours and usage area, using a reasonable method.

Long-term deferred expenses refer to those incurred during the renovation, retrofitting, decoration, and repair of R&D facilities, which are aggregated based on actual expenditures and amortized evenly over the specified period.

(4) Amortization expenses of intangible assets Amortization expenses of intangible assets refer to the amortization of software, intellectual

property, and non-patented technologies (proprietary technologies, licenses, design and calculation methods, etc.) used in research and development activities.

• (5) Design Expenses Design expenses refer to costs incurred for conceptualizing, developing, and manufacturing new products and processes, including designing procedures, technical specifications, regulations, and operational characteristics, as well as related expenses for creative design activities aimed at obtaining innovative, creative, and breakthrough products.
• (6) Equipment debugging costs and testing expenses Equipment debugging costs refer to expenses incurred during research and development activities in the tooling preparation process, including the development of special and dedicated production machines, changes to production and quality control procedures, or the formulation of new methods and standards.

Costs incurred for routine tooling preparation and industrial engineering for large-scale batch and commercial production are not included in the aggregation scope.

Testing expenses include clinical trial fees for new drug development, field trial fees for exploration and development technologies, and field test fees, among others.

• (7) Outsourced research and development expenses Outsourced research and development expenses refer to costs incurred by the Company when commissioning other domestic or foreign institutions or individuals to conduct research and development activities (the results of which are owned by the Company and are closely related to its main business operations).
• (8) Other expenses Other expenses refer to those directly related to research and development activities beyond the aforementioned expenses, including technical book and material costs, document translation fees, expert consultation fees, high-tech R&D insurance premiums, costs for retrieval, demonstration, evaluation, appraisal, and acceptance of R&D results, as well as fees for intellectual property applications, registrations, and agency services, meeting expenses, travel expenses, communication costs, etc.

Expenses for the research phase of internal research and development projects shall be included in the current profit and loss when incurred. Development expenditures can be capitalized only when all of the following conditions are met at the same time, that is, it is technically feasible to complete the intangible asset to make it usable or saleable; there is an intention to complete the intangible asset and use or sell it; the way for intangible assets to generate economic benefits, including the ability to prove that there are markets for the products generated by the intangible assets or the intangible assets themselves. Intangible assets that will be used internally can prove their usefulness; there are sufficient technology, financial resources and other resource supports to complete the development of the intangible asset and ability to use or sell the intangible asset; the expenditure attributable to the development of such intangible asset can be reliably measured.

The Company's specific criteria for dividing the research stage expenditure and development stage expenditure of internal research and development projects:

Development expenditures can be capitalized only when all of the following conditions are met at the same time, that is, it is technically feasible to complete the intangible asset to make it usable or saleable; there is an intention to complete the intangible asset and use or sell it; the way for intangible assets to generate economic benefits, including the ability to prove that there are markets for the products generated by the intangible assets or the intangible assets themselves. Intangible assets that will be used internally can prove their usefulness; there are sufficient technology, financial resources and other resource supports to complete the development of the intangible asset and ability to use or sell the intangible asset; the expenditure attributable to the development of such intangible asset can be reliably measured.

• 27. Impairment of long-term assets

√Applicable □Not applicable

For long-lived assets with finite useful lives, such as intangible assets, if indications of impairment exist as of the balance sheet date, their recoverable amounts shall be estimated. For the goodwill formed due to the merger of enterprises and the intangible assets with uncertain service life, the Group carries out impairment tests at least at the end of each year, regardless of the impairment signs. Goodwill is tested for impairment in combination with its related asset groups or groups of asset groups.

If the recoverable amount of the aforementioned long-term assets is lower than their carrying value, the difference is recognized as an impairment loss and included in current period profit or loss.

• 28. Long-term deferred expenses

√Applicable □Not applicable

Long-term prepaid expenses account for expenditures that have been incurred and are amortized over a period longer than one year (excluding one year). Long-term deferred expenses are recorded based on the actual amount incurred and amortized evenly over the benefit period or specified period. If the long-term deferred expense item cannot benefit future accounting periods, the amortized value of the item that has not been amortized will be fully transferred to the current period's profit or loss.

• 29. Contract liabilities

√Applicable □Not applicable

The Company presents contractual assets or contractual liabilities in the balance sheet based on the relationship between performance obligations and customers’ payments. The Company offsets contract assets and contract liabilities under the same contract and presents them at net amounts.

The Company presents rights to consideration receivable from customers that are unconditional (i.e., dependent solely upon the passage of time) as accounts receivable; rights to consideration arising from the transfer of goods to customers, where such rights depend on factors beyond the mere passage of time, are presented as contract assets.

Contract liabilities are the Company’s obligations to transfer products to customers since it has received or shall receive consideration from customers.

• 30. Employee compensation

• (1) Accounting treatment methods for short-term compensation

√Applicable □Not applicable

The Company recognizes the actual short-term employee remuneration as liabilities during the accounting period when employees provide services to the Company, and records them in the current profit or loss or related asset costs.

• (2) Accounting treatment method for post-employment benefits √Applicable □Not applicable

The post employment welfare plan includes a defined contribution plan and a defined benefit plan.

• (1) During the accounting period in which employees provide services to the Company, the amount to be contributed as calculated under the defined contribution plan is recognized as a liability and recorded in current profit or loss or the cost of related assets.
• (2) The accounting treatment for defined benefit plans typically includes the following steps:

• 1) Based on the projected unit credit method, unbiased and mutually consistent actuarial

assumptions are used to estimate demographic and financial variables, measure the obligations arising from defined benefit plans, and determine the period to which the obligations belong. At the same time, the obligations arising from the defined benefit plan are discounted to determine the present value of the defined benefit plan obligations and the current service cost.

• 2) If there are assets in a defined benefit plan, the deficit or surplus formed by subtracting

the fair value of the defined benefit plan assets from the present value of the defined benefit plan obligation is recognized as a net defined benefit liability or asset. If a defined benefit plan has a surplus, the net assets of the defined benefit plan are measured at the lower of the plan surplus and the asset ceiling

• 3) At the end of the period, the employee compensation costs arising from defined benefit

plans are recognized as three components: service cost, net interest on the net defined benefit liability or asset, and remeasurements of the net defined benefit liability or asset. Among these, the service cost and net interest on the net defined benefit liability or asset are included in current profit or loss or the cost of related assets, while the remeasurements of the net defined benefit liability or asset are included in other comprehensive income. These amounts recognized in other comprehensive income cannot be reclassified to profit or loss in subsequent periods but can be transferred within equity.

(3) Accounting treatment methods for termination benefits

√Applicable □Not applicable

Where the Group provides severance benefits to its employees, the employee compensation liabilities arising from the severance benefits will be recognized, and the amount will be recognized in the profit or loss for the current period on the earlier date below: the date when the Group cannot unilaterally withdraw the severance benefits provided as a result of the employment termination plan or downsizing proposal; or the date when the Group recognizes the costs or expenses relating to the reorganization involving the payment of severance benefits.

(4) Accounting treatment methods for other long-term employee benefits

√Applicable □Not applicable

Other long-term benefits provided to employees that meet the conditions of defined contribution plans are accounted for in accordance with the relevant provisions of defined contribution plans; other long-term benefits not meeting these conditions are accounted for in accordance with the relevant provisions of defined benefit plans. To simplify the accounting treatment, the resulting employee benefit costs are recognized as service costs, net interest on net liabilities or net assets of other long-term employee benefits, and changes arising from remeasurement of net liabilities or net assets of other long-term employee benefits, with the total net amount of these components recognized in current period profit or loss or the cost of related assets.

31. Estimated liabilities

□Applicable √Not applicable

32. Share-based payment

□Applicable √Not applicable

• 33. Preferred stocks, perpetual bonds, and other financial instruments

□Applicable √Not applicable

• 34. Revenue

(1) Disclosure of accounting policies adopted for revenue recognition and measurement by business type

√Applicable □Not applicable Revenue Recognition Principle On the contract commencement date, the Company evaluates the contract, identifies each

individual performance obligation included in the contract, and determines whether each individual performance obligation is to be fulfilled over a period of time or at a point in time.

When one of the following conditions is met, the performance obligation is fulfilled within a certain period of time; otherwise, the performance obligation is fulfilled at a certain point in time:

• (1) the customer obtains and consumes the economic benefits brought by the Company's performance when the Company performs the contract; (2) the customer can control the commodities under construction in the process of the Company's performance; (3) the commodities produced by the Company during the performance of the contract have irreplaceable purposes, and the Company is entitled to collect payment for the performance part that has been completed to date throughout the term of the Contract.

In view of performance obligations fulfilled within a certain period of time, the Company recognizes revenue according to the progress of performance within that period. When the performance progress cannot be reasonably determined, if the cost incurred by the Company is expected to be compensated, the revenue shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined. In view of performance obligations fulfilled at a certain point in time, the Company recognizes revenue at the point in time when the customer obtains control over the relevant goods. When judging whether the customer has obtained the right to control the goods, the Company takes into account the following signs: the Company has the right to receive the current payment for the goods, that is, the customer has the obligation to make the current payment for the goods; The enterprise has transferred the legal ownership of the goods to the customer, that is, the customer has the legal ownership of the goods; The enterprise has transferred the physical goods to the customer, that is, the customer has physically occupied the goods; The enterprise has transferred the main risks and rewards of the ownership of the goods to the customer, that is, the customer has obtained the main risks and rewards of the ownership of the goods; The customer has accepted the goods; Other signs indicating that the customer has obtained control of the goods.

Revenue Recognition Principles

• (1) The Company shall measure revenue at the transaction price allocated to each

individual performance obligation. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties and amounts expected to be refunded to the customer.

• (2) The Company determines the best estimate of the variable consideration based on the

expected value or the most likely amount, but the transaction price including the variable consideration should not exceed the accumulated recognized revenue when the relevant uncertainty is eliminated. It is highly unlikely that a significant reversal will occur amount.

• (3) If there is a significant financing component in the contract, the Company shall

determine the transaction price based on the amount payable in cash assuming the customer obtains control over the commodity or service. The difference between the transaction price and the contract consideration shall be amortized using the effective interest method during the contract period.

• (4) For contracts containing two or more performance obligations, the Company allocates

the transaction price to each performance obligation at the contract inception date based on the relative proportion of the standalone selling prices of the goods promised under each performance obligation.

Specific methods for revenue recognition

(1) Goods Sales Contract Sales contracts between the Company and customers typically include commitments to transfer goods, which may vary depending on the customer's agreement. As customers are able to benefit separately from the aforementioned goods or services or use them together with other readily available resources, and there is no significant integration, modification, customization, or high correlation between the aforementioned goods or services, the Company considers them as clearly distinguishable goods and constitutes separate performance obligations.

On the basis of comprehensive consideration of the following factors, the Company recognizes revenue at the time when the customer obtains control over the relevant goods: the current right to receive payment for the goods, the transfer of the main risks and rewards of ownership of the goods, the transfer of legal ownership of the goods, the transfer of physical assets of the goods, and the customer's acceptance of the goods.

(2) Service Provision Contract The service contracts between the Company and customers usually include performance obligations such as providing the use of shops in the China Commodities City markets and the supporting services for operation, providing hotel accommodation and catering services, providing paid use services for funds to external parties of the Group, and providing collection and payment services.

• 1) The use of shops in China Commodities City markets and its supporting services As the customer simultaneously obtains and consumes the economic benefits brought by the Company's performance, the Company recognizes it as a performance obligation fulfilled over a period of time and recognizes revenue based on the progress of performance, except when the progress cannot be reasonably determined. Under the output method, the Company determines the performance progress of the provision of the use of shops in the China Commodities City markets and the supporting services for operation based on the number of using days of the shops. When the performance progress cannot be reasonably determined, if the cost incurred by the Group is expected to be compensated, the income shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined.
• 2) Hotel accommodation business As the customer simultaneously obtains and consumes the economic benefits brought by the Company's performance, the Company recognizes it as a performance obligation fulfilled over a period of time and recognizes revenue based on the progress of performance, except when the progress cannot be reasonably determined. The Company determines the progress of performance obligations for hotel accommodation services based on the output method, using the number of accommodation days. When the performance progress cannot be reasonably determined, if the cost incurred by the Group is expected to be compensated, the income shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined.
• 3) Hotel catering business For the separate performance obligation of providing hotel catering services, the Company

separately prices the hotel catering services and recognizes revenue upon completion of the services.

4) Real Estate Sales Business For real estate sales operations, the Company recognizes revenue upon satisfaction of all the following conditions: (i) the real estate development project has been completed and passed inspection and acceptance by competent authorities; (ii) the buyer and seller have entered into a legally binding sales contract; (iii) the buyer has made the agreed purchase payments in accordance with the payment terms stipulated in the sales contract; and (iv) the buyer has obtained control over the relevant property.

(2) Adopting different business models for similar businesses involves different revenue recognition methods and measurement methods

□Applicable √Not applicable

35. Contract costs

√Applicable □Not applicable

The incremental costs incurred by the Company to obtain contracts that are expected to be recovered are recognized as contract acquisition costs and recognized as an asset.

If the cost incurred by the Company for the performance of the contract does not apply to the scope of the relevant standards such as inventory, fixed assets or intangible assets, and meets the following conditions at the same time, it is recognized as an asset as the cost of contract performance:

• (1) The cost is directly related to a current or expected contract, including direct labor,

direct materials, manufacturing expenses (or similar expenses), costs clearly borne by the customer, and other costs incurred only because of the contract;

• (2) This cost increases the resources that the Company will use in the future to fulfill its

contractual obligations;

• (3) The cost is expected to be recoverable. The Company amortizes assets related to contract costs using the same basis as the

recognition of revenue from the related goods or services, and recognizes the amortization as an expense in the current period.

If the carrying amount of an asset related to contract costs exceeds the remaining consideration expected to be received from transferring the goods or services associated with the asset minus the estimated costs to be incurred, the Company recognizes an impairment provision for the excess amount and records it as an asset impairment loss. If changes in factors that previously caused impairment result in the remaining consideration expected to be received from transferring goods or services related to the asset, minus estimated costs to be incurred, exceeding the asset's carrying amount, the previously recognized impairment loss is reversed and included in current profit or loss, provided that the reversed carrying amount does not exceed what the carrying amount would have been had no impairment been recognized.

36. Government subsidy

√Applicable □Not applicable

Government grants are recognized when the following conditions are simultaneously met: (1) the Company can fulfill the conditions attached to the government grant; (2) the Company can receive the government grant. If a government grant falls within monetary assets, it will be measured by the amount received or receivable. If a government grant does not fall within monetary assets, it will be measured by fair value. If the fair value of a grant cannot be determined reliably, it will be measured by its nominal amount.

Basis for judgment and accounting treatment of government grants related to assets Government documents stipulate that grants used to purchase, construct, or otherwise

form long-term assets are classified as asset-related government grants. If government documents are unclear, the basic conditions required to obtain the subsidy are used as the basis for judgment. Subsidies where the basic condition is the acquisition or construction of long-term assets are classified as asset-related government grants. Government grants related to assets are deducted from the carrying amount of the relevant assets or recognized as deferred income. Asset-related government grants are recognized as deferred incomes and included in the current profit and loss in terms within the service life of the relevant assets in a reasonable and systematic way. Government subsidies measured in nominal amounts are directly recognized in the current period's profit or loss. If the relevant assets are sold, transferred, scrapped or damaged before the end of their useful life, the undistributed balance of relevant deferred income shall be transferred to the profit and loss of the current period of asset disposal.

Basis for judgment and accounting treatment methods of government grants related to revenue

Government grants other than those related to assets are classified as government grants related to income. Government subsidies containing the part related to assets and the part related to income are accounted for separately according to different parts; if it is difficult to distinguish, the whole shall be classified as government subsidies related to income. Government grants related to income, which are intended to compensate for related costs,

expenses, or losses incurred in future periods, should be recognized as deferred income. They are recognized in the profit or loss for the period in which the related costs, expenses, or losses are recognized, or they offset the related costs. For government grants that compensate for related costs, expenses, or losses that have already been incurred, they should be directly recognized in the profit or loss for the current period or offset the related costs.

Government subsidies related to the Company’s daily operating activities are recorded in other income or offset related cost expenses according to the essence of the economic substance. Government subsidies not related to the Company’s daily activities are recorded in non-operating income and expenditure.

Accounting Treatment Methods for Policy-Based Preferential Loan Interest Subsidies

• (1) When the fiscal authority allocates interest subsidy funds to the lending bank, and the

lending bank provides loans to the Company at a policy-based preferential interest rate, the actual amount of the loan received shall be recorded as the loan’s book value. The related borrowing costs shall be calculated based on the principal of the loan and the policy-based preferential interest rate.

• (2) If the finance directly transfers the discounted funds to the Company, the Company will

offset the relevant borrowing costs with the corresponding discounted interest.

• 37. Deferred income tax assets/ deferred income tax liabilities

√Applicable □Not applicable

Based on the difference between the book value of assets and liabilities and their tax base (if the tax base can be determined for items not recognized as assets and liabilities in accordance with the tax law, the difference between the tax base and its book value), deferred income tax assets or deferred income tax liabilities are calculated and recognized according to the applicable tax rate during the period when the asset is expected to be recovered or the liability is settled.

The recognition of deferred income tax assets is limited to the amount of taxable income that is likely to be obtained to offset temporary differences. On the balance sheet date, if there is conclusive evidence that sufficient taxable income is likely to be obtained in the future period to offset deductible temporary differences, the deferred income tax assets that have not been recognized in the previous accounting period shall be recognized.

On the balance sheet date, the Company reviews the book value of deferred income tax assets. If it is likely to obtain sufficient taxable income in the future to offset the benefits of deferred income tax assets, the Group will write down the book value of deferred income tax assets. When it is likely to obtain sufficient taxable income, the Group will reverse the reduced amount.

The current income tax and deferred income tax of the Company are included in the current profit and loss as income tax expenses or income, but the income tax arising from the following situations is not included: (1) Business combination; (2) Transactions or events directly recognized in the owner's equity.

The Company presents deferred tax assets and deferred tax liabilities as a net amount when the following conditions are simultaneously met: (1) it has the legal right to settle current tax assets and current tax liabilities on a net basis; (2) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the same taxable entity or different taxable entities, but in each future period when significant deferred tax assets and deferred tax liabilities are expected to reverse, the relevant taxable entities intend to settle current tax assets and current tax liabilities on a net basis or simultaneously acquire assets and settle liabilities.

• 38. Lease

√Applicable □Not applicable Judgment basis and accounting treatment methods for simplifying short-term leases and low-value asset leases as a lessee √Applicable □Not applicable

The Company recognizes leases with a lease term not exceeding 12 months and excluding purchase options as short-term leases on the commencement date of the lease term; Leases with lower value when a single leased asset is considered a brand new asset are recognized as low-value asset leases.

For all short-term leases and leases of low-value assets, the Company recognizes lease payments in each period of the lease term on a straight-line basis as related asset costs or current period profit and loss.

Except for short-term leases and leases of low-value assets accounted for using the simplified approach mentioned above, the Company recognizes right-of-use assets and lease liabilities at the commencement date of the lease.

(1) Right-of-use assets The right-of-use asset is initially measured at cost, which includes: 1) the initial

measurement of the lease liability; 2) lease payments made on or before the commencement date of the lease, less any lease incentives received; 3) initial direct costs incurred by the lessee;

4) an estimate of the costs to be incurred by the lessee for dismantling and removing the leased asset, restoring the site on which it is located, or restoring the asset to the condition required by the lease terms.

The Company depreciates the right-of-use assets using the straight-line method. Where the ownership of the leased asset can be reasonably determined at the end of the lease term, the Company as the lessee shall take depreciation during the remaining useful life of the leased asset. Where it is not reasonably certain that ownership of the leased asset will be acquired at the end of the lease term, the Company shall make depreciation within the shorter period of the lease term or the remaining useful life of the leased asset.

(2)Lease liabilities

At the commencement date of the lease, the Company recognizes the present value of the unpaid lease payments as a lease liability. In calculating the present value of the lease payments, the Group uses the lease embedded interest rate as the discount rate; If the inherent interest rate of the lease cannot be determined, the Company's incremental borrowing rate shall be used as the discount rate. The difference between lease payments and their present value is recognized as unearned finance charges, with interest expenses recognized during each lease period at the discount rate used to determine the present value of lease payments, and recorded in current profit or loss. Variable lease payments that are not included in the measurement of lease liabilities are recognized in the current period's income statement when they actually occur.

After the commencement of the lease term, when there are changes in the substantive fixed payments, estimated payable amounts of the guaranteed residual value, indices or ratios used to determine lease payments, or changes in the assessment results or actual exercise of purchase options, renewal options, or termination options, the Company remeasures the lease liability based on the present value of the revised lease payments and adjusts the carrying amount of the right-of-use asset accordingly. If the carrying amount of the right-of-use asset has been reduced to zero but further reduction of the lease liability is still required, the remaining amount is recognized in current period profit or loss.

(3) After-sale leaseback transactions The Company evaluates and determines whether the asset transfer in a

sale-and-leaseback transaction constitutes a sale in accordance with Accounting Standards for Business Enterprises No. 14—Revenue.

If the asset transfer in a sale and leaseback transaction qualifies as a sale, the Company measures the right-of-use asset arising from the leaseback based on the portion of the original asset's carrying amount related to the right of use obtained, and recognizes only the gain or loss related to the rights transferred to the lessor.

If the asset transfer in a sale and leaseback transaction does not qualify as a sale, the Company continues to recognize the transferred asset and simultaneously recognizes a financial liability equal to the transfer proceeds, accounting for this financial liability in accordance with "Accounting Standards for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments."

Classification criteria and accounting treatment methods for leasing as a lessor √Applicable □Not applicable

The lease that transfers virtually all the risks and rewards related to the ownership of the leased asset on the lease commencement date is a finance lease, and other leases are operating leases.

(1)Operating Lease The Company recognizes lease receipts as rental income on a straight-line basis over the

lease term. Initial direct costs incurred are capitalized and amortized on the same basis as the recognition of rental income, and are included in the current period's profit or loss in installments. Variable lease payments related to operating leases that are not included in lease receipts are included in profit or loss for the current period when they are actually incurred.

(2)Financial Lease

At the commencement date of the lease, the Company recognizes finance lease receivables at the net investment in the lease (the sum of the present value of the unguaranteed residual value and lease payments not yet received at the commencement date, discounted using the interest rate implicit in the lease) and derecognizes the finance lease assets. During each period of the lease term, the Company calculates and recognizes interest income using the interest rate implicit in the lease.

The variable lease payments obtained by the Company as the lessor which are not recorded in the net lease investment measurement are recorded in the current profit or loss when they are actually incurred.

(3) After-sale leaseback transactions The Company evaluates and determines whether the asset transfer in a

sale-and-leaseback transaction constitutes a sale in accordance with Accounting Standards for Business Enterprises No. 14—Revenue.

If the asset transfer in a sale and leaseback transaction qualifies as a sale, the Company accounts for the asset purchase in accordance with other applicable accounting standards for enterprises and accounts for the asset lease in accordance with Accounting Standards for Business Enterprises No. 21—Leases.

If the asset transfer in a sale and leaseback transaction does not qualify as a sale, the Company does not recognize the transferred asset but recognizes a financial asset equal to the transfer proceeds and accounts for this financial asset in accordance with Accounting Standards for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments.

39. Other important accounting policies and accounting estimates

√Applicable □Not applicable

Measurement of fair value

The Company measures equity instrument investments at fair value at each balance sheet date. Fair value refers to the price received from the sale of an asset or paid for the transfer of a liability by a market player in the orderly transactions on the measurement date. For the assets and liabilities which are measured or disclosed by fair value in the financial statements, the levels of fair value are determined based on the lowest-level input of important significance for the overall measurement of fair values: Level 1 input is the unadjusted offer price for an identical asset or liability that can be obtained in an active market on the measurement date; Level 2 inputs are the inputs that are directly or indirectly observable for related assets or liabilities other than Level 1 inputs; Level 3 inputs are the inputs that are observable for related assets or liabilities. On each balance date, the Group re-evaluates the assets and liabilities that are recognized in the financial statements and keeps being measured by fair value so as to determine whether to change the measurement levels of fair value.

Significant accounting judgments and estimates

In the preparation of financial statements, the management needs to make judgments, estimates and assumptions, which will affect the presented amounts and disclosure of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities on the balance sheet date. However, the uncertainty of these assumptions and estimates may result in significant adjustments to the book value of future affected assets or liabilities.

Judgments In applying the Company's accounting policies, management has made the following

judgments that have a significant impact on the amounts recognized in the financial statements:

(1) Operating lease - as a lessor The Company has signed lease contracts for investment properties. The Company

considers that, based on the terms of the lease contracts, it retains all significant risks and rewards of ownership of these properties and therefore treats them as operating leases.

• (2) Classification of investment properties and fixed assets The Company classifies the buildings and structures leased out other than for the main businesses such as market and hotel services as well as the auxiliary land use rights thereof as investment properties, including but not limited to the auxiliary banking and catering outlets for market operation and the auxiliary service outlets for hotels. Other buildings and structures leased out are classified as fixed assets.
• (3) Business model The classification of financial assets at initial recognition depends on the Company's business model for managing these assets. When determining the business model, the Company considers factors including corporate evaluation methods and the way financial asset performance is reported to key management personnel, the risks affecting financial asset performance and their management approaches, as well as the methods by which relevant business managers are compensated. When assessing whether the objective is to collect contractual cash flows, the Company needs to analyze and evaluate the reasons, timing, frequency, and value of the sale of financial assets before their maturity date.
• (4) Contract cash flow characteristics The classification of financial assets at initial recognition depends on the characteristics of the contractual cash flow of the financial assets. For the judgment on whether the contractual cash flow is the repayment of principal and the payment of interest on outstanding principal, including the evaluation of the adjustment to the time value of money, it should be judged whether it is significantly different from the benchmark cash flow; for the financial assets with the early repayment characteristic, it should be judged whether the fair value of the early repayment characteristic is extremely low.

Uncertainties of estimates The following are key assumptions regarding the future at the balance sheet date and other

key sources of estimation uncertainty that may result in significant adjustments to the book value of assets and liabilities in future accounting periods.

• (1) Impairment of financial instruments The Company evaluates the impairment of financial instruments with the expected credit loss model. To apply the model, the Company needs to make significant judgments and estimates and take into account all reasonable and evidenced information, including forward-looking information. In making these judgments and estimates, the Company infers expected changes in debtor credit risk based on historical repayment data combined with economic policies, macroeconomic indicators, industry risks, and other factors. Different estimates may affect the provisions for impairment and the provision that has been made for impairment may not necessarily be equal to the actual amount of impairment loss in the future.
• (2) Net realizable value of property inventory The Company's real estate inventory is measured at the lower of cost and net realizable value, with the calculation of net realizable value requiring the use of assumptions and estimates. If the management adjusts the estimated price and the costs and expenses to be incurred until the completion, it will affect the estimate of the net realizable value of the inventory and the difference will affect the provision for inventory depreciation.
• (3) Impairment of non-current assets other than financial assets (excluding goodwill) The Company determines, on the balance sheet date, whether the non-current assets other than financial assets have a sign of being impaired. Non-current assets other than financial assets are subject to impairment testing when there are indications that their book value is irrecoverable. When the book value of an asset or a group of assets is higher than its recoverable value, i.e. fair value less the disposal expenses or the present value of expected future cash flow, whichever is higher, the asset or group has been impaired. For the fair value less the disposal expenses, the Group refers to the agreed selling price or observable market

price of the similar asset in a fair transaction, less the cost increase directly attributable to the disposal of the asset. When predicting the present value of future cash flows, the management must estimate the expected future cash flows of the asset or group of assets and select an appropriate discount rate. When identifying a group of assets, the management considers whether the smallest identifiable group of assets can generate income and cash flows independently from other departments or units, or the income and cash inflows generated thereby are mostly independent from other departments or units, and also takes into account the way of managing or monitoring production and operating activities and the way of making decisions on the continued use or disposal of the asset. Please refer to Note V. 27 for details.

• (4) Impairment of goodwill The Company tests goodwill for impairment at least annually. This requires estimating the present value of the future cash flows of the asset group or combination of asset groups to which the goodwill is allocated. When estimating the present value of future cash flows, the Company needs to estimate the cash flows generated by future asset groups or combinations of asset groups, and at the same time select an appropriate discount rate to determine the present value of future cash flows. Please refer to Note V. 27 for details.
• (5) Fair value of non-listed equity investments The Company determines the fair value of non-listed equity investments based on the expected future cash flows discounted at the current discount rate of other financial instruments with similar contractual terms and risk characteristics. This requires the Company to estimate expected future cash flows, credit risks, volatility, and discount rates, which introduces uncertainty.
• (6) Development expenditures When determining the amount of capitalization, management must make assumptions on

the expected future cash flow, the applicable discount rate, and the expected benefit period of the asset.

• (7) Deferred Tax Assets To the extent that it is very likely for the Group to have enough taxable income to be offset against the deductible losses, the Group shall recognize deferred income tax assets in connection with the outstanding deductible losses. This requires the management to use lots of judgments to estimate the acquisition time and amount of the taxable income to be acquired in the future to determine the amount of deferred income tax assets to be recognized, in consideration of the tax payment planning strategy.
• (8) Lessee incremental borrowing interest rate For leases where the interest rate implicit in the lease cannot be determined, the Company uses the lessee's incremental borrowing rate as the discount rate to calculate the present value of the lease payments. When determining the incremental borrowing rate, the Company takes the observable interest rate as the reference basis for determining the incremental borrowing rate according to the economic environment it is in. On this basis, the Company adjusts the reference interest rate according to its own situation, the underlying asset situation, the lease term, the amount of lease liabilities and other specific conditions of the lease business to obtain the applicable incremental borrowing rate.

• 40. Changes in important accounting policies and accounting estimates

• (1) Changes in important accounting policies

□Applicable √Not applicable

• (2) Changes in important accounting estimates

□Applicable √Not applicable

(3) The first execution of new accounting standards or interpretations involving adjustments to the financial statements at the beginning of the year of implementation starting in 2026

• □Applicable √Not applicable

• 41. Other

• □Applicable √Not applicable

• VI. Taxes

• 1. Main tax types and tax rates

Major taxes and tax rates √Applicable □Not applicable

Disclosure of taxpayers subject to different income tax rates √Applicable □Not applicable

• 2. Tax incentives √Applicable □Not applicable

• 1. According to the Announcement on the Filing of High-tech Enterprises recognized by

Zhejiang Provincial Accreditation Agency in 2025 issued by the Office of the National High-tech Enterprise Accreditation Management Leading Group, Yiwu China Commodities City Big Data Co., Ltd. has been listed in the filing list of high-tech enterprises recognized by Zhejiang Provincial Accreditation Agency in 2025 and passed the recognition of high-tech enterprises. The Certificate number is GR202533004132. Date of issue: December 19, 2025. Validity period: three years. From January 1, 2025 to December 31, 2027, Yiwu China Commodities City Big Data Co., Ltd. will be subject to a reduced corporate income tax rate of 15%.

• 2. According to the Announcement on the Filing of High-tech Enterprises recognized by

Zhejiang Provincial Accreditation Agency in 2024 issued by the Office of the National High-tech Enterprise Accreditation Management Leading Group, Kuaijietong Payment Service Co., Ltd. has been listed in the filing list of high-tech enterprises recognized by Zhejiang Provincial Accreditation Agency in 2024 and passed the recognition of high-tech enterprises. The Certificate number is GR202433009630. Date of issue: December 6, 2024. Valid period: three years. Kuaijietong Payment Service Co., Ltd. will be subject to a reduced enterprise income tax rate of 15% from January 1, 2024 to December 31, 2026.

• 3. According to the Announcement on the Filing of High-tech Enterprises recognized by

Zhejiang Provincial Accreditation Agency in 2023 issued by the Office of the National High-tech Enterprise Accreditation Management Leading Group, Zhejiang Yiwugou E-commerce Co., Ltd. has been listed in the filing list of high-tech enterprises recognized by Zhejiang Provincial Accreditation Agency in 2023 and passed the recognition of high-tech enterprises. The Certificate number is GR202333013352. Date of issue: December 18, 2024. Valid period: three years. The high-tech enterprise qualification of Zhejiang Yiwugou E-commerce Co., Ltd. was valid from January 1, 2023, to December 31, 2025. Given that the qualification requires re-certification upon expiration, Yiwugou Company currently files and pays corporate income tax on a provisional basis at the preferential rate of 15%. The applicable tax rate will be adjusted in accordance with the outcome of the re-certification.

• 3. Other

□Applicable √Not applicable

• VII. Notes to items in consolidated financial statements

• 1. Monetary funds

√Applicable □Not applicable

Unit: RMB

Other notes

Monetary funds with restricted ownership or usage rights are detailed in Note VII. 31. Assets with restricted ownership or usage rights.

• 2. Held-for-trading financial assets

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

• 3. Derivative financial assets

□Applicable √Not applicable

• 4. Notes receivable

• (1) List of notes receivable by category

□Applicable √Not applicable

• (2) Notes receivable pledged by the Company at the end of the period

□Applicable √Not applicable

• (3) Notes receivable that have been endorsed or discounted by the Company at the end of the period and have not yet matured on the balance sheet date

□Applicable √Not applicable

• (4) Categorized disclosure based on the bad debt provision method

• □Applicable √Not applicable

• Accounts receivable for which bad debt provision is made individually:
• □Applicable √Not applicable Explanation for making bad debt provision for accounts receivable by group:
• □Applicable √Not applicable Provision for bad debts based on the general model of expected credit losses
• □Applicable √Not applicable

Classification basis and bad debt provision ratio for each stage None

Explanation of significant changes in the book balance of accounts receivable with changes in loss provisions in this period:

• □Applicable √Not applicable (5) Provisions for bad debts
• □Applicable √Not applicable In which the recovered or reversed amount is important:
• □Applicable √Not applicable

Other notes: None

(6) Notes receivable actually written off during the current period

• □Applicable √Not applicable Important notes receivable written off:
• □Applicable √Not applicable Description of notes written off:
• □Applicable √Not applicable Other notes:
• □Applicable √Not applicable

• 5. Accounts receivable

(1) Disclosure based on account age √Applicable □Not applicable

Unit: RMB

Zhejiang China Commodities City Group Co., Ltd. Semi-Annual Report for 2026

(2) Categorized disclosure based on the bad debt provision method √Applicable □Not applicable

Unit: RMB

Accounts receivable for which bad debt provision is made individually: √Applicable □Not applicable

Unit: RMB

Explanation for making bad debt provision for accounts receivable individually:

□Applicable √Not applicable

94 /187

Explanation for making bad debt provision for accounts receivable by group: √Applicable □Not applicable Combined provision items: combined provision for bad debts based on credit risk characteristics

Unit: RMB

Description of combined provision for bad debts:

• □Applicable √Not applicable

Provision for bad debts based on the general model of expected credit losses

• □Applicable √Not applicable

Classification basis and bad debt provision ratio for each stage None

Explanation of significant changes in the book balance of accounts receivable with changes in loss provisions in this period:

• □Applicable √Not applicable

(3) Provisions for bad debts

√Applicable □Not applicable

Unit: RMB

In which the recovered or reversed amount is important:

□Applicable √Not applicable Other notes: None

(4) Accounts receivable actually written off during the current period

• □Applicable √Not applicable Information of write-off of important accounts receivable
• □Applicable √Not applicable Description of accounts receivable written off:

(5) Five debtors with the highest closing balances of accounts receivable and contract assets

√Applicable □Not applicable

Unit: RMB

Other notes None

Other notes:

• □Applicable √Not applicable

• 6. Contract assets

• (1) Contract assets situation

□Applicable √Not applicable

• (2) The amount and reasons for significant changes in book value during the reporting period

Classification basis and bad debt provision ratio for each stage None

Explanation of significant changes in the book balance of contract assets with changes in loss provisions in this period:

• □Applicable √Not applicable

• (4) Provision for bad debts of contract assets in this period

• □Applicable √Not applicable In which the recovered or reversed amount is important:
• □Applicable √Not applicable Other notes: None

• (5) Actual written-off contract assets in this period

• □Applicable √Not applicable Among them, important contract assets write off
• □Applicable √Not applicable Description of contract assets written off:
• □Applicable √Not applicable Other notes:
• □Applicable √Not applicable

• 7. Receivables Financing

• (1) Accounts receivable financing listed by classification

□Applicable √Not applicable

• (2) Accounts receivable financing pledged by the Company at the end of the period

□Applicable √Not applicable

• (3) Accounts receivable financing that has been endorsed or discounted by the Company at the end of the period and has not yet matured on the balance sheet date

• □Applicable √Not applicable

Classification basis and bad debt provision ratio for each stage None

Explanation of significant changes in the financing book balance of accounts receivable with changes in loss provisions in this period:

• □Applicable √Not applicable

• (5) Provisions for bad debts

• □Applicable √Not applicable In which the recovered or reversed amount is important:
• □Applicable √Not applicable Other notes: None

• (6) Accounts receivable financing actually written off in this period

• □Applicable √Not applicable Among them, important accounts receivable financing written off
• □Applicable √Not applicable Explanation of writing-off:
• □Applicable √Not applicable

• (7) Changes in accounts receivable financing and changes in fair value in this period:

□Applicable √Not applicable

• (8) Other notes:

□Applicable √Not applicable

• 8. Prepayments

• (1) Presentation of prepayments by aging

√Applicable □Not applicable

Unit: RMB