CMC - Annual Report 2020 | FinancialReports.eu

Stock Code ： 2204

China Motor Corporation 2020 Annual Report

(Translation)

Printed on March 31, 2021

Notice to Readers

The Annual Report have been translated into English from the original Chinese version. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese version shall prevail.

I. Information regarding Spokesperson, Deputy Spokesperson

Spokesperson: Cheng-Chang Huang

Title: Vice President

Deputy Spokesperson: Yu-Chun Su

Title: General Manager, Corporate Planning Division, China Motor Corporation Tel: 886-3-4783191

Email: [email protected]

II. Contact Information of Headquarter, Branch Company and Plant

Headquarter Address: 11F., No.2, Sec. 2, Dunhua S. Rd., Da’an Dist., Taipei City 106, Taiwan Tel: 886-2-23250000

Yang Mei Plant Address: No.618, Xiucai Rd., Yangmei Dist.,Taoyuan City 326, Taiwan Tel: 886-3-4783191

Hsin Chu Plant

Address: No.2, Guangfu Rd., Hukou Township, Hsinchu County 303, Taiwan Tel: 886-3-5985841

III. Common Share Transfer Agent and Registrar

Company: China Motor Corporation

Address: 7F., No.150, Sec. 2, Nanjing E. Rd., Zhongshan Dist., Taipei City 104, Taiwan Tel: 886-2-25156421

Website: http:// www.china-motor.com.tw

IV. Information regarding 2020 Auditors

Company: Deloitte & Touche

Auditors: Eddie Shao, Ya-Ling Wong

Address: 20F, Taipei Nan Shan Plaza, No. 100, Songren Rd., Xinyi Dist., Taipei 11073,

Taiwan

Tel: 886-2-27259988

Website: http://www.deloitte.com.tw

V. Information regarding Depositary: N.A.
VI. Corporation Website: http:// www.china-motor.com.tw

Table of Contents

Report to Shareholders ____________ 6	Report to Shareholders ____________ 6	Report to Shareholders ____________ 6
Company		Overview ________ 8
I.	Date of Incorporation ··················································································· 8
II.	Company History ······················································································· 8
III.	Business Results ························································································ 9
IV.	Charity Activities ····················································································· 10
Corporate		Governance Report ___________ 14
I.	Organizational System ··············································································· 14
II.	Information on the company’s Directors, President, Executive Vice Presidents, Vice President
	s, and the Supervisors of all the company’s divisions and branch units ······················· 15
	(I)	Information on Board of Directors ......................................................................................... 15
	(II)	Directors’ Professional Expertise and Independence Status ................................................... 27
	(III)	Information on the Company’s President, Executive Vice Presidents, Vice Presidents, and the
		Supervisors of all the Company’s divisions and branch units ................................................ 29
	(IV)	Remuneration paid during the most recent fiscal year to Directors, Independent Directors, the
		President, and Executive Vice Presidents ............................................................................... 35
	(V)	Names of the managers allocating employee remuneration and the state of allocations ........ 41
III.	The	state of the Company’s implementation of corporate governance ························ 42
	(I)	The state of operations of the Board of Directors ................................................................... 42
	(II)	Operation of the audit committee ........................................................................................... 44
	(III)	The state of the Company’s implementation of corporate governance, any variance from the
		Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the
		reason for any such variance................................................................................................... 50
	(IV)	The Remuneration Committee’s composition and operating status. ...................................... 60
	(V)	The state of the Company’s performance of social responsibilities, any variance from the
		Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies,
		and the reason for any such variance ...................................................................................... 63
	(VI)	The state of the Company’s performance in the area of ethical corporate management, any
		variance from the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx
		Listed Companies, and the reason for any such variance. ...................................................... 76
	(VII) Corporate Governance Guidelines and Regulations ............................................................... 80
	(VIII) Other Important Information Regarding Corporate Governance............................................ 80
	(IX)	Internal Control System .......................................................................................................... 81
	(X)	Punishment and Improvement Status of Violation Internal Control System during the year 2020
		and until 31 March 2021. ........................................................................................................ 83
	(XI)	Major Resolutions at Shareholder Meetings and Board of Directors Meetings during the year
		2020 and until 31 March 2021. ............................................................................................... 83

Table of Contents

	(XII) Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting
	to Important Resolutions Passed by the Board of Directors during the year 2020 and until 31
	March 2021 ............................................................................................................................. 85
	(XIII) Resignation or Dismissal of Chairman, President, and Heads of Accounting, Finance, Internal
	Audit, Corporate Governance and R&D during the year 2020 and until 31 March 2021 ...... 85
IV.	Information Regarding Audit Fees ································································· 85
V.	Information for Replacement of CPA ······························································ 87
VI.	Chairman, President and Heads of Finance or Accounting who worked in the CPA’s firm or its
	affiliates ································································································ 88
VII.	Changes in Shareholdings of Directors, Managers and Major Shareholders ················· 89
VIII. Relationship among the Top Ten Shareholders ··················································· 91
IX.	The total equity stake held in re-invested enterprises by the Company, its Directors, Managers,
	and any companies controlled directly or indirectly by the Company ························· 92
Information on Capital Raising Activities ________ 93
I.	Capital and Shares ···················································································· 93
	(I) Source of Capital .................................................................................................................... 93
	(II) Type of Stock .......................................................................................................................... 93
	(III) Status of Shareholders ............................................................................................................ 93
	(IV) Shareholding Distribution Status ............................................................................................ 94
	(V) List of Major Shareholders ..................................................................................................... 94
	(VI) Market Price, Net Worth, Earnings, and Dividends per Share of the Recent Two Years ....... 95
	(VII) Dividend Policy and Implementation Status .......................................................................... 95
	(VIII) The Impact of Stock Dividend Issuance on the Company’s Business Performance and Earnings
	per Share ................................................................................................................................. 96
	(IX) Remuneration of employees and Directors ............................................................................. 96
	(X) Buy-back of Treasury Stock ................................................................................................... 99
II.	Issuance of Corporate Bonds ········································································ 99
III.	Issuance of Preferred Stock ·········································································· 99
IV.	Issuance of Global Depository Receipts ··························································· 99
V.	Issuance of Employee Stock Options and New Restricted Employee Shares ················· 99
VI.	Status of New Shares Issuance in Connection with Mergers and Acquisitions ··············· 99
VII.	Financing Plans and Implementation ······························································· 99
Operations Overview ___________ 100
I.	Business Activities ··················································································· 100
	(I) Business Scope ..................................................................................................................... 100
	(II) Industry Overview ................................................................................................................ 103
	(III) Technology and R&D overview ........................................................................................... 105

Table of Contents

	(IV) Long-term and short-term business development plan ......................................................... 106
II.	Market, production, and sales overview ·························································· 107
	(I) Market analysis ..................................................................................................................... 107
	(II) Main Uses and Production Processes of Major Products ...................................................... 112
	(III) Supplying Status of Core Materials ....................................................................................... 113
	(IV) Suppliers and Clients that Takes over 10% of the Amount of Imports (Sales) over the Last Two
	Years ...................................................................................................................................... 113
	(V) Production in the Last Two Years .......................................................................................... 115
	(VI) Sales over the Last 2 Calendar Years ..................................................................................... 115
III.	Sales over the Last 2 Years ········································································· 115
IV.	Environmental Protection Expenditure ··························································· 116
	(I) Any losses suffered by the Company in 2020 and up to 31 March 2021 due to environmental
	pollution incidents (including any compensation paid and any violations of environmental
	protection laws or regulations found in environmental inspection) ....................................... 116
	(II) Forecast of Environmental Protection Expenditure for the Next Three Years ....................... 116
V.	Labor and Management Relationship ····························································· 116
	(I) Employee benefit plans, continuing education, training, retirement systems, and the status of
	their implementation, and the status of labor-management agreements and measures for
	preserving employees’ rights and interests ............................................................................ 116
	(II) Labor-management disputes in 2020 and as of 31 March 2021 ........................................... 123
VI.	Important Contracts ················································································· 124
Financial Overview _______ 125
I.	Condensed Balance Sheet, Statement of Comprehensive Income, Auditors and Auditor’s
	Opinions for the last five years ····································································· 125
	(I) Condensed Balance Sheet and Statement of Comprehensive Income .................................. 125
	(II) Auditors’ Opinions for the Last Five Years .......................................................................... 129
II.	Financial Analysis for the Last Five Years ······················································· 130
III.	Audit Committee’s Review Report ································································ 134
IV.	Consolidated Financial Statements and Appendix ··············································· 135
V.	Financial Statements and Appendix of the Corporation ········································ 229
VI.	If the Company or its affiliates have experienced financial difficulties in 2020 up to March 31,
	2021, the annual report shall explain how said difficulties will affect the Company's financial
	situation ······························································································· 295
Review and Analysis of Financial Position, Financial Performance, and Risk issues296
I.	Financial position ···················································································· 296
II.	Financial performance ·············································································· 297
III.	Cash Flow Analysis ·················································································· 298

IV.	Impact of recent significant capital expenditures on financial operations ···················· 298	Impact of recent significant capital expenditures on financial operations ···················· 298
V.	Recent investment policy, main reasons for profit or loss and improvement plan, and
	investment plan for the coming year ······························································ 299
VI.	Risks	································································································· 301
	(I)	The impact of interest rate, exchange rate changes and inflation on the Company's profit or loss
		and future countermeasures .................................................................................................. 301
	(II)	The policies of engaging in high-risk, highly leveraged investments, lending of funds to others,
		endorsements and guarantees, and derivative transactions, the main reasons for profits or losses,
		and future measures to address them. ................................................................................... 301
	(III)	Future research and development plans and estimated associated costs .............................. 302
	(IV)	The impact of significant domestic and foreign policy and legal changes on the Company's
		financial operations and the measures to address them ........................................................ 302
	(V)	Impact of technological changes and industry changes on the Company's financial operations
		and measures to address them: The information security risk event was assessed to have no
		significant impact on the Company's operations. ................................................................. 302
	(VI)	The impact of corporate image change on corporate crisis management and response measures
		.............................................................................................................................................. 302
	(VII)	Expected benefits, possible risks and response measures for mergers and acquisitions activities
		............................................................................................................................................. 302
	(VIII)	Expected benefits, possible risks and countermeasures for plant expansion ........................ 303
	(IX)	Risks associated with the concentration of imports or sales and measures to address them 303
	(X)	The impact, risk and countermeasures of a significant transfer or change in shareholding of
		Directors or major shareholders. ........................................................................................... 303
	(XI)	Effect of the change in operating rights of the Company, as well as risk and response measures.
		.............................................................................................................................................. 303
	(XII)	Litigation or non-litigation events ........................................................................................ 303
	(XIII)	Other important risks and corresponding responses ............................................................. 303
VII.	Other	important matters ············································································· 303
Special Notes ___________ 304
I.	Information on affiliated companies ······························································ 304
	(I)	Report on Consolidated Operations of Affiliated Companies .............................................. 304
	(II)	Consolidated financial statements of affiliated companies: Consolidated together with the
		Company’s subsidiaries in the consolidated financial statement. ......................................... 314
	(III)	Reports on Affiliations: None. .............................................................................................. 315
II.	Private placement of marketable securities during FY2020 up to March 31, 2021 ········· 316
III.	Holding or disposal of shares in the Company by the Company's subsidiaries during FY2020
	up to March 31, 2021 ················································································ 316

Table of Contents

IV.	Other matters that require additional supplementary explanations ···························· 316
V.	Events that had a significant impact on shareholders' equity or the price of securities for the
	year ended 2020 until March 31, 2021: ··························································· 316

Report to Shareholders

In 2020, Taiwan’s auto market hit record high growth rates not seen since 2005, boosted by the psychological expectations of the final year of the government’s old vehicle replacement (scrappage) subsidy program. The total number of newly registered vehicles reached 457,000, and the number of domestic sales of the Company was 49,461 (including OEM and imported vehicles), exceeding the 48,759 units in 2019. The Company has delivered a net operating profit of NT$1,622 million and net income of NT$6.01 per share after tax. The Company’s consolidated revenue was NT$30.875 billion, consolidated operating income was NT$1.777 billion, and consolidated net income after tax was NT$3.541 billion. The Company delivered solid sales results in the first quarter, with consolidated revenue of NT$8.645 billion, up 12.8% from the same period last year. The increase in sales units boosted plant-wide overall equipment effectiveness, coupled with lower promotion costs and higher reinvestment income, so overall resulted in greater profitability compared to the same period last year.

In terms of development outlook of 2021, the Company will launch the 2021-version Eclipse Cross in January, the Outlander PHEV in April, and the CMC e-Veryca five-passenger EV vehicle in May. In the second half of the year, new versions of the Lancer and Outlander models will also be launched to address dynamic consumer demands and preferences. The Company’s domestic sales volume is estimated to reach 50,000 units for the year (including OEM and imported vehicles), an estimated increase of 1.5% over last year (2020). In the export market, with the launch of the sale of CMC’s Delica model in March this year (2021), the Company expects to sell 1,800 units, an estimated increase of 141.3% over last year (2020). In the electric two-wheeled vehicle segment, the Company will focus on multi-energy supplementation as the main axis of development, and expects to launch a shared battery-swap model with Gogoro in the third quarter, which is expected to meet the needs of consumers with different usage habits, and is expected to sell 9,000 units for the year, an estimated growth of 50.6% over last year (2020).

In light of dynamic changes and challenges in the market environment, the Company’s future development strategy is as follows:

In terms of new product introduction, the Company is actively engaging with Mitsubishi to import or domestically produce popular Japanese or overseas passenger car models into the Taiwan market. We are also committed to improving the product line of medium, small and light commercial vehicles, and independently developing commercial vehicles equipped with ADAS systems and other high-tech equipment to enhance the driving experience as well as passenger safety and comfort in our line of commercial vehicles.
In order to capture the growth potential in the OEM as well as imported vehicles market, the

Report to Shareholders

Company intends to construct a new production line that features both high levels of automation and smart manufacturing. The production line is envisaged to provide OEM customers with excellent production efficiency and quality, thereby expanding production advantages. In order to capture the growth space of the imported vehicles market, the dealers invested by the Company (Fortune Motors, Shung Ye Motors, Ling Wei Motor) have gradually expanded the brand management of imported vehicles, and the company has been able to share the commercial benefits from the expansion of the imported vehicles market.

In terms of grasping development opportunities in new energy, new energy vehicles (NEVs) are an inevitable trend going forward. The Company’s new energy development will be carried out in three directions: introduction of Mitsubishi EVs, independent research and development of NEVs, and capability development of technology and key components.
In terms of overeas business development, in the Mainland China market, our investment in South East Motor Corporation will take advantage of Fujian Province’s “NEV Fujian” development strategy to actively engage in collaboration opportunities with new energy vehicle start-ups, and our investment in Fujian Benz, with its association as a luxury brand, is expected to grow in sales and profits as the Chinese economy continues to develop. In addition to the Chinese market, the Company has also secured the full support of Mitsubishi Japan, which will introduce distributors in 33 countries to help CMC expand its foreign sales market.
In terms of digital transformation, the Company continues to promote smart manufacturing, smart marketing and smart decision-making to improve production quality and efficiency, optimize customer experience and service management efficiency, and enhance internal communication efficiency and data-based decision making capabilities.

We are grateful for the support and encouragement of our shareholders, and we will strive to give back to them by delivering better sales and profitability.

Chairperson

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Li-Lien Chen Yen

March 31, 2021

Company Overview

I. Date of Incorporation

June 13, 1969

II. Company History

Year 1969 The Corporation was founded by late Yen Ching Ling with capital amounted NT$100 million.
Year 1970 The Corporation signed a technical cooperation contract with Mitsubishi Motors Corporation.
Year 1973 Yangmei Plant was built, and launched formal production
Year 1986 Mitsubishi Motors Corporation (MMC) and Mitsubishi Corporation officially invested the Corporation, holding 19% and 6% of the stock respectively.
Year 1988 Verica, a light commercial vehicle, was developed by the Corporation successfully, launched for formal production.
Year 1990 Mechanical stamping plant was built, and Hsinchu Plant was built.
Year 1993 Our first product in the sedan field - official launch of Lancer. The production amount of cars in the same year broke 500 thousand units.
Year 1998 Over 1 million cars were sold.
Year 1999 South East Motor Co., Ltd. was completed for production. In the same year, the main building of CARTEC was completed, and the “China Motor Corporation Indigenous Cultural and Educational Foundation” was founded.
Year 2006 The Corporation signed a letter of intent with Chrysler to produce Dodge brand vehicles and exported them to Mexico from Taiwan. In the same year, the Corporation undertook the production of Chrysler’s Town & Country RV, which was the first time of it to be technically authorized and produced overseas.
Year 2007 The plant of Fujian Daimler Motors Industry Co., Ltd. (now Fujian Benz Automotive Co., Ltd.) was constructed.
Year 2010 The Corporation joined in green energy industry, releasing “eMOVING,” an electric scooter.
Year 2012 Export of the Lancer Fortis to the Middle East market. China-Motor

Company Overview

Corporation cooperated with Mitsubishi Motors Corporation (MMC) to march toward the international market together with the work divided into production and marketing.

Year 2013 Self-owned brand 3.5T Leadca commercial vehicle was released. Year 2015 Research and develop Zinger independently, and have the car released with China Motor Brand.

Year 2016 China Motor Corporation helped Mitsubishi Motor Corporation with international division of labor. The first batch of modules was shipped to Indonesia.

Year 2017 The Grand Lancer, of which China-motor Asia Research & Technology Center (CARTEC) led the development, was launched.

Year 2018 Launch of Veryca A180/A190. Year 2019 Ms. Li-Lien Chen Yen succeeded the position of the Chairperson. Year 2019 The brand new corporate vision and identity has been publicized, as a celebration of the Company’s 50th anniversary.

Year 2020 Launch of independently researched and developed Zinger Pickup. Year 2020 eMOVING and Gogoro announced their cooperation to meet the needs of different types of consumers with various energy supplementing technologies.

III. Business Results

◆Year 2018

(I) Won the top 5% of “Corporate Governance Evaluation” for 4 consecutive years.
(II) Ranked No. 10 in the Large-scale Enterprise Group of the “CSR Award of CommonWealth Magazine” and No. 1 in the automobile industry for five consecutive years.
(III) Energy Benchmarking Prize from the Ministry of Economic Affairs.
(IV) The Friendly Parenting Award of the Work-Life Balance Award from the Ministry of Labor.
(V) The Excellent Award of Air Pollution Reduction from Taoyuan City Government.
(VI) Appointed as Low-Carbon Technology Demonstration Manufacturer by Taoyuan City Government.

Company Overview

(VII) The only Automotive company awarded excellent manufacturer of “2018 Annual Factory Greening Counseling Program”

◆Year 2019

(I) Won the top 5% of “Corporate Governance Evaluation” for five consecutive years.
(II) Ranked No. 6 in the Large-scale Enterprise Group of the “CSR Award of CommonWealth Magazine” and No. 1 in the automobile industry for six consecutive years.
(III) Won “CHR Health Corporate Citizenship Award” and is the first and only automotive company to receive the award in the Health Management category.
(IV) Outstanding Energy Saving Performance Award for Group Enterprises from Bureau of Energy, Ministry of Economic Affairs.
(V) The Ministry of the Interior issued a letter approving the green building label (old building improvement category) for the main plant (Building C) of the Hsinchu Plant of China Motor Corporation.
(VI) The Top Award of Air Pollution Reduction from Taoyuan City Government. (Special Merit Award).

(VII) Received Daimler Asia’s highest honorary innovation award for 13 countries in Japan.

◆Year 2020
(I) Won the top 5% of “Corporate Governance Evaluation” for six consecutive years
(II) Silver Level of the second “National Enterprise Environmental Protection Award”
(III) Received Sports Enterprise Certification by the Sports Department of the Ministry of Education
(IV) Given the “Workplace Gender Equality Index Certification” by The Bureau of Labor Affairs of Taipei City Government

IV. Charity Activities

With the brand spirit of “Start for Happiness,” China Motor Corporation has made caring for the rural areas and being rooted in the land an important ambition, focusing on the four main aspects “core functions, deep connection with indigenous people, knowledge and education, and giving back to the rural areas,” and closely linking with four platforms “China Motor Corporation Indigenous Cultural and Educational Foundation,” “China Motor Corporation

Company Overview

Volunteer Club,” “China Motor Corporation CSR Committee” and “China Motor Corporation Support for Indigenous People’s Production and Marketing Enterprise Partnership.” We will continue to invest in corporate resources and employee participation to leverage our core functions and promote multi-faceted philanthropic actions to all sectors, implement Sustainable Development Goals (SDGs) from the United Nations and fulfill the ideal of a better society.

(I) Promote the Rural Partnership Program

China Motor Corporation has long supported the production and marketing activities of the indigenous people. Every year, through the response of the employees, we purchase the harvest from tribes regularly, and since 2016, we have introduced the organic vegetables grown by the indigenous farmers to the employees’ restaurants, and now we still supply them three days a week to take care of our employees’ health. In addition, since 2018, we have called for the participation of third-party factories to form the “Alliance of Enterprises Supporting Indigenous People’s Production and Marketing,” gathering the strength of nearly 50 third-party factories to jointly purchase on a long-term basis in order to expand the purchasing volume, hoping to support the sustainable development of indigenous tribes through a complete production and marketing cycle and to stabilize the livelihood of indigenous small farmers.

(II) Vehicle maintenance service tour to guard the vehicle safety in rural areas

China Motor Corporation has a dense distribution and service network to protect the safety of car owners. In addition to the 126 maintenance plants, China Motor Corporation has combined the service systems of Fortune Motors and Shung Ye Motor to launch the “Vehicle maintenance service tour” for areas with lower service density, such as rural, coastal and mountainous areas. Since its inception in 2016, it has traveled to 23 counties and cities throughout Taiwan and held 81 maintenance services, reaching as far as the Penghu Islands and as high as the Shihlei Tribe in Hsinchu, located at 1,450 meters in the mountains. For the first time, the “Vehicle maintenance service tour” combined industry-academia cooperation in 2020, and joined hands with Taipei City University of Science & Technology and Dong Wu Senior Industrial Home Economics Vocational High School to go to the Shanmei tribe in Chiayi’s Alishan Township to repair the vehicles, and through the participation of students studied Vehicle Maintenance, the “Vehicle maintenance service tour” took root.

Company Overview

In addition, in order to effectively expand the service scope, the public service activities have been combined with the support of third-party factories since 2017, and a total of seven companies participated in 2020, including “buy one get one free for returning used tires at Bridgestone tires in Taiwan,” “50% off for returning Yuasa battery,” “free replacement of windshield wipers,” “free replacement of CPC engine oil,” “free replacement of oil filter,” “free replacement of NGK spark plug when reaching 50,000 km,” and “free Orange Electronic’s TPMS upon returning” and other great maintenance deals.

(III) Long-term sponsorship of the Rural Hope Reading Program

In order to bridge the knowledge gap between urban and rural areas and cultivate reading seeds, China Motor Corporation has been sponsoring the “Hope Reading Project” of the Global Views Educational Foundation for a long time, continuously touring Taiwan’s rural elementary schools, making nearly 160 trips around Taiwan and accumulating more than 211,810 kilometers of service. Leading children in remote areas to move in the world of reading, not only crosses the distance between urban and rural areas, but also becomes an important spiritual indicator of the event and further making children’s dream of reading come true.

(IV) China Motor Corporation’s Happiness Guard Bus touring around rural areas

As the No. 1 brand of children friendly cars, China Motor Corporation has expanded its care for underprivileged children by launching the “Happy Care Project” since 2016. The Happiness Guardian Program is a long-term, ongoing effort to donate Happiness Guard buses to organizations in need and to take concrete action to protect the happiness and safety of children. In order to take care of underprivileged children, China Motor Corporation’s “Happiness Guard Programme” donates three Delica Happiness Guard buses each year to provide shuttle services for underprivileged children. Up to February 2021, 9 vehicles have been donated to rural areas throughout Taiwan. In addition, China Motor Corporation’s “Happiness Guard Programme” provides an annual purchase subsidy of NT$30,000 (limited to 50 units per year) to all children’s social welfare organizations, elementary schools and kindergartens attached to elementary schools in Taiwan for children’s cars over 10 years old or passenger cars and vans with 8 persons or more, in order to care for the happiness and safety of children and provide better care for underprivileged children in Taiwan.

Company Overview

(V) China Motor Corporation protecting the environment, cleaning the beach and mountains

China Motor Corporation has long term flung ourselves into environmental protection strategies and we turn our attention on the environment into concrete actions. Besides setting a goal to conserve energy and reduce carbon for Hsinchu and Yangmei plants, we include environmental protection- related activities into our long term promoted volunteer activity strategies since 2017. The employees spontaneously established the environmental protection volunteer club and conducted environment-related activities voluntarily. In 2020, eighteenth environmental activities were conducted, the guarded areas included the Jioucyonghu, LengShuiKeng, Furen Trail, beach-cleaning in Nanliao fishery port, beach cleaning in Guanyin Hsutsou port, beach cleaning in Tainan Tian Sian port and beach cleaning in Taichung Songpo port, etc, with a total of 282 volunteers participated, as part of the efforts to sustain the environment.

In addition, China Motor Corporation has expanded from the company itself to its upstream and downstream partners. In 2020, China Motor Corporation Association launched the “Environmental Sustainability Seminar and Beach Cleanup Event,” holding an environmental seminar and beach cleanup event in North, Central and Southern Taiwan. 39 companies participated in the three events and cleaned up a large amount of marine debris.

Corporate Governance Report

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Corporate Governance Report
I. Organizational System
Shareholders’ Meeting
Board of Directors
Chairperson
Audit Committee
Audit Division
Remuneration Committee
President
Integrity Management and
Headquarters Compliance Management Committee
Executive Vice President Executive Vice President
Vice President Vice President Vice President Vice President Vice President Vice President
14
Sales Division Service Division Overseas Sales Division Electric Scooter Sales Division Procurement Division President Office Management Information System Division General Administration Division Health and Safety Division Finance & Accounting Division Styling Division Quality Control Division Yang Mei Plant Hsin Chu Plant Production Technology Division Production Control Division Electrical Engineering and Electronics Division Technology Foresight Division Product Engineering Division Vehicle Testing Division Research and Development Division Product Project Division
Product Planning, domestic sales and sales channel management. Sales of parts, product after-sales maintenances and services, CS market planning and customer satisfaction improvement. management of AGV products Promotion and management of overseas sales business. Training and management of distributors in Mainland China., Sales promotion and Domestic sales, product planning, channel management, delivery and finished vehicle inventory management of electric scooters. Procurement of raw materials and equipment domestically and abroad. Business strategy planning analysis, corporate image management and shaping. Planning and maintenance of plant-wide automation and information network systems. Develop human resources policies, recruitment, education, and welfare. Factory safety and health management The formulation and implementation of financial accounting systems, capital planning and financing management, and shareholder services. Changes of exterior and interior designs for all vehicle products and creation of the Company’s own design and drawings. Quality research and development, inspection, assurance and supervision. Manufacturing of automobiles and their parts and research and development of their manufacturing processes and equipment. The processing and assembly of finished cars, engines and their parts, as well as the research and development of their manufacturing processes and equipment. Introduction, improvement and research and development of production technology and production line. Production plan formulation, control, and warehouse management. Planning, designing and R&D of vehicles’ electrical and electronic systems. The establishment of vehicle communication network technology and development of forward-looking parts related businesses Technical research and development, create self-production plans, new product development. The overall development and testing plans, and actual vehicle testing analysis. Research, development and control of new vehicle models and localized parts. New product development planning and progress control.
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Corporate Governance Report

II. Information on the company’s Directors, President, Executive Vice Presidents, Vice President s, and the Supervisors of all the company’s divisions and branch units

(I) Information on Board of Directors

Title	Nationa lity or place of registra tion	Name	Gender	Elected Date	Date of First Election	Term of contract	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Spouse and children of minor age’s current shareholding	Spouse and children of minor age’s current shareholding
							Number of shares	%	Number of shares	%	Number of shares	%
Chairperson	R.O.C.	Yulon Motor Co., Ltd. Representative Li-Lien Chen Yen	Female	2019.06.26	1994.07.01	3 years	111,480,444	8.05	44,592,177 *2,216,162	8.05 0.40	4,432,322	0.80
Director	Japan	Mitsubishi Motors Corporation Representative Toshinaga Kato	Male	2019.12.16	2019.12.16	3 years	193,768,273	14.00	77,507,309	14.00	-	-

*It indicates personal shareholding.

Corporate Governance Report

				March 31, 2021	March 31, 2021	March 31, 2021	March 31, 2021
Shareholding in other’s name		Principal work experience and academic qualifications	Position(s) held concurrently in the company and / or in any other company	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.			Remark
Number of shares	%			Title	Name	Relationship
-	-	Department of Physical Education, Chinese Culture University	Chairperson, Yulon Motor Co., Ltd. Chairperson, Yulon Nissan Motor Co., Ltd. Chairperson, Taiwan Acceptance Corporation Chairperson, Tai Yuen Textile Co., Ltd. Chairperson, Winsome Development Co., Ltd. Chairman, Carnival Industrial Corporation Chairman and President, Yulon Management Co.,Ltd. Director, Yulon Construction Co.,Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-
-	-	Department of Law, Waseda University, Japan Work experience is described as those in the right column	Chief of North Asia Department, Mitsubishi Motors Corporation Vice Chairman, GAC Mitsubishi Motor Co., Ltd. Vice Chairman, GAC Mitsubishi Distribution Co., Ltd. Vice Chairperson, Shenyang Aerospace Mitsubishi Motors Engine Manufacturing Co., Ltd. Director, South East (Fujian) Motors Co., Ltd. Director, Harbin Dongan Automotive Engine Manufacturing Co., Ltd. Mitsubishi Motors (China) Co., Ltd. Director, Fortune Motors Co., Ltd.	-	-	-	-

Corporate Governance Report

Title	Nationa lity or place of registrat ion	Name	Gender	Elected date	Date of First Election	Term of contract	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Spouse and children of minor age’s current shareholding	Spouse and children of minor age’s current shareholding
							Number of shares	%	Number of shares	%	Numbe r of shares	%
Director	R.O.C.	Tai Yuen Textile Co., Ltd. Representative Hsin-I Lin	Male	2019.06.26	1984.07.20	3 years	348,589,538	25.19	139,435,815	25.19	-	-
Director	R.O.C.	Tai Yuen Textile Co., Ltd. Representative Chen-Hsiang Yao	Male	2021.02.26	2021.02.26	3 years	348,589,538	25.19	139,435,815	25.19	-	-
Director	Japan	Mitsubishi Corporation Representative Daisuke Okamoto	Male	2020.04.30	2020.04.30	3 years	66,404,796	4.80	26,561,918	4.80	-	-

Corporate Governance Report

Shareholding in other’s name	Shareholding in other’s name	Principal work experience and academic qualifications	Position(s) held concurrently in the company and / or in any other company	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Remark
Number of shares	%			Title	Name	Relationship
-	-	Department of Mechanical Engineering, National Cheng Kung University Chairperson, Industrial Technology Research Institute Vice Premier, Executive Yuan and Chairperson, Council for Economic Planning and Development Minister, Ministry of Economic Affairs President, Taiwan Transportation Vehicle Manufacturers Association Vice Chairman and President, China-Motor Corporation	Director, Yulon Motor Co., Ltd. Executive Director and Independent Director, Shihlin Electric & Engineering Corporation	-	-	-	-
-	-	MIB, Curtin University, Australia Executive Vice President, Yulon Motor Co., Ltd.	Director and President , Yulon Motor Co., Ltd. Director, Yulon Nissan Motor Co., Ltd. Director, Foxtron Vehicle Technologies Co., Ltd. Chairman, Luxgen Motor Co., Ltd. Director, Taiwan Acceptance Corporation Chairman, Uni Auto Parts Manufacture Co.,Ltd. Chairman, Yulon Construction Co.,Ltd. Director, Yulon Management Co.,Ltd. Supervisor, Dongfeng Yulon Motor Co., Ltd. Vice Chairman, Guangzhou Fengshen Automobile Co., Ltd. Chairman, Yulon(China) Automobile Investment Company For other details, please refer to “Summary of affiliated companies”	-	-	-	-
-	-	Department of Management Studies, Hiroshima University, Japan Work experience is described as those in the right column	Chief of North Asia Automotive Department, Automotive Business Division, Mitsubishi Corporation Chairperson, Hongling Financial Leasing Co., Ltd. Director, Shenyang Aerospace Mitsubishi Motors Engine Manufacturing Co., Ltd.	-	-	-	-

Corporate Governance Report

Title	Nationali ty or place of registrati on	Name	Gender	Elected date	Date of First Election	Term of contract	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Spouse and children of minor age’s current shareholding	Spouse and children of minor age’s current shareholding
							Number of shares	%	Number of shares	%	Numbe r of shares	%
Director	R.O.C.	Tai Yuen Textile Co., Ltd. The Company Representative Chao-Wen Chen	Male	2019.06.26	2016.06.24	3 years	348,589,538	25.19	139,435,815	25.19	-	-
Director	R.O.C.	Yulon Motor Co., Ltd. Representative Tai-Ming Chen	Male	2019.06.26	2008.07.21	3 years	111,480,444	8.05	44,592,177	8.05	-	-
Director	R.O.C.	Le Wen Investment Co., Ltd. The Company Representative Hsin-Cheng Tseng	Male	2019.06.26	2018.11.20	3 years	5,539,400	0.40	2,215,760	0.40	-	-

Corporate Governance Report

Shareholding in other’s name Current shareholding	Shareholding in other’s name Current shareholding	Principal work experience and academic qualifications	Position(s) held concurrently in the company and / or in any other company	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Remark
Number of shares	%			Title	Name	Relationship
-	-	Executives Program of Graduate School of Business Administration, National Chengchi University Department of Chemical Engineering, Chung Yuan Christian University Executive Vice President, China-Motor Corporation Vice President, China-Motor Corporation General Manager, Production Technology Division, China-Motor Corporation	Director and President, China-Motor Corporation Chairperson, Kian Shen Corporation Chairperson, ROC-Spicer Ltd. Chairperson, Fortune Motors Co., Ltd. Director, Shung Ye Motors Co., Ltd. Director, Shye Shyang Mechanical Industrial Co., Ltd. Director, South East (Fujian) Motors Co., Ltd. Director, Fu Lun Motors Co., Ltd. President, Taiwan Transportation Vehicle Manufacturers Association For other details, please refer to “Summary of affiliated companies”	-	-	-	-
-	-	LLM, Boston University	Senior Consultant, Jones Day Taipei Office Independent Director, Simplo Technology Co., Ltd. Independent Director, PCL Technologies, Inc. Independent Director, Orient Pharma Co., Ltd.	-	-	-	-
-	-	MBA, National Chengchi University Department of Nuclear Engineering and Science, National Tsing Hua University Vice President, China-Motor Corporation General Manager, Service Division, China-Motor Corporation	Director and Executive Vice President, China-Motor Corporation Director, Kian Shen Corporation Director, ROC-Spicer Ltd. Director, Fortune Motors Co., Ltd. Director, Shung Ye Motors Co., Ltd. Director, Tokio Marine Newa Insurance Co., Ltd. Director, Fu Lun Motors Co., Ltd. Director, South East (Fujian) Motors Co., Ltd. Director, Mercedes-Benz Hong Kong Ltd. Director, Fujian Benz Automotive Co., Ltd. Director, Aprec (Cayman) Industrial Co., Ltd. Director, Alance (Samoa) Machines Co., Ltd. Director, Fujian Spicer Drivetrain System Co., Ltd. Director, Tai-ya Investment (HK) Co., Ltd. Director, Shenyang Spicer Driveshaft Co., Ltd. Director, Fuzhou Aprec Mechanical and Electrical Co., Ltd. Director, Fuzhou Xinrui Electromechanical Co., Ltd. Director, Fuzhou Xinrui Mechanical and Electrical Co., Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-

Corporate Governance Report

Title	Nationalit y or place of registratio n	Name	Gender	Elected date	Date of First Election	Term of contract	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Spouse and children of minor age’s current shareholding	Spouse and children of minor age’s current shareholding
							Number of shares	%	Number of shares	%	Numbe r of shares	%
Independe nt Director	R.O.C.	Chi-Ching Chen	Male	2019.06.26	2016.06.24	3 years	-	-	-	-	-	-
Independe nt Director	R.O.C.	Wei-Ching Lue	Female	2019.06.26	2019.06.26	3 years	-	-	-	-	-	-
Independe nt Director	R.O.C.	Yun-Hua Yang	Male	2019.06.26	2016.06.24	3 years	-	-	-	-	-	-

Corporate Governance Report

Shareholding in other’s name Current shareholding	Shareholding in other’s name Current shareholding	Principal work experience and academic qualifications	Position(s) held concurrently in the company and / or in any other company	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Other Managerial Roles, Directors, or Supervisors who are spouses, or relatives within the second degree of kinship.	Remark
Number of shares	%			Title	Name	Relationship
-	-	MBA, Massachusetts Institute of Technology Sloan School of Management EMBA, College of Commerce, Global Economics and Trading Management, National Chengchi University Director, GigaMedia Limited Co. Director, Financial One Corp.		-	-	-	-
			Member of Remuneration Committee,
			China-Motor Corporation
			Independent Director and Member of
			Remuneration Committee, Taiwan Acceptance
			Corporation
			Member of Remuneration Committee, Kian
			Shen Corporation
			Director, Haofeng Assets Co., Ltd.
-	-	Master, Graduate School, Department of Land Economics, National Chengchi University Deputy Major, New Taipei City Government Commissioner, Department of Finance, New Taipei City Government Deputy Director-General, National Treasury Administration, Ministry of Finance Counselor, Ministry of Finance	Member of Remuneration Committee, China-Motor Corporation Independent Director and Member of Remuneration Committee, Kian Shen Corporation	-	-	-	-
-	-	PhD of Law, Eberhard Karls Universität in Tübingen, Germany LLM, Department of Law, National Taiwan University Professor, Department of Law, National Chengchi University Associate Professor, Department of Law, National Chengchi University Member of Law Amendment Committee, Judicial Yuan	Member of Remuneration Committee, China-Motor Corporation Independent Director and Remuneration Committee, Yulon Nissan Motor Co., Ltd.	-	-	-	-

Corporate Governance Report

Table 1: Major Shareholders of the Institutional Shareholders

Table 1: Major Shareholders of the Institutional Shareholders	Table 1: Major Shareholders of the Institutional Shareholders
April 25, 2021
Name of the institutional shareholder	Major Shareholders of the institutional shareholder
1. Tai Yuen Textile Co., Ltd.	1. Xian Wei Investment Co., Ltd. (22.15%) 2. Yen Tjing Ling Industrial Development Foundation (14.24%) 3. British Virgin Islands Hoffman Brother Investment Company (9.8%) 4. British Virgin Islands Evans Corporation (9.71%) 5. Caymans Islands West Bridge Investment Company (9.13%) 6. Li Yuan Investment Corporation (7.17%) 7. Yong shun Investment Corporation (6.82%) 8. Diamond Hosiery & Thread Co., Ltd.(5.89%) 9. Li Peng Investment Co., Ltd. (5.61%) 10. Yuan Wei Investment Co., Ltd. (3.10%)
2. Yulon Motor Co., Ltd.	1. Tai Yuen Textile Co., Ltd. (18.11%) 2. China Motors Corporation (16.67%) 3. Li-Lien Chen Yen (3.31%) 4. Pei-Yu Yen(3.28%) 5. Hsiang-Nan Yen (3.28%) 6. Chia Yuan Investment Co.,Ltd.(2.85%) 7. Fan-Terh Investment Co., Ltd. (1.61%) 8. Yen Tjing Ling Industrial Development Foundation (1.09%) 9. JP Morgan Chase Bank in its Capacity as Master Custodian for PGIA Progress International Equity Index (0.79%) 10. JP Morgan Chase Bank in its Capacity as Master Custodian for Vanguard Emerging Stock MarketIndex Fund (0.79%)
3. Mitsubishi Motors Corporation	1. Nissan Motor Co., Ltd.(34.03%) 2. Mitsubishi Corporation(20.02%) 3. The Master Trust Bank of Japan, Ltd. (Trust Account) (2.29%) 4. Mitsubishi Heavy Industries, Ltd.(1.44%) 5. Custody Bank of Japan, Ltd. (Trust Account) (1.07%) 6. Custody Bank of Japan, Ltd. (Trust Account 5) (1.03%) 7. Mitsubishi UFJ Trust and Banking Corporation (0.99%) 8. Custody Bank of Japan, Ltd. (Trust Account 9) (0.88%) 9. JP MORGAN CHASE BANK 385632(0.87%) 10. .BNYMSANVASAGENT/CLIENTSLUXUCITS NONTREATY 1(0.72%)
4. Mitsubishi Corporation	1. The Master Trust Bank of Japan, Ltd. (Trust Account) (8.23%) 2. Custody Bank of Japan, Ltd. (Trust Account) (5.79%) 3. BNYM AS AGT/CLTS NON TREATY JASDEC (5.32%) 4. Meiji Yasuda Life Insurance Company(4.38%) 5. Tokio Marine & Nichido Fire Insurance Co., Ltd.(3.88%) 6. The Master Trust Bank of Japan, Ltd. (Mitsubishi Heavy Industries, Ltd. Retirement Benefit Trust Account)(2.18%) 7. Custody Bank of Japan, Ltd. (Trust Account 5) (1.82%) 8. JP MORGAN CHASE BANK 385781 (1.31%) 9. Custody Bank of Japan, Ltd. (Trust Account 9) (1.29%) 10.STATE STREET BANK WEST CLIENT-TREATY 505234 (1.27%)
5. Le Wen Investment Co., Ltd.	1. Wei Tai Investment Co., Ltd. (40.32%) 2. Wavin Investment Co., Ltd. (30.63%) 3. Fan-Terh Investment Co., Ltd.(18.90%) 4. Li-Lien Chen Yen (3.39%) 5. Pei-Yu Yen (3.37%) 6 Hsiang-Nan Yen (3.37%) 7. Wei KungChi(0.02%)

Corporate Governance Report

Table Two: The Major Shareholders of the Major Shareholders of the Institutional Shareholders in

Table One

Table One	Table One
April 25, 2021
Name of the Corporation	Major Shareholders of the Corporation
1. Xian Wei Investment Co., Ltd.	1. Tai Yuen Textile Co., Ltd. (90.6%) 2. Diamond Hosiery& Thread Co.,Ltd.(9.4%)
2. Yen Tjing Ling Industrial Development Foundation	The Foundation is funded 100% by Mr. Yen, Ching-Ling and Ms. Wu, Shuen-Wen.
3. British Virgin Islands Hoffman Brother Investment Company	The information is not available due to the limitations of local practices.
4. British Virgin Islands Evans Corporation	The information is not available due to the limitations of local practices.
5. Caymans Islands West Bridge Investment Company	The information is not available due to the limitations of local practices.
6. Li Yuan Investment Co., Ltd.	1. Vivian Wu Industry and Commerce ECCC Foundation (99.126%) 2. Diamond Hosiery & Thread Co., Ltd. (0.869%) 3. Fan-Terh Investment Co., Ltd. (0.001%) 4. Wei Tai Investment Co., Ltd. (0.001%) 5. Le Wen Investment Co., Ltd. (0.001%) 6. Vincent Investment Co., Ltd. (0.001%) 7. Wavin Investment Co.,Ltd.(0.001%)
7. Yong shun Investment Corporation	1. Vivian Wu Industry and Commerce ECCC Foundation (99.083%) 2. Diamond Hosiery & Thread Co., Ltd. (0.912%) 3. Fan-Terh Investment Co., Ltd. (0.001%) 4. Wei Tai Investment Co., Ltd. (0.001%) 5. Le Wen Investment Co., Ltd. (0.001%) 6. Vincent Investment Co., Ltd. (0.001%) 7. Wavin Investment Co.,Ltd.(0.001%)
8. Diamond Hosiery & Thread Co., Ltd.	1. British Virgin Islands Wanda Company (72.51%) 2. Tai Yuen Textile Co., Ltd. (21.97%) 3. Xian Wei Investment Co., Ltd. (5.09%) 4. Vivian Wu Industry and Commerce ECCC Foundation (0.1684%) 5. Le Wen Investment Co., Ltd. (0.13%) 6. Wavin Investment Co., Ltd. (0.13%) 7. Li-Lien Chen Yen (0.0002%) 8. Pei-Yu Yen (0.0002%) 9. Hsiang-Nan Yen(0.0002%)
9. Li Peng Investment Co., Ltd.	1. Vivian Wu Industry and Commerce ECCC Foundation (98.993%) 2. Diamond Hosiery & Thread Co., Ltd. (1.002%) 3. Fan-Terh Investment Co., Ltd. (0.001%) 4. Wei Tai Investment Co., Ltd. (0.001%) 5. Le Wen Investment Co., Ltd. (0.001%) 6. Vincent Investment Co., Ltd. (0.001%) 7. Wavin Investment Co.,Ltd.(0.001%)
10. Yuan Wei Investment Co., Ltd.	1. Vivian Wu Industry and Commerce ECCC Foundation (91.513%) 2. Diamond Hosiery & Thread Co., Ltd. (8.477%) 3. Fan-Terh Investment Co., Ltd. (0.002%) 4. Wei Tai Investment Co., Ltd. (0.002%) 5. Le Wen Investment Co., Ltd. (0.002%) 6. Vincent Investment Co., Ltd. (0.002%) 7. Wavin Investment Co.,Ltd.(0.002%)
11. China Motors Corporation	1. Tai Yuen Textile Co., Ltd. (25.19%) 2. Mitsubishi Motors Corporation(14.00%)

Corporate Governance Report

Name of the Corporation	Major Shareholders of the Corporation
	3. Yulon Motor Co., Ltd. (8.05%) 4. Diamond Hosiery & Thread Co., Ltd. (6.76%) 5. Mitsubishi Corporation (4.80%) 6. Nan Shan Life Insurance Co., Ltd.(2.70%) 7. Taiwan Life Insurance Co., Ltd.(1.18%) 8. Fan-Terh Investment Co., Ltd. (0.87%) 9. Yung Han Investment Co., Ltd.(0.72%) 10. New Labor Pension Fund(0.65%)
12. Chia Yuan Investment Co.,Ltd.	No information is available.
13. Fan-Terh Investment Co., Ltd.	1. Wei Tai Investment Co., Ltd. (33.36%) 2. Wavin Investment Co., Ltd. (33.30%) 3. Le Wen Investment Co., Ltd. (33.30%) 4. Chuan-Lin Zhu (0.02%) 5. Wei KungChi(0.02%)
14. JP Morgan Chase Bank in its Capacity as Master Custodian for PGIA Progress International EquityIndex	The information is not available due to the limitations of local practices.
15. JP Morgan Chase Bank in its Capacity as Master Custodian for Vanguard EmergingStock Market Index Fund	The information is not available due to the limitations of local practices.
16. Nissan Motor Co., Ltd.	1. Renault S.A.(43.40%) 2. The Master Trust Bank of Japan Ltd.(Shintaku-guchi)(3.72%) 3. The Chase Manhattan Bank, N.A. London Special Account No. 1(3.38%) 4. Custody Bank of Japan(Shintaku-guchi)(1.38%) 5. Nippon Life Insurance(1.28%) 6. Custody Bank of Japan(Shintaku-guchi 5)(1.17%) 7. Custody Bank of Japan(Shintaku-guchi 9)(1.12%) 8. State Street Bank West Client-Treaty 505234(0.78%) 9. JP Morgan Chase Bank 385781(0.76%) 10.Moxleyand Co LLC(0.63%)
17.The Master Trust Bank of Japan, Ltd. (Trust Account)	1. Mitsubishi UFJ Trust and Banking Corporation (46.50%) 2. Nippon Life Insurance Company (33.50%) 3. Meiji Yasuda Life Insurance Company (10.00%) 4. The Norinchukin Trust & BankingCo.,Ltd.(10.00%)
18. Mitsubishi Heavy Industries, Ltd.	1. The Master Trust Bank of Japan, Ltd. (Trust Account)(7.00%) 2. Custody Bank of Japan, Ltd. (Trust Account)(4.80%) 3. Meiji Yasuda Life Insurance Company(2.30%) 4. Custody Bank of Japan, Ltd. (Trust Account 5)(2.00%) 5. The Nomura Trust and Banking Co., Ltd. (Retirement Benefit Trust Account for The Bank of Mitsubishi UFJ, Ltd.)(1.90%) 6. Custody Bank of Japan, Ltd. (Trust Account 7)(1.70%) 7. State Street Bank West Client - Treaty 505234(1.50%) 8. Mitsubishi Heavy Industries Employee Shareholding Association(1.50%) 9.J p Morgan Chase Bank 385151(1.30%) 10. Government Of Norway(1.20%)
19. Custody Bank of Japan, Ltd. (Trust Account)	1. Sumitomo Mitsui Trust Holdings, Inc.(33.30%) 2. Mizuho Financial Group, Inc (27.00%) 3. Resona Bank, Limited (16.70%) 4. Dai-ichi Life Insurance Company, Limited (8.00%) 5. Asahi Mutual Life Insurance Company (5.00%) 6. Meiji Yasuda Life Insurance Company (4.50%) 7. Japan Post Life Insurance Co.,Ltd. (3.50%) 8. JTC Holdings Fukoku Mutual Life Insurance Company (2.00%)

Corporate Governance Report

Name of the Corporation	Major Shareholders of the Corporation
20. Custody Bank of Japan, Ltd. (Trust Account 5)	The information is not available due to the limitations of local practices.
21. MUFG Bank,Ltd.	Mitsubishi UFJ Financial Group,Inc.(100%)
22. Custody Bank of Japan, Ltd. (Trust Account 9)	The information is not available due to the limitations of local practices.
23.JP MORGAN CHASE BANK 385632	The information is not available due to the limitations of localpractices.
24.BNYMSANV AS AGENT/CLIENTS LUX UCITS NON TREATY 1	The information is not available due to the limitations of local practices.
25.BNYM AS AGT/CLTS NON TREATY JASDEC	The information is not available due to the limitations of local practices.
26. Meiji Yasuda Life Insurance Company	The information is not available due to the limitations of localpractices.
27.Tokio Marine & Nichido Fire Insurance Co.	1. The Master Trust Bank of Japan, Ltd. Trust Account (10.20%) 2. Custody Bank of Japan, Ltd. Trust Account (7.10%) 3. Meiji Yasuda Life Insurance Company (2.30%) 4. Custody Bank of Japan, Ltd. (Trust Account 5) (2.10%) 5. Barclays Securities Japan Ltd. (1.80%) 6. Japan Custody Bank, Ltd. (Trust Account 7) (1.70%) 7. SSBTC CLIENT OMNIBUS ACCOUNT (1.60%) 8. JPMorgan Chase Bank 385781 (1.60%) 9. Japan Custody Bank, Ltd. (Trust Account 9) (1.60%) 10. The Master Trust Bank of Japan, Ltd. Retirement Benefit Trust Account,Mitsubishi Corporation Account(1.60%)
28. The Master Trust Bank of Japan, Ltd. (Mitsubishi Heavy Industries, Ltd. Account and Retirement Benefit Trust Account)	The information is not available due to the limitations of local practices.
29. JP MORGAN CHASE BANK 385781	The information is not available due to the limitations of localpractices.
30. STATE STREET BANK WEST CLIENT - TREATY 505234	The information is not available due to the limitations of local practices.
31. Wavin Investment Co., Ltd.	1. Li-Lien Chen Yen (28.83%) 2. Pei-Yu Yen (28.73%) 3. Hsiang-Nan Yen (28.73%) 4. Le Wen Investment Co., Ltd. (10.40%) 5. Jing Yu Investment Co., Ltd. (3.11%) 6. Fan-Terh Investment Co., Ltd. (0.10%) 7. Wei Tai Investment Co.,Ltd.(0.10%)
32.Wei Tai Investment Co., Ltd.	1. Li-Lien Chen Yen (33.32%) 2. Pei-Yu Yen (33.29%) 3. Hsiang-Nan Yen (33.29%) 4. Fan-Terh Investment Co., Ltd. (0.04%) 5. Wavin Investment Co., Ltd.(0.02%) 6. Le Wen Investment Co., Ltd. (0.02%) 7. JingYu Investment Co.,Ltd.(0.02%)

Corporate Governance Report

(II) Directors’ Professional Expertise and Independence Status

March 31, 2021

Criteria Name	Have more than five years of work experience and the following professional qualifications	Have more than five years of work experience and the following professional qualifications	Have more than five years of work experience and the following professional qualifications	The	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	state of independence compliance (note)	Number of other public offering companie s, which the Director concurren tly serving as independ ent Director within
	Business and Legal Affairs Lecturers or above in public or private colleges and universities from the finance, accounting or relevant departments required for corporate operations.	Judges, prosecutors, lawyers, accountants or other professional and technical personnel required for corporate operations who require to pass the national examination and hold with relevant certifications	Work experience required for business, legal affairs, finance, accounting or corporate operations.	1	2	3	4	5	6	7	8	9	10	11	12
Li-Lien Chen Yen	-	-			-	-		-	-	-	-				-	-
Toshinaga Kato	-	-			-			-	-	-	-				-	-
Hsin-I Lin	-	-			-			-	-	-	-				-	1
Chen-Hsiang Yao	-	-			-			-	-	-	-				-	-
Daisuke Okamoto	-	-			-			-	-	-	-				-	-
Chao-Wen Chen	-	-		-	-			-	-	-	-				-	-
Tai-Ming Chen					-			-	-	-	-	-			-	3
Hsin-Cheng Tseng	-	-		-	-				-	-	-				-	-
Chi-Ching Chen	-	-														1
Wei-Ching Lue	-	-														1
Yun-Hua Yang			-													1

Note: If the Directors meet any of the followings two years before being elected or during the term of office,

Corporate Governance Report

please mark “  “in the corresponding boxes.

Not an employee of the Corporation or any of its affiliates.
Not a Director or Supervisor of the Company or an affiliated business of the Company. (However, this restriction does not apply in case of the person is an independent Director of the Company, its parent company, subsidiaries or subsidiaries of the same parent company established in accordance with this law or local regulations.)
Not holding personally, held by the person’s spouse, minor children or held under others’ names in an aggregate amount of one percent or above of the total number of issued shares of the Company or ranked as one of top ten natural person shareholders.
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under (1) or any of the persons in (2) and (3).
Not a Director, Supervisor or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a Director or Supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act (provided, independent Directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent are excluded).
Not a Director, Supervisor or employee of another company where a majority of the Company’s Director seats or voting shares and those of any other company are controlled by the same person (provided, independent Directors appointed in accordance with the Act or the laws and regulations of the local country by and concurrently serving as such at the Company and its parent or subsidiary or a subsidiary of the same parent are excluded).
Not a Director (or governor), Supervisor or employee of that other company or institution where the chairperson, president, or person holding an equivalent position of the Company and a person in any of those positions at another company or institution are the same person or are spouses (provided, independent Directors appointed in accordance with the Act or the laws and regulations of the local country by and concurrently serving as such at the Company and its parent or subsidiary or a subsidiary of the same parent are excluded).
Not a Director, Supervisor, manager or a shareholder holding more than 5% of shares of a specific company or institution with financial or business activities with the Company (provided, if the certain company or institutions holds 20 percent or more and no more than 50 percent of the total number of issued shares of the Company; and independent Directors appointed in accordance with the Act or the laws and regulations of the local country by and concurrently serving as such at the Company and its parent or subsidiary or a subsidiary of the same parent are excluded).
Not a professional individual who or an owner, partner, Director, Supervisor or officer of a sole proprietorship, partnership, company or institution that provides auditing services to the Company or any affiliate of the Company or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative Remuneration exceeding NT$500,000, or a spouse thereof; This restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
Not a spouse, or relative within the second degree of the kinship with other Directors.
Not been a person of any conditions defined in Article 30 of the Company Law.
Not a government, corporate, or its representative elected under the definition of Article 27 of the Company Law.

Corporate Governance Report

(III) Information on the Company’s President, Executive Vice Presidents, Vice Presidents, and the Supervisors of all the Company’s divisions and branch units

Title	Nationality	Name	Gender	Elected date	Current shareholding	Current shareholding	Spouse and children of minor age’s Current shareholding	Spouse and children of minor age’s Current shareholding	Shareholding in other’s name	Shareholding in other’s name
					Number of shares	%	Number of shares	%	Number of shares	%
President	R.O.C.	Chao-Wen Chen	Male	2015.06.01	-	-	-	-	-	-
Executive Vice President	R.O.C.	Hsin-Cheng Tseng	Male	2019.04.01	-	-	-	-	-	-
Executive Vice President	R.O.C.	Chen Shing Ju	Male	2020.01.01	4,621	-	8,000	-	-	-

Corporate Governance Report

		March 31, 2021	March 31, 2021	March 31, 2021	March 31, 2021
Principal work experience and academic qualifications	Position(s) held concurrently in the Company and / or in any other company	Managers who are spouses or relatives within the second degree of kinship			Remark
		Title	Name	Relationship
Executives Program of Graduate School of Business Administration, National Chengchi University Department of Chemical Engineering, Chung Yuan Christian University Executive Vice President, China-Motor Corporation Vice President, China-Motor Corporation General Manager, Production Technology Division, China-Motor Corporation	Director and President, China-Motor Corporation Chairperson, Kian Shen Corporation Chairperson, ROC-Spicer Ltd. Chairperson, Fortune Motors Co., Ltd. Director, Shung Ye Motors Co., Ltd. Director, Shye Shyang Mechanical Industrial Co., Ltd. Director, South East (Fujian) Motors Co., Ltd. Director, Fu Lun Motors Co., Ltd. President, Taiwan Transportation Vehicle Manufacturers Association For other details, please refer to “Summary of affiliated companies”	-	-	-	-
MBA, National Chengchi University Department of Nuclear Engineering and Science, National Tsing Hua University Vice President, China-Motor Corporation General Manager, Service Division, China-Motor Corporation	Director and Executive Vice President, China-Motor Corporation Director, Kian Shen Corporation Director, ROC-Spicer Ltd. Director, Fortune Motors Co., Ltd. Director, Shung Ye Motors Co., Ltd. Director, Tokio Marine Newa Insurance Co., Ltd. Director, Fu Lun Motors Co., Ltd. Director, South East (Fujian) Motors Co., Ltd. Director, Mercedes-Benz Hong Kong Ltd. Director, Fujian Benz Automotive Co., Ltd. Director, Aprec (Cayman) Industrial Co., Ltd. Director, Alance (Samoa) Machines Co., Ltd. Director, Fujian Spicer Drivetrain System Co., Ltd. Director, Tai-ya Investment (HK) Co., Ltd. Director, Shenyang Spicer Driveshaft Co., Ltd. Director, Fuzhou Aprec Mechanical and Electrical Co., Ltd. Director, Fuzhou Xinrui Electromechanical Co., Ltd. Director, Fuzhou Xinrui Mechanical and Electrical Co., Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-
Department of Mechanical Engineering, National Feng Chia University Vice President, China-Motor Corporation General Manager, Product Engineering Division, China-Motor Corporation General Manager, Product Project and Testing Division, China-Motor Corporation Project General Manager, Product Technology Division, China-Motor Corporation	Director, Uni-Calsonic Corp. Director, Yueki Industrial Co., Ltd. Director, Advancision Corporation Director, YES Energy Service Co., Ltd. Director, Fujian Huaqing Engine Industry Ltd. Director, Fuzhou Xinrui Mechanical and Electrical Co., Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-

Corporate Governance Report

Title	Nationality	Name	Gender	Elected date	Current shareholding	Current shareholding	Spouse and children of minor age’s current shareholding	Spouse and children of minor age’s current shareholding	Shareholding in other’s name	Shareholding in other’s name
					Number of shares	%	Number of shares	%	Number of shares	%
Vice President	R.O.C.	Ching-Wu Chien	Male	2014.01.01	-	-	-	-	-	-
Special Assistant (Vice President)	R.O.C.	Hsing-Ju Huang	Male	2016.12.19	-	-	-	-	-	-
Vice President	R.O.C.	Chiung-Chih Tseng	Male	2017.01.01	18,566	-	-	-	-	-
Vice President	R.O.C.	Chin-Huang Chang	Male	2020.01.01	-	-	-	-	-	-

Corporate Governance Report

Principal work experience and academic qualifications	Position(s) held concurrently in the Company and / or in any other company	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Remark
		Title	Name	Relationship
Executives Program of Graduate School of Business Administration, National Chengchi University General Manager, Sales Division, China-Motor Corporation General Manager, Marketing Division, China-Motor Corporation	Supervisor, Fortune Motors Co., Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-
Bachelor of Science in Transportation / Industrial Design, Art Center College of Design California, USA Graphic / Industrial Design Pasadena City College California, USA Consultant, Styling Division, China-Motor Corporation Senior Manager, 2nd Design Department, Hua-Chuang Automobile Information Technical Center Manager, Design Centre, Yulon Nissan Motor Co., Ltd. Head of Styling Division, Yulon Motor Co., Ltd.	None.	-	-	-	-
Department of Mechanical Engineering, Tamkang University General Manager, Procurement Division, China-Motor Corporation	None.	-	-	-	-
Department of Mechanical Engineering, National Cheng Kung University Vice President, appointed to South East Motor by China-Motor Corporation Project General Manager, Development Division, China-Motor Corporation	Director, Kian Shen Corporation Director, Uni-Calsonic Corp. Director, ROC-Spicer Ltd. Director, Fuzhou Fushiang Motor Co., Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-

Corporate Governance Report

Title	Nationality	Name	Gender	Elected date	Current shareholding	Current shareholding	Spouse and children of minor age’s current shareholding	Spouse and children of minor age’s current shareholding	Shareholding in other’s name	Shareholding in other’s name
					Number of shares	%	Number of shares	%	Number of shares	%
Vice President	R.O.C.	Cheng-Chang Huang	Male	2020.01.01	10,657	-	-	-	-	-
Vice President	R.O.C.	Ching-Yun Liao	Male	2020.01.01	29	-	-	-	-	-
Vice President	R.O.C.	Tsung-Yu Chen	Male	2020.01.01	580	-	-	-	-	-
Accounting and Finance Supervisor	R.O.C.	Chun-Ching Liao	Female	2020.01.01	-	-	-	-	-	-
Corporate Governance Officer	R.O.C.	Ling-Jun Lin	Female	2019.02.01	8,653	-	260	-	-	-

Corporate Governance Report

Principal work experience and academic qualifications	Position(s) held concurrently in the Company and / or in any other company	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Remark
		Title	Name	Relationship
Department of Industrial Engineering and Engineering Management, National Tsing Hua University General Manager, Information Division, China-Motor Corporation Project General Manager, Information Department, China-Motor Corporation	Supervisor, Xin Mi Co., Ltd. Supervisor, Fuzhou Xin Mi Electric Co., Ltd. Supervisor, Fuzhou Xinrui Mechanical and Electrical Co., Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-
Graduate School, Department of Mechanical Engineering, National Cheng Kung University Department of Mechanical Engineering, National Cheng Kung University General Manager, Product Project Division, China-Motor Corporation Project General Manager, Product Engineering Department, China-Motor Corporation	Director, Taiway Industry Co., Ltd.	-	-	-	-
MBA, University of Texas, USA General Manager, Sales Division, China-Motor Corporation Project General Manager, Sales Division, China-Motor Corporation	Director, Fortune Motors Co., Ltd. Supervisor, Shung Ye Motors Co., Ltd. Director, CARPLUS Auto Leasing Corporation For other details, please refer to “Summary of affiliated companies”	-	-	-	-
Department of Accounting, Tamkang University Project General Manager, Sales Division, China-Motor Corporation	Supervisor, Kian Shen Corporation Supervisor, Uni-Calsonic Corp. Supervisor, Fu Lun Motors Co., Ltd. Supervisor, Aprec (Cayman) Industrial Co., Ltd. For other details, please refer to “Summary of affiliated companies”	-	-	-	-
Master of Commerce, National Taiwan University Project Manager, Business Management Group, China Motor Corporation Project Manager, Planning & Management Group, China Motor Corporation General Manager, President Office, China Motor Corporation	None.	-	-	-	-

Corporate Governance Report

(IV) Remuneration paid during the most recent fiscal year to Directors, Independent

Directors, the President, and Executive Vice Presidents

1. Remuneration Paid to Directors and Independent Directors

Title	Name	Director’s Remuneration	Director’s Remuneration	Director’s Remuneration	Director’s Remuneration	Director’s Remuneration	Director’s Remuneration	Director’s Remuneration	Director’s Remuneration	Total Remuneration (A+B+C+D) Over Net Profit After Tax in Percentage %	Total Remuneration (A+B+C+D) Over Net Profit After Tax in Percentage %
		(A) Wages		(B) Pensions		(C) Remuneration		(D) Allowances
		From the Company	From All Consolidated Entities	From the Company	From All Consolidated Entities	From the Company	From All Consolidated Entities	From the Company	From All Consolidate d Entities	From the Company	From All Consolidated Entities
Chairperson	Li-Lien Chen Yen	14,516	15,024	-	-	17,130 (Note 2)	17,489 (Note 2)	4,960 (Note 3)	5,632 (Note 3)	1.12	1.16
Director	Toshinaga Kato
Director	Hsin-I Lin
Director	Kuo-Rong Chen (Note 1)
Director	Chen-Hsiang Yao (Note 1)
Director	Daisuke Okamoto
Director	Chao-Wen Chen
Director	Tai-Ming Chen
Director	Hsin-Cheng Tseng
Independent Director	Chi-Ching Chen
Independent Director	Wei-Ching Lue
Independent Director	Yun-Hua Yang
1. Please specify the payment policy, system, standards, and structure of the remuneration of independent Directors, as well as the relevance between the factors, such as their responsibilities, risks, input time, and the amount of paid remuneration：For the remuneration paid to the independent Directors, a comprehensive consideration is taken, including their responsibilities, risks, and input time as a Director and a member in any functional committee, while referring to the independent Directors’ remuneration in other enterprises with governmental stakes and other listed companies within the Group and then the remunerations decided pursuant to the regulations related to the Company Act, with approvals from the Board of Directors. 2. In addition to the aforementioned disclosures, any remuneration received in the most recent year by the Directors of the Company for rendering services (such as serving as a non-employed consultant) to any company listed in the Financial Report: None.

Note: 1. The representative of Tai Yuen Textile Co., Ltd. was Director, Kuo-Rong Chen, and changed to Chen-Hsiang Yao from February 26, 2021.
Director’s remuneration from profit distribution is paid to the Corporation.
- (1) Chairperson, Li-Lien Chen Yen and Director, Tai-Ming Chen, are representatives of Yulon Motor Co., Ltd.
- (2) Director, Hsin-I Lin, Chen-Hsiang Yao and Chao-Wen Chen, are representatives of Tai Yuen Textile Co., Ltd.
- (3) Director, Hsin-Cheng Tseng, is the representative of Le Wen Investment Co., Ltd.
- (4) Director, Toshinaga Kato, is the representative of Mitsubishi Motors Corporation.
- (5) Director, Daisuke Okamoto, is the representative of Mitsubishi Corporation.
This fee includes the costs associated with the Company’s car.

Corporate Governance Report

Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand
Part-time employees received related remuneration								Ratio of A, B, C, D, E, F and G to net profit after tax (%)		Received remuneration from other non-subsidiary invested businesses or the Parent Company
Wages, Bonuses and Allowances(E)		Pensions (F)		Employee Remuneration (G)
From the Company	From All Consolidated Entities	From the Company	From All Consolidated Entities	From the Company		From All Consolidated Entities		From the Company	From All Consolidated Entities
				Cash Value	Stock Value	Cash Value	Stock Value
34,296	34,296	323	323	148	-	148	-	2.18	2.22	21,457

Corporate Governance Report

Class interval of remuneration to each Director of the Company	Director’s Name	Director’s Name	Director’s Name	Director’s Name
	Total of the first four remuneration items(A+B+C+D)		Total of the first seven remuneration items(A+B+C+D+E+F+G)
	From the Company	From All Consolidated Entities	From the Company	Parent company and all reinvested businesses (note)
Below $1,000,000	Tai-Ming Chen Hsin-I Lin Kuo-Rong Chen Chao-Wen Chen Hsin-Cheng Tseng Toshinaga Kato Daisuke Okamoto Chi-Ching Chen Wei-Ching Lue Yun-Hua Yang	Tai-Ming Chen Hsin-I Lin Kuo-Rong Chen Chao-Wen Chen Hsin-Cheng Tseng Toshinaga Kato Daisuke Okamoto Chi-Ching Chen Yun-Hua Yang	Tai-Ming Chen Kuo-Rong Chen Toshinaga Kato Daisuke Okamoto Chi-Ching Chen Wei-Ching Lue Yun-Hua Yang	Tai-Ming Chen Toshinaga Kato Daisuke Okamoto Chi-Ching Chen Yun-Hua Yang
$1,000,000 (inclusive) ~ $2,000,000 (exclusive)	Mitsubishi Motors Mitsubishi Corporation Le Wen Investment Co., Ltd.	Mitsubishi Motors Mitsubishi Corporation Le Wen Investment Co., Ltd. Wei-Ching Lue	Mitsubishi Motors Mitsubishi Corporation Le Wen Investment Co., Ltd.	Mitsubishi Motors Mitsubishi Corporation Le Wen Investment Co., Ltd. Kuo-Rong Chen Wei-Ching Lue
$2,000,000 (inclusive) ~ $3,500,000 (exclusive)
$3,500,000 (inclusive) ~ $5,000,000 (exclusive)	Tai-Yuen Textile Co., Ltd.	Tai-Yuen Textile Co., Ltd.	Hsin-I Lin,Tai-Yuen Textile Co., Ltd.	Tai-Yuen Textile Co., Ltd.
$5,000,000 (inclusive) ~ $10,000,000 (exclusive)	Yulon Motor Co., Ltd.	Yulon Motor Co., Ltd.	Yulon Motor Co., Ltd. Hsin-Cheng Tseng	Yulon Motor Co., Ltd. Hsin-I Lin Hsin-ChengTseng
$10,000,000 (inclusive) ~ $15,000,000 (exclusive)
$15,000,000 (inclusive) ~ $30,000,000 (exclusive)	Li-Lien Chen Yen	Li-Lien Chen Yen	Li-Lien Chen Yen Chao-WenChen	Chao-Wen Chen
$30,000,000 (inclusive) ~ $50,000,000 (exclusive)				Li-Lien Chen Yen
$50,000,000 (inclusive) ~ $100,000,000 (exclusive)
$100,000,000 and up
Total	11 seats	11 seats	11 seats	11 seats

Note: If the Directors received remuneration from other non-subsidiary invested businesses, they shall be

disclosed in this column.

Corporate Governance Report

2. Remuneration Paid to the President and Executive Vice Presidents

Unit: NTD$ Thousand

Title	Name	Wages	Wages	Pensions	Pensions	Bonuses and Allowances	Bonuses and Allowances	Bonuses and Allowances	Employee Remuneration	Employee Remuneration	Employee Remuneration	Employee Remuneration	Employee Remuneration	Total Remuneration (A+B+C+D) Over Net Profit After Tax in Percentage %	Total Remuneration (A+B+C+D) Over Net Profit After Tax in Percentage %	Received remuneration from other non-subsidiary invested businesses or the Parent Company
		From the Company	From All Consolida ted Entities	From the Company	From All Consolida ted Entities	From the Company (Note)	From All Consolida ted Entities		From the Company		From All Consolidated Entities			From the Company	From All Consoli dated Entities
									Cash Value	Stock Value	Cash Value	Stock Value
President	Chao- Wen Chen	7,764	7,764	519	519	28,418	28,418		208	-	208	-		1.13	1.13	1,328
Executive Vice President	Hsin- Cheng Tseng
Executive Vice President	Chen Shing Ju
Note: This fee includes the company’s vehicle distribution fee and fuel subsidy, but does not include the relevant remuneration to the driver, which is NT$1,544,000.
Class interval of remuneration to each President and Executive Vice President of the Company								Name of the President and					Executive Vice Presidents
								From the Company					Parent company and all reinvested businesses (note)
Below $1,000,000
$1,000,000 (inclusive) ~ $2,000,000 (exclusive)
$2,000,000 (inclusive) ~ $3,500,000 (exclusive)
$3,500,000 (inclusive) ~ $5,000,000 (exclusive)
$5,000,000 (inclusive) ~ $10,000,000 (exclusive)								Hsin-Cheng Tseng, Chen Shing Ju					Hsin-Cheng Tseng, Chen ShingJu
$10,000,000 (inclusive) ~ $15,000,000 (exclusive)
$15,000,000 (inclusive) ~ $30,000,000 (exclusive)								Chao-Wen Chen					Chao-Wen Chen
$30,000,000 (inclusive) ~ $50,000,000 (exclusive)
$50,000,000 (inclusive) ~ $100,000,000 (exclusive)
$100,000,000 and up
Total								3 members					3 members

Note: If the President and Executive Vice Presidents received remuneration from other non-subsidiary

invested businesses, they shall be disclosed in this column.

Corporate Governance Report

The ratio analysis of the remuneration paid to the Company’s Directors, the President and Executive Vice Presidents to the net profit after tax during the two most recent fiscal years.
(1) The ratio analysis of the total remuneration paid over the net profit after tax

Unit: NTD$ Thousand

			Unit: NTD$ Thousand	Unit: NTD$ Thousand
Payee	Year 2020		Year 2019
	Total amount of Remuneration	The ratio of remuneration to the individual net profit(%)	Total amount of Remuneration	The ratio of remuneration to the individual net profit(%) (Note)
Director	36,606	1.12	18,890	-
The President and Executive Vice Presidents	36,909	1.13	32,349	-

Note: As there is an after-tax net loss of NT$2.466 billion in 2019, no ratio is calculated additionally.

(2) The ratio analysis of the total remuneration paid over the net profit after tax

in the financial statements of the Company

Unit: NTD$ Thousand

Payee	Year 2020	Year 2020	Year 2019	Year 2019
	Total amount of Remuneration	The ratio of remuneration to the individual net profit(%)	Total amount of Remuneration	The ratio of remuneration to the individual net profit(%) (Note)
Director	38,145	1.16	20,173	-
The President and Executive Vice Presidents	36,909	1.13	32,349	-

Note: As there is an after-tax net loss of NT$2.466 billion in 2019, no ratio is calculated additionally.

(3) Description
A. The increase in total compensation for Directors, the President and Executive Vice President compared to FY2019 is due to the non-payment of Directors' compensation and bonus in FY2019 due to loss; the fixed compensation for Directors is based on the value of their participation in and contribution to the Company's operations, which is paid at the going rate in the industry and is not specifically related to the Company's profit or loss after tax.
B. The correlation among the remuneration payment policy, standards and structure, remuneration establishing procedures, and management efficacy and risks in the future:
- (1) The remunerations paid to Directors and managers are decided by the Remuneration Committee, which reviews the annual and long term performance objectives of the Company’s Directors and

Corporate Governance Report

managers, as well as policy, standards and structure on regular basis. The achievement of these performance objectives by Directors and managers are reviewed periodically. With the consideration of remuneration amounts, payment methods, and future operating risks, the proposal is presented to the Board of Directors before implementation; the remunerations distributed from earnings require the approval of the Shareholders’ meeting.

(2) Pursuant to Article 28 of the Articles of Incorporation, the Directors of the Company may receive compensations, for which the Board of Directors are authorized to decide based on the peers’ standards.
(3) Article 27 of the Articles of Incorporation also specifies that in case that there is profit in a fiscal year, the remunerations to employees and Directors shall be provided; provided the remunerations to employees shall not be less than 0.1%, while remunerations to Directors shall not be more than 0.5%. Independent Directors are not entitled to such distribution. The remunerations to Managers include salaries and bonuses. For salaries, the peers’ standard, title, level, education and career background, expertise and functions are referred to. For bonus, the “Guidelines of Issuing Annual Incentive Bonus and Employee Bonus” is pursuant to, for calculating the reasonable compensation based on the appraisal items in the Guidelines, namely achievement of objectives, profitability, operating effects, performance appraisals and contributions, among other things. The remuneration system to Directors and managers may be reviewed from time to time based on the actual operation and related laws and regulations.

Corporate Governance Report

(V) Names of the managers allocating employee remuneration and the state of allocations

	allocations	allocations	allocations	allocations	allocations	allocations
	March 31, 2021 Unit: NTD$Thousand
Title		Name	Amount of Stock Dividends	Amount of Cash Dividends	Total	The ratio of total amount to the net profit after tax (%)
Managers	President	Chao-Wen Chen	-	560	560	0.017
	Executive Vice President	Hsin-Cheng Tseng
	Executive Vice President	Chen Shing Ju
	Vice President	Ching-Wu Chien
	Vice President	Chiung-Chih Tseng
	Special Assistant (Vice President)	Hsing-Ju Huang
	Vice President	Cheng-Chang Huang
	Vice President	Ching-Yun Liao
	Vice President	Chin-HuangChang
	Vice President	Tsung-Yu Chen
	Accounting and Finance Supervisor	Chun-Ching Liao
	Corporate Governance Officer	Ling-Jun Lin

Corporate Governance Report

III. The state of the Company’s implementation of corporate governance

(I) The state of operations of the Board of Directors
(1) The Board of Directors’ Meeting convened seven times during the year 2020 and

up to March 31, 2021, and the attendance of Directors was as follows:

Title	Name of the institutional shareholder	Name of the Representative	Number of Actual Attendance	Number of Proxy Attendance	Ratio of Actual Attendance	Remark
Chairperson	Yulon Motor Co., Ltd.	Li-Lien Chen Yen	6	1	85.7
Director	Mitsubishi Motors Corporation	Toshinaga Kato	7	0	100
Director	Tai Yuen Textile Co., Ltd.	Hsin-I Lin	7	0	100
Director	Tai Yuen Textile Co., Ltd.	Kuo-Rong Chen	3	3	50	Term ended on February 25, 2021
		Chen-Hsiang Yao	1	0	100	From February 26, 2021, Chen-Hsiang Yao was appointed by Tai-Yuen Textile Co., Ltd. as a Director representative.
Director	Mitsubishi Corporation	Takayasu Yonekura	1	0	100	Term ended on April 29, 2020
		Daisuke Okamoto	6	0	100	From April 30, 2020, Daisuke Okamoto was appointed by Mitsubishi Motor Corporate as the representative of Director.
Director	Tai Yuen Textile Co., Ltd.	Chao-Wen Chen	7	0	100
Director	Yulon Motor Co., Ltd.	Tai-Ming Chen	6	1	85.7
Director	Le Wen Investment Co., Ltd.	Hsin-Cheng Tseng	7	0	100
Independent Director	-	Chi-Ching Chen	7	0	100
Independent Director	-	Wei-Ching Lue	7	0	100
Independent Director	-	Yun-Hua Yang	7	0	100
Other information to be documented: I. The operation of the board of Directors’ meetingshall state the date andperiod of the board meeting,the

Corporate Governance Report

content of the motion, the opinions of all independent Directors and the Company’s handling of the opinions of the independent Directors if any of the following circumstances apply:
(I) Matters listed in Article 14-3 of the Securities and Exchange Act: Since the Company established the Audit Committee, Article 14-5 of the Securities and Exchange Act is applicable and Article 14-3 of the Securities and Exchange Act is not applicable. Please refer to the description of “Operation of the Audit Committee” for relevant resolutions.
(II) Other than the foregoing, other resolutions of the Board of Directors that were opposed or qualified by the independent Directors and for which records or written statements are available: None.
II. The recusal of a Director from an interest motion should include the name of the Director, the content of the motion, the reason for the recusal, and the circumstances of the vote: The Directors of the Company uphold the principle of high self-discipline and do not vote on the motions listed in the board of Directors’ meeting if they have an interest that may be detrimental to the Company’s interests; with respect to the recusal of an independent Director’s remuneration, the Company has established internal procedures for the recusal of interest in 2017 and follows them accordingly.
III. Assessment of the current and most recent year’s goals for enhancing the functions of the Board of Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Company established an audit committee in 2016.
(2) The Board of Directors meetings were convened seven times in 2020 and up to

the end of March 2021, and the attendance of independent Directors was as

follows:

Actual Attendance; Proxy Attendance, Absence

Attendance of Independent Directors at each Board of Directors’ Meeting

Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:	Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:	Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:	Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:	Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:	Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:	Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:	Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: The Companyestablished an audit committee in 2016. (2) The Board of Directors meetings were convenedseven times in 2020 and up to the end of March 2021, and the attendance of independent Directors was as follows:
Actual Attendance; Proxy Attendance, Absence Attendance of Independent Directors at each Board of Directors’ Meeting
Year			2020				2021
Meeting Date	03.26	05.14	07.02	08.06	11.12	12.17	03.23
Chi-Ching Chen	◎	◎	◎	◎	◎	◎	◎
Wei-Ching Lue	◎	◎	◎	◎	◎	◎	◎
Yun-Hua Yang	◎	◎	◎	◎	◎	◎	◎

(3) The state of implementing Board of Directors evaluations

Evaluation Cycle	Evaluation Period	Scope of Evaluation	Evaluation Method	Content of Evaluation
To be executed once every 3 years	2020.01.01 ~ 2020.12.31	Evaluation of Board of Directors’ Performance	Engage an external professional organization (Taiwan Institute of Ethical Business and Forensics), experts	1. Professional skills: organization and structure, selection and continuing education 2. Decision-making effectiveness: business involvement and decision quality improvement 3. Internal control compliance: internal control 4. Sustainable Development: corporate social responsibility
To be executed once every year	2020.01.01 ~ 2020.12.31	Evaluation of Board of Directors’ Performance	Internal self-assessment by the Board of Directors	1. Level of participation in the operation of the Company 2. Improvement on the decision making quality of theBoard

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				3. Composition and structure of the Board 4. Director election and continuing training 5. Internal Control
To be executed once every year	2020.01.01 ~ 2020.12.31	Evaluation of Individual Director’s Performance	Self-assessment by the Board member	1. Understanding in the Company and duties 2. Alignment of the goals and mission of the Company; 3. Level of participation in the operation of the Company 4. Management of internal relationship and communication; 5. Directors’ professionalism and continuing training 6.InternalControl

(II) Operation of the audit committee
(1) There are three members in the Company’s Audit Committee.
(2) Tenure of office: the Company established the Audit Committee in 2016, and the tenure of the 2nd intake office is from July 1, 2019 to June 30, 2022. In 2020 and up to end of March, 2021, five meetings were convened and the attendance of

each member is as follows:

Title	Name	Number of Actual Attendance	Number of Proxy Attendance	Ratio of Actual Attendance
Convener	Chi-Ching Chen	5	0	100
Committee Member	Wei-Ching Lue	5	0	100
Committee Member	Yun-Hua Yang	5	0	100
Other information to be documented: I. The operation of the audit committee shall state the date and period of the board meeting, the content of the motion, the opinions of the audit committee and the Company’s handling of the opinions of the audit committee if any of the following circumstances apply: (I) Matters listed in Article 14-5 of the Securities and Exchange Act: Please refer to point (5). (II) In addition to the foregoing, other resolutions not approved by the Audit Committee and approved by two-thirds of all Directors: None. II. The circumstances under which an independent Director disqualifies himself/herself from the implementation of an interest motion shall state the name of the independent Director, the content of the motion, the reasons for the disqualification and the circumstances under which he/she participated in the vote: None. III. Communication between independent Directors and internal auditors and accountants (e.g., matters, methods and results of communication regarding the Company’s financial and business conditions): Please refer to (6) “Description of communication between the Company’s Independent Directors and internal auditors and accountants” for details.

(3) The purpose of the Company’s Audit Committee is to assist the Board of

Directors in fulfilling its role of overseeing the quality and integrity of the

Corporate Governance Report

Company in performing accounting, auditing, financial reporting processes and financial controls related to the Company. The Audit Committee’s meeting was convened four times in 2020 and discussed the following matters:

Financial statement audit and accounting policy and procedures
Internal control system and related policy and procedures
Material asset or derivative transactions
Major loans, endorsements or guarantees
Offering or issuance of securities
Derivatives and cash investments
Compliance
Whether managers and Directors are involved in related party transactions and prone to conflict of interest
Grievance report
Fraud prevention plan and investigation report
Information security
Corporate risk management
Background, independence and performance of attesting accountants
Appointment, dismissal or remuneration of attesting accountants
Appointment and dismissal of finance, accounting or internal audit managers
Fulfillment of Audit Committee duties
(4) China Motor Corporation’s Audit Committee has been empowered under its foundation principles to conduct appropriate review and investigation as needed to fulfill its duties. The committee may also contact internal auditors, financial statement auditors and employees directly to serve the above purpose. The Audit Committee is also empowered to engage lawyers, CPAs or other consultants to assist its duties, and may monitor performance of the above external parties. For a complete context of Audit Committee foundation rules, please visit China Motor Corporation’s website.

(5) Operation of the Audit Committee

Board of Directors	Motion	Matters listed in Article 14-5 of the Securities and Exchange Act
The 20th term fifth time	1. Proposal for CMC’s FY 2019 financial statements.	V
	2. Proposal for CMC’s profit distribution of year 2019.	V
	3. Proposal to submit the “Declaration on the Internal ControlSystem” for FY 2019.	V

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Board of Directors	Motion	Matters listed in Article 14-5 of the Securities and Exchange Act
2020.03.26	4. The evaluation of the independence and suitability of the CPAsfor Year 2020.	V
	5. Amendments to partial articles of the Company’s “Articles of Incorporation.”	V
	6. Amendments to partial articles of the Company’s “Rules of Procedure of the Board of Directors” and the “Internal Audit Implementation Policies for Procedure of theBoard of Directors.”	V
	7. Amendments to partial articles of the Company’s “Audit Committee’s Articles of Association” and “Internal Audit Implementation Policies for Procedure of theAuditCommittee.”	V
	8. Amendments to partial articles of the Company’s “Rules for Financial Statement Preparation Process Management” and “Internal Audit Implementation Policies for Financial Statement Preparation ProcessManagement.”	V
	9. Amendments to partial articles of the “ParliamentaryRulesforShareholders’ Meetings.”	V
	10. Amendments to partial articles of the “Corporate GovernanceBest PracticePrinciples.”
	11. Amendments to partial articles of the “Managerial Operational Procedures to Prevent Insider Trading” and the “Internal Audit Implementation Policies for the Managerial Operational ProcedurestoPrevent Insider Trading.”	V
	12. Revising China Motor Corporation’s audit operationplan foryear 2020.	V
	Results of the Audit Committee Resolution (March 26, 2020): Passed unanimously by audit committee members.
	The Company’s handling of the Audit Committee’s opinion: Passed unanimously by all present Directors.
The 20th term Sixth 2020.05.14	There were no matters discussed by the Audit Committee.
The 20th term Eighth 2020.08.06	1. Amendments to partial articles of the Company’s “AuditCommittee’sArticles of Association.”	V
	2. Amendment to the partial articles of the “Internal Control System of the Stock Affair Unit” and the “Internal Audit Implementation Policies for the Service Unit.”	V
	Results of the Audit Committee Resolution (August 6, 2020): Passed unanimously by audit committee members.

Corporate Governance Report

Board of Directors	Motion	Matters listed in Article 14-5 of the Securities and Exchange Act
	The Company’s handling of the Audit Committee’s opinion: Passed unanimously by all present Directors.
The 20th term Tenth 2020.12.17	1. Draw up China Motor Corporation’s audit operationplan foryear 2021.	V
	2. Propose to continue the granting of NTD 600 million loan to oursubsidiary,HualingMotors.	V
	3. Remuneration to China Motor Corporation’s financialstatement auditorsforyear 2021~2023	V
	4. Amendments to partial articles of the “Rules for Electionof Directors.”
	Results of the Audit Committee Resolution (December 17, 2020): Passed unanimously by audit committee members.
	The Company’s handling of the Audit Committee’s opinion: Passed unanimously by all present Directors.
The 20th term Eleventh 2021.03.23	1. Proposal for CMC’s FY 2020 financial statements.	V
	2. Proposal for CMC’s profit distribution of year 2020.	V
	3. Proposal to submit the “Declaration on the Internal ControlSystem” for FY 2020.	V
	4. Analysis report on the performance of Audit Committee
	Results of the Audit Committee Resolution (March 23, 2021): Passed unanimously by audit committee members.
	The Company’s handling of the Audit Committee’s opinion: Passed unanimously by all present Directors.

(6) Description of communication between the Company’s Independent Directors and internal auditors and accountants
A. Communication method between the Independent Directors of the Company and the internal auditors and accountants
- a. The independent Directors and the accountant meet regularly every year, and the accountant communicates with the independent Directors regarding the review of the Company’s financial condition and the implementation of internal control, including the update of relevant laws and regulations and the explanation of contents that have a more significant impact on profit or loss.

Corporate Governance Report

b. The head of internal audit meets regularly with the independent Directors to explain the status of the Company’s internal audit execution and internal control operations.

B. Summary of communication state in 2020 and up to March 31, 2021

Date	Key points of communication between Independent Directors and accountants	Key points of communication between Independent Directors and Head of internal audit
2020.03.26	 Accountants reported on the 2019 key audit matters, key accounting policies, key accounting estimation and key matters or transactions.  The accountant communicated with the meeting participants on the issues raised.	 December, 2019 ~ February, 2020 Audit Highlights Report  The audit supervisor communicated with the meeting participants on the issues raised.
2020.05.14	 None.	 March ~ April 2020 Audit Highlights Report  The audit supervisor communicated with the meeting participants on the issues raised.
2020.08.06	 None.	 May ~ June 2020 Audit Highlights Report  The audit supervisor communicated with the meeting participants on the issues raised.
2020.12.17	 The accountant reported on the key audit matters and other issues communicated in 2020.  The accountant communicated with the meeting participants on the issues raised.	 July ~ November 2020 Audit Highlights Report  The audit supervisor communicated with the meeting participants on the issues raised.
2021.03.23	 Accountants reported on the 2020 key audit matters, key accounting policies, key accounting forecast and key matters or transactions, accounting adjustments.  The accountant communicated with the meeting participants on the issues raised.	 December, 2020 ~ February, 2021 Audit Highlights Report  The audit supervisor communicated with the meeting participants on the issues raised.

(7) The state of implementing Board of Director evaluation

Corporate Governance Report

Evaluation Cycle	Evaluation Period	Scope of Evaluation	Evaluation Method	Content of Evaluation
To be executed once every year	2020.01.01 ~ 2020.12.31	Evaluation of Audit Committee’s performance	Audit Committee Internal Self-Assessment	1. Level of participation in the operation of the Company 2. Understanding of the Audit Committee’s duties 3. Improvement on the decision making quality of the Audit Committee 4. Composition and election of Audit Committee members 5.InternalControl

Corporate Governance Report

(III) The state of the Company’s implementation of corporate governance, any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance

Items of Evaluation			The state of implementation	Any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Description Summary
I. Has the Company established and disclosed the Code of Corporate Governance Practices in accordance with the “Code of Corporate Governance Practices for Listed Companies”?	ˇ		The Company has established a Code of Corporate Governance Practices, which is disclosed on the Market Observation Post System and the Company’s website.	The Company has established and disclosed the Company’s Code of Corporate Governance Practices in accordance with the “Code of Corporate Governance Practices for Listed Companies” and has also established a comprehensive internal control system, therefore, the Company has operated and enforced the relevant regulations in accordance with the spirit of the “Code of Corporate Governance Practices for Listed Companies”
II. Shareholding structure and shareholders’ equity of the Company (I) Does the Company have internal procedures to handle shareholders’ suggestions, questions, disputes and litigation matters, and implement them in accordance with the procedures? (II) Does the Company have a list of the major shareholders and ultimate controllers of the major shareholders who actually control the Company?	ˇ ˇ		(I) For shareholders’ suggestions, questions, disputes and litigation matters, in addition to having a spokesperson to explain to the public, shareholders can go to the Company’s website at http://www.china-motor.com.tw to respond to their opinions, and the responsible unit will respond appropriately depending on the issue. In addition, there is a dedicated unit under the Finance Division that can handle and respond to the situation at any time. (II) The Company keeps track of the list of major shareholders and ultimate controllers of major shareholders who effectively control the Company, and reports its shareholdings and the creation and dissolution of shares in accordance with the provisions of the Regulations Governing the Reporting of Information by Public Companies.	(I) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (II) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Corporate Governance Report

Items of Evaluation			The state of implementation	Any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Description Summary
(III) Has the Company established and implemented a risk control and firewall mechanism with its affiliates? (IV) Does the Company have internal regulations that prohibit insiders from trading marketable securities using information that is not publicly available?	ˇ ˇ		(III) The Company implements risk control and firewall mechanisms with its affiliates in accordance with the “Regulations Governing Related Party Transactions.” (IV) The Company has established the “Procedures for Prevention of Insider Trading” to prohibit insiders from trading marketable securities using undisclosed information in the market.	(III) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (IV) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”
III. Composition and Responsibilities of the Board of Directors (I) Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly? (II) Other than the Remuneration Committee and the Audit Committee which are required by law, does the Company plan to set up other Board committees? (III) Has the Company established methodology for evaluating the performance of its Board of Directors,	ˇ ˇ	ˇ	(I) Based on the Company’s “Corporate Governance Best Practice Principles,” the “Policy of Board Member Diversification” was established in December 2016 for the composition of the Board of Directors, published on the official website and enforced. To meet the diversification requirements for the Directors, please refer to the “Policy of Board Member Diversification” Section for the related measuring indicators and implementation. (II) The Company has established the Audit Committee and Remuneration Committee, as required by laws. (III) The Company has approved the “Guidelines for Evaluating Performance of the Board of Directors” in December 2015. The internal evaluation to the performance of the Board of Directors is at least	(I) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (II) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (III) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed

Corporate Governance Report

Items of Evaluation			The state of implementation	Any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Description Summary
on an annual basis, reported the results of performance to the Board of Directors, and use the results as reference for Directors’ remuneration and renewal? (IV) Does the Company regularly evaluate its attesting accountants’	ˇ		conduct once per year. The evaluation is conducted through questionnaire, including “Operation of the Board of Directors” and “Participation of Directors,” in the way that Directors evaluate operations of the Board of Directors and themselves for the participation. The outcomes of the aforementioned questionnaire will be the reference for selecting or nominating Directors. Every year once all the questionnaires are recovered, the Company analyzes the questionnaires as mentioned previously, and presents the outcomes and the improvement suggestions to the Board of Directors. The evaluations items for the performance of the Board of Directors including:○ 1 the participations to the Company’s operation;○ 2 enhancement of the quality of the Board of Directors’ decision-making; composition and○ 3 structure of the Board of Directors;○ 4 selection and continuing educations of Directors;○ 5 and internal controls. Items that are covered in the measurements of the evaluations against the performance of the Directors shall at least include the followings:○ 1 understanding of the Company and awareness to the functions of Directors;○ 2 participations to the Company’s operation;○ 3 expertise and continuing educations of Directors;○ 4 and internal controls.The Company has completed the evaluations to the performances of the Board of Directors and Directors in January 2021. The outcomes of the 2020 evaluation showed an outstanding overall operations of the Board of Director. Among these, the selection and continuing educations of Directors and internal controls were the best. (IV) Explanation on the assessment to the attesting accountants’ independence: 1. The Company assesses the independence ofthe attesting accountants ontheregular	Companies” (IV) Comply with the “Corporate Governance Best-Practice

Corporate Governance Report

Items of Evaluation			The state of implementation	Any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Description Summary
independence?			basis (once a year), pursuant to the “Corporate Governance Best Practice Principles.” 2. By referring the “Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China,” No. 10, “Integrity, Objectivity and Independence,” the assessment form is made, and the Declaration of Independence is obtained from the accounting firm. 3. There are 15 evaluation criteria, including the interest relationship of the accountants and the Company, whether or not the accountants have double identities, whether or not the accountants defend the Company, their familiarity with the Company’s personnel, are they threatened by the Company, and their tenure of practices. 4. With the assessment by the Audit Committee and the Board of Directors in March 2021, the attesting accountants engaged by the Company conform to the independence.	Principles for TWSE/TPEx Listed Companies”
IV. Does the TWSE/TPEx Listed Company appoint competent and appropriate corporate governance personnel and corporate governance officer to be in charge of corporate governance affairs (including but not limited to furnishing information required for business execution by Directors, assisting Directors’ compliance of law, handling matters related to board meetings and shareholders’ meetings according to law, and recording minutes of board	ˇ		For the corporate governance, the Company has set the Head of Corporate Governance under the President Office, with the resolution of the Board of Directors. The Head of Corporate Governance is appointed to a department manager (who is a manager, with three years or more experience of management in legal, finance, or agenda area for a listed company). The dedicated units are pointed to President Office and Finance Department, to take charge of the following corporate governance related affairs: 1. Registration or changes to registration of the Company, including changes of Directors /supervisors and business in operations. 2. Shareholders’ meeting-related affairs, including the proposals to shareholders’ meeting approved by the Board of Directors; meeting notice of shareholders’ meeting; convention of meetings, preparation of meeting minutes and uploading. 3. Board of Directors related affairs, including the internal approvals for the proposals to the Board of Directors,	Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Corporate Governance Report

Items of Evaluation			The state of implementation	Any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Description Summary
meetings and shareholders’ meetings)?			notice of Board meeting; convention of meetings, preparation of meeting minutes and required announcement and submitting the documents such as meeting minutes. 4. Regular provision of required information for Directors to fulfill their duties, including quarterly financial reports, overview of the Company’s operations, resolutions of the Audit Committee; and resolutions of the Remuneration Committee. 5. Implementation of corporate governance, including conducting continuing education of corporate governance to Directors and related executives of the Company, establishing the goals of corporate governance promotion, and periodical tracking. 6. Actively improving the ranking of corporate governance for the Company, the objective is to be within the top 5% of all listed companies. The implementation in 2020 is describe as the following. For the continuing education of the head of corporate governance, please refer to the official website: 1. Planning and arrangement of Directors’ ongoing education in 2020. 2. Purchase of Director liability insurance in 2020. 3. To implement the corporate governance, the performance evaluation to the Board of Directors and Directors was conducted in January 2020 and reported to the Board of Directors in March. 4. The periodical investor conferences were conducted to present the operating performance in 2020. 5. The AGM was convened in June 2020. The registration for the date of AGM, the meeting notices, agenda manuals and meeting minutes were prepared within the period required by laws, pursuant to laws. 6. Directors are notified and given relevant information at least 7 days in advance prior to a board meeting. Minutes are prepared and disseminated to individual Directors within 20 days after each meeting, and are being kept as important files.

Corporate Governance Report

Items of Evaluation			The state of implementation	Any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Description Summary
			7. Regularly reviewing the objectives and implementation of corporate governance, through the CSR Committee and presenting to the Board of Directors every six months. 8. The corporate governance has been ranked among the top 5% of all listed companies for five consecutive years. 9. The total number of hours of training for the Head of Corporate Governance for the year 2020 was 12.
V. Has the Company established a means of communicating with its Stakeholders: none (including but not limited to shareholders, employees, customers, suppliers, etc.) or created a Stakeholders Section on its Company website? Does the Company respond to stakeholders’ questions on corporate responsibilities?	ˇ		The Company has set the “Stakeholders’” Section at the official website, with detailed contact information, for stakeholders (customers, general public, and suppliers) to reflect their opinions and replying to them properly.	Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”
VI. Has the Company appointed a professional shareholders’ affairs agency for its Shareholders’ Meetings?		ˇ	The Company handles the shareholders’ affairs internally.	To grasp the lists of major shareholders controlling the Company de facto and the ultimate controllers of these shareholders timely, the Company handles the shareholders affairs internally.
VII. Information Disclosure (I) Has the Company established a corporate website to disclose information regarding its financials, business and corporate governance status? (II) Does the Company use other information disclosure channels (e.g., maintaining an	ˇ ˇ		(I) The Company’s corporate website discloses information regarding its financials, business and corporate governance status. (II) The Company has established an English-language website, designating staff to handle information collection and disclosure, appointing	(I) Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (II) Comply with the “Corporate Governance Best-Practice

Corporate Governance Report

Items of Evaluation			The state of implementation	Any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Description Summary
English-language website, designating staff to handle information collection and disclosure, appointing spokespersons, webcasting investors conference etc.)? (III) Does the Company announce and report the annual financial statements within two months after the end of the fiscal year and announce and report the first, second, and third quarter financial statements as well as the operating status of each month before the prescribed deadline?		ˇ	spokespersons, and uploads the information related to the investor conference to the corporate website. (III) The Company reports financial reports and the monthly operating status pursuant to the “List of Matters Required to Be Handled by Issuers of Listed Securities.”	Principles for TWSE/TPEx Listed Companies” (III) The Company abides with the “List of Matters Required to Be Handled by Issuers of Listed Securities.”
VIII. Has the Company disclosed other information to facilitate a better understanding of its corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, Directors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for Directors)?	ˇ		Please refer to the note.	Comply with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Corporate Governance Report

Items of Evaluation	The state of implementation	The state of implementation	The state of implementation
	Yes	No	Description Summary
IX. Please specify the measures adopted by the Company to improve the items listed in the corporate governance review result from Taiwan Stock Exchange’s Corporate Governance Center and the improvement plans for items yet to be improved: For the outcomes of the sixth (2019) corporate governance evaluation released in April 2020, the Company has been ranked among the top 5% of all listed companies for a consecutive five years. For the indicators that the Company has missed, namely 4.11 and 4.14, the improvements were made in 2020, and described as the following: The Company has completed the external verification of annual greenhouse gas emissions for 2018 and 2019; and will report to the Board of Directors the status of communication with each stakeholder and disclose the actualcontent andfrequency of implementation.
Note: Key information helpful to understand the operation of corporate governance (I) Employee interests: the Company protects employees’ interests pursuant to the Labor Standard Act, with the employee manual established to specify the interests they are entitled to. The affairs related to employees’ interests are published on the intranet and Company bulletin boards from time to time. (II) Care to employees: the measures to care for employees include canteen, dorms, fitness center, swimming pool, library, health care center. Also carnivals, and subsidies to employee trips are provided from time to time, with regular physical checks. (III) Investor relations: the Company regularly published the information concerned by investors, such as future development and financial positions, on the official website. At least two investor conferences are called every year to explain the current operating status and outlooks. Dedicated personnel are set to reply the questions from investors and explain the Company’s future development through conference calls from time to time. (IV) Supplier relations: the Company has Procurement Department in place. The Department takes charge of supplies from suppliers, as well as the improvement of the qualities of parts supplied by the suppliers from time to time. The supplier convention is convened annually to explain the annual plans of the Company and the outlooks. (V) Rights of stakeholders: the Company manages the rights and obligations to stakeholders pursuant to laws and regulations, and a dedicate unit is appoint to deal with stakeholders. (VI) Continuing Education Taken by the Directors: the Company regularly provided the information regarding continuing educations to Directors (independent Directors included), and encourage them to take such educations. Also, for any enforcement of new laws, regulations, or accounting system, external instructors are invited to the Company, to provide sessions to Directors (independent Directors included). All these are disclosed on the MOPS. (VII) The implementation of risk management policies and measure standards of risks: the Company has Audit Office in place, to conduct routine audits of possible risks and present their implementation in the regular internal operating meetings. (VIII) Implementation of client policies (respecting consumers’ needs): The Company has 0800 hotlines and webpage to respond to consumers’ needs and feedbacks. Distributors are also required to respond timely to the clients. (IX) Insurance bought for Directors and supervisors by the Company: to enhance the corporate governance, the Company purchases liability insurances for Directors (independent Directors included)every year,and discloses such on the MOPS.

(IV) Supplier relations: the Company has Procurement Department in place. The Department takes charge of supplies from suppliers, as well as the improvement of the qualities of parts supplied by the suppliers from time to time. The supplier convention is convened annually to explain the annual plans of the Company and the outlooks.

Corporate Governance Report

Diversity Policy for Board Members

The Company’s board of Directors approved a policy on diversity of board members on December 19, 2016, the main elements of which are as follows.

The Company will consider the diversity of board members from various aspects, including education, experience, gender, independence, professional experience and different nationalities, when selecting and reviewing Directors and Independent Directors, and will evaluate whether they can perform their duties and bring maximum benefits to the Company after joining the Board.
In order for the Company’s board members to meet the diversity requirements, the followings are required for measurable diversity indicators:
(1) Independence: The composition of the Directors and the Independent Directors in the Board of the Directors should remain balanced to ensure that the Board of Directors possesses high independence. Hence, the Board of Directors of the Company should include at least three Independent Directors.
(2) Gender: The Company is committed to maintaining a working environment free of gender discrimination. Based on the same considerations, the Company’s Board of Directors includes at least one female Director.
(3) Nationality: For the Company’s diversified business portfolio, having one (including more than one) board member with a different nationality supports understanding the knowledge and insights of business operations in other countries. Hence, the Company’s Board of Directors includes at least one foreign Director.
(4) Abilities and experiences: Based on the consideration that Directors with financial, academic, and management backgrounds are eligible to provide the Company with professional management advice, the Company’s Board of Directors should include at least one Director or Independent Director with professional background (such as accounting ).

3. Report of the implementation status:

Diversity indicators Director’s Name	Range of age (29 years old and below/30~35 years old/ 51 years old and up)	Independence (Director/Independent Director)	Gender	Nationality	Abilities and experiences
Li-Lien Chen	51 and up	Director	Female	R.O.C.	Operations

Corporate Governance Report

Diversity indicators Director’s Name	Range of age (29 years old and below/30~35 years old/ 51 years old and up)	Independence (Director/Independent Director)	Gender	Nationality	Abilities and experiences
Yen					management
Hsin-I Lin	51 and up	Director	Male	R.O.C.	Operations management
Chen-Hsiang Yao	51 and up	Director	Male	R.O.C.	Operations management
Toshinaga Kato	51 and up	Director	Male	Japan	International Business Management
Tai-Ming Chen	51 and up	Director	Male	R.O.C.	Laws
Daisuke Okamoto	30~50 years old	Director	Male	Japan	International Business Management
Chao-Wen Chen	51 and up	Director	Male	R.O.C.	Operations management
Hsin-Cheng Tseng	51 and up	Director	Male	R.O.C.	Operations management
Chi-Ching Chen	51 and up	Independent Director	Male	R.O.C.	Operations management
Wei-Ching Lue	51 and up	Independent Director	Female	R.O.C.	Public finance and business
Yun-Hua Yang	51 and up	Independent Director	Male	R.O.C.	Laws

Note: The Company has 11 directors (including 3 independent directors)

Corporate Governance Report

(IV) The Remuneration Committee’s composition and operating status.
the Remuneration Committee member’s information

Identity (note 1)	Condition Name	Have more than five years of work experience and the following professional qualifications	Have more than five years of work experience and the following professional qualifications	Have more than five years of work experience and the following professional qualifications	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	Status of compliance of independence (note 2)	The number of compani es’ Remune ration Commit tee member ship (s) that is (are) concurre ntly held
		A Lecturer or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	Judges, prosecutors, lawyers, accountants or other professional and technical personnel required for corporate operations who require to pass the national examination and hold with relevant certifications	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	Chi- Ching Chen	-	-												2
Independent Director	Wei- Ching Lue	-	-												1
Independent Director	Yun-Hua Yang			-											1

Note 1: The identity being a Director, Independent Director or others.

Note 2: Status of compliance of independence.

(1) Not an employee of the Company or any of its affiliates.
(2) Not a Director or Supervisor of the Company or any of its affiliates (provided that such restriction is not applicable to Independent Directors appointed in accordance with the Act or the laws and regulations of the local jurisdiction by, and concurrently serving as such at, the Company and its parent, subsidiaries or subsidiaries of the same parent).
(3) Not a natural-person shareholder who, together with the person’s spouse, minor children, or under others’ name, holds in an aggregate of 1% or more of the number of the total issued shares of the Company or ranks top 10 in shareholdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a manager under subparagraph (1) or any of the persons under subparagraph (2) and (3).
(5) Not a Director, Supervisor, or employee of a legal person shareholder that directly holds 5% or more of the number of the total issued shares of the Company, or that ranks top 5 in shareholdings, or that designates its representative to serve as a Director or Supervisor of the Company pursuant to Article 27, paragraph 1 or 2 of the Company Act (provided that such restriction is not applicable to Independent Directors appointed in accordance with the Act or the laws and regulations of the local jurisdiction by, and concurrently serving as such at, the Company and its parent, subsidiaries or subsidiaries of the same parent).
(6) Not a Director, Supervisor, or employee of the other company where the majority of such company’s Director seats or voting shares are controlled by the same person (provided that such

Corporate Governance Report

restriction is not applicable to Independent Directors appointed in accordance with the Act or the laws and regulations of the local jurisdiction by, and concurrently serving as such at, the Company and its parent, subsidiaries, or subsidiaries of the same parent).

(7) Not a Director (or Governor), Supervisor or employee of the other company or institution where the Chairman, President, or person holding an equivalent position in such company or institution are the same person or are spouses (provided that such restriction is not applicable to Independent Directors appointed in accordance with the Act or the laws and regulations of the local jurisdiction by, and concurrently serving as such at, the Company and its parent, subsidiaries or subsidiaries of the same parent).
(8) Not a Director, Supervisor, manager or a shareholder holding more than 5% of shares of a certain company or institution which holds financial or business relationship with the Company (provided that if such certain company or institution holds 20% or more and no more than 50% of the number of total issued shares of the Company, and its Independent Director is appointed in accordance with the Act or the laws and regulations of the local jurisdiction by, and concurrently serving as such at, the Company and its parent, subsidiaries or subsidiaries of the same parent).
(9) Not a professional, sole proprietorship, partnership, or owner, partner, Director (governor), supervisor, manager of a company or institution or such person’s spouse that provides auditing services or over the past two years derives accumulated revenue nor more than NT$ 500,000 through commercial, legal, financial, accounting or related services to the Company or its affiliates. This restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) No such matters defined in Article 30 of the Company Law have occurred.
The information of operation of the Remuneration Committee.
(1) 3 Remuneration Committee Members are appointed
(2) tenor: From 1 July 2019 to 30 June 2022. The most recent annual Remuneration Committee has been held 3 times (A), and the attendances of

the Committee Members are as follows:

Title	Name	Attendance (B)	Number of Proxy Attendance	Ratio of Actual Attendance (B/A)	Remark
Convener	Chi-Ching Chen	3	0	100%	The duties of the Remuneration Committee are stated in description (3)
Committee Member	Wei-Ching Lue	3	0	100%
Committee Member	Yun-Hua Yang	3	0	100%
Other information to be documented: I. If the Board of Directors declines to adopt or modify the recommendation of the Remuneration Committee, it should specify the date of the meeting, session, content of the motion, resolution of the Board of Directors, and the Company’s response to the Remuneration Committee’s opinion (if the Remuneration passed by the Board of Directors exceeds the recommendation of the Remuneration Committee, the differences and the causes for such differences shall be specified): None. II. If any member objected or expressed reservations to the resolutions of the Remuneration Committee and such opinions are recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the responses to members’ opinions should be specified: None.

Corporate Governance Report

(3) The duties of the Remuneration Committee

The Remuneration Committee shall exercise the care of a prudent manager to fulfill the following duties, and offer recommendations for discussion by the Board of Directors:

A. Prescribe and periodically review the performance assessment and remuneration policy, system, standards, and structure of the Directors and the managers.
B. Periodically evaluate and prescribe the remuneration of the Directors and the managers.
(4) The most recent annual Remuneration Committee meeting date, resolution content, and the Company’s handling of the Remuneration Committee’s opinions are as follows:

Remuneration Committee	Motion	Resolutions	The Company’s handling of the Remuneration Committee’s opinions.
The 4th term The 3rd meeting 26 March 2020	1. Allocation of the Directors and the employee s’ remuneration for the fiscal year 2019. 2. Amendments of the Company’s “Remuneration Committee Charter” and part of the “Compensation Committee Charter and Internal Audit Implementation Rules.”	Passed unanimously by the Committee Members.	Proposed by the Board of Directors and passed unanimously by all attending members.
The 4th term The 4th meeting 2020.12.17	The calendar plan of the Remuneration Committee meetings in the fiscal year 2021.	Passed unanimously by the Committee Members.	Report to the Board of Directors.
The 4th term The 5th meeting 23 March 2021.	Allocation of the Directors and the employee s’ remuneration for the fiscal year 2020	Passed unanimously by the Committee Members.	Proposed by the Board of Directors and passed unanimously by all attendingmembers.

(5) Others: none
The implementation status of the assessment of the Remuneration Committee.

Evaluation Cycle	Evaluation Period	Scope of Evaluation	Evaluation Method	Content of Evaluation
To be executed once every year	1 January 2020 ~ 31 December 2020.	Performance assessment of the Remuneration Committee.	Self-assessment of the Remuneration Committee.	1. Level of participation in the operation of the Company 2. Cognition of the duties of the Remuneration Committee. 3. Improve the decision quality of the Remuneration Committee. 4. The composition and election of the Remuneration Committee. 5. InternalControl

Corporate Governance Report

(V) The state of the Company’s performance of social responsibilities, any variance from the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance.

CMC has long been devoted to promoting corporate governance, developing environmental sustainability and supporting social welfare, etc. To improve the efficiency of its corporate social responsibility efforts, the Company approved the assembly of the “Corporate Social Responsibility Management Committee” (“CSR Management Committee”) in 2014 with the President serving as chief committee member and the President’s Office serving as the Executive Secretary. The Committee leads the teams of “Corporate Governance,” “Employee Care,” “Environmental Sustainability,” “Customer and Partner Relationship” and “Social Welfare.” Each team is led by a Vice President or higher position, and the President’s Office, General Administration Department, Yang Mei Factory and Procurement Department serve as the secretary respectively. Other departments of these teams, including Financial and Accounting Department, Management Information System Department, Audit Department, Hsin Chu Factory, Product Project Department, Electrical and Electronic Engineering Department, Product Engineering Department, Vehicle Testing Department, Production Technology Department, Production Management Department, Service Department, Sales Department, Electric Scooter Operation and Sales Department and Product Development Department, are responsible for promoting corporate social responsibility, editing the Company’s Corporate Social Responsibility Report, and periodically reporting implementation status to the Board of Directors.

Corporate Governance Report

==> picture [516 x 431] intentionally omitted <==

----- Start of picture text -----

CSR Head and executive secretary of
Management Committee the Committee
President, Chao-Wen Chen
Executive Secretary
President Office
Corporate Governance Employee Care Team Environmental Customer and Partner Social Welfare Team
Team Sustainability Team Relationship Team
Vice President of Planning & Management Gr. Vice President of Planning & Management Gr. Vice President of Production Gr. Executive Vice President of Sales Gr. Vice President of Planning & Management Gr.
President Office Administration General Yang Mei Plant Procurement Division President Office
Finance & Accounting Division Hsin Chu Plant Service Division General
Division General Sales Division Administration
Audit Division Administration Electric Scooter Sales Division
Management Division Division Sales Division
Information System Product Project Research and Electric Scooter Sales
Division Division Development Division Division
Electrical and
Electronic
Engineering Division
Product Engineering
Division
Vehicle Testing
Division
Production
Technology Division
Production Control
Division
Note: Representing the responsible
department
Related departments
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Corporate Governance Report

Items of Evaluation	The state of implementation	The state of implementation	The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” andreasons.
	Yes	No	Description Summary
I. Does the Company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies?	ˇ		The Company is mainly engaged in the manufacture and sales of finished cars and parts and does not engage in high-leverage nor high-risk investments. It also has functional committees (the Audit Committee and the Remuneration Committee) that address the guidelines which Directors and managers should abide by to examine and manage related risks and response strategies. Furthermore, each functional unit of the Company identifies detailed risks based on respective expertise and establishes related management policies to effectively reduce the Company’s operation risks which includes: 1 Operation risk management (1) Implement ethical management policies, (2) insure the Directors and management, (3) insure business interruption, (4) proactively collect changes in laws, policies and the market, and formulate countermeasures, and (5) implement corporate governance education and training to prevent the impact stemmed from amendments of laws. 2. Legal affairs and patent risk management (1) Employ professional legal personnel to review various contracts and provide internal legal advice, to handle legal disputes and litigation, and to assist in handling patents, trademarks and IP rights and other related affairs, (2) timely monitor and manage changes in laws and regulations through the system to strengthen legal compliance. 3. Financial risk management (1) Integrate the financial control mechanism and tax planning, (2) regularly hedge the foreign exchange rate risks, (3) prudently assess the market capital situation and bank interest rates, and (4) strategically evaluate the benefits of the reinvestment companies. 4. Environmental and climate risks management (1) Obtained the ISO 14001 environmental management system certification, (2) set various standard operating procedures of emergency response to withstand force majeure changes, (3) establish catastrophe prevention and warning mechanisms, and (4) promote green procurement and supply chain promotion. 5. Occupational safety and health risk management (1) Set up dedicated unit to plan and supervise the safety and health affairs, continuously improve the risks of personnel, equipment, and Environment. and (2) acquired certifications of OHSAS 18001 and CNS 15506 occupational safety and health risk management system.	Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”

Corporate Governance Report

Items of Evaluation	The state of implementation	The state of implementation	The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
			6. Information risk management (1) Establish confidential information protection management guidelines and implement confidential information protection, (2) establish information security manuals, (3) install endpoint protection system for vigorous monitoring, and (4) regularly train and disseminate the employees.
II. Does the Company have a dedicated (or ad-hoc) CSR organization with Board of Directors’ authorization to senior management, and report to the Board of Directors.	ˇ		1. CMC has long been devoted to promoting corporate governance, developing environmental sustainability and supporting social welfare. To improve the efficiency of its corporate social responsibility efforts, the Company approved the assembly of the “Corporate Social Responsibility Management Committee” (“CSR Management Committee”) in 2014 with the President serving as chief committee member and the President’s Office serving as the Executive Secretary. The CSR Committee leads the five teams of “Corporate Governance, Employee Care, Environmental Sustainability, Customer and Partner Relationship and Social Welfare.” Each team is led by a Vice President or higher position, and the President’s Office, General Administration Department, Yang Mei Factory and Procurement Department serve as respective secretaries to promote corporate social responsibility, edit the Company’s Corporate Social Responsibility Report, and report implementation status twice a year to the Board of Directors. 2. The Company establishes three-year goal every year. In 2020 the main project was “Synchronization with International Standards.” The relevant implementation status and achievements are as follows: A. Corporate Governance Team (1) The Company’s “Corporate Governance evaluation was ranked top 5% (the 1st class interval) among all listed companies for the 6th consecutive year and also top 10% (the 1st class interval) of non-financial and non-electronic companies with market capitalization of NTD 10 billion and up. (2) With reference to the Taiwan Intellectual Property Management System, the Company established the Company’s intellectual propertymanagementsystem formulatedand	Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”

Corporate Governance Report

Items of Evaluation	The state of implementation	The state of implementation	The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
			implemented by the Ministry of Economic Affairs. (3) Formulated the Company’s risk management policies and procedures (including risk management scope, organizational structure and its operating status). (4) Being in line with international standards, the Company had set up an English user interface in the reporting area on the English official website. B. Employee Care Team (1) The Company was awarded and acknowledged the “Sport-Loving Enterprise” by the Sports Administration, Ministry of Education and “Certification of Workplace Gender Equality Indicator” by the Department of Labor, Taipei City Government, becoming a Happy Enterprise that cases for employees in all aspects. (2) Established a COVID-19 pandemic prevention team and work with upstream and downstream cooperating companies and distributors to implement effective epidemic prevention policies. (3) This year’s human rights promotion measures implemented the “Bully-Free Workplace Program” in four aspects: policy announcement, education promotion, system establishment, and complaint handling. C. Environmental Sustainability Team (1) The Company’s Yangmei factory increased energy usage and promoted the popularization of green energy vehicles with “green production” and is awarded the Silver Prize at the 2nd “National Enterprise Environmental Protection Award.” (2) Formulated the environmental sustainability development strategy as “green production, green procurement, green product” (3) Responded to the “Earth Hour 60+” event for two consecutive years and invite HSBC and Shung Ye Taiwan’s exhibition centers and service stations to turn off lights for one hour with the world on 28 March. (4) The Company cooperated with suppliers to organize beach cleaning activities and environmental protection seminars. A total of 39 suppliers and 126 people had participated, and a total of 253 kg of marine debris were collected. (5) The Company’s Yangmei and Hsinchu factories completed the introduction of rainwater storage and recycle equipment for gardening and toilet flushing to improve the reuse of water resources. D. Client and Partner Relationship Team (1) Revised the selection procedure of high-performance manufacturers to stipulate that newly selectedmanufacturersmust obtain ISO

Corporate Governance Report

Items of Evaluation			The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
			14001 certification and to exclude those being punished by the environmental protection units or occupational safety and health units and those who have not passed ISO 14001 certification. (2) In October 2020, the Company organized the "CSR Orientation" course to assist suppliers in promoting CSR, with a total of 24 companies participating. (3) The Company guided its maintenance plants to conserve energy and reduce carbon emissions. Fortune Motor’s Hualien and Beitou plants have adopted a total of 96 items of LED green lighting appliances and water-saving equipment in their customer lounges and maintenance areas respectively. E. Social Welfare Team (1) The "Rural Repair Tour Service" had added four suppliers, including CPC (engine oil), NGK Taiwan (spark plugs), General Enterprise (oil filters), and Orange Electronics (TPMS), and the Company had also invited teachers and students from Taipei University of Science and Technology and Auto Mechanics Department, Chiayi Dong Wu Senior Industrial Home Economics Vocational High School, to participate in, expanding the influence of CSR through industry-academia cooperation. (2) The Company hosted total 6 traffic safety camps at Ching Shui Elementary School, Chao Men Elementary School, and Fortune Motors Shung Ye Branch to educate children the correct traffic safety knowledges. (3) The Company had designed 14 national tour routes throughout Taiwan and arranged friendly markets of individual farmers from the local areas for this year’s car ownership campaign. With a total of 3,301 participants, including distributors, car owners and citizens, all parties had jointly fostered the tourism industry, boosted local consumptions, and supported organic agriculture without pesticides and chemical fertilizers
III. Environmental Issues (I) Has the Company established a proper environmental management system according to its industrial characteristics?	ˇ		(I) The Company has established an environmental management system that complies with environmental laws and other requirements, the effective use of resources, pollution prevention and continuous improvement, corresponds to the Company’s production operations, and has obtained ISO14001 certification.	(I) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.”

Corporate Governance Report

Items of Evaluation			The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
(II) Is the Company committed to improving the utilization efficiency of various resources and using recycled materials with low impact on the environment? (III) Does the Company assess the potential risks and opportunities of climate change to the Company now and in the future, and take measures to respond to climate-related issues? (IV) Has the Company compiled statistics on greenhouse gas emissions, water consumption and total weight of waste for the past two years, and formulated policies for energy conservation and carbon reduction, greenhouse gas reduction, water use reduction or other waste management?	ˇ ˇ ˇ		(II) The Company has built a CMC energy management system to improve the efficiency of the use of resources and holds regular meetings to review the system to promote energy (resource) management and has obtained ISO50001 certification. (III) As the era of “Climate Emergency” approaches, the key to corporate sustainability lies in how to transform the climate crisis. CMC has been concerned about climate change issues and is actively responding to the impact of extreme weather on its business operations. In addition to the introduction of various environmental management projects, the Company also identifies the opportunities hidden in the risks, hoping to explore new faces and business opportunities. Please refer to the notes for the Company’s measures for climate related issues. (IV) To ensure that every environmental issue is systematically managed, the Company has introduced ISO 14001 environmental management system certification, regularly reviews the achievement of targets and environmental improvement projects, conducts annual internal audits and commissions BSI to conduct external audits, and holds environmental management review meetings to report and review various environmental performance. Specific measures for environmental sustainability are as follows: 1. Improve the efficiency of energy use and implement low carbon manufacturing. (1) With the Introduction of the “Phase III Intelligent Energy Management System,” the energy saving was 103,372 kWh/year, the average energy saving rate of Yangmei plant in the past three years reached 3.28%, and the carbon reduction benefit is about 486 tons/year. (2) Promote the upgrade of major equipment, introduce high efficiency air compressors, iced water hosts, etc. to reduce energy consumption. (3) Replace the factories’ mercury lighting lamps with energy-saving LED lamps (4) Control and examine the carbon and water footprints of	(II) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.” (III) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.” (IV) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.”

Corporate Governance Report

Items of Evaluation			The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
IV. Social Issues (I) Does the Company formulate management policies and procedures according to applicable laws and regulations and the	ˇ		products, and has obtained BSI certification in 2019 (5) Introduce the ISO14064-1 greenhouse gas inspection and management system, and since 2009, the Company has been voluntarily disclosing greenhouse gas emissions in the Environmental Protection Administration’s national greenhouse gas registration platform every year. 2. Water Pollution Prevention (1) As a major water user, the paint factory dismantled obsolete water-consuming equipment and systems and implemented a centralized spraying system to concentrate productions and reduce water and electricity consumption. (2) Enhanced the recycling of process water and promoted the recycling of process boiler steam condensate and coating plant UF wash water through the reverse osmosis equipment, effectively reduced total water consumption by approximately 26.6%. (3) The total water intake of Yangmei plant was 229,725 tons in 2020 and 235,827 tons in 2019, saving 2.6% of water consumption. 3. Waste Management (1) All types of wastes are reported online and entrusted to legal vendors in accordance with the regulations, and the rate of proper disposal is 100%. (2) Installed the waste solvent recycling system in the coating plant. The volume of waste solvent removed in 2020 was 103.95 tons, which is 57.5% less than that of 244.61 tons in 2017. (3) The Company is working to achieve the goal of circular economy by introducing recyclable plastic materials into the entire car lineup and increasing the recycling rate of product parts. (4) Reduced the amount of non-recyclable waste and increase the recycling rate from 61.93% as of the base year 2017 to 65.97%. (5) Implemented refuse sorting and promoted the waste reduction project, reducing waste by 20.5% compared to that of the base year 2017. (I) The Company complies with relevant labor laws and regulations and respects internationally recognized basic labor human rights principles. The management of the Company regularly reviews labor laws and regulations and readily examines whether the internal practices are complied with the laws and regulations and will	(I) Complied with the requirements of “Corporate Social Responsibility Best Practice

Corporate Governance Report

Items of Evaluation			The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
International Bill of Human Rights? (II) Has the Company established and implemented reasonable employee welfare programs (including remuneration, vacation and other benefits, etc.) and appropriately reflected operational performance or results in employee compensation?	ˇ ˇ		cooperate in amending the relevant practices if modifications are required. The Company has no differential treatment in employment policies. (II) The Company strives to create a happy workplace with a friendly environment and industry-leading strategies, hoping to not only retain talents with happiness, but also to take care of employees’ family lives through innovative practices. 1. Quality Work Environment (1) Staff cafeteria, coffee shops, convenience stores, etc. are available for employees to eat and drink healthily, and a complete sports and leisure center (with swimming pool, indoor basketball/badminton court, gymnasium, aerobatics classroom, etc.) is available for free use by employees and their families. 2. Happy and Diversified Vacation In addition to the leave provided under the Labor Standards Act, the Company provides special leave, company travel leave, a nine-day summer vacation and winter vacation (to coincide with the Spring Festival), a new student leave for those whose children are attending elementary school, and volunteer leave. 3. Thoughtful and Comprehensive Maternity Care Measures (1) The Company has an affiliated kindergarten and a family-friendly care center to solve the problem of childcare for employees’ children, so that employees can have no worries. (2) Starting from 2018, the Company provides a child care subsidy of $3,000 per year to employees whose children are under the age of 3 and do not meet the admission criteria for kindergarten classes and are enrolled in a child care service contracted by the Company. (3) Dependents (spouse and children) are also eligible for daily subsidy of hospitalization under group insurance. (4) The Company provides free newborn insurance service and offers a comprehensive nursing room space. (5) The Company offers scholarships and summer camps for employees’ children, and holds parent-child seminars from time to time. 4. Convenient and Preferential Living	Principles for TWSE/GTSM Listed Companies.” (II) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.”

Corporate Governance Report

Items of Evaluation			The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
(III) Does the Company provide a safe and healthy working environment for employees and implement regular safety and health education for employees? (IV) Does the Company	ˇ ˇ		Assistance (1) Organize family day and hiking activities every year, inviting employees and their family members to participate. (2) Provide staff dormitory with free internet access, free bedding change and parcel collection services. (3) Diversified transportation services including transportation cars, business cars, night and holiday car rentals discounts, and low-interest car loans for employees. (4) Provide legal counseling, psychological counseling contact, mail delivery and banking services, and health center outpatient services. 5. Descent Payroll System Including basic salary, bonus for at least 2 months of monthly payroll for 3 festivals (Spring Festival, Mid-Autumn Festival, and Dragon Boat Festival), and special year-end bonus according to the Company’s operational performance and personal evaluation. In addition, the employs enjoy birthday gift coupons, senior staff recognition and awards, and employee travel grants. (III) The Company established the “Safety and Health Office,” which not only conducts audits on work safety in each working environment, but also supervises the safety and health affairs of the whole company and holds regular workplace safety training. In addition, the Company conducts annual employee health examination with a frequency and items that are better than that required by law and performs health education and follow-up with outpatient physicians in response to the examination results. Related health promotion mechanisms include: (1) Case tracking management: To intervene according to the urgency of the improvement and conduct case tracking management by providing personal health education, individual medical counseling and referral treatment, as well as regular follow-up reviews of status every quarter. (2) The health center employs specialists who provide daily outpatient and medical counseling services. (3) Health promotion activities: weight loss classes, smoking cessation classes, physical fitness testing, blood donation activities and related preventive health activities, etc. (4) Hire visually impaired professional massage therapists to provide employees with stress relief massage services. (IV) The Company regularly conducts education and	(III) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.” (IV) Complied with

Corporate Governance Report

Items of Evaluation			The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
develop effective career development programs for employees? (V) Does the Company comply with relevant laws and regulations and international standards regarding customer health and safety, customer privacy, marketing and labeling of its products and services, and has established relevant policies and complaint procedures to protect consumer rights? (VI) Does the Company formulate a supplier management policy requiring suppliers to comply with relevant regulations on issues such as environmental protection, occupational safety and health or labor rights, and their implementation status? V. Does the Company	ˇ ˇ ˇ		training programs, including pre-employment classes and in-service training, and assigns appropriate employees to attend courses on job-related knowledge and skills. (V) Regarding the product advertisements, in addition to the principle of truthfulness and honesty in accordance with the actual vehicle as the main emphasis, all the appeals and methods of expression are in compliance with the laws and regulations stipulated by the Government authorities, and under the premise of complying with the laws and regulations, the relevant vehicle product data are labeled in the appropriate positions on the product to clearly inform consumers, and are also detailed in the car owner’s manual, so that consumers can fully and conveniently understand the specifications, performance, operation and precautions of the product. In order to provide better service to every CMC car owner, CMC has developed a comprehensive customer service management mechanism, and regularly conducts service improvement, information update and staff training for the customer services hotline, and also connects with the 0800 free service hotline of dealerships across the country to provide consumers with more diversified and comprehensive services and channels for consultation on their rights. (VI) The Company expects to lead the automotive industry chain manufacturers to be concerned about and exercise their social responsibilities and move towards sustainable development together, and thus has signed the “Fundamental Contracts” with suppliers and implemented CSR assessment and auditing of suppliers to ensure their compliance with the Company’s environmental and occupational safety and health policies and laws and regulations. In addition, the Company will include the “Integrity and Compliance Pledge” in the “ Fundamental Contracts” signed with suppliers and has the right to terminate and cancel the contract in case of dishonest behavior of the suppliers. The Company’s CSR report is composed in accordance	the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.” (V) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.” (VI) Complied with the requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.” Complied with the

Corporate Governance Report

Items of Evaluation	The state of implementation	The state of implementation	The state of implementation	Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons.
	Yes	No	Description Summary
refer to international reporting rules or guidelines to compile reports that disclose non-financial information of the Company, such as CSR report? Has the CSR report obtained a certificating third-party’s verification of statement of assurance?			with the GRI Standards core options and the AA1000 Accountability Principles (2008), covering information on CSR management principles, material topics and key issues, and project performance, etc. In addition, this Report has been reviewed by the heads of the relevant departments of the Company and the Chairman of the CSR Management Committee based on their professional knowledge and management experiences, and SGS Taiwan Ltd. has been commissioned to conduct a materiality review and assurance on the content and data in accordance with the core options of the GRI Guidelines. The Independent Assurance Opinion Statement has been annexed to the report.	requirements of “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”
VI. If the Company established its own CSR guidelines in accordance with the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies,” please describe the differences between its operation and the established guidelines: The Company has formulated its CSR guidelines in 2014 in accordance with the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies,” has established a comprehensive internal audit system and thus has been operating and executing related regulations accordingto the “Corporate Social ResponsibilityBest Practice Principles for
VII. Other important information for understanding the Company’s CSR operations: The Company’s CSR report has been disclosed on its official website and the Market Observation Post System.

Corporate Governance Report

Note: Climate change related risks and opportunities and countermeasures.

Note: Climate change related risks and opportunities and countermeasures.	Note: Climate change related risks and opportunities and countermeasures.	Note: Climate change related risks and opportunities and countermeasures.
Risk Category: Policies and Laws Risks Opportunities CMC’s countermeasures Various environment-oriented laws and regulations are being introduced and renewed. Gaining stakeholders’ trust by responding to regulatory changes in advance. Procure cloud software for regulatory additions/amendments check, and for timely review and improvement. Renewable Energy Development Act Develop renewable energy plans in advance to promote energydiversification. Invested NT$11 million in self-built solar power equipment. Greenhouse Gas Reduction and Management Methodology. 1. Improve power efficiency with the opportunity to reduce operating costs. 2. Optimize the manufacturing process to lessen its environmental impact. 1. Introduce the ISO14064-1 greenhouse gas inspection and management system and ISO14001 environmental management systems. 2. Introduce coating robot arms to drive the reduction of raw materials and coatings in the manufacturing process for eliminatingharmful emissions. Energy Management Methodology Improve power efficiency with the opportunity to reduce operating costs 1. Obtained transition certification to ISO50001: 2018 2. Set energy saving and carbon reduction goals, and introduce various energy conservation projects in the manufacturing areas, such as intelligent energy management systems, equipment modifications,etc. The 6th Phase of Air Emission Standards of Mobile Source. Improve power efficiency with the opportunity to reduce operating costs Monitor car emission levels through in-plant quality control system to comply with the phase 6 regulatory emission standards. Risk Category: TechnologyRisk Risks Opportunities CMC’s countermeasures Unable to innovate the technology with the market demand and thus suffer from market obsolescence. Actively develop electric scooters and their supporting measures to be in line with global market trends. 1. Invested NTD 250 million in electric vehicle research and development to cater to the booming green energy market 2. Invested NTD 18 million in constructing charging stations. 3. Invested NTD 3 million in establishing the control and service appfor electric scooters. Risk Category: Market Risk – Changes in Consumer Behavior Risks Opportunities CMC’s countermeasures Consumers are aware of the impact of climate change and wish to purchase environment-friendly and energy-efficient products. Provide environmentally friendly and energy-efficient products and services to meet the needs of stakeholders, gain their trust and thus increase the Company’s revenue. 1. In response to the development of green energy, the Company promoted electric scooters and widely built charging stations to provide new low-carbon and energy-saving options to meet market demand. 2. The Company has been actively acquiring environmental protection and energy saving labels and has acquired 71 items for four-wheeled products and 4 items for two-wheeled products in 2019. 3. Introduce the concept of circular economy and enhance the recycling rate of disposed products through the detachable design ofparts and components. Risk Category: Market Risk –Increases in Global EnergyPrices Risks Opportunities CMC’s countermeasures Fluctuating energy prices affect production and operating costs. Improve power efficiency with the opportunity to reduce operating costs 1. Full implementation of intelligent energy management system (EMS) to reduce electricity consumption and cost. 2. Improve energy-consuming lighting in the factories to achieve energy-saving effect and obtain the green building label at the same time. Risk Category: Extreme Climate Catastrophe Risks Opportunities CMC’s countermeasures Reduction or interruption of production capacity due to wind, flood and drought. Enhance the ability of production lines to withstand natural disasters. 1. Establish emergency SOPs to deal with force majeure changes. 2. Develop disaster prevention mechanism and reporting mechanism. Dry season causes water shortage. Improve process water efficiency, increase water recyclingrate and reduce water costs. 1. Introduce water reduction construction. 2. Introduce rainwater recyclingsystem. Extreme cold or hot climates cause a higher vehicle failure rate. 1. Gaining stakeholders’ trust by providing vehicle products that can withstand extreme weather conditions. 2. Produce vehicles that can adapt to a variety of regional climates to increase export opportunities. Construct high temperature and cryogenics laboratory
Risk Category: Policies and Laws
Risks	Opportunities	CMC’s countermeasures
Various environment-oriented laws and regulations are being introduced and renewed.	Gaining stakeholders’ trust by responding to regulatory changes in advance.	Procure cloud software for regulatory additions/amendments check, and for timely review and improvement.
Renewable Energy Development Act	Develop renewable energy plans in advance to promote energydiversification.	Invested NT$11 million in self-built solar power equipment.
Greenhouse Gas Reduction and Management Methodology.	1. Improve power efficiency with the opportunity to reduce operating costs. 2. Optimize the manufacturing process to lessen its environmental impact.	1. Introduce the ISO14064-1 greenhouse gas inspection and management system and ISO14001 environmental management systems. 2. Introduce coating robot arms to drive the reduction of raw materials and coatings in the manufacturing process for eliminatingharmful emissions.
Energy Management Methodology	Improve power efficiency with the opportunity to reduce operating costs	1. Obtained transition certification to ISO50001: 2018 2. Set energy saving and carbon reduction goals, and introduce various energy conservation projects in the manufacturing areas, such as intelligent energy management systems, equipment modifications,etc.
The 6th Phase of Air Emission Standards of Mobile Source.	Improve power efficiency with the opportunity to reduce operating costs	Monitor car emission levels through in-plant quality control system to comply with the phase 6 regulatory emission standards.
Risk Category: TechnologyRisk
Risks	Opportunities	CMC’s countermeasures
Unable to innovate the technology with the market demand and thus suffer from market obsolescence.	Actively develop electric scooters and their supporting measures to be in line with global market trends.	1. Invested NTD 250 million in electric vehicle research and development to cater to the booming green energy market 2. Invested NTD 18 million in constructing charging stations. 3. Invested NTD 3 million in establishing the control and service appfor electric scooters.
Risk Category: Market Risk – Changes in Consumer Behavior
Risks	Opportunities	CMC’s countermeasures
Consumers are aware of the impact of climate change and wish to purchase environment-friendly and energy-efficient products.	Provide environmentally friendly and energy-efficient products and services to meet the needs of stakeholders, gain their trust and thus increase the Company’s revenue.	1. In response to the development of green energy, the Company promoted electric scooters and widely built charging stations to provide new low-carbon and energy-saving options to meet market demand. 2. The Company has been actively acquiring environmental protection and energy saving labels and has acquired 71 items for four-wheeled products and 4 items for two-wheeled products in 2019. 3. Introduce the concept of circular economy and enhance the recycling rate of disposed products through the detachable design ofparts and components.
	Risk Category: Market Risk –Increases in Global EnergyPrices
Risks	Opportunities	CMC’s countermeasures
Fluctuating energy prices affect production and operating costs.	Improve power efficiency with the opportunity to reduce operating costs	1. Full implementation of intelligent energy management system (EMS) to reduce electricity consumption and cost. 2. Improve energy-consuming lighting in the factories to achieve energy-saving effect and obtain the green building label at the same time.
	Risk Category: Extreme Climate Catastrophe
Risks	Opportunities	CMC’s countermeasures
Reduction or interruption of production capacity due to wind, flood and drought.	Enhance the ability of production lines to withstand natural disasters.	1. Establish emergency SOPs to deal with force majeure changes. 2. Develop disaster prevention mechanism and reporting mechanism.
Dry season causes water shortage.	Improve process water efficiency, increase water recyclingrate and reduce water costs.	1. Introduce water reduction construction. 2. Introduce rainwater recyclingsystem.
Extreme cold or hot climates cause a higher vehicle failure rate.	1. Gaining stakeholders’ trust by providing vehicle products that can withstand extreme weather conditions. 2. Produce vehicles that can adapt to a variety of regional climates to increase export opportunities.	Construct high temperature and cryogenics laboratory

Corporate Governance Report

(VI) The state of the Company’s performance in the area of ethical corporate management, any variance from the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance.

Assessment Items			The state of implementation	Variance from the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance.
	Yes	No	Description Summary
I. Establishment of ethical corporate management policies and programs (I) Does the Company have a Board-approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy? (II) Does the Company have mechanisms in place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the Company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies? (III) Does the Company provide clearly the operating procedures,	ˇ ˇ ˇ		(I) All the business activities conducted by the Company are based on the principles of fairness, honesty, trustworthiness, and transparency. All employees must behave in good faith. The Company has established the “Ethical Corporate Management Best Practice Principle” and the “Procedures for Ethical Management and Guidelines for Conduct” which strictly require each employee to implement the ethical policies. The ethical corporate management policies of the Company are specified in the annual reports and CSR reports, as well as how the Board of Directors and management fulfill the commitment of ethic management. (II) To have employees understand the ethical behaviors, the Company not only publishes the regulations and documents related to ethical management on the intranet for them to inquire any time, but also applies diversified approaches, such as posters, promotional activities, to announce the Company’s management philosophy and compliance to systems of the Company. Moreover, to ensure the Company’s business activities conform to the laws and regulations of ethical management, a whistle-blowing system is also provided in the official website and the internal platform. In the Company’s “Procedures for Ethical Management and Guidelines for Conduct,” the unethical behaviors and related preventive procedures are specified and set forth that the violations will be punished pursuant to the Working Rules and the related regulations. (III) The Company’s “Procedures for Ethical Management and Guidelines for Conduct” has set forth the preventive procedures specifically	(I) Complied with the Ethical Corporate Management Best Practice Principle. (II) Complied with the Ethical Corporate Management Best Practice Principle. (III) Complied with the Ethical

Corporate Governance Report

Assessment Items	The state of implementation	The state of implementation	The state of implementation	Variance from the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance.
	Yes	No	Description Summary
code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the Company enforce the programs above effectively and perform regular reviews and amendments?			for the business activities with higher risks of unethical behaviors, such as receiving improper benefits, political donations, donations and sponsorships, and the regulations are reviewed and amended regularly. Also, in the Company’s “Working Rules,” the sections of “Service Ethics” and “Reward/Disciplinary Actions, Promotion and Performance Appraisal” explain what are the acceptable employee’s behaviors and how to handle others’ improper behaviors and the appeals for disciplinary actions. The “Working Rules” are explained in the orientation and published on the intranet for employees to inquire any time.	Corporate Management Best Practice Principle.
II. Fulfill operations integrity policy (I) Does the Company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (II) Does the Company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations?	ˇ ˇ		(I) In the “Working Rules,” the Company specifies relevant ethics of services, greatly emphasizes the ethics of all business counterparties, and incorporate the ethical clauses into the standard contract templates. (II) The Company’s implementation status is as follows: 1. The Company has established the ethical management and governance management committee. The executive secretary is the Administration Department, and the Vice GR of Planning and Management, Tseng, Hsin-Cheng, is the Chief member. Based on the functions and scopes of each unit, the implementation of the Ethical Corporate Management Best Practice Principle is ensured. The implementation is reported to the Board of Directors at least once every year by the President Office. The implementation status for 2020 has been reported in the Board Meeting on 17 December 2020. 2. To provide proper channel of statement for the policy of preventing conflicts of interests, the Company has established “The China Motor Corporation’s Ethical Corporate Management Best Practice Principle” in 2015. 3. The affairs promoted for the ethical management in 2020 are listed as follows: (1)Established unethicalbehavior risk	(I) Complied with the Ethical Corporate Management Best Practice Principle. (II) Complied with the Ethical Corporate Management Best Practice Principle.

Corporate Governance Report

Assessment Items	The state of implementation	The state of implementation	The state of implementation	Variance from the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any suchvariance.
	Yes	No	Description Summary
(III) Does the Company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (IV) Does the Company have effective accounting and internal control systems in place to implement ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct, or hire outside accountants to perform the audits? (V) Does the Company regularly hold internal and external educational trainings on operational integrity?	ˇ ˇ ˇ		assessment policies. (2) Announce ethical management to the new Directors and new manager and require them to sign the statement for ethical management. (3) Announce the ethical management concept to employees aperiodically. (III) In the “Working Rules,” the Company specifies that if an employee takes any job with a similar nature as that of the Company and having conflicts of interests, without the Company’s prior consent, and thus damage the Company’s interests, he/she may be dismissed and sued if the condition is severe. Moreover, employees’ annual work objectives are derived from the Company’s or the department’s annual work direction. The Company ensures the consistency of the objectives top-down and prevents conflicts of interests through thorough communications. The Company specified the preventive procedures for the unethical behaviors and interest recusals “Procedures for Ethical Management and Guidelines for Conduct,” and established a dedicated unit and appealing channels for thorough communications so that implementations could be implemented effectively. (IV) To ensure the accuracy and completeness of the financial related process and respective controls, the Company has designed the internal control system. The Audit Office also prepares the annual audit plans for various audits. The outcomes of audit and the subsequent correction programs are presented to the Board of Directors and management, as the consolidation of audit performance and prevention to the unethical behaviors. (V) In 2020 the Company conducted the trainings related to the ethical management issues (including the compliance of the ethical management regulations, orientations of ethical management,and case studies of ethical	(III) Complied with the Ethical Corporate Management Best Practice Principle. (IV) Complied with the Ethical Corporate Management Best Practice Principle. (V) Complied with the Ethical Corporate Managemen

Corporate Governance Report

Assessment Items	The state of implementation	The state of implementation	The state of implementation	Variance from the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any suchvariance.
	Yes	No	Description Summary
			management) with total 1,759 of participating head counts and 1,834.5 hours	t Best Practice Principle.
III. Operation of the integrity channel. (I) Does the Company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up? (II) Does the Company have in place standard operating procedures for investigating accusation cases, as well as follow-up actions and relevant post-investigation confidentiality measures? (III) Does the Company provide proper whistleblower protection?	ˇ ˇ ˇ		(I) to (III) The employees may directly report to the Administration Department, or may report any violations of ethics directly to the Supervisors via the "Employee Complaint Mailbox," and the respective investigations are conducted privately. Moreover, the whistleblowing may be anonymous, and the presiding department shall never disclose the information related to the whistleblower for full protection. The Company also publicized the whistleblowing hotline and handling practices. Dedicated personnel and relevant operating procedures will be appointed based on the identity of the stakeholder.	(I)~(III) were complied with the Ethical Corporate Management Best Practice Principle
IV. Strengthening information disclosure (1) Does the Company disclose its ethical corporate management policies and the results of its implementation on the Company’s website and MOPS?	ˇ		The Company has disclosed the content of the Company’s ethical corporate management principles on its official website and the MOPS, and the Company’s operating status is also disclosed on the official website regularly, which if necessary may include the status of its ethical corporate management.	Complied with the Ethical Corporate Management Best Practice Principle
V. If the Company has established the ethical corporate management policies based on the “Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies,” please describe any discrepancy between the policies and their implementation: In 2014, the Company established its own Code of Business Ethics with reference to the “ Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies.” At present, the Company also established a comprehensive internal control system, therefore the Company has been operating and implementing according to the spirt of the “Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies.”
VI. Other important information to facilitate a better understanding of the Company’s ethical corporate management policies: the Company’s ethical corporate management principles have been amended in December 2015 (effective from July 2016); also, the “Ethical Management and Compliance Management Committee” has convenedannual meetingsregularly since2015.Themeeting was convenedin November

Corporate Governance Report

Assessment Items	The state of implementation	The state of implementation	The state of implementation	Variance from the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any suchvariance.
	Yes	No	Description Summary
2020 to explain the implementation of the concurrent year and discuss the future approaches.

(VII) Corporate Governance Guidelines and Regulations:

Please refer the “Corporate Governance” of Market Observation Post System and the Company’s website (http://www.china-motor.com.tw).

(VIII) Other Important Information Regarding Corporate Governance:

Please refer the “Corporate Governance” of Market Observation Post System and the Company’s website (http://www.china-motor.com.tw).

Corporate Governance Report

(IX) Internal Control System
Statement of Internal Control System

China Motor Corporation

Statement of Internal Control System

Date: 23 March 2021

Based on the findings of self-assessments, the Company states the

following with regard to its internal control system for the year of 2020:

I. The Company is fully aware that the Company’s Board of Directors and General Manager are responsible for establishing, implementing, and maintaining an adequate internal control system. The Company has established such system. Such internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of the Company’s operation (including profitability, performance, and safeguarding of assets), reliability of financial reports, timeliness, transparency, and compliance with applicable laws and regulations.
II. An internal control system has its inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the aforementioned targets. Moreover, the effectiveness of an internal control system may be subject to changes in environment and circumstances. However, the Company’s internal control system contains a self-monitoring mechanism, and once deficiencies are identified, the Company will take corrective action.
III. The Corporation evaluates the design and operating effectiveness of its internal control system based on the criteria provided by the “Regulations Governing the Establishment of Internal Control System by Public Companies” (the “Regulations”). The judgmental criteria adopted by the Regulations are based on the management control process and divide the internal control system into five components: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring. Each component further covers certain items. Please refer to “Regulations” for the aforementioned items.
IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid judgmental criteria.
V. Based on the results of the preceding evaluation, the Company concluded that the design and implementation of the Company’s internal control system (including the supervision and management of subsidiaries) as of 31 December 2020, including the understanding of the extent to which operational

Corporate Governance Report

effectiveness and efficiency objectives are achieved, the reports are reliable, and the internal control system is timely, transparent, and in compliance with relevant regulations and relevant laws and regulations, is effective, and it can reasonably ensure the achievement of the above objectives.

VI. This Statement will form an integral part of the Company’s Annual Report and Prospectus and will be made available to the public. If the contents of the above-mentioned disclosures are false, concealed, or otherwise unlawful, legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

VII. This Statement has been passed by the Board of Directors Meeting of the Company held on 23 March 2021, where none of the 11 attending Directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement.

==> picture [92 x 94] intentionally omitted <==

China Motor Corporation

Chairman: Li-Lien Chen Yen Signature

President: Chao-Wen Chen Signature

Corporate Governance Report

The independent auditor’s report shall be disclosed if the auditor is designated to review internal control system: None.
(X) Punishment and Improvement Status of Violation Internal Control System during the year 2020 and until 31 March 2021: None.
(XI) Major Resolutions at Shareholder Meetings and Board of Directors Meetings during the year 2020 and until 31 March 2021.
Major resolutions of the Board of Directors’ Meetings

Date of meeting	Important Resolutions	Implementation Status
2020.03.26	1. Proposal of the Company’s 2019 financial statements. 2. Proposal of the Company’s 2019 earnings distribution. 3. Proposal of the Company’s 2019 remuneration to the Directors and employees. 4. The meeting date and location of the Company’s 2020 Annual Meeting of Shareholders. 5. Proposal of the execution of the Company’s “Statement of Internal Control System” as of 2019. 6. Evaluation of the independence and suitability of the CPAs as of year 2020. 7. Proposal for removing the non-compete clause prohibition for the Directors in the 2020 Shareholder Meeting. 8. Partial amendments to the articles of the Company’s “Articles of Incorporation.” 9. Partial amendments to the articles of the Company’s “Parliamentary Rules for the Board of Directors” and the “Internal Audit Implementation Policies for the Parliamentary Rules for the Board of Directors.” 10. Partial amendments to the articles of the Company’s “Audit Committee’s Articles of Association” and the “Internal Audit Implementation Policies for the Rules of Procedure and Operational Management for the Audit Committee.” 11. Partial amendments to the articles of the Company’s “Remuneration Committee’s Articles of Association” and the “Internal Audit Implementation Policies for the Rules of Procedure and Operational Management for the Remuneration Committee.” 12. Partial amendments to the articles of the Company’s “Managerial Regulations for Financial Statement Preparation” and the ‘Internal Audit Implementation Policies for the Managerial Regulations for Financial Statement Preparation.” 13. Partial amendments to the articles of the Company’s “Parliamentary Rules for the Shareholders” 14. Partial amendments to the articles of the Company’s “Corporate Governance Best Practice Principles.” 15. Partial amendments to the articles of the Company’s “Managerial Operational Procedures to Prevent Insider Trading” and the “Internal Audit Implementation Policies for the Managerial Operational Procedures to Prevent Insider Trading.” 16. Revising the Company’s audit operation plan for 2020.	The Company has implemented the resolutions and disclosed in the Market Observation Post System. Motion 1, 2, 7, 8, and 13 were recognized and resolved in the 2020 Shareholder Meeting.
2020.05.14	1. Proposal of removing the non-compete clause prohibition for the Directors in the 2020 Shareholder Meeting. 2. Proposal of abolishing the registration of the branch of the Company’s talent trainingcenter.	The Company has implemented the resolutions and disclosed in the

Corporate Governance Report

Date of meeting	Important Resolutions	Implementation Status
		Market Observation Post System. Among others, motion 1 has been proposed to 2020 Shareholder Meeting for resolution.
2020.07.02	1. Removal of the non-compete clause prohibition for the General Manager.	The Company has implemented the resolutions and disclosed in the Market Observation Post System.
2020.08.06	1. Partial amendments to the Company’s “Performance Evaluation Standard for the Board of Directors” 2. Partial amendments to the articles of the Company’s “Audit Committee’s Articles of Association.” 3. Partial amendments to the articles of the Company’s “Internal Control System of the Stock Affairs Unit” and the “Internal Audit Implementation Policies for the Stock Affairs Unit.”	The Company has implemented the resolutions and disclosed in the Market Observation Post System.
2020.11.12	1. Proposal of formation of the Company’s “Risk Management Policies”	Implemented in accordance with the Resolution.
2020.12.17	1. The Company’s 2021 annual corporate budget. 2. The Company proposed to renew the NTD 600 million borrowing to the subsidiary Hualing Motors. 3. Formulated the Company’s 2021 audit plan. 4. Changes of department managers (or above) of the Company. 5. The Company’s CPA compensation package for year 2021~2023. 6. Partial amendments to the Company’s “Directors Election Policies.”	The Company has implemented the resolutions and disclosed in the Market Observation Post System. Among others, motion 6 will be proposed to 2021 Shareholder Meeting for resolution.
2021.03.23	1. The Company’s 2020 Financial Reports 2. The Company’s 2020 Earnings Distribution 3. The Company’s 2020 remuneration to the Directors and the employees 4. The meeting date and location of the Company’s 2021 Annual Meeting of Shareholders 5. Proposal for removing the non-compete clause prohibition for the Directors in the 2021 Shareholder Meeting. 6. Proposal of the execution of the Company’s “Statement of Internal Control System” as of 2020. 7. The change of the Company’s CPAs and evaluation of the independence and suitability of the CPAs as of year 2021.	The Company has disclosed in the Market Observation Post System and implemented the resolutions. Motion 1 and 2 will be proposed to 2021 Shareholder Meeting for recognition; motion 5 will be proposed to 2021 Shareholder Meeting for resolution.

Corporate Governance Report

2. Major Resolutions and Implementation Status of 2020 Shareholder Meeting

Date of meeting	Important Resolutions	Implementation Status
2020.06.24	1. Recognition of the final account book as of 2019.	We have announced and reported according to the regulations.
	2. Recognition the allocation of earnings as of 2019.	Implemented according to the regulations.
	3. Approved the partial amendments to the articles of the Company’s “Articles of Incorporation.”	Already disclosed on our website and applied post-amendmentprocedures.
	4. Approved the partial amendments to the articles of the Company’s “Parliamentary Rules for the Shareholders.”	Implemented according to the amended procedures.
	5. Approved to remove the non-compete clause prohibition for the Directors in the 2020 Shareholder Meeting.	We have implemented according to the resolved contents.

(XII) Major Issues of Record or Written Statements Made by Any Director or Supervisor

Dissenting to Important Resolutions Passed by the Board of Directors during the year 2020 and until 31 March 2021: None

(XIII) Resignation or Dismissal of Chairman, President, and Heads of Accounting, Finance, Internal Audit, Corporate Governance and R&D during the year 2020 and until 31 March 2021: None

IV. Information Regarding Audit Fees

Audit Fee

Audit Fee
Accounting Firm	Name of CPA	Period Covered by CPA’s Audit	Remarks
Deloitte & Touche	Chih-Ming Shao, Ya-Ling Wong	2020.01.01 ~ 2020.12.31

Fee Item Fee Range	Fee Item Fee Range	Audit Fee	Non-audit Fee	Total
1	Below 2,000,000		ˇ
2	2,000,000(inclusive)~ 4,000,000(exclusive)
3	4,000,000(inclusive)~ 6,000,000(exclusive)
4	6,000,000(inclusive)~ 8,000,000(exclusive)	ˇ		ˇ
5	8,000,000(inclusive)~ 10,000,000(exclusive)
6	10,000,000and up

(I) When the non-audit fees paid to the CPA, the CPA’s firm and its affiliates are more than one fourth of the audit fee, disclose of the amounts of audit and non-audit fees and the content of non-audit services is required:

Corporate Governance Report

Unit: NTD$ Thousand

Accounti ng Firm	Name of CPA	Audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Period Covered by CPA’s Audit	Remarks
			System Design	Company Registratio n	Human Resource	Others (note)	Sub total
Deloitte & Touche	Chih-Ming Shao Ya-Ling Wong	7,610	-	-	-	280	280	2020.01.01 ~ 2020.12.31	Transfer Pricing Report, etc.

If the “other” of non-audit fee reaches 25% of non-audit fee, specify its service content in the note

(II) Replace the accounting firm and the audit fee paid in the year of replacement is less than that in previous year, disclose the amount of audit fee before and after the replacement and its reasons: N.A.
(III) For the audit fee that is reduced more than 10 percent as comparing to the previous year, disclose the amount reduced, percentage and reason: N.A.

Corporate Governance Report

V. Information for Replacement of CPA

(I) Regarding the former CPA

Replacement Date	January 2021.	January 2021.	January 2021.	January 2021.
Replacement reasons and explanations	Given Deloitte & Touche’s internal rotation requirement, the CPA Hsiu-Ming Hsu succeeded the duty of the original CPA Chih-Ming Shao.
Describe whether the Company terminated, or the CPA did not accept the appointment	Parties Status		CPA	The Company
	Termination of appointment		(N.A.)	(N.A.)
	No longer accepted (continued) appointment		(N.A.)	(N.A.)
Other issues (except for unqualified issues) in the audit reports within the last two years	Partial of long-term investments accounted for using equity method is recognized based on the audit report of other CPA and therefore the modified unqualified opinions are issued.
Differences with the Company	Yes	-	Accounting principles or practices
		-	Disclosure of financial statements
		-	Audit scope or steps
		-	Others
	None.	ˇ
	Explanation	-
Other disclosure (items to be disclosed in accordance with clause 10.6.A.d to g of Regulations Governing Information to be Published in Annual Reports of Public Companies	None.

(II) Regarding the successor CPA

Regarding the successor CPA
Name of CPA	Deloitte & Touche
Name of CPA	CPA Hsiu-MingHsu
Date of Appointment	January2021.
Consultation results and opinions on accounting treatments or principles with respect to specified transactions and the Company’s financial reports that the CPA might issue prior to the engagement.	N.A.
Succeeding CPA’s written opinion of disagreement toward the former CPA	None.

Corporate Governance Report

(III) The former CPA’s written response to the matters referred to article 10.5.A and article 10.5.(2) (iii) of Regulations Governing Information to be Published in Annual Reports of Public Companies: N.A.
VI. Chairman, President and Heads of Finance or Accounting who worked in the CPA’s firm or its affiliates: None.

Corporate Governance Report

VII. Changes in Shareholdings of Directors, Managers and Major Shareholders

(I) Changes in share transfer and share pledge by Directors, Managers and shareholders with shareholdings of over 10%

				Unit: share	Unit: share
Title	Name	FY2020		As of March 31,2021
		Increase (decrease) in shares held	Increase (decrease) in shares pledged	Increase (decrease) in shares held	Increase (decrease) in shares pledged
Director (note 1)	Tai-Yuen Textile Co.,	-	-	-	-
Director	Yulon Motor Co., Ltd	-	-	-	-
Director (note 1)	Mitsubishi Motors	-	-	-	-
Director	Mitsubishi	-	-	-	-
Director	Le Wen Investment	-	-	-	-
Chairperson	Li-Lien Chen Yen	-	-	2,216,162 (Note 2)	-
Director	Toshinaga Kato	-	-	-	-
Director	Hsin-I Lin	-	-	-	-
Director	Kuo-Rong Chen (Note 3)	-	-	-	-
Director	Takayasu Yonekura (Note 3)	-	-	-	-
Director	Daisuke Okamoto	-	-	-	-
Director/President	Chao-Wen Chen	-	-	-	-
Director	Tai-Ming Chen	-	-	-	-
Director/Executive Vice President	Hsin-Cheng Tseng	-	-	-	-
Independent	Chi-Ching Chen	-	-	-	-
Independent	Wei-Ching Lue	-	-	-	-
Independent	Yun-Hua Yang	-	-	-	-
Executive Vice President	Chen Shing Ju	-	-	-	-
Vice President	Ching-Wu Chien	-	-	-	-
Vice President	Chiung-Chih Tseng	-	-	-	-
Special Assistant (Vice President)	Hsing-Ju Huang	-	-	-	-

Corporate Governance Report

Vice President	Cheng-Chang Huang	-	-	-	-
Vice President	Ching-Yun Liao	-	-	-	-
Vice President	Chin-Huang Chang	-	-	-	-
Vice President	Tsung-Yu Chen	-	-	-	-
Accounting and	Chun-Ching Liao	-	-	-	-
Corporate	Ling-Jun Lin	-	-	-	-

Note 1: shareholders with shareholdings of over 10%

Note 2: Acquired by way of inheritance.

Note 3: The term of office of Director Kuo-Rong Chen ended on February 25, 2021 and was succeeded by Chen-Hsiang Yao from February 26, 2021.
(II) Where the counterparty in any such transfer or pledge of equity interests is a related party, the counterparty’s name, and its relationship with the Company as well as the Company’s Directors, Supervisors, and shareholders with shareholdings of over 10%, and the number of shares transferred or pledged shall be disclosed: None.

Corporate Governance Report

VIII. Relationship among the Top Ten Shareholders

Name	Current Shareholding	Current Shareholding	Spouse and children of minor age’s current shareholding	Spouse and children of minor age’s current shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Rema rks Note
	Number of shares	Shares holding %	Number of shares	Shares holding %	Number of shares	Shares holding %	Name	Relationship
Tai-Yuen Textile Co., Ltd	139,435,815	25.19	-	-	-	-	Yulon Motor Co., Ltd	Same Chairman	-
							Diamond Hosiery & Thread Co.,Ltd	Same Chairman	-
Representative: Hsin-I Lin	-	-	-	-	-	-	-	-	-
Representative: Chen-HsiangYao	-	-	-	-	-	-	-	-	-
Representative: Chao-Wen Chen	-	-	-	-	-	-	-	-	-
Mitsubishi Motors Corporation	77,507,309	14.00	-	-	-	-	Mitsubishi Corporation	Affiliate accounted for using equity method	-
Representative: Toshinaga Kato	-	-	-	-	-	-	-	-	-
Yulon Motor Co., Ltd	44,592,177	8.05	-	-	-	-	Tai-Yuen Textile Co., Ltd	Same Chairman	-
							Diamond Hosiery & Thread Co.,Ltd	Same Chairman	-
Representative: Li-Lien Chen Yen	2,216,162	0.40	4,432,322	0.80	-	-	-	-	-
Representative: Tai-MingChen	-	-	-	-	-	-	-	-	-
Tai-Yuen Textile Co., Ltd	37,438,652	6.76	-	-	-	-	Tai-Yuen Textile Co., Ltd	Same Chairman	-
							Yulon Motor Co., Ltd	Same Chairman	-
Mitsubishi Corporation	26,561,918	4.80	-	-	-	-	Mitsubishi Motors Corporation	Affiliate accounted for using equity method	-
Representative: Daisuke Okamoto	-	-	-	-	-	-	-	-	-
Nan Shan Life Insurance Company,Ltd.	14,964,600	2.70	-	-	-	-	-	-	-
Taiwan Life Insurance Co.,Ltd.	6,549,600	1.18	-	-	-	-	-	-	-
Fan-Terh Investment Co.,Ltd.	4,837,758	0.87	-	-	-	-	-	-	-
Yung Han Investment Co.,Ltd.	3,997,638	0.72	-	-	-	-	-	-	-
New Labor Pension Fund	3,649,800	0.65	-	-	-	-	-	-	-

Corporate Governance Report

IX. The total equity stake held in re-invested enterprises by the Company, its Directors, Managers, and any companies controlled directly or indirectly by the Company

Company
	March 31, 2021
Affiliated Enterprises	Ownership by the Company		Direct or Indirect Ownership by Directors/ Supervisors/ Managers		Total Ownership
	Number of shares	%	Number of shares	%	Number of shares	%
Yulon Motor Co., Ltd.	166,714,441	16.80	219,594,247	21.96	386,308,688	38.76
Kian Shen Corporation	32,201,367	43.87	49,331	0.07	32,250,698	43.94
Hwa Wei Holdings Co., Ltd.	40,000	40.00	60,000	60.00	100,000	100.00
China Motor Investment Co., Ltd.	40,000	100.00	-	-	40,000	100.00
Fortune Motors Co	132,116,729	41.93	30,990,158	9.62	163,106,887	51.55
Sino Diamond Motor Corporation	151,067,030	100.00	-	-	151,067,030	100.00
Alliance Investment & Management Co., Ltd	183,000,000	100.00	-	-	183,000,000	100.00
ROC Spicer Ltd.	147,990	29.60	102,302	20.46	250,292	50.06
Tokio Marine Newa Insurance Co., Ltd.	61,510,524	20.57	52,009,524	17.39	113,520,048	37.96
Daimler Vans Hong Kong Ltd.	46,565,750	32.45	-	-	46,565,750	32.45
Shung Ye Motor Enterprise	29,667,632	39.98	12,368	0.02	29,680,000	40.00
COC Tooling & Stamping Co., Ltd.	33,564,678	49.76	33,891,444	50.23	67,456,122	99.99
Uni-calsonic Corp.	6,083,525	31.20	5,983,875	30.68	12,067,400	61.88
China Engine Corporation	87,999,000	52.10	32,001,000	18.95	120,000,000	71.05
Uni Auto Parts Manufacture Co., Ltd.	13,032,137	15.00	21,728,516	25.00	34,760,653	40.00
Hua Chung Motor Co., Ltd.	8,790,000	100.00	-	-	8,790,000	100.00
Yueki Industrial Co., Ltd.	2,936,222	15.08	12,783,109	65.67	15,719,331	80.75
Fujian Spicer Drivetrain System Co., Ltd.	7,308,000	29.00	5,166,000	20.50	12,474,000	49.50
Tai Ya Investment (HK) Co., Limited	2,242,077	29.00	1,584,917	20.50	3,826,994	49.50

Note: The affiliates are investment of the Company accounted for using equity method

Information on Capital Raising Activities

I. Capital and Shares

(I) Source of Capital

		Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand
Year/Month	Issue Price (NTD)	Authorized Capital		Paid-in Capital		Remark
		Number of shares	Value	Number of shares	Value	Sources of Capital	Capital Increased by Assets Other than Cash	Others
2007.09	10	1,800,000	18,000,000	1,391,301	13,913,008	Stock dividends of Common Stock	-	2007/09/14 Jing Shou Shang No. 09601227310
2011.01	10	1,800,000	18,000,000	1,384,051	13,840,508	Decrease in treasury stock	-	2011/01/17 Jing Shou Shang No. 10001001380
2019.08	10	1,800,000	18,000,000	553,620	5,536,203	Capital reduction by cash	-	2019/08/19 Jing Shou Shang No. 10801113240

(II) Type of Stock

Type of Stock	Type of Stock	Type of Stock	Type of Stock
April 25, 2021
Share Type	Authorized Capital
	Issued Shares (share, note)	Unissued Shares (share)	Total Shares
Registered Share Certificates	553,620,342	1,246,379,658	1,800,000,000

Note: TWSE listed stock

(III) Status of Shareholders

April 25, 2021

						April 25, 2021
Number of Shareholders Quantity	Government Agencies	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total Shares
Total	2	19	135	36,782	261	37,199
Shareholding (share)	4,003,800	19,447,341	256,037,784	112,281,088	161,850,329	553,620,342
Percentage	0.72	3.51	46.25	20.28	29.24	100.00

Information on Capital Raising Activities

(IV) Shareholding Distribution Status

April 25, 2021

			April 25, 2021
Class of Shareholding (Unit: share)	Number of Shareholders	Shareholding (share)	Percentage
1～999	21,202	5,454,939	0.99
1,000～5,000	12,849	26,075,685	4.71
5,001～10,000	1,576	12,434,411	2.25
10,001～15,000	420	5,287,617	0.96
15,001～20,000	292	5,418,768	0.98
20,001～30,000	227	5,739,472	1.04
30,001～40,000	126	4,590,923	0.83
40,001～50,000	90	4,135,584	0.75
50,001～100,000	169	12,267,036	2.22
100,001～200,000	112	16,323,096	2.94
200,001～400,000	54	15,542,204	2.80
400,001～600,000	27	13,282,361	2.40
600,001～800,000	9	5,925,488	1.07
800,001～1,000,000	9	7,988,815	1.44
1,000,001 or above	37	413,153,943	74.62
Total Shares	37,199	553,620,342	100.00

(V) List of Major Shareholders

April 25, 2021

		April 25, 2021
Shares Shareholder	Shareholding (share)	Shareholding (%)
1. Tai Yuen Textile Co., Ltd.	139,435,815	25.19
2. Mitsubishi Motors Corporation	77,507,309	14.00
3. Yulon Motor Co., Ltd.	44,592,177	8.05
4. Diamond Hosiery & Thread Co., Ltd	37,438,652	6.76
5. Mitsubishi Corporation	26,561,918	4.80
6. Nan Shan Life Insurance Co., Ltd.	14,964,600	2.70
7. Taiwan Life Insurance Co., Ltd.	6,549,600	1.18
8. Fan-Terh Investment Co., Ltd.	4,837,758	0.87
9. Yung Han Investment Co., Ltd.	3,997,638	0.72
10. New Labor Pension Fund	3,649,800	0.65

Information on Capital Raising Activities

(VI) Market Price, Net Worth, Earnings, and Dividends per Share of the Recent Two

Years

Years
Item	Year		Year 2019	Year 2020	As of 31 March 2021
Market Price per Share (NTD)	Highest Market Price		45.70	51.20	67.40
	Lowest Market Price		22.75	24.40	46.00
	Average Market Price		29.61	39.06	56.94
Net Worth per Share (NTD)	Before Distribution		69.98	76.09	- (Note 3)
	After Distribution		69.98	76.09(Note 1)	- (Note 3)
Earnings per Share (NTD)	Weighted Average Shares (thousand shares)		1,051,879	553,620	553,620
	Earnings per Share		(2.38)	6.01	- (Note 3)
Dividends per Share (NTD)	Cash Dividends (note 2)		1.70	-	-
	Stock Dividends	-	-	-	-
		-	-	-	-
	Accumulated Undistributed Dividends		-	-	-
Return on Investment	Price / Earnings Ratio (Note 1)		(12.44)	6.50	-
	Price / Dividend Ratio (Note 2)		17.42	-	-
	Cash Dividend Yield Rate (Note 3)		5.74%	-	-

Note: 1. The 2021 Shareholder Meeting has not yet been convened, and the distribution of

earnings is not yet confirmed. Thus, the EPS amount before and after distribution are the same.

The distribution of earnings of the previous fiscal year.
As at the publication date 31 March 2021, financial figures for the first quarter reviewed by the CPA are not yet available, and thus are not disclosed.

(VII) Dividend Policy and Implementation Status

Dividend Policy

The dividend policy in the current version of the Articles of Incorporation is as

follows:

If earnings are available for distribution at the end of a fiscal year, 10% of net

income – that is, after offsetting any loss from prior year(s) and paying all taxes

Information on Capital Raising Activities

and dues – shall be set aside as legal reserve and appropriated in accordance with the Securities Exchange Law. The remaining net income can be distributed along with prior accumulated retained earnings. The Board of Directors will consider the above-mentioned factors when making the dividend distribution proposal. Dividends will be distributed in accordance with the resolution approved by the Board of Directors and at the annual Shareholder Meeting. The Company is operated in a mature and stable industry. Dividends are distributed with reference to the Company’s profitability, capital demand for future business plans and industry environment change. In addition, the dividend distribution plan is made with reference to shareholder benefit and long-term organizational financial planning. Dividend distribution is not less than 40% of the net income. Dividends are distributed in the form of cash or stock. The amount of cash distributed each year shall not be less than 20% of the total amount of dividends issued.

Proposed Distribution of Dividend at the present Shareholder Meeting The 2020 distribution of earnings has been formulated by the Board of Directors. A cash dividend of NTD 7 per share will be distributed. The appropriation of the aforementioned earnings is intended to be made first from the retained earnings of 2020.

If the Company resolves to buy back the Company’s shares or transfer treasury shares to employees that affect the number of shares outstanding as at the dividend distribution date, it is proposed to request the Shareholders Meeting to authorize the Board of Directors to adjust the dividend distribution ratio.

(VIII) The Impact of Stock Dividend Issuance on the Company’s Business Performance and Earnings per Share:

None.

(IX) Remuneration of employees and Directors
Information Relating to Compensation of Employees, Directors and

Information on Capital Raising Activities

Supervisors in the Articles of Incorporation

The Company’s Articles of Incorporation stipulates the regulations regarding employees and Directors’ compensation as follows:

The remuneration payable by the Company in the case of profit for the year is as follows.

(1) No higher than 0.5% of net income as remuneration for Directors.
(2) No less than 0.1% of net income as remuneration for employees. The Board of Directors may resolve to make distributions in stock or cash to employees of affiliated companies who meet certain criteria, which are authorized to be set by the Board of Directors.

The employee’s compensation and remuneration to Directors should be approved by the Board of Directors and be presented on Shareholders Meeting. However, if the Company still has accumulated losses, it shall retain the amount of the indemnity in advance and then allocate employees’ and Directors’ remuneration in accordance with the rate designated in the first item. The Company distributed a fixed percentage (0.5% for the past three years except for the loss-making 2019) from the pre-tax net income prior to deducting remunerations to employees and Directors.

Accounting for the difference between the actual amount of employee and Director remuneration and the estimated amount. The Company makes the best estimate of the remuneration to employees and Directors according to the Company’s Articles of Incorporation and recognizes such remuneration as expenses. In the event of a material change in the amount of payment resolved by the Board of Directors in the subsequent period, such change shall be adjusted to the current year (the year in which such expense was originally recognized). If there is a change in the actual amount paid in the following year, such change will be treated as a change in accounting estimate and recorded as profit or loss in the following year.
The approval status of remuneration distribution by the Board of Directors:

Information on Capital Raising Activities

(1) If the amount of employee compensation and Director remuneration distributed in cash or stock differs from the amount estimated in the year in which the expense is recognized, the amount, the reason and the treatment of such difference shall be disclosed.

The 2020 remuneration of employees, Directors and Supervisors had been approved by the 11th meeting of the 20th term Board of Directors on 23 March 2021. The proposed cash remuneration was NT$31,923,000 and NT$17,130,000 to employees and Directors respectively, which were identical to the estimated amount of the year of expenses recognition. If there is a change in the actual amount to be paid in 2021, it will be treated as a change in accounting estimate and recorded as profit or loss in 2021. The Company also provides incentive bonuses such as bonus for the three festivals, additional annual bonus, and bonus for the growth of the management team based on the operating performance and individual performance of employees to encourage employees to create better performance for the Company and its shareholders.

(2) The amount of employee compensation distributed in stock and its proportion to the aggregate of the standalone net income after tax and total employee compensation in the standalone financial statements of the period The Company has not distributed remuneration to employees in the form of stocks in 2020 and therefore the circumstance is not applicable.
The actual distribution status of remuneration to employees and Directors and Supervisors (including number of shares distributed, amount and share price), the amount, reason and handling of difference from the recognized employee profit sharing and remunerations to Directors and supervisors.

The proposal for the distribution of 2019 profits was passed at the 5th meeting of the 20th term Board of Directors on 26 March 2020. The Company did not generate profit for the year 2019 (earnings before tax being negative), and thus

Information on Capital Raising Activities

did not distribute profit to employees and Directors.

(X) Buy-back of Treasury Stock: None.
II. Issuance of Corporate Bonds: None
III. Issuance of Preferred Stock: None
IV. Issuance of Global Depository Receipts: None
V. Issuance of Employee Stock Options and New Restricted Employee Shares: None.
VI. Status of New Shares Issuance in Connection with Mergers and Acquisitions: None
VII. Financing Plans and Implementation: N.A.

Operations Overview

I. Business Activities
(I) Business Scope
1. Main areas of business operations
  - (1) CA01090 Aluminum Casting Manufacturing
  - (2) CB01010 Machinery and Equipment Manufacturing
  - (3) CC01010 Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing
  - (4) CD01030 Automobiles and Parts Manufacturing
  - (5) CD01040 Motor Vehicles and Parts Manufacturing
  - (6) CD01050 Bicycles and Parts Manufacturing
  - (7) CC01090 Batteries Manufacturing
  - (8) CD01990 Other Transport Equipment and Parts Manufacturing
  - (9) CQ01010 Die Manufacturing
  - (10) E603050 Cybernation Equipment Construction
  - (11) E603100 Electric Welding Construction
  - (12) E604010 Mechanical Installation Construction
  - (13) E605010 Computing Equipment Installation Construction
  - (14) F106030 Wholesale of Mold
  - (15) F112040 Wholesale of Petrochemical Fuel Products
  - (16) F113010 Wholesale of Machinery
  - (17) F113110 Wholesale of Batteries
  - (18) F113020 Wholesale of Household Appliance
  - (19) F113070 Wholesale of Telecom Instruments
  - (20) F114010 Wholesale of Automobiles

(21) F114020 Wholesale of Motorcycles

(22) F114030 Wholesale of Motor Vehicle Parts and Supplies

(23) F114040 Wholesale of Bicycle Parts and Supplies

(24) F114050 Wholesale of Tire and Tubes

(25) F119010 Wholesale of Electronic Materials

100

Operations Overview

(26) F206030 Retail Sale of Die

(27) F212050 Retail Sale of Petroleum Products

(28) F213010 Retail Sale of Household Appliance

(29) F213060 Retail Sale of Telecom Instruments

(30) F213110 Retail Sale of Batteries

(31) F214010 Retail Sale of Automobiles

(32) F214020 Retail Sale of Motorcycles

(33) F214030 Retail Sale of Motor Vehicle Parts and Supplies

(34) F214040 Retail Sale of Bicycles and Parts

(35) F214050 Retail Sale of Tires and Tubes

(36) F219010 Retail Sale of Electronic Materials

(37) F401010 International Trade

(38) F401021 Restrained Telecom Radio Frequency Equipment and Materials

Import

(39) F501990 Other Eating and Drinking Places Not Elsewhere Classified

(40) H703100 Real Estate Rental and Leasing

(41) I102010 Investment Consultancy

(42) I103060 Management Consulting Services

(43) I301010 Software Design Services

(44) I401010 General Advertising Services

(45) I501010 Product Designing

(46) IE01010 Telecommunications Number Agencies

(47) IZ01010 Copying Services

(48) IZ02010 Typewriting Services

(49) IZ04010 Translation Services

(50) IZ12010 Manpower Services

(51) J901020 Hotels and Motels

(52) J903020 Mountain Climbing Guiding Services

(53) JA01010 Automotive Repair and Maintenance

101

Operations Overview

(54) JA01990 Other Automobile Services

(55) JA02010 Electric Appliance and Audiovisual Electric Products Repair

Shops

(56) JA02020 Motorcycle Repair Shops

(57) JA02030 Bicycle Repair Shops

(58) JB01010 Exhibition Services

(59) JE01010 Rental and Leasing Business

(60) J202010 Industry Innovation and Incubation Services

(61) F106010 Wholesale of Ironware

(62) CC01020 Electric Wires and Cables Manufacturing
(63) CC01030 Electric Appliance and Audiovisual Electric Products

Manufacturing

(64) CC01080 Electronic Parts and Components Manufacturing

(65) IZ99990 Other Industry and Commerce Services Not Elsewhere Classified

(66) ZZ99999 Other than licensed businesses, to manage and operate businesses not prohibited or restricted by law

Revenue distribution

Manufacture and sales of vehicles and related components accounted for 96%

of revenue.

Current Products of the Company
Commercial vehicles:

Delica 2.4L series

Veryca A180/A190 1.5L series

Sedans:

Grand Lancer 1.8L series

Colt Plus 1.5L series

Recreational/Commercial vehicles:

Outlander 2.4L series

Outlander PHEV series

Eclipse Cross 1.5T series

102

Operations Overview

Zinger 2.4L series

Electric vehicles

Electric scooter series: iE125, iE PICKUP, eMoving, eMoving Super Electric bikes: Bobe, Shine

Electric commercial vehicles: Veryca EV series

Future plans for new products

Our plans for the development of new products during the next three years aim to meet market demands and create sales topics. We will continue to unveil innovative and cutting-edge types on the basis of our current models in order to enhance the competitiveness of our products and the power of product in each market segment. With comprehensive marketing strategies, our sales performance will improve. Moreover, responding to the trend of electrification of vehicles, the Company will strengthen the coverage of new energy vehicles and gradually introduce PHEV plug-in hybrid vehicles and BEV electric vehicles for sale.

The focus of the recent product development plan will be on enhancing functionality, convenience and safety and will launch electric bikes and iE125 new model during the second quarter of the year.

Considering the diverse and highly mobile needs of consumers, other than maintaining the living circle of “charging at home, making up when going out,” in the fourth quarter, the Company will launch a new model with replaceable battery to expand and fulfill the needs of different lifestyles.

(II) Industry Overview

Current and future industry prospects

The number of sales in Taiwan in recent years was approximately 420,000 to 450,000 units. According to the data released by the National Development Council, in December last year (2020), the Purchasing Managers Index (PMI, if over 50% means the economy is expanding) of the manufacturing sector was 61.3%, indicating a consecutive 6 months of expansion, and which marks the

103

Operations Overview

highest acceleration since March 2017. In 2020, the number of total sales in the Taiwanese car market reached 457,000 units, or 4% growth from that of 440,000 in 2019. For this year’s (2021) outlook, with the introduction of the new COVID-19 vaccines and the increase in the disease prevention capacity of all countries, global economic growth is expected to recover but still depends on the disease control situation of all countries. Research institutions are optimistic about Taiwan’s economic growth rate for this year (2021), with estimates of 4.64% from DGBAS, 4.3% from the TIER, and 3.4% from the IHS.

This year (2021) the COVID-19 epidemic will continue to have an impact, but with vaccination and the application of new technologies, the world is entering a post-epidemic era. Last year (2020) in Taiwan, since people were unable to travel abroad, the demand for domestic travel has increased dramatically, and the government’s policy of tax subsidy for replacing old vehicles has led to a surge in vehicle replacement across the country, pushing the total sales volume to 457,000 units last year (2020). Thus, estimation of such volume for this year (2021) is 438,000 units.

Upstream, midstream and downstream industry linkages Automobiles is a technology and capital intensive industry that involves an extensive range of business partners from parts suppliers in the upstream, car manufacturing in the midstream to sales and after-sale service partners in the downstream. These industry participants work closely and affect each other on a significant level. The relationship between parts suppliers and car

manufacturers is especially intricate given the complex procedures and more than ten thousand parts involved in car manufacturing and assembly. For this reason, parts suppliers generally work with car manufacturers in a satellite arrangement to ensure long-term and stable business relationship. Due to the tight working relationship within the automobile industry, car manufacturers also have the tendency to engage upstream and downstream partners in vertical

104

Operations Overview

integrations of varying degree.

Product development trends

Automobiles is a competitive market in Taiwan, one that car manufacturers are constantly creating new segments by introducing new models and offerings. Due to rising environmental protection awareness and oil prices, car manufacturers will become more aggressive in the introduction of next-generation engines, hybrids, plug-in hybrids and electric vehicles, and CMC will respond to this trend by assessing and investing into the development of relevant technologies.

Product competition

Automobile market in Taiwan has long been highly competitive. Despite the continuous increase in the market share of imported vehicles in recent years, last year (2020) domestically produced cars still accounted for approximately 51.6% of market share. While a 4% growth is observed in overall car sales, such share of domestically produced cars still increased by 0.4% compared to the previous year (2019), indicating that domestic car manufacturers have finally turned around their sales by launching various new models in 2020. In the future, the Company will continually invest in R&D and production to enhance product competitiveness and meet the fast-changing consumers’ needs and the market environment.

(III) Technology and R&D overview

R&D expenses

In 2020 the Company’s standalone R&D expense was NT$1,551,518,000. In 2020 the consolidated R&D expense was NT$1,660,284,000.

Successfully developed technology and products in 2020 and by 31 March 2021
(1) In June 2020, the enhanced edition of Outlander was developed and launched for mass production and sale.
(2) In June 2020, the enhanced edition of Colt Plus was developed and launched for mass production and sale.

105

Operations Overview

(3) In July 2020, the budget edition of iE 125, the electric two-wheeled general heavy scooter, was developed and launched for mass production and sale.
(4) In September 2020, the all new Zinger Pickup was developed and launched for mass production and sale.
(5) In October 2020, the special edition of Grand Lancer was developed and launched for mass production and sale.
(6) In October 2020, the enhanced edition of Delica/ Delica-Truck were developed and launched for mass production and sale.
(7) In October 2020, the enhanced edition of Veryca A180/ A190 were developed and launched for mass production and sale.
(8) In February 2021, the export edition of Delica/ Delica-Truck were developed and launched for mass production and sale.
(IV) Long-term and short-term business development plan

For short-term, the Company will invest more in commercial vehicles to upgrade existing products, develop new models, and accelerate the electrification and smartening of vehicles to withstand challenges from competitors; in terms of the consumer car market, new models from Japan Mitsubishi will be continually imported. For long-term, to grasp the business opportunities arising from the trend of new energy industry and mobility services, the Company has not only invested in the development of electric two-wheeled products to provide consumers with multiple energy solutions, but also promoted the development of key components for new energy vehicles and refined product quality and technical capabilities. Therefore, the Company will adopt the four aspects of “defending the market position in the Taiwanese commercial vehicles,” “deepening Mitsubishi brand in the Taiwanese market,” “proactively expanding electric two-wheeled vehicles market in Taiwan,” and “focusing on developing new energy business” as its long-term development strategy, and continually scaling its export and developing Automated Guided Vehicle (AGV) to achieve sustainable profitability and operations with the Company’s growth.

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Operations Overview

II. Market, production, and sales overview

(I) Market analysis
Market condition of car sales

The Company's products include sedans, commercial passenger vehicles, recreational vehicles and commercial vehicles, and the main sales area is Taiwan. Last year (2020) the number of total cars sold under the Company’s brand (including imports) was 52,285(YoY +2%) , accounting for a 11.4% market share. Of the products sold, sedans accounted for 6,984 (YoY +15%), RVs 11,982 (YoY -11%); commercial vehicles (including heavy commercial vehicles) accounted for 33,319 (YoY +6%). (The above figures were based on the number of licensed cars)

Future supply, demand and growth of the car market Taiwanese car market has been in drastic decline from the peak sale of 510,000 units in 2005 to half of which, 229,000 units, in 2008. However, in recent years, under the reshuffling of the global supply chain caused by the U.S.-China trade war and the favorable government policy of replacing the obsolete vehicles the total sales volume has exceeded 443,000 units on average in the past five years, and the total market volume even reached 457,000 units last year (2020). The domestic car market was also developing under effective epidemic control, coupled with a significant rotation of domestic models from major manufacturers. With that, the annual domestic car sales increased 5.13% to 235,000 units with a 0.4% YoY increase in market share. The Company is also optimistic about the development of Taiwan's car market, as it had previously been subject to restrictions since Taiwan's accession to the WTO.
Competition strategy in the car market Faced with a challenging environment, the Company will proactively focus on deepening the Taiwanese market and investing into new energy and systems. Explanation is as follows:

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Operations Overview

Favorable factors:

(1) After years of diligent cultivation, the Company has established an excellent brand image with great word of mouth that has won consumers’ identification and recognition. Moreover, the Company have successfully been established as the No. 1 commercial vehicle brand among consumers.
(2) The Company has contributed in self-development for decades and thus has established a certain foundation. In addition to the recognition by its business partners, the Company will re-initiate the CMC Delica exporting business, and gradually expand the export market from the Middle East market to prove the Company’s self-development capacity.
(3) In response to the trend of green energy, the Company has been early in the development of new energy technology and has mass-produced vehicles in the field of new energy systems, including electric cars and electric scooters, and is one of the pioneers in Taiwan’s domestic electric vehicle industry. In addition, with the market demand for electric scooters, the cooperation with Gogoro has been expanded this year to add a new power exchange mode to provide brand customers with more comprehensive new energy transportation services.
(4) The Company has the most compact sales and service network and a complete horizontal peripheral business system in Taiwan. The scope of services includes automobile sales, product insurance, car owner services, car leasing and used car sales, etc. With innovative technologies such as digital marketing, the Company is able to enhance its competitive advantages comprehensively and effectively.

Unfavorable factors:

(1) In response to the impact generated by TESLA and other start-up car makers, traditional automakers have been accelerating the development of new energy and self-driving vehicles through alliances and partnerships, further widening the technological gap between smaller manufacturers and

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Operations Overview

continuing to introduce hybrid products with improved energy consumption in response to increasingly stringent emissions regulations.

(2) Through brand consolidation, cooperation and global production arrangement, multinational car manufacturers provide the market with more cost competitive imported models. On the other hand, luxury imported vehicles have also been imported in parallel to provide the market with the opportunity to enjoy luxury cars at a more affordable price, with a variety of car models to meet the different needs of consumers and correspondingly compress the competitiveness of domestically produced cars.

Countermeasures:

(1) Cultivate the Taiwan market
Flexibly utilize the Mitsubishi brand and in-house developed products to develop dual lines, enhance product competitiveness, and shorten product development lead time. In addition to actively participating in Mitsubishi Motors’ new vehicle development program, the Company is also launching new products under the self-owned brand to bring the new models closer to the needs of the Taiwan market and to expedite the introduction process of the new models.

Meanwhile, the sales channel has been undergoing a transformation of corporate identity since 2018 following the reshaping of the Mitsubishi brand to bring consumers a whole new experience.

CMC will continue to develop auto parts according to customers’ needs to satisfy consumers’ diverse demands. A mobile APP has been developed in line with the new consumption trend to provide car owners with more personalized and customized service, and to improve customers’ attachment and loyalty to the CMC brand.

(2) Actively expanding export sales and joining the international production system of Mitsubishi Motors Japan.

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Operations Overview

The Company is actively accelerating the expansion of its foreign sales business, giving priority to the Middle East, Central and South America, and Southeast Asia markets. Through the enhancement of its own technology, the Company is actively participating in the international production system of Mitsubishi Motors Japan, expanding the benefits of technology development and application fields, and striving for more opportunities for cooperation in overseas markets to strengthen the combined effect of each other.

(3) Enhance the ability of technology R&D

The Company has invested in the establishment of the “China-motor Asia Research & Technology Center” and has developed various new and improved models (e.g. Veryca/Varica 、 Freeca 、 Grunder, Zinger, Colt Plus, Leadca and Grand Lancer, etc) to accommodate the needs of the Taiwan / China markets. In the future, the Company will expand the scope of its in-house technology and establish the capability of key components support to ensure the competitiveness in self-developed vehicles and the new energy market, and to cultivate independent design and development capabilities.

Electric scooters and bikes:

Affected by the oil and electricity equalization policy last year, the price difference between subsidized gasoline scooters and electric scooters has narrowed. Combined with the low oil prices resulting from the impact of the COVID-19 pandemic, sales of gasoline scooters surged by 28% last year (2020). Such short-term favorable policies led to an early replacement wave in Taiwan's scooter market, with total yearly sales volume surpassing one million units(YoY +15%), which adversely affected the sales of electric scooter by 99,205 units (YoY -41%). The drastic shift in industry policy has also led electric scooter manufacturers to adjust their product strategies.

Last year (2020), the Company's eMOVING electric scooter was significantly

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Operations Overview

affected by the oil and electricity equalization, and the number of licensed units decreased by 33% year-on-year to 3,034 units. In contrast, the sales of 3,244 electric bicycles increased 21% year-on-year, indicating that the general public's acceptance of electric two-wheeled vehicles has increased significantly compared to the past. Consumers are beginning to embrace the benefits of electric powered bicycles in a market that is not segregated by gas-powered scooters.

The Company launched the ordinary heavy electric scooter (iE125) in 2019 to enter the mainstream market and continues to plan new models for light electric scooters to be launched this year (2021) to meet the most recent consumer demands and complete the product line of electric scooters. The Company also continues to build supercharging stations to provide consumers with a better service and experience. This year, the Company will collaborate with Gogoro to provide consumers with a better way to replenish their electricity in residential complexes and will offer consumers a variety of energy solutions through the brand’s recharge and exchange program.

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Operations Overview

(II) Main Uses and Production Processes of Major Products

The Company mainly produces a variety of commercial vehicles, sedans and leisure/commercial vehicles primarily for cargo, passenger and leisure use, and their production processes are as follows:

==> picture [414 x 502] intentionally omitted <==

----- Start of picture text -----

Product planning Client
Style design Dealer
Design Vehicle readiness
Completed
Test
vehicle
manufacturing
compliance
Development Completed
and various vehicle inspection
types of testing
Stamping and Mechanical
Supplier parts
door assembly processing
Body Welding Engine assembly
Body painting Vehicle assembly
----- End of picture text -----

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Operations Overview

(III) Supplying Status of Core Materials
The raw materials purchased by the Company are critical parts needed for operations such as car manufacturing, sales and maintenance. International suppliers are companies including Mitsubishi Corporation of Japan. Domestic parts supplies are supported by auto parts third-parties. With signed contracts and

long-time cooperation, the Company’s raw materials supplying status is very stable.

Category	Supplier	Item	Procurement Strategy
Automotive Parts	Mitsubishi Motors Corporation	Parts such as CKD	Contract signed, delivery in batches
Automotive Parts	115 automotive parts suppliers such as Kian Shen Corporation	Auto parts that are domestically produced	Contract signed, delivery in batches
Raw material	CPC Corporation, Taiwan	Various oil products	Contract signed, delivery in batches
Raw material	Such as Taiwan Kansai Paint Co. Ltd.	Baking varnish, spray paint, solvent, etc	Contract signed, delivery in batches
Raw material	Nippon Steel and Sumitomo Metal and Chun Yuan Steel Industry Co., Ltd.	Steel plates	Contract signed, delivery in batches

(IV) Suppliers and Clients that Takes over 10% of the Amount of Imports (Sales) over the Last Two Years
Major Suppliers in the Last Two Calendar Years

Unit: NTD$ Thousand

				Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand
2019				2020
Company Name	Value	% of Total Net Procurement amount	Relationship with Issuer	Company Name	Value	% of Total Net Procurement amount	Relationship with Issuer
Mitsubishi Corporation	2,521,272	12	Investor with significant influence	Mitsubishi Corporation	341,231	2	Investor with significant influence
Net Procurement Amount	20,467,903	100	-	Net Procurement Amount	18,556,152	100	-

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Operations Overview

Note: The decrease in Mitsubishi Corporation of Japan’s purchase amount was due to the business restructuring of Mitsubishi Corporation of Japan and Mitsubishi Motors Corporation of Japan.

2. Major Clients in the Last Two Calendar Year

Unit: NTD$ Thousand

				Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand
2019				2020
Company Name	Value	% of Total Net sales	Relationship with Issuer	Company Name	Value	% of Total Net sales	Relationship with Issuer
Fortune Motors Co	18,280,036	57	Affiliate accounted for using equity method	Fortune Motors Co	19,179,923	62	Affiliate accounted for using equity method
Shung Ye Motor Enterprise	5,969,642	19	Affiliate accounted for using equity method	Shung Ye Motor Enterprise	5,259,792	17	Affiliate accounted for using equity method
Net Sales	32,067,972	100	-	Net Sales	30,874,600	100	-

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Operations Overview

(V) Production in the Last Two Years

Unit:[Quantity - units] Unit: NTD$ Thousand

				Unit:Quantity - units Unit: NTD$ Thousand	Unit:Quantity - units Unit: NTD$ Thousand	Unit:Quantity - units Unit: NTD$ Thousand
Year Capacity Volume and Value Main Products	2019			2020
	Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
4-wheeld vehicles	56,880	49,508	19,903,249	56,880	47,365	19,451,372
2-wheeled vehicles	14,640	4,061	135,560	14,640	3,108	90,702

Note: The production volume and value in the table above are based on production of completed cars.

Production capacity refers to the volume manufactured using existing production equipment

operating under normal single shift given considerations to factors such as holidays or days when production ceases.

(VI) Sales over the Last 2 Calendar Years

Quantity – Vehicles (set) Unit: Unit: NTD$ Thousand

					Unit: Quantity – Vehicles (set) Unit: NTD$ Thousand	Unit: Quantity – Vehicles (set) Unit: NTD$ Thousand	Unit: Quantity – Vehicles (set) Unit: NTD$ Thousand	Unit: Quantity – Vehicles (set) Unit: NTD$ Thousand
Year Volume Main Products	2019				2020
	Domestic Sales		Exports		Domestic Sales		Exports
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
4-wheeld vehicles	46,923	21,362,269	854	241,996	48,440	22,138,001	744	216,420
2-wheeled vehicles	8,241	459,848	-	-	5,964	305,697	-	-

Note: The sales value and value in the aforementioned table is mainly based on sale of completed car.

III. Sales over the Last 2 Years

Sales over the Last 2 Years	Sales over the Last 2 Years
Year		Year 2019	Year 2020	March 31,2021
Number of employees		3,156	2,917	2,877
Average Age		42.19	42.32	42.46
Average years of Service		13.96	13.59	13.61
Education	Ph. D.	3	2	2
	Master	560	517	510
	Bachelor	1,202	1,120	1,113
	Senior High School	1,168	1,084	1,062
	Below Senior High School	223	194	190

Note: The table above is based on consolidated information.

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Operations Overview

IV. Environmental Protection Expenditure

(I) Any losses suffered by the Company in 2020 and up to 31 March 2021 due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in environmental inspection): None

None.

(II) Forecast of Environmental Protection Expenditure for the Next Three Years

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----- Start of picture text -----

Unit: NTD$ Thousand
2021 2022 2023
Year Environmental Environmental Environmental
Item Protection Value Protection Value Protection Value
Expenditure Expenditure Expenditure
(1) Waste water, 39,680 (1) Waste water, 30,574 (1) Waste water, 30,365
Proposed
waste gas and waste gas and waste gas and
Pollution
waste treatment waste treatment waste treatment
Prevention and
transportation fee transportation fee transportation
Control
fee
Equipment or
(2) Pollution 14,251 (2) Pollution 7,221 (2) Pollution 9,051
Expenses
Inspection Fee Inspection Fee Inspection Fee
Expected
Complied with the (1) Air Pollution Control Act, (2) Water Pollution Control Act, (3) Waste
improvement
Disposal Act, and (4) Toxic and Concerned Chemical Substances Control Act.
situation
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V. Labor and Management Relationship

(I) Employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees’ rights and interests.
Employee Welfare
- (1) Uniforms, transportation vehicles and holiday/night car rental concessions.
- (2) Fully equipped dormitories, activity centers, training centers, restaurants and nurseries.
- (3) Regularly holding activities such as family day, year-end dinner and raffles drawing, domestic and foreign travel (with travel subsidies),
- (4) Sponsoring employee’s social group activities.
- (5) Free group term insurance, injury insurance, and regular health checkups

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Operations Overview

for colleagues.

(6) Providing hospitalization condolences, sympathy and mutual aid pro mourning, and dependents entitled to hospitalization benefits.
(7) Providing gifts for the three major Public Holidays, birthdays, wedding, child birth, pregnancy and retirement.
(8) Providing scholarships for employees and their children, emergency loans and aids.
(9) Signing agreements with excellent domestic stores to become “Appointed Stores” to provide employees with diversified information for purchasing and selection.

(10) Providing discounts to employees for purchasing cars.

Education and Training system
(1) The Company’s human resources development integrates the two goals of “Corporate Development” and “Employee Satisfaction” to nurture professionals, develop personal potential and establish learning organizations so that the growth of the Company and employees are integrated.
(2) To implement the concept of talent development, the Company’s talent development system is divided into “ in-house education and training,” “off-site education and training,” “overseas training,” “job training” and “training for verification personnel” to provide a series of courses of core working skill, management skill and professional skill and to offer a convenient real-time online learning system, so that the personal development of employees and the needs of the work task are closely integrated.
- A. In-house education and training:
  - a. Core working skill training
  - b. Management skill training
  - c. Professional skill training

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Operations Overview

d. New Employee Training
e. Project Training
B. Off-site education and training:

For the implementation of education and training in the Company, in addition to the planned in-house education and training, each department may apply to send its staffs to participate in various education and training courses sponsored by external organizations according to its needs. The application for off-site education and training shall be reviewed by the education and training department for qualification and recommendation of dispatching the training or not.

C. Overseas training:

Each department may, according to its actual work needs, participate in overseas training organized by external organizations, or propose its own overseas training program and send appropriate personnel to overseas training after approval. The Company also provide project training for the executives of joint venture companies based in China to come to Taiwan.

D. On-the-Job training (OJT):

The managers at each level will develop their staff’s abilities by assigning work, coaching, and implementing projects in the workplace according to the nature of their work and their individual abilities.

E. Training for verification personnel:

Training and qualification verification for personnel of each department who engages in design, production, installation, after-sales service and environmental management related inspection, testing and monitoring matters, internal auditing and environmental management, and safety and health related operations.

F. Succession training for management and executive personnel: The Group’s senior management conference regularly reviews the selection, promotion, rotation, relocation and expatriation, and cultivation process of the succession of senior management of the Group and each subsidiary every year to implement the management

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Operations Overview

mechanism of the Group’s reserve candidates. In addition to providing multiple training methods for the reserve talents in the “Management Talent Cultivation Program,” the Company also assigns important projects and responsibilities and establishes a rotation career path to complement the implementation of experience training and job rotation for increasing the working exposures and accelerating the maturity of the reserve talents.

Retirement System
(1) The retirement of employees shall be conducted in accordance with the following stipulations:
- A. The Company has a retirement plan for its regular employees. The retirement reserve is funded monthly by the Group and is managed by the Company’s Labor Retirement Reserve Supervisory Committee and deposited in the name of the Committee in Bank of Taiwan.
- B. Those who choose to adopt the Labor Standards Act for retirement will be eligible for retirement benefits only when they meet the Labor Standards Act requirements for retirement and apply for retirement.
- C. Those who choose to adopt the Labor Pension Act shall be paid monthly by the Company to their personal accounts based on the wages of the employees from the date of filing, and their years of service before opting for the Labor Pension Act will be preserved and they can apply for pension only when they meet the retirement requirements of the Labor Standards Law and apply for retirement.
- D. The Labor Pension Act is applicable to all employees who joined the Company after 1 July 2005 (including those who left and were re-employed).
(2) The retirement requirements of employees shall be conducted in accordance with the following stipulations:
- A. An employee who has one of the following conditions may apply for

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Operations Overview

retirement:

     - a. Have been employed by the Company for at least 15 years and have reached the age of 55.

     - b. Have been employed by the Company for at least 25 years.

     - c. Have been employed by the Company for at least 10 years and have reached the age of 60.

  - B. The Company shall not compel an employee to retire unless the employee falls under one of the following circumstances:

     - a. Reaches the age of 65

     - b. Is mentally or physically incapacitated for work.

(3) The pension benefits for employees calculated in accordance with the Labor Standards Act are as follows:
- A. Two base units shall be granted for each year of service; however, one base unit shall be granted for each year of service in excess of 15 years, up to a maximum of a total of 45 base units. Those who have worked for less than half year shall be counted as half year, and those who have worked over half year shall be counted as one year.
- B. For employees who retire due to mental or physical disability resulting from the performance of their duties, 20% or five base units shall be added in accordance with the provisions of the aforementioned clauses.
- C. The standard of base unit of pension refers to the average monthly salary at the time of retirement approved.
Labor-management Agreements
(1) Based on the concept of coexistence and co-prosperity, our Company works together in the spirit of harmony and cooperation to seek the greatest benefits for all employees.
(2) The Company has established a year-end bonus and profit-sharing system to combine the interests of employees with that of the Company and to create excellent performance together.
(3) Regularly convene labor-management meetings to smoothen
- communication channels and promote harmonious and solidarity between

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Operations Overview

employers and employees.

Employee Rights Protection Measures
(1) Promote a program of assistance for employees to maintain their physical and social health, provide psychological and legal consultation and counseling, and build a comprehensive, holistic and caring counseling system.
(2) Conduct training on managerial roles and implement coaching skills in daily management.
(3) Promote the concept of multi-directional communication, encourage participation in management, and cultivate team consensus.
(4) Disclosure of operation and management status to increase cohesion and crisis awareness among employees.
(5) Focus on issues of employees, enhance the union organization, and protect the rights and interests of employees.
(6) Regularly convene labor-management meetings to coordinate the relationship between employers and employees.
Working environment and employee safety protection measures Ensuring work safety is the most critical aspect of the Company, therefore, in addition to the implementation of the relevant national laws and regulations, the Company has also obtained the Ministry of Labor's "Occupational Safety and Health Management System Performance Accreditation" in 2019. In 2020, the Company completed the conversion of the OHSAS 18001 and CNS 15506 (formerly TOSHMS) occupational safety and health management system, and successfully obtained ISO/CNS 45001 certificate, with the validity period lasting from December 14, 2020 to December 13, 2023. This exemplifies the Company's persistence in continuously improving the occupational safety and health standards. Moreover, for various hazards that may be caused by the nature of different workplaces, such as: cutting, winding, induction, falling, fire and explosion, falling objects, poisoning, asphyxiation...etc., hazard
identification, risk assessment and introduction of hazard prevention measures

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Operations Overview

and related management regulations are conducted to ensure the safety and physical and mental health of all employees and stakeholders. Meanwhile, the Company has continued to improve the risk of hazards to personnel, equipment and the environment through the operation mechanism of the occupational safety and health management system and completed 1,010 safety and health improvements in 2020.

(1) Specific practices for a good working environment
A. The Company has planted abundant flowers and trees in the vacant land of its factories to decorate the environment and has planned thematic flower areas and seasonal flowers according to the seasons.
B. Set up QCC space, a café, and other resting places.
C. Smoking is prohibited in all workplaces and restaurants and can only do so in designated smoking locations.
D. Set up a special walkway for dining and commuting to and from work, and properly separate pedestrian and vehicle traffic.
E. The plant is widely equipped with turbine exhaust and partial exhaust equipment to ensure air quality.
F. Introduction and improvement of intrinsic safety of equipment
G. Additional air conditioners are installed in the painting areas to improve comfort.
H. Every half year, the Company implements the environment
- measurement to monitor and improve the working places for dust, noise and organic solvents in the factory.
(2) Protection measures for employee’s physical safety
A. Plan and implement occupational safety and health management system to improve the performance of safety and health management.
B. Develop occupational safety and health management plans and execute them effectively to ensure the safety and health of employees.
C. Regularly convene occupational safety and health meetings and track the status of achieving safety and health performance indicators to strengthen the implementation of safety and health policies

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Operations Overview

     - D. Regularly conduct health examinations for employees and require employees to undergo regular follow-up examinations or treatment in addition to health education for those with abnormal health examination results to ensure the health of employees.

     - E. Promote the concept of hazard prevention and risk management among employees and their families, and continue to conduct home safety and fire escape training, fire escape training in employees’ offices, factories and dormitories, carbon monoxide poisoning prevention, traffic safety, observation of employees’ work safety, and other factory disaster cases studies. In 2020, a total of 1,741 people had completed occupational safety and health education training.

Code of Conduct and Ethics
- (1) Code of Conduct: The Company has set “honesty, care and responsibility” as the code of conduct for its employees.
- (2) Code of Ethics: The Company’s work rules include a special chapter on “Service Ethics,” which explicitly regulates work attitude, stringent confidentiality, rules on the use of public property, and the prohibition of accepting bribes or improper benefits.
- (3) The Code of Conduct and the Code of Ethics are the priorities of the orientation and management of newcomers.
(II) Labor-management disputes in 2020 and as of 31 March 2021
The Company did not have labor-management disputes in 2020 and as of 31 March 2021 and will continue to promote labor-management harmony in such spirit, and hence the Company does not expect to suffer any contingent losses from labor-management disputes in the future.

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Operations Overview

VI. Important Contracts

Important	Contracts
Contract Nature	Parties	commencement dates and expiration dates of contracts	Details	Restrictive clauses
Licensing and technical cooperation contracts	Mitsubishi Motors Corporation	1 July 2005 ~ 7 September 2025	The Company is licensed to manufacture and sell parts, components, and vehicles designed by Mitsubishi Motors Corporation based on the design, drawings, and technical specifications provided by it. Mitsubishi Motors Corporation should send staff to provide necessary technical assistance in manufacturing at any time at the request of the Company.	The Company should not assign or re-license the rights and licenses granted by Mitsubishi Motors Corporation to a third party without Mitsubishi Motors Corporation’s prior written consent.
Parts supply and sales of completed vehicles agreements	Daimler Trucks Asia Taiwan Ltd.	1 January 2017 ~ 20 April 2025	1. The Company provides vehicles under the FUSO brand and locally manufactured parts to Daimler Trucks Asia Taiwan Ltd. (DTAT). 2. DTAT shall provide imported parts to the Company.	The rights and obligations shall not be transferred to third parties without the prior written consent of the counterparty.
Distribution contract	Fortune Motors Co., Ltd.	1 August 2018 ~ 30 December 2021	Distribution of sedans, RVs, Commercial vehicles, and trucks below 3.5 tons.	Distribution territory: Taiwan and Fujian areas under the ROC jurisdiction.
Distribution contract	Shung Ye Motor Enterprise	30 December 2017 ~ 29 December 2021	Distribution of sedans, Rvs, Commercial vehicles below 3.5 tons.	Distribution territory: Taiwan and Fujian areas under the ROC jurisdiction.
Shareholders Agreement	Daimler AG	Since 4 November 2004	Established and manages Fujian Daimler Automotive Co., Ltd. (now Fujian Benz Automotive Co., Ltd.), a joint venture established among CMC, Daimler AG, and Fujian Motors Group, to manufacture medium and light sedans at the weight 2 ~ 6 tons.	Except for models licensed by Mitsubishi Motors Corporation or Daimler AG or independently developed models, the Company should not develop, manufacture, and distribute models competitive with models manufactured and distributed by Fujian Benz Automotive Co., Ltd. in China.

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Financial Overview

I. Condensed Balance Sheet, Statement of Comprehensive Income, Auditors and Auditor’s Opinions for the last five years
(I) Condensed Balance Sheet and Statement of Comprehensive Income

1. Condensed Balance Sheet

(1) Consolidated Financial Statement

Unit: NTD$ Thousand

		Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand
Year Item		Financial Summaryfor The Last Five Years
		2020(note)	2019	2018	2017	2016
Current assets		20,378,864	17,362,074	25,022,561	24,571,917	24,001,876
Investment		25,025,448	25,019,153	30,893,216	30,156,745	29,528,944
Property, Plant and Equipment		6,527,229	6,419,254	6,388,147	6,543,043	6,432,443
Intangible assets		373,697	484,360	304,163	154,628	142,571
Other assets		2,292,455	2,181,627	1,896,329	2,102,593	2,073,639
Total assets		54,597,693	51,466,468	64,504,416	63,528,926	62,179,473
Current liabilities	Before Distribution	7,272,243	7,660,051	7,520,912	7,787,062	7,877,685
	After Distribution	7,272,243	7,660,051	9,873,798	10,278,354	10,092,166
Non-current liabilities		1,618,806	1,641,478	1,209,415	1,284,902	1,580,426
Total Liabilities	Before Distribution	8,891,049	9,301,529	8,730,327	9,071,964	9,458,111
	After Distribution	8,891,049	9,301,529	11,083,213	11,563,256	11,672,592
Equity attributable to shareholders of the parent		42,123,390	38,742,061	52,160,275	50,950,021	49,421,655
Capital stock		5,536,203	5,536,203	13,840,508	13,840,508	13,840,508
Capital surplus		6,411,778	6,414,118	6,403,633	6,407,340	6,407,220
Retained earnings	Before Distribution	30,830,486	27,593,337	32,431,776	30,434,088	28,619,636
	After Distribution	30,830,486	27,593,337	30,078,890	27,942,796	26,405,155
Other equityinterest		(655,077)	(801,597)	(515,642)	268,085	554,291
Treasurystock		-	-	-	-	-
Non-controlling interest		3,583,254	3,422,878	3,613,814	3,506,941	3,299,707
Total	Before Distribution	45,706,644	42,164,939	55,774,089	54,456,962	52,721,362
equity	After Distribution	45,706,644	42,164,939	53,421,203	51,965,670	50,506,881

Note: The 2021 Annual General Meeting of Shareholders has not yet been convened, and the distribution of the 2020 earnings has not yet been determined; therefore, the amount before and after distribution remain the same.

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Financial Overview

(2) Standalone Financial Statement

Unit: NTD$ Thousand

		Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand	Unit: NTD$ Thousand
Year Item		Financial Summaryfor The Last Five Years
		2020(note)	2019	2018	2017	2016
Current assets		15,318,461	12,120,424	18,364,097	18,199,258	17,695,756
Investment		27,392,369	27,117,410	34,316,145	33,640,632	33,011,238
Property, Plant and Equipment		4,206,695	4,013,461	3,610,823	3,654,637	3,471,752
Intangible assets		373,697	484,360	304,163	154,628	142,571
Other assets		1,221,889	1,158,124	1,111,356	1,204,990	1,251,585
Total assets		48,513,111	44,893,779	57,706,584	56,854,145	55,572,902
Current liabilities	Before Distribution	5,533,590	5,310,596	4,692,751	4,969,538	5,014,126
	After Distribution	5,533,590	5,310,596	7,045,637	7,460,830	7,228,607
Non-current liabilities		856,131	841,122	853,558	934,586	1,137,121
Total Liabilities	Before Distribution	6,389,721	6,151,718	5,546,309	5,904,124	6,151,247
	After Distribution	6,389,721	6,151,718	7,899,195	8,395,416	8,365,728
Capital stock		5,536,203	5,536,203	13,840,508	13,840,508	13,840,508
Capital surplus		6,411,778	6,414,118	6,403,633	6,407,340	6,407,220
Retained earnings	Before Distribution	30,830,486	27,593,337	32,431,776	30,434,088	28,619,636
	After Distribution	30,830,486	27,593,337	30,078,890	27,942,796	26,405,155
Other equityinterest		(655,077)	(801,597)	(515,642)	268,085	554,291
Treasurystock		-	-	-	-	-
Total	Before Distribution	42,123,390	38,742,061	52,160,275	50,950,021	49,421,655
equity	After Distribution	42,123,390	38,742,061	49,807,389	48,458,729	47,207,174

126

Financial Overview

2. Condensed Statement of Comprehensive Income

(1) Consolidated Financial Statement

Unit: NTD$ Thousand (except for earnings (losses) per share, NTD)

Year Item	FinancialSummaryfor TheLast FiveYears	FinancialSummaryfor TheLast FiveYears	FinancialSummaryfor TheLast FiveYears	FinancialSummaryfor TheLast FiveYears	FinancialSummaryfor TheLast FiveYears
	2020	2019	2018	2017	2016
Operatingrevenue	30,874,600	32,067,972	34,869,514	38,908,093	40,584,424
Gross profit	4,907,079	5,298,392	6,190,557	6,521,213	7,172,452
Income from operations	1,776,670	1,819,908	1,898,041	2,434,560	2,591,893
Non-operating income and expenses	1,975,796	(3,500,171)	2,412,672	2,441,447	1,493,659
Income beforetax	3,752,466	(1,680,263)	4,310,713	4,876,007	4,085,552
Net Income (loss) from continuing operation	3,540,548	(2,308,373)	3,892,042	4,537,351	3,592,360
Income from discontinuing operation(note)	-	-	-	2,839	5,012
Netincome (Loss)	3,540,548	(2,308,373)	3,892,042	4,540,190	3,597,372
Other comprehensive income (income aftertax)	129,049	(296,174)	(367,622)	(389,392)	(1,370,347)
Total comprehensive income	3,669,597	(2,604,547)	3,524,420	4,150,798	2,227,025
Net income attributable to shareholders of the parent	3,277,320	(2,465,573)	3,592,999	4,105,643	3,189,100
Net income attributable to non-controlling interest	263,228	157,200	299,043	434,547	408,272
Comprehensive income attributable to Shareholders of the parent	3,382,531	(2,674,645)	3,298,141	3,743,553	1,993,759
Comprehensive income attributable to non-controlling interest	287,066	70,098	226,279	407,245	233,266
Earningsper Share	6.01	(2.38)	2.64	3.01	2.34

Note: Net income from discontinued operation is net of income tax.

127

Financial Overview

(2) Standalone Financial Statement

Unit: NTD$ Thousand (except for earnings (losses) per share, NTD)

	Unit: NTD$ Thousand (except for earnings (losses) per share, NTD)	Unit: NTD$ Thousand (except for earnings (losses) per share, NTD)	Unit: NTD$ Thousand (except for earnings (losses) per share, NTD)	Unit: NTD$ Thousand (except for earnings (losses) per share, NTD)	Unit: NTD$ Thousand (except for earnings (losses) per share, NTD)
Year Item	Financial Summaryfor The Last Five Years
	2020	2019	2018	2017	2016
Operatingrevenue	26,962,048	26,365,024	26,585,972	30,234,697	30,577,106
Grossprofit	4,088,747	4,186,339	4,485,470	4,606,119	5,128,358
Income from operations	1,621,866	1,814,933	1,807,663	2,064,434	2,263,593
Non-operating income and expenses	1,756,454	(3,807,506)	2,088,336	2,275,209	1,264,507
Income before tax	3,378,320	(1,992,573)	3,895,999	4,339,643	3,528,100
Net Income (loss) from continuing operation	3,277,320	(2,465,573)	3,592,999	4,105,643	3,189,100
Loss from discontinuing operation	-	-	-	-	-
Net income(Loss)	3,277,320	(2,465,573)	3,592,999	4,105,643	3,189,100
Other comprehensive income (income after tax)	105,211	(209,072)	(294,858)	(362,090)	(1,195,341)
Total comprehensive income	3,382,531	(2,674,645)	3,298,141	3,743,553	1,993,759
Earnings per Share	6.01	(2.38)	2.64	3.01	2.34

128

Financial Overview

(II) Auditors’ Opinions for the Last Five Years

Year	Year 2020	Year 2019	2018	2017	2016
CPA	Chih-Ming Shao Ya-Ling Wong	Chih-Ming Shao Ya-Ling Wong	Chih-Ming Shao Ya-Ling Wong	Chih-Ming Shao Ya-Ling Wong (note)	Chih-Ming Shao Hsiu-Ming Hsu
Audit Opinion	An Unqualified opinion with Other Matter Paragraph	An Unqualified opinion with Other Matter Paragraph	An Unqualified opinion with Other Matter Paragraph	An Unqualified opinion with Other Matter Paragraph	An Unqualified opinion with Other Matter Paragraph

Note: Due to internal rotation of the CPA firm, the auditing CPA has changed from Hsiu-Ming Hsu to Ya-Ling Wong since 2017.

129

Financial Overview

II. Financial Analysis for the Last Five Years

(I) Consolidated Financial Statement

Item	Year		Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
		2020	2019	2018	2017	2016
Financial structure (%)	Debt Ratio	16.28	18.07	13.53	14.28	15.21
	Ratio of long-term capital to property, plant and equipment	725.05	682.42	892.02	851.93	844.19
Solvency (%)	Current ratio	280.23	226.66	332.71	315.55	304.68
	Quick ratio	192.48	133.21	253.61	232.23	228.50
	Interest earned ratio		(78.05)	295.47	366.82	337.02
		224.21
	(times)

Operating performance (times)	Accounts receivable turnover(times)	12.79	10.62	11.13	13.03	13.91
	Average collection period(days)	28.53	34.36	32.79	28.01	26.24
	Inventory turnover (times)	6.16	6.00	6.51	6.59	6.44
	Accounts payable turnover(times)	7.23	7.11	7.84	9.32	9.96
	Average days in sales	59.25	60.83	56.06	55.38	56.67
	Property, plant and equipment turnover (times)	4.77	4.79	5.18	5.77	6.04
	Total assets turnover (times)	0.58	0.53	0.52	0.60	0.63
Profitability (%)	Return on total assets (%)	6.70	(3.95)	6.10	7.24	5.78
	Return on stockholders’ equity (%)	8.06	(4.71)	7.06	8.47	6.83
	Pre-tax income to paid-in capital (%)	67.78	(30.35)	31.15	35.23	29.57
	Profit ratio (%)	11.47	(7.53)	11.62	12.13	9.17
	Earnings per share (NT$)	6.01	(2.38)	2.64	3.01	2.34
Cash flow (%)	Cash flow ratio (%)	41.15	22.24	38.24	22.28	41.31
	Cash flow adequacy ratio(%)	77.57	69.92	85.06	92.85	87.44
	Cash reinvestment ratio (%)	3.98	(0.92)	0.45	(0.58)	1.44
Leverage	Operatingleverage	3.47	2.76	3.09	2.45	2.57
	Financial leverage	1.01	1.01	1.01	1.01	1.00

130

Financial Overview

Year Item	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
	2020	2019	2018	2017	2016
1. The increase in each of the solvency ratios in FY2020 was mainly due to the increase in cash and cash equivalents as a result of the Company's earnings in FY2020. 2. Accounts receivable turnover rate increased in 2020 mainly due to the decrease in average accounts receivable. 3. The increase in each of the profitability ratios in FY2020 was mainly due to the increase in profit or loss after tax as a result of the increase in the shares of affiliates and joint ventures recognized under the equity method. 4. The increase in cash flow ratio and cash reinvestment ratio in FY2020 was mainly due to the increase in net cash flow from operating activities as a result of the decrease in inventories in FY2020. 5. The increase in operatingleverage in FY2020 was mainlydue to the decrease in variable operatingcosts and expenses.

(II) Standalone Financial Statement

Item	Year		Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
		2020	2019	2018	2017	2016
Financial structure (%)	Debt Ratio	13.17	13.70	9.61	10.38	11.07
	Ratio of long-term capital to property, plant and equipment	1021.69	986.26	1468.19	1419.69	1456.29
Solvency (%)	Current ratio	276.83	228.23	391.33	366.22	352.92
	Quick ratio	184.49	125.79	303.32	279.87	264.56
			(23168.45)	86578.76	94341.07	54279.46
	Interest earned ratio (times)	30713.00

Operating performance (times)	Accounts receivable turnover(times)	15.05	14.05	15.60	17.46	18.24
	Average collection period (days)	24.25	25.98	23.40	20.90	20.01
	Inventoryturnover(times)	6.82	6.58	6.96	6.94	6.49
	Accounts payable turnover (times)	7.48	7.61	8.15	9.73	9.95
	Average days in sales	53.52	55.47	52.44	52.59	56.24
	Property, plant and equipment turnover	6.56	6.79	7.19	8.35	8.64
	Total assets turnover (times)	0.58	0.50	0.46	0.53	0.54
Profitability (%)	Return on total assets(%)	7.02	(4.81)	6.27	7.30	5.70
	Return on stockholders’ equity (%)	8.11	(5.42)	6.97	8.18	6.45
	Pre-tax income to paid-in capital ratio Paid-in capital ratio	61.02	(35.99)	28.15	31.35	25.49
	Profit ratio(%)	12.16	(9.53)	13.75	13.80	10.58
	Earningsper share(NT$)	6.01	(2.38)	2.64	3.01	2.34
Cash flow (%)	Cash flow ratio (%)	40.74	26.19	47.00	44.17	38.10
	Cash flow adequacy ratio (%)	63.85	60.23	70.80	82.94	70.23
	Cash reinvestment ratio (%)	3.37	(1.53)	(0.37)	(0.03)	(0.22)
Leverage	Operatingleverage	3.72	2.50	3.09	2.80	2.45

131

Financial Overview

Item	Year	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
		2020	2019	2018	2017	2016
	Financial leverage	1.00	1.00	1.00	1.00	1.00
1. The increase in each of the solvency ratios in FY2020 was mainly due to the increase in cash and cash equivalents as a result of the Company's earnings in FY2020. 2. The increase in each of the profitability ratios in FY2020 was mainly due to the increase in profit or loss after tax as a result of the increase in the shares of affiliates and joint ventures recognized under the equity method. 3. The increase in cash flow ratio and reinvestment ratio in FY2020 was mainly due to the increase in net cash flow from operating activities as a result of the decrease in inventories in FY2020. 4. The increase in operatingleverage in FY2020 was mainlydue to the decrease in operatingincome.

132

Financial Overview

Financial structure
(1) Debt of long fund to bank property and equipment=total liabilities/total assets.
(2) Ratio of long-term capital to property, plant and equipment = (total equity+ non-current liabilities) / property, plant and equipment.

2. Solvency

(1) current ratio = current assets / current liabilities
(2) quick ratio = (current assets- inventory- prepaid expenses - other current assets) / current liabilities.
(3) Interest coverage ratio= earnings before interest and tax / Interest Expense.

3. Operating performance

(1) Account receivable turnover (including accounts receivable and notes receivable resulted from business operation) = net sales / average balance of account receivable (including accounts receivable and notes receivable resulted from business operation).
(2) Days sales in account receivable=365/account receivable turnover.
(3) Inventory turnover=cost of goods sold/average inventory.
(4) Account payable turnover (including accounts payable and notes payable resulted from business operation) =operating costs/average balance of account payable (including accounts payable and notes payable resulted from business operation).
(5) Average days in sales=365/Inventory turnover.
(6) Property, plant and equipment turnover= net sales/net average property, plant and equipment.
(7) Total assets turnover=net sales/average total assets.

4. Profitability

(1) Ratio or return on total assets=[net income+interest expense*(1-tax rate)]/average total assets
(2) Ratio or return on equity=net income/average net equity
(3) Profit ratio= net income/net sales.
(4) Earnings per share= (net income - preferred stock dividend)/weighted average stock shares issued.

5. Cash flow

(1) Cash flow ratio=net cash flow from operating activity/current liabilities.
(2) Cash flow adequacy ratio= (net cash flow from operating activities within five year/ (capital expenditure +inventory increase +cash dividend) within five years.
(3) Cash re-investment ratio= (net cash flow from operating activity -cash dividend)/ (total fixed assets+ long-term investment+ other assets+ working capital).

6. Leverage

(1) Operating leverage= (net operating income-operating variable cost and expense)/operating income.
(2) Financial leverage= operating income/(operating income-interest expense).

133

Financial Overview

III. Audit Committee’s Review Report

The Company’s 2020 Financial Statements and Consolidated Financial Statements were audited and finalized by CPA Chih-Ming Shao and Ya-Ling Wong of Deloitte & Touche. Hence the Company submitted the Financial Statements along with the Operation Report and the earnings distribution proposal for the Audit Committee’s review and were deemed to be correct. This is hereby reported in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Please verify the audit and review results.

To the 2021 Annual Meeting of Shareholders

China Motor Corporation

Chairman of Audit Committee: Chi-Ching Chen

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23 March 2021

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Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

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The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

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VI. If the Company or its affiliates have experienced financial difficulties in 2020 up to March 31, 2021, the annual report shall explain how said difficulties will affect the Company's financial situation: None

295

Review and Analysis of Financial Position, Financial Performance, and Risk issues

I. Financial position

Comparative Analysis of Financial Position

			Unit: NTD$ Thousand	Unit: NTD$ Thousand
Year Item	December 31, 2020	December 31, 2019	Difference
			Value	%.
Current assets	20,378,864	17,362,074	3,016,790	17.38
Investment	25,025,448	25,019,153	6,295	0.03
Property, Plant and Equipment	6,527,229	6,419,254	107,975	1.68
Intangible assets	373,697	484,360	(110,663)	(22.85)
Other assets	2,292,455	2,181,627	110,828	5.08
Total assets	54,597,693	51,466,468	3,131,225	6.08
Current Liabilities	7,272,243	7,660,051	(387,808)	(5.06)
Non-current liabilities	1,618,806	1,641,478	(22,672)	(1.38)
Total Liabilities	8,891,049	9,301,529	(410,480)	(4.41)
Capital stock	5,536,203	5,536,203	-	-
Capital surplus	6,411,778	6,414,118	(2,340)	(0.04)
Retained earnings	30,830,486	27,593,337	3,237,149	11.73
Other equity interest	(655,077)	(801,597)	146,520	18.28
Treasury stock	-	-	-	-
Equity Attributable to the Parent	42,123,390	38,742,061	3,381,329	8.73
Non-controlling interest	3,583,254	3,422,878	160,376	4.69
Total equity	45,706,644	42,164,939	3,541,705	8.40
Variance analysis (changes of 20% or more in the last two years, and changes amounting to NT$10 million). Decrease in intangible assets mainly resulting from the intangible asset reductions related to car model development.

296

Review and Analysis of Financial Position, Financial Performance, and Risk issues

II. Financial performance

Comparative Analysis of Financial Position

Unit: NTD$ Thousand

Year Item	2020	2019	Increase (decrease) Amount	Percentage of change
Net Operating Revenue	30,874,600	32,067,972	(1,193,372)	(3.72)
Operating Costs	25,968,953	26,817,163	(848,210)	(3.16)
Gross profit	4,905,647	5,250,809	(345,162)	(6.57)
Realized Gross Operating Profit	4,907,079	5,298,392	(391,313)	(7.39)
Direct Operating Expenses	3,130,409	3,478,484	(348,075)	(10.01)
Operating Income (Loss)	1,776,670	1,819,908	(43,238)	(2.38)
Non-operating income and expenses	1,975,796	(3,500,171)	5,475,967	156.45
Income (loss) from Continuing Operations before Tax	3,752,466	(1,680,263)	5,432,729	323.33
Income tax benefit (expense)	(211,918)	(628,110)	416,192	66.26
Income (loss) from Continuing Operations after Tax	3,540,548	(2,308,373)	5,848,921	253.38
Income from Discontinued Operations	0	0	-	-
Net profit for the Year	3,540,548	(2,308,373)	5,848,921	253.38
Other Comprehensive Income	129,049	(296,174)	425,223	143.57
Total Comprehensive Income	3,669,597	(2,604,547)	6,274,144	240.89
Variance analysis (changes of 20% or more in the last two years, and changes amounting to NT$10 million): 1. The increase in non-operating income and expenses was mainly due to the increase in the shares of affiliates and joint ventures recognized under the equity method. 2. The decrease in income tax expense was mainly due to the decrease in income tax expense as a result of the investment loss recognized for tax purposes in FY2020. 3. The increase in other comprehensive income was mainly due to the increase in the share of other comprehensive income or loss recognized bythe equitymethod for affiliates andjoint ventures.

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Review and Analysis of Financial Position, Financial Performance, and Risk issues

III. Cash Flow Analysis

(I) Liquidity analysis for the last two years

Year Item	Year 2020	Year 2019	Increase (decrease) %
Cash Flow Ratio (%)	41.15	22.24	18.91
Cash flow Adequacy Ratio (%)	77.57	69.92	7.65
Cash Reinvestment Ratio (%)	3.98	(0.92)	4.90
Analysis of percentage change: The increase in cash flow ratio, cash flow adequacy ratio and cash reinvestment ratio was mainly due to the increase in net cash flow from operating activities as a result of the increase in earnings and decrease in inventories in FY2020.

The increase in cash flow ratio, cash flow adequacy ratio and cash reinvestment ratio was mainly due to the increase in net cash flow from operating activities as a result of the increase in earnings and decrease in inventories in FY2020.

Note: The information in the table is compiled based on data from the consolidated financial statement.

(II) Analysis of the Company's cash liquidity in the next year

Analysis of the Company's cash liquidity in the next year	Analysis of the Company's cash liquidity in the next year	Analysis of the Company's cash liquidity in the next year	Analysis of the Company's cash liquidity in the next year
				Unit: NTD$ Thousand
Cash balance at beginning of year	Estimated annual net cash flows from operating activities	Estimated annual net cash flows from investing and financing activities	Estimated remaining (deficit) cash	Estimated Cash Shortage Remedies
				Investment Plan	Financial Management Plan
6,821,985	2,284,179	(3,766,272)	5,339,892	-	-
1. Analysis of changes in cash flows for the coming year. (1) Operating activities: Operating activities: Net cash inflow from operating revenues of NT$2,284,179,000. (2) Investing activities: Net cash inflow from investing activities is expected to be NT$109,070,000. (3) Fundraising activities: Net cash outflow from fundraising activities was NT$3,875,342,000. 2. Estimated cash shortage remediation measures and liquidityanalysis: Not applicable.

Note: The information in the table is based on individual financial statements.

IV. Impact of recent significant capital expenditures on financial operations

Significant capital expenditures of NT$795,507,000 in FY2020 are expected to have the

298

Review and Analysis of Financial Position, Financial Performance, and Risk issues

following potential benefits:

(I) New product introduction: To increase the market share of the Company's products and increase turnover and sales volume.
(II) Introduction of spare parts: To increase the self-production rate of parts and reduce production costs.
(III) Sales enhancement: Increase company and product awareness, improve after-sales service quality, and promote sales.
(IV) Upward productivity: production line equipment renewal, automation, Layout rationalization for improvements of production capacity and technology.
(V) Improve quality: Improve the total quality assurance capability of third party vendors, implement the operation of the total quality assurance system, eliminate quality PONC (Price of Non Conformance), improve customer satisfaction with product quality, and implement source flow management and foolproof measures.
(VI) Improve the working environment: upgrade computer equipment, replace office equipment and business vehicles with new models, plan and construct factory-wide offices and improve air quality, and add pollution prevention equipment.
V. Recent investment policy, main reasons for profit or loss and improvement plan, and investment plan for the coming year
The reinvestment approach of the Company remains in automobile-related industries. Looking back at the investment gain in 2020, in the overall Taiwanese automobile market (large-sized vehicles included), sales grew modestly from 2019 by 4.1%, mainly due to the growth of the domestic RV car market. By capturing business opportunities and implementing cost-saving practices through our upstream suppliers in Taiwan as well as downstream dealership system, the Company’s profit is equivalent to that in 2019. As for the mainland market, affected by the China -U.S. trade war and the COVID-19 pandemic, the growth rate was still negative in 2020, resulting in a decreased profit of Southeast Motor lower than that in 2020. However, Fujian Benz Automotive retained strong growth driven by selective dealership performance management and strong publicity marketing activities. The Company therefore recognizes that Fujian Benz’s reinvestment profit has increased

299

Review and Analysis of Financial Position, Financial Performance, and Risk issues

compared to 2020. In addition, in 2019, the Company was affected by huge impairment losses of its reinvestment businesses Yulon and Haitec, but there was no such occurrence last year (2020). As a result, the overall reinvestment recognized profit in 2020 was NT$1.693 billion, compared with 2019, which recognized a loss of NT$3.891 billion, registering a growth of 143.5%.

(I) Regarding the reinvestment business in Mainland China, the economic growth rate of Mainland China for the year (2020) was 2.3%, which was a decline of 3.8% from 6.1% in 2019. The overall automobile market sales in 2020 were 25.31 million units, which was a decline of 1.9% from the previous year. The Company's reinvestment in Southeast Auto was affected by the overall market decline in mainland China. In 2020, its sales were 18,500 units, a 53.9% decline from the previous year; as for Fujian Benz Automotive its sales totaled 29,900 units in 2020, an increase of 6.4% from the previous year.
(II) In addition, the green energy business is one of the Company's future investment priorities. In the electric two-wheeler business, the Company launched the first electric locomotive EM50 in 2010, and subsequently launched EM80 and EM100 in 2011 and 2013 respectively. EM25 was launched in 2013 featuring “five exemptions” (licensing-exempt, driving license-exempt, fuel tax-exempt, car inspection-exempt, and fuel-free). In November 2017, the new model eMOVING Shine electric bicycle was launched. The first fast-charging general-heavy vehicle iE125 was launched in Taiwan in July 2019 and the fast-charging commercial model iE PICKUP was launched in October of the same year, with cumulative sales of over 7,000 units. Up to 180 charging stations was constructed across Taiwan (including at CPC petrol stations and other companies). Total electric vehicle sales in 2020 was 6,278 units, with 3,034 electric scooters sold, indicating a market share of 3%.

This year (2021), we will focus on the development of "multiple energy-powered solutions" and provide consumers with more thoughtful and convenient products. The Company will introduce battery-switching models to meet the needs of

300

Review and Analysis of Financial Position, Financial Performance, and Risk issues

consumers under different living and usage conditions.

VI. Risks

(I) The impact of interest rate, exchange rate changes and inflation on the Company's profit or loss and future countermeasures.

The change in interest rate mainly affects the financial assets held by the Company. If the interest rate increases by one dollar, the Company's net income before income tax will increase by NT$18,401,000 in 2020.

The Company holds foreign-currency assets and liabilities, which exposes the Company to the risk of a decrease in the value of foreign-currency assets and fluctuations in future cash flows due to changes in exchange rates. Based on the Company's operating results for 2020, it is estimated that if the NTD strengthens by 1% against the USD, pre-tax income will decrease by NT$3,105,000, if the NTD strengthens by 1% against the JPY, pre-tax income will increase by NT$188,000, and if the NTD strengthens by 1% against the RMB, pre-tax income will decrease by NT$6,873,000.

After the outbreak of the COVID-19 pandemic last year, the United States, Europe and other major countries eased monetary policies to boost the economy. Therefore, the global economy is expected to show recovery after the pandemic is effectively controlled this year, in the low interest rate environment in the short term, the world faces the risk of inflationary pressure, but also the rapid rise of 10-year U.S. bond interest rates. However, the growth rate of core prices remains low, so it is still expected to be shrouded in the shadow of deflation for a prolonged period into the future. High inflation, deflation or negative interest rates will reduce market efficiency, interfere with investment and consumption decisions, and may also have a partial impact on the Company's operating costs. For this reason, CMC will continue monitoring the market's expectations toward inflation or deflation, and respond with appropriate product and service adjustments.

(II) The policies of engaging in high-risk, highly leveraged investments, lending of funds to others, endorsements and guarantees, and derivative transactions, the main reasons for profits or losses, and future measures to address them.
The Company is not engaged in high-risk, highly leveraged investments.

301

Review and Analysis of Financial Position, Financial Performance, and Risk issues

Loans of funds to others, endorsements and guarantees, and derivative transactions are handled in accordance with the policies set forth in the Company's "Procedures for Loans of Funds to Others," "Regulations Governing Endorsements and Guarantees," and "Procedures for Dealing in Derivative Instruments."
(III) Future research and development plans and estimated associated costs. The mission of our R&D center CARTEC and the development of its product groups follow the Company's established management policy and carry out the following technological development directions: (1) Develop relevant vehicle technologies that quickly respond to market demand characteristics and regulations; (2) Develop system integration capabilities to develop differentiated and high value-added products; (3) Modify products to meet the needs of different export regions; (4) Develop new energy and energy-saving related products, and focus on integrated design, analysis, and verification technologies for advanced power systems, electronic control systems, and automotive electronics; and (5) Develop green energy two-wheeled products with cutting-edge features.
The Company expects to spend NT$1,114,736,000 on research and development in FY2021.
(IV) The impact of significant domestic and foreign policy and legal changes on the Company's financial operations and the measures to address them.
The Company continues to pay close attention to changes in laws and policies that affect its business and operations, and no significant domestic or foreign policy and legal changes have had a material impact on the Company's financial operations so far in 2020.
(V) Impact of technological changes and industry changes on the Company's financial operations and measures to address them: The information security risk event was assessed to have no significant impact on the Company's operations.
(VI) The impact of corporate image change on corporate crisis management and response measures: None.
(VII) Expected benefits, possible risks and response measures for mergers and

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Review and Analysis of Financial Position, Financial Performance, and Risk issues

acquisitions activities: None.

(VIII) Expected benefits, possible risks and countermeasures for plant expansion: None.
(IX) Risks associated with the concentration of imports or sales and measures to address them.

The Company's inventory purchases are scattered to hundreds of third-party vendors, there is no centralized phenomenon. Although sales and distribution are made through two major distributors, it is the nature of the industry to deal with a limited number of distributors. The Company has contracts with the distributors and holds equity interests in the distributors as well. In addition, the many years of cooperative relationship indicate there is no risk of concentration of sales.

(X) The impact, risk and countermeasures of a significant transfer or change in shareholding of Directors or major shareholders: None.
(XI) Effect of the change in operating rights of the Company, as well as risk and response measures: None.
(XII) Litigation or non-litigation events: None.
(XIII) Other important risks and corresponding responses: None.

VII. Other important matters: None.

303

Special Notes

I. Information on affiliated companies

(I) Report on Consolidated Operations of Affiliated Companies
Organization chart of affiliated companies: Please refer to page 228
Basic information of each affiliated company

December 31, 2020

Unit: NTD$ Thousand

Serial Number	Company Name	Date of Incorporation	Address	Paid-in capital	Paid-in capital	Paid-in capital	Main business or production items
				Currency	Value	Exchange rate
1	Kian Shen Corporation	May 30, 1963	No. 100, Xinjiang Road, Yangmei District, Taoyuan City	NT	$ 734,001	1.000	Heavy vehicle frame and mold fixture products
2	Kian Shen Investment Co.,Ltd.	March 13, 2002	Portcullis Chambers 4th Floor, Ellen Skelton Building, 3076 Sir Francis Drake Highway,Road Town, Tortola, British Virgin Islands VG1110	US	$ 10,296	28.48	Manufacturin g and Service Industries
3	Kian Shen Investment Hong Kong Co.Limited	November 15, 2007	15/F.,BOC Group Life Assurance Tower,136 Des Voeux Road Central,Central, HK	US	$ 25,907	28.48	Investment
4	COC Tooling & Stamping Co., Ltd.	December 2, 1982	No. 412, Section 2, Renhe Road, Daxi District, Taoyuan City	NT	$ 674,591	1.000	Automotive molds, inspection tools and fixture products
5	Y.M.HI-TECH Industrial., Ltd.	October 1, 2003	No. 412, Section 2, Renhe Road, Daxi District, Taoyuan City	NT	$ 50,000	1.000	Steel plate cutting

304

Special Notes

Serial Number	Company Name	Date of Incorporation	Address	Paid-in capital	Paid-in capital	Paid-in capital	Main business or production items
				Currency	Value	Exchange rate
6	China Engine Corporation	July 24, 1995	No. 3, Chi Niu Diao, 30, Hengfeng Lane, Dayuan District, Taoyuan City	NT	$1,689,000	1.000	Automobile engine and parts manufacturin g
7	Power Station Holdings Ltd. Taiwan Branch (Mauritius)	April 26, 2002	3rd Floor, Standard Chartered Tower, 19 Cybercity, Ebene, Republic of Mauritius	US	$ 3,750	28.48	Reinvestment and general sales business
8	Hua Chung Motor Co., Ltd.	February 15, 2006	No. 618, Xiucai Road, Yangmei District, Taoyuan City	NT	$ 87,900	1.000	Automobile manufacturin g and sales
9	Greentrans Corporation	December 24, 2009	11F, No. 2, Section 2, Dunhua South Road, Da'an District, Taipei City	NT	$ 10,000	1.000	Sales of motorcycle and parts
10	Ling Wei Motor Co., Ltd.	November 19, 2007	11F, No. 2, Section 2, Dunhua South Road, Da'an District, Taipei City	NT	$ 36,084	1.000	Used car sales
11	Greentrans Investment Co., Ltd.	March 14, 2012	Offshore Chambers,P.O.Box 217,Apia, Samoa	US	$ 11,200	28.48	Investment
12	Jiangsu Greentrans Electromechanical Co., Ltd.	July 10, 2012	No.130, Yinshan West Road, Chengxiang Town Industrial Park, Chengxiang Town, Taicang City, Jiangsu Province, China	US	$ 11,200	28.48	Manufacture and sales of electric motorcycle parts
13	Brilliant Insight International	January 16, 2014	No. 3, Qingnian Road, 6, Gaoshan	NT	$ 22,000	1.000	Consulting services

305

Special Notes

Serial Number	Company Name	Date of Incorporation	Address	Paid-in capital	Paid-in capital	Paid-in capital	Main business or production items
				Currency	Value	Exchange rate
	Consultancy Service Co., Ltd.		Lane, Yangmei District, Taoyuan City
14	Fujian Brilliant Insight Consultancy Service Co., Ltd.	April 24, 2013	Comprehensive office building of Southeast (Fujian) Automobile Industry Co., Ltd., Southeast Qingkou Investment Zone, Minhou County, Fujian Province	US	$ 3,400	28.48	Consulting services
15	Hwa Wei Holdings Co., Ltd.	May 26, 1995	Citco Building, Wickhams Cay, P. O. Box 662, Road Town, Tortola, British Virgin Island	US	$ 100	28.48	Overseas investment in production and service industries
16	China Motor Investment Co.,Ltd.	November 8, 2005	Unit 25, 2nd Floor, Nia Mall, Saleufi Street, Apia, Samoa	US	$ 40	28.48	Investment
17	Alliance Investment & Management Co., Ltd	January 11, 1999	13th Floor, No. 2, Section 2, Dunhua South Road, Da'an District, Taipei City	NT	$1,830,000	1.000	Investment
18	Sino Diamond Motor Corporation	June 5, 1993	11F, No. 2, Section 2, Dunhua South Road, Da'an District, Taipei City	NT	$1,510,670	1.000	Sales and after-sales service of vehicles
19	Hwa-Yu Corporation Ltd.	November 12, 2003	2ndFloor,Building B,SNPF Plaza,Savalalo, Apia,Samoa	US	$ 36,943	28.48	Overseas investment in production and service industries
20	Hwa-Lin	December	OMC	US	$ 33,393	28.48	Overseas

306

Special Notes

Serial Number	Company Name	Date of Incorporation	Address	Paid-in capital	Paid-in capital	Paid-in capital	Main business or production items
				Currency	Value	Exchange rate
	Investments Ltd.	14, 1999	Chambers,P.O. Box 3152, Road Town, Tortola, British Virgin Island				investment in production and service industries
21	Tianjin Hwarui Maintenance Co., Ltd.	September 22, 2003	Block A, Wanglanzhuang Automobile City, Weijin South Road, Xiqing District, Tianjin	US	$ 8,020	28.48	Sales and maintenance of vehicle and parts
22	Tianjin Hwahong Sales Co., Ltd.	January 19, 2003	Block A, Wanglanzhuang Automobile City, Weijin South Road, Xiqing District, Tianjin	CNY	$ 30,000	4.377	Sales of vehicle and parts
23	Dongguan Huayi Motor Maintenance Co., Ltd.	July 11, 2016	Hengkeng Section, Guanzhang Road, Liaobu Town, Dongguan City	US	$ 4,450	28.48	Sales and maintenance of vehicle and parts
24	Dongguan Huashun Motor Sales Co., Ltd.	October 18, 2002	Hengkeng Section, Guanzhang Road, Liaobu Town, Dongguan City	CNY	$ 25,000	4.377	Sales of vehicle and parts

307

Special Notes

Information on the same shareholders who are presumed to be in a controlling or subordinate relationship: None.
Information on directors, supervisors and president s of affiliated companies

December 31, 2020

Unit: shares, %

			December 31, 2020 Unit: shares, %	December 31, 2020 Unit: shares, %
Company Name	Title	Name or representative (as of March 31, 2021)	Shares held(Note 1),(Note 2)
			Number of shares	Shareholding ratio
Kian Shen Corporation	Chairperson Director Director Director Independent Director Independent Director Supervisor President	China Motor Corporation Representative: Chao-Wen Chen China Motor Corporation Representative: De-Chao Huang Yulon Management Company Ltd. Representative: Hsin-Cheng Tseng Chin-Huang Chang KUOZUI Motors.,Ltd. Representative: Wen-Chi Chien Kun-Sheng Lan Takayuki Ogano Wei-Ching Lu Te-Chang Yeh Wei Tai Investment Co., Ltd. Representative: Yuan-Lung Chen Chun-Ching Liao De-Chao Huang	32,201,367 32,201,367 10,600 24,178,711 0 0 740,857	43.87% 43.87% 0.01% 32.94% 1.01%
Kian Shen Investment Co.,Ltd.	Director	Kian Shen Corporation Representative: Chao-Wen Chen	10,296,105 (USD$1 per share)	100.00%
Kian Shen Investment Hong Kong Co.Limited	Director	Kian Shen Investment Co.,Ltd. Representative: Chao-Wen Chen	25,907,038 (USD$1 per share)	100.00%
COC Tooling & Stamping Co., Ltd.	Chairperson Director Director	Yulon Motor Co., Ltd. Representative: Chen-Hsiang Yao Yulon Motor Co., Ltd. Representative: Chung-Yuan Chen China Motor Corporation Representative: Tung-Tai Hsiung Chen Shing Ju	25,469,581 25,469,581 33,564,678	37.76% 37.76% 49.76%

308

Special Notes

Company Name	Title	Name or representative (as of March 31, 2021)	Shares held(Note 1),(Note 2)	Shares held(Note 1),(Note 2)
			Number of shares	Shareholding ratio
	Supervisor President	Chin-Huang Chang Tai Yuen Textile Co., Ltd. Representative: Yuan-Lung Chen Tung-Tai Hsiung	8.421,863	12.48%
Y.M.HI-TECH Industrial., Ltd.	Chairperson Director Director Supervisor President	COC Tooling & Stamping Co., Ltd. Representative: Tung-Tai Hsiung COC Tooling & Stamping Co., Ltd. Representative: Chia-Pin Lin Shou-Hsu Chiu Tsung-Chih Chen Metal One Corporation Representative: Ta-Chieh Sun Mei-Ching Wu Chia-Pin Lin	4,250,000 4,250,000 750,000	85.00% 85.00% 15.00%
China Engine Corporation	Chairperson Director Director Director Supervisor Supervisor Supervisor	Yulon Motor Co., Ltd. Representative: Hung-Cheng Chen Yulon Motor Co., Ltd. Representative: Chien-Hui Li China Motor Corporation Representative: Ching-Ya Chen Chen Shing Ju Tao-Ming Wang Chin-Huang Chang Min-Hui Chiu National Development Fund, Executive Yuan Representative: Wei-Hsien Li Chin-Piao Lin Sino Diamond Motor Corporation Representative: Cheng-Chang Huang SENTEC E&E CO., Ltd Representative: Huang-Chao Hui Ministry of Economic Affairs, R.O.C Representative: Chao-Chung Kuo	32,000,000 32,000,000 87,999,000 32,000,000 1,000 6,000,000 8,900,000	18.95% 18.95% 52.10% 18.95% 0.00% 3.55% 5.27%

309

Special Notes

Company Name	Title	Name or representative (as of March 31, 2021)	Shares held(Note 1),(Note 2)	Shares held(Note 1),(Note 2)
			Number of shares	Shareholding ratio
	President	Hung-Cheng Chen
Power Station Holdings Ltd. Taiwan Branch (Mauritius)	Director	China Engine Corporation Representative: Hung-Cheng Chen	3,750,000 (USD$1 per share)	100.00%
Hua Chung Motor Co., Ltd.	Chairperson President	China Motor Corporation Representative: Chao-Wen Chen Hsin-ChengTseng	8,790,000	100.00%
Greentrans Corporation	Chairperson President	Hua Chung Motor Co., Ltd. Representative: Hsin-Cheng Tseng Ching-Wu Chien	1,000,000	100.00%
Ling Wei Motor Co., Ltd.	Chairperson President	Hua Chung Motor Co., Ltd. Representative:Tsung-Yu Chen Tsung-Yu Chen	3,608,397	100.00%
Greentrans Investment Co., Ltd.	Director	Alliance Investment & Management Co., Ltd Representative: Chao-Wen Chen	11,200,000 (USD$1 per share)	100.00%
Jiangsu Greentrans Electromechanical Co., Ltd.	Managing Director Supervisor President	Greentrans Investment Co., Ltd. Representative: Chen-Hsing Chu Greentrans Investment Co., Ltd. Representative: Cheng-Chang Huang Shih-Ching Yao	11,200,000 (Contribution in USD) 11,200,000 (Contribution in USD)	100.00% 100.00%
Brilliant Insight International Consultancy Service Co., Ltd.	Chairperson President	Sino Diamond Motor Corporation Representative: Cheng-Chang Huang Ming-Cheng Sung	2,200,000	100.00%
Fujian Brilliant Insight Consultancy Service Co., Ltd.	Managing Director Supervisor President	Hwa-Yu Corporation Ltd. Representative: Cheng-Chang Huang Hwa-Yu Corporation Ltd. Representative: Chun-Ching Liao Cheng-Chang Huang	3,400,000 (Contribution in USD) 3,400,000 (Contribution in USD)	100.00% 100.00%
Hwa Wei Holdings Co., Ltd.	Director	China Motor Corporation Representative: Chao-Wen Chen	40,000 (USD$1 per share)	40.00%

310

Special Notes

Company Name	Title	Name or representative (as of March 31, 2021)	Shares held(Note 1),(Note 2)	Shares held(Note 1),(Note 2)
			Number of shares	Shareholding ratio
China Motor Investment Co.,Ltd.	Director	China Motor Corporation Representative: Chao-Wen Chen	40,000 (USD$1 per share)	100.00%
Alliance Investment & Management Co., Ltd	Chairperson Director Supervisor President	China Motor Corporation Representative: Chao-Wen Chen China Motor Corporation Representative: Li-Lien Chen Yen Hsin-Cheng Tseng Cheng-Chang Huang China Motor Corporation Representative: Chun-Ching Liao Chao-Wen Chen	183,000,000 183,000,000 183,000,000	100.00% 100.00% 100.00%
Sino Diamond Motor Corporation	Chairperson President	China Motor Corporation Representative: Chao-Wen Chen Hsin-Cheng Tseng	151,067,030	100.00%
Hwa-Yu Corporation Ltd.	Director	Sino Diamond Motor Corporation Representative: Chao-Wen Chen	36,942,942 (USD$1 per share)	100.00%
Hwa-Lin Investments Ltd.	Director	Hwa-Yu Corporation Ltd. Representative: Chao-Wen Chen	33,392,942 (USD$1 per share)	100.00%
Tianjin Hwarui Maintenance Co., Ltd.	Chairperson Vice Chairman Director Supervisor President	Hwa-Lin Investments Ltd. Representative: Ching-Wu Chien Dongguan Huayi Motor Maintenance Co., Ltd. Representative: Cheng-Chang Huang Hwa-Lin Investments Ltd. Representative: Hua-Hsun Yin Hwa-Lin Investments Ltd. Representative: Chun-Ching Liao San-Ho Wang	8,000,000 (Contribution in USD) 20,000 (Contribution in USD) 8,000,000 (Contribution in USD) 8,000,000 (Contribution in USD)	99.75% 0.25% 99.75% 99.75%
Tianjin Hwahong Sales Co., Ltd.	Managing Director	Tianjin Hwarui Maintenance Co., Ltd.	30,000,000 (Contribution	100.00%

311

Special Notes

Company Name	Title	Name or representative (as of March 31, 2021)	Shares held(Note 1),(Note 2)	Shares held(Note 1),(Note 2)
			Number of shares	Shareholding ratio
	President	Representative: San-He Wang San-Ho Wang	in RMB)
Dongguan Huayi Motor Maintenance Co., Ltd.	Managing Director Supervisor President	Hwa-Lin Investments Ltd. Representative: Ching-Wu Chien Hwa-Lin Investments Ltd. Representative: Chun-Ching Liao Hsun-Wen Liu	4,450,000 (Contribution in USD) 4,450,000 (Contribution in USD)	100.00% 100.00%
Dongguan Huashun Motor Sales Co., Ltd.	Managing Director President	Dongguan Huayi Motor Maintenance Co., Ltd. Representative: Hsun-Wen Liu Hsun-Wen Liu	25,000,000 (Contribution in RMB)	100.00%

Note: 1. If the investee company is a limited liability company, the number of shares and the

percentage of shareholding are disclosed, and the amount of capital contribution and the

percentage of capital contribution are disclosed for other companies.

If the director or supervisor is a legal entity, the relevant information of the representative shall be disclosed.

312

Special Notes

5. Overview of the operations of each affiliated company

December 31, 2020

(In NT$ Thousand, except Earnings Per Share)

Company Name	Capital Amount	Total assets	Total Liabilities	Net Value	Operating revenue	Operating Profit	Profit (Loss) for the Period (After Tax)	Earnings per Share (After Tax)
Kian Shen Corporation	734,001	5,285,525	961,549	4,323,976	1,052,991	6,571	324,045	4.41
Kian Shen Investment Co.,Ltd.	328,888	4,213,068	530	4,212,538	0	(81)	403,384	39.18
Kian Shen Investment Hong Kong Co.Limited	737,831	4,135,443	45,803	4,089,640	0	(185)	362,531	13.99
COC Tooling & Stamping Co., Ltd.	674,591	2,127,690	668,870	1,458,820	1,364,517	151,384	128,947	1.91
Y.M.HI-TECH Industrial., Ltd.	50,000	230,735	145,335	85,400	351,938	12,813	12,525	2.51
China Engine Corporation	1,689,000	1,143,035	286,805	856,230	264,666	3,128	29,898	0.18
Power Station Holdings Ltd. Taiwan Branch (Mauritius)	106,800	137,747	53,400	84,347	0	0	(11,032)	(2.94)
Hua Chung Motor Co., Ltd.	87,900	78,815	120	78,695	0	(123)	7,016	0.80
Greentrans Corporation	10,000	36,450	25,658	10,792	92,948	403	416	0.42
Ling Wei Motor Co., Ltd.	36,084	124,845	85,311	39,534	158,160	5,710	6,585	1.82
Greentrans Investment Co., Ltd.	344,369	217,825	0	217,825	104	(35)	(8,171)	(0.73)
Jiangsu Greentrans Electromechanical Co.,Ltd.	318,976	234,852	17,040	217,812	59,760	(8,283)	(8,136)	-
Brilliant Insight International Consultancy Service Co.,Ltd.	22,000	27,442	11,396	16,046	47,649	(4,223)	(3,326)	(1.51)
Fujian Brilliant Insight Consultancy Service Co.,Ltd.	96,832	89,558	497	89,061	6,072	(2,672)	(2,252)	-
Hwa Wei Holdings Co.,Ltd.	3,080	742,169	55,300	686,869	0	(24,399)	(769,574)	(7,695.74)
China Motor Investment Co.,Ltd.	1,402	414,190	0	414,190	0	0	(461,821)	(11,545.53)

313

Special Notes

Company Name	Capital Amount	Total assets	Total Liabilities	Net Value	Operating revenue	Operating Profit	Profit (Loss) for the Period (After Tax)	Earnings per Share (After Tax)
Alliance Investment & Management Co.,Ltd	1,830,000	1,288,468	176	1,288,292	0	(180)	4,039	0.02
Sino Diamond Motor Corporation	1,510,670	2,659,545	1,265,380	1,394,165	2,136,168	58,450	148,047	0.98
Hwa-Yu Corporation Ltd.	1,173,922	813,562	0	813,562	0	0	110,077	2.98
Hwa-Lin Investments Ltd.	1,054,045	724,464	0	724,464	0	(1,648)	112,331	3.36
Tianjin Hwarui Maintenance Co., Ltd.	228,410	332,052	133,396	198,656	73,375	(6,213)	(3,755)	-
Tianjin Hwahong Sales Co.,Ltd.	131,310	195,871	66,023	129,848	1,431	(4,462)	557	-
Dongguan Huayi Motor Maintenance Co.,Ltd.	126,736	24,644	10,320	14,324	2,092	649	(66,030)	-
Dongguan Huashun Motor Sales Co., Ltd.	109,425	188,353	175,064	13,289	68,211	(31,932)	(64,427)	-

(II) Consolidated financial statements of affiliated companies: Consolidated together with the Company’s subsidiaries in the consolidated financial statement.

314

Special Notes

Statement on Consolidated Financial Statements of Affiliated Companies

The Company hereby declares that

For the year ended December 31, 2020 (January 1, 2020 to December 31, 2020), the companies that should be included in the consolidated financial statements of affiliated companies in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" and the companies that should be included in the consolidated financial statements of affiliated companies in accordance with IFRS 10 are consistent, and the information required to be disclosed in the consolidated financial statements of affiliated companies has already been disclosed in the consolidated financial statements of subsidiary companies.

China Motor Corporation

==> picture [92 x 94] intentionally omitted <==

Chairman: Li-Lien Chen Yen

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23 March 2021

(III) Reports on Affiliations: None.

315

Special Notes

II. Private placement of marketable securities during FY2020 up to March 31, 2021: None.
III. Holding or disposal of shares in the Company by the Company's subsidiaries during FY2020 up to March 31, 2021: None.
IV. Other matters that require additional supplementary explanations: None.
V. Events that had a significant impact on shareholders' equity or the price of securities for the year ended 2020 until March 31, 2021: None.

China Motor Corporation

Chairperson

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==> picture [126 x 57] intentionally omitted <==

316

AI assistant

CMC — Annual Report 2020

51979_rns_2021-07-26_123f758d-6d86-433f-8581-cecfcc5eff78.pdf

China Motor Corporation 2020 Annual Report

Notice to Readers

Table of Contents

Report to Shareholders

I. Date of Incorporation

II. Company History

III. Business Results

◆Year 2018

IV. Charity Activities

(I) Promote the Rural Partnership Program

(II) Vehicle maintenance service tour to guard the vehicle safety in rural areas

(III) Long-term sponsorship of the Rural Hope Reading Program

(IV) China Motor Corporation’s Happiness Guard Bus touring around rural areas

(V) China Motor Corporation protecting the environment, cleaning the beach and mountains

Corporate Governance Report

(I) Information on Board of Directors

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Table One

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Directors, the President, and Executive Vice Presidents

1. Remuneration Paid to Directors and Independent Directors

Corporate Governance Report

Corporate Governance Report

2. Remuneration Paid to the President and Executive Vice Presidents

Corporate Governance Report

III. The state of the Company’s implementation of corporate governance

Attendance of Independent Directors at each Board of Directors’ Meeting

(3) The state of implementing Board of Directors evaluations

Corporate Governance Report

Corporate Governance Report

B. Summary of communication state in 2020 and up to March 31, 2021

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

3. Report of the implementation status:

Corporate Governance Report

(3) The duties of the Remuneration Committee

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Corporate Governance Report

Statement of Internal Control System

Corporate Governance Report

2. Major Resolutions and Implementation Status of 2020 Shareholder Meeting

IV. Information Regarding Audit Fees

Audit Fee

Corporate Governance Report

V. Information for Replacement of CPA

(II) Regarding the successor CPA

VII. Changes in Shareholdings of Directors, Managers and Major Shareholders

Corporate Governance Report

VIII. Relationship among the Top Ten Shareholders

Corporate Governance Report

I. Capital and Shares

(I) Source of Capital

(II) Type of Stock

(III) Status of Shareholders

Information on Capital Raising Activities

(IV) Shareholding Distribution Status

(V) List of Major Shareholders

Years

(VII) Dividend Policy and Implementation Status

Information on Capital Raising Activities

CMC Annual Report 2020

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