凤凰网首页 手机凤凰网

凤凰卫视
  • [亚太] 上证指数 2319.12 (1.00%) 深证成指 9466.14 1.78% 恒生指数 19664.10 -1.06% 台北 7233.69 0.17% 韩国 1964.83 0.39%
  • [亚太] 日经 8841.22 -0.09% 澳大利亚 4348.48 0.45% 新西兰 3294.64 0.40% 印度孟买 17234.00 0.92% 新加坡 2916.26 0.75%
  • [美洲] 道琼斯 12660.50 -0.58% 纳斯达克 2816.55 0.40% 标普500 1316.33 -0.16% 加拿大 12466.50 0.02% 巴西 62904.20 -0.08%
  • [欧洲] 英国富时 5733.45 -1.07% 法国CAC 3318.76 -1.32% 德国DAX 6511.98 -0.43% 俄罗斯 1508.04 -0.44% Stoxx50 2436.62 -0.97%
  • [其他] 纽约原油 99.70 0.00% 纽约黄金 1738.40 0.00% 人民币/美元 6.33 0.00% 美元指数 78.83 0.00% 基金指数 3782.30 1.37%
  • [亚太] 上证指数 2319.12 (1.00%) 深证成指 9466.14 1.78% 恒生指数 19664.10 -1.06% 台北 7233.69 0.17% 韩国 1964.83 0.39%
  • [亚太] 日经 8841.22 -0.09% 澳大利亚 4348.48 0.45% 新西兰 3294.64 0.40% 印度孟买 17234.00 0.92% 新加坡 2916.26 0.75%
  • [美洲] 道琼斯 12660.50 -0.58% 纳斯达克 2816.55 0.40% 标普500 1316.33 -0.16% 加拿大 12466.50 0.02% 巴西 62904.20 -0.08%
  • [欧洲] 英国富时 5733.45 -1.07% 法国CAC 3318.76 -1.32% 德国DAX 6511.98 -0.43% 俄罗斯 1508.04 -0.44% Stoxx50 2436.62 -0.97%
  • [其他] 纽约原油 99.70 0.00% 纽约黄金 1738.40 0.00% 人民币/美元 6.33 0.00% 美元指数 78.83 0.00% 基金指数 3782.30 1.37%
免费注册
大华股份(002236)公告正文

大华股份:2018年年度报告(英文版)

公告日期 2019-03-27
股票简称:大华股份 股票代码:002236
                   2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




ZHEJIANG DAHUA TECHNOLOGY CO., LTD.




     2018 Annual Report



                  Stock code: 002236
                  Stock Abbreviation: Dahua
                  Date of Disclosure: March 2019




                                                                          1
                                                       2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




             Section I Important Notes, Contents and Definitions

     The Board of Directors, Board of Supervisors, Directors, Supervisors and Senior Management
of Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to as the "Company") hereby
guarantee that the information presented in this report shall be authentic, accurate and complete and
free of any false records, misleading statements or material omissions, and they will bear joint and
several liability for such information.

     Fu Liquan, the Company's legal representative, Wei Meizhong, chief accountant, and Xu
Qiaofen, person in charge of accounting institution (Accounting Officer) hereby declare and warrant
that the financial statements in the annual report are authentic, accurate and complete.

     All directors attended the meeting of the Board of Directors for deliberation of this annual
report.

     The Company invites each investor to carefully read the annual report and pay particular
attention to the following risk factors:

     1. Risk of technology upgrade

     The video surveillance industry is a typical technology-intensive industry, which is changing
extremely fast. The Company has always attached importance to technical innovation and R&D of
new products, with a strong ability of continuous innovation. If the Company is unable to keep up
with development trends in the industry's technology, to pay full attention to customers' diversified
individual needs, and to be followed by sufficient R&D investments, it will still face the risk of
losing market competitiveness due to discontinuous innovation.

     2. Risk of business model transformation

     With the development of network communications, cloud computing, and big data, as well as
the popularity of smart phones, the business model in the IoT era may have an impact on the
traditional industry development model. If an enterprise cannot timely grasp opportunities brought
about by the business model transformation, it may face the risk that the original market structure
becomes broken.

                                                                                                              2
                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.



     3. Risk of product information security

     The Company attaches great importance to and continuously strengthens resource investment
to ensure safe and reliable operations of the security system so as to respond to the product
information security risks on the Internet. However, there may still exist hackers, computer viruses,
physical    security    vulnerabilities,   natural    disasters,     accidents,      power       interruptions,
telecommunications failures, and other terrorism or warfare events, which exert influences such as
security vulnerabilities, system failures, or service interruptions.

     4. Risk of intellectual property rights

     The acceleration of the Company's globalization and self-owned brand strategy will likely
bring intellectual property risks such as IP rights protection and patent infringement. Preventions of
and responses to the above risk such as rights claims or lawsuits, whether active or passive, all
feature high costs, long cycles and high uncertainty, and may bring about risks such as fluctuations
in business relations and public opinions environment, increased legal litigations and rising costs.

     5. Risk of exchange rate

     The Company's export transactions are mostly settled in United States Dollars ("USD"), while
overseas sales have increased continuously. Therefore, fluctuations in the foreign exchange rate
have the potential to affect the profits of the Company.

     6. Risk of decline in local fiscal spending power

     At present, local fiscal revenues are declining, while the debt is relatively high. If the local
fiscal paying capacity is reduced, it may lead to the slowdown in the growth of some industry
demands, extensions of project time, longer periods for companies to withdraw capital, and
customers' payment delay.

     7. Risk of international operation

     The Company's products and solutions cover many overseas countries and regions.
International business operation may face trade protection, political conflict, debt problem, and
localized operation compliance in the countries where they operate, which may bring negative
impact on the Company's local business development.



                                                                                                                3
                                                       2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.



     The above points might not be all-inclusive of all other potential risks, please pay attention to
the potential investment risk.

     The profit distribution proposal passed upon deliberation at the meeting of the Board of
Directors is: to take 2,997,621,930 as a base, to distribute to all shareholders cash dividends of
RMB 1.00 (tax inclusive) each per 10 shares, and 0 bonus share, and not to convert capital reserves
to share capital.




                                                                                                              4
                                                                                                       2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




                                                                                  Contents




Section I Important Notes, Contents and Definitions ..............................................................................................................................2
Section II Company Profile and Main Financial Indicators ...................................................................................................................10
Section III Corporate Business Overview..............................................................................................................................................13
Section IV Discussion and Analysis on Business Circumstance............................................................................................................36
Section V Significant Events .................................................................................................................................................................56
Section VI Changes in Shares and Information about Shareholders ......................................................................................................75
Section VII Information of Preferred Shares .........................................................................................................................................84
Section VIII Information about Directors, Supervisors, Senior Management and Employees ..............................................................85
Section IX Corporate Governance .......................................................................................................................................................100
Section X Situation on Corporate Bonds .............................................................................................................................................107
Section XI Financial Reports ...............................................................................................................................................................108
Section XII Documents Available for Reference .................................................................................................................................251




                                                                                                                                                                                              5
                                                             2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




                                               Definitions


                     Item              Refers To                                Definitions

From January 1, 2018 to December 31,
                                       Refers To   Reporting Period
2018

Zhejiang Dahua Technology Co., Ltd.    Refers To   Dahua, Dahua Technology, Company, this Company

Dahua System Engineering, System
                                       Refers To   Zhejiang Dahua System Engineering Co., Ltd.
Engineering Company

Dahua Vision Technology                Refers To   Zhejiang Dahua Vision Technology Co., Ltd.

Dahua Security Network, Operation
                                       Refers To   Zhejiang Dahua Security Network Operation Service Co., Ltd.
Company

Dahua Ju'an                            Refers To   Zhejiang Dahua Ju'an Technology Co., Ltd.

Guangxi Dahua Information              Refers To   Guangxi Dahua Information Technology Co., Ltd.

Dahua Security                         Refers To   Zhejiang Dahua Security Service Co., Ltd.

Wuxi Ruide, Wuxi Dahua                 Refers To   Wuxi Dahua Ruide Electronic Technology Co., Ltd.

Guangxi Security                       Refers To   Guangxi Dahua Security Service Co., Ltd.

Huatu Microchip                        Refers To   Zhejiang Huatu Microchip Technology Co., Ltd.

Xiaohua Technology, Hangzhou Xiaohua   Refers To   Hangzhou Xiaohua Technology CO., LTD.

Dahua Zhilian                          Refers To   Zhejiang Dahua Zhilian Co., Ltd.

Tecomore Technology                    Refers To   Hangzhou Tecomore Technology Co., Ltd.

Dahua Investment                       Refers To   Zhejiang Dahua Investment Management Co., Ltd.

South North United                     Refers To   South North United Information Technology Co., Ltd.

Guangxi Zhicheng, Dahua Zhicheng       Refers To   Guangxi Dahua Zhicheng Co., Ltd.

Hangzhou Huacheng, Huacheng Network    Refers To   Hangzhou Huacheng Network Technology Co., Ltd.

Xinjiang Information                   Refers To   Xinjiang Dahua Zhixin Information Technology Co., Ltd.

HuaRay Technology                      Refers To   Zhejiang HuaRay Technology Co., Ltd.

Fuyang Hua'ao                          Refers To   Hangzhou Fuyang Hua'ao Technology Co., Ltd.

Huafei Intelligent                     Refers To   Zhejiang Huafei Intelligent Technology CO., LTD.

Huachuang Vision                       Refers To   Zhejiang Huachuang Vision Technology Co., Ltd.

Guizhou Huayi                          Refers To   Guizhou Huayi Shixin Technology Co., Ltd.

Hunan System Technology                Refers To   Hunan Dahua System Technology Co., Ltd.

Xinjiang Dahua Information             Refers To   Xinjiang Dahua Information Technology Co., Ltd.



                                                                                                                    6
                                                             2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Xinjiang Intelligence                 Refers To   Xinjiang Dahua Intelligence Technology Co., Ltd.

Guizhou Intelligence                  Refers To   Guizhou Dahua Intelligence Technology Co., Ltd.

Xinjiang Zhihe                        Refers To   Xinjiang Dahua Zhihe Information Technology Co., Ltd.

China Standard Intelligent Security   Refers To   China Standard Intelligent Security Technology Co., Ltd.

Guangxi Huacheng                      Refers To   Guangxi Huacheng Technology Co., Ltd.

Meitan Dahua Technology               Refers To   Guizhou Meitan Dahua Information Technology Co., Ltd.

Inner Mongolia Zhimeng                Refers To   Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd.

Xinjiang Zhitian                      Refers To   Xinjiang Dahua Zhitian Information Technology Co., Ltd.

Xinjiang Xinzhi                       Refers To   Xinjiang Dahua Xinzhi Information Technology Co., Ltd.

Xinjiang Huayue                       Refers To   Xinjiang Dahua Huayue Information Technology Co., Ltd.

Tianjin Dahua                         Refers To   Tianjin Dahua Information Technology Co., Ltd.

Dahua Zhilong                         Refers To   Hunan Dahua Zhilong Information Technology Co., Ltd.

Vision Technology                     Refers To   Zhejiang Fengshi Technology Co., Ltd.

Zhongcheng Technology                 Refers To   Dahua Zhongcheng (Beijing) Technology Co., Ltd.

Huaxiao Technology                    Refers To   Zhejiang Huaxiao Technology Co., Ltd.

Xi'an Dahua                           Refers To   Xi'an Dahua Zhilian Technology Co., Ltd.

Wuxi Ruipin                           Refers To   Wuxi Dahua Ruipin Technology Co., Ltd.

Dahua Robot                           Refers To   Zhejiang Dahua Robot Technology Co., Ltd.

Beijing Huayue                        Refers To   Beijing Huayue Shangcheng Information Technology Service Co., Ltd.

                                                  Shanghai Huashang Chengyue Information Technology Service Co.,
Shanghai Huashang                     Refers To
                                                  Ltd.

Dahua Jinzhi                          Refers To   Zhejiang Dahua Jinzhi Technology Co., Ltd.

Dahua Guangxun                        Refers To   Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd.

Huajuan Technology                    Refers To   Hangzhou Huajuan Technology Co., Ltd.

Dahua HK                              Refers To   Dahua Technology (HK) Limited

Dahua USA                             Refers To   Dahua Technology USA Inc.

Dahua Europe                          Refers To   Dahua Europe B.V.

Dahua Middle East                     Refers To   Dahua Technology Middle East FZE

Dahua Mexico                          Refers To   Dahua Technology Mexico S.A. DE C.V

Dahua Chile                           Refers To   Dahua Technology Chile SpA

Dahua Colombia                        Refers To   Dahua Technology Colombia S.A.S

Dahua Australia                       Refers To   Dahua Technology Australia PTY LTD

Dahua Singapore                       Refers To   Dahua Technology Singapore Pte. Ltd.

Dahua South Africa                    Refers To   Dahua Technology South Africa Proprietary Limited




                                                                                                                       7
                                                   2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Dahua Peru                  Refers To   Dahua Technology PerúS.A.C

                                        DAHUA TECHNOLOGY BRASIL COMRCIO E SERVIOS EM
Dahua Brazil                Refers To
                                        SEGURANA ELETRNICA LTDA

Dahua Russia                Refers To   Dahua Technology Rus Limited Liability Company

Dahua Canada                Refers To   Dahua Technology Canada INC.

Dahua Panama                Refers To   Dahua Technology Panama S.A.

Dahua Hungary               Refers To   Dahua Technology Hungary Kft

Dahua Poland                Refers To   Dahua Technology Poland Sp. z o.o.

Dahua Italy                 Refers To   Dahua Italy S.R.L.

Dahua Tunisia               Refers To   Dahua Technology Tunisia

Dahua Kenya                 Refers To   Dahua Technology Kenya Limited

Dahua UK                    Refers To   Dahua Technology UK Limited

Dahua Bulgaria              Refers To   Dahua Technology Bulgaria EOOD

Dahua Serbia                Refers To   Dahua Technology SRB d.o.o.

Dahua Germany               Refers To   Dahua Technology GmbH

Dahua Malaysia              Refers To   Dahua Security Malaysia SDN. BHD.

Dahua Korea                 Refers To   Dahua Technology Korea Company Limited

Dahua Indonesia             Refers To   PT. Dahua Vision Technology Indonesia

Dahua India                 Refers To   Dahua Technology India Private Limited

Dahua Turkey                Refers To   Dahua Guvenlik Teknolojileri Sanayi ve Ticaret A.S.

Dahua Czech                 Refers To   Dahua Technology Czech s.r.o.

Dahua Argentina             Refers To   Dahua Argentina S.A.

Dahua Spain                 Refers To   Dahua Iberia, S.L.

Dahua Kazakhstan            Refers To   Dahua Technology Kazakhstan LLP

Dahua Denmark               Refers To   Dahua Technology Denmark Aps.

Dahua France                Refers To   Dahua Technology France

American Lechange           Refers To   Lorex corporation

Dahua Technology Holdings   Refers To   Dahua Technology Holdings Limited

Dahua Morocco               Refers To   Dahua Technology Morocco SARL

Dahua Technology Italy      Refers To   Dahua Technology Italy S.R.L.

Dahua Uzbekistan            Refers To   Dahua Vision LLC

Dahua Netherlands           Refers To   Dahua Technology Netherlands B.V.

Dahua Sri Lanka             Refers To   Dahua Technology China (Pvt) LTD

Dahua Lorex                 Refers To   Lorex Technology Inc




                                                                                                          8
                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Dahua Pakistan      Refers To   Dahua Technology Pakistan (private) Limited

Dahua New Zealand   Refers To   Dahua Technology New Zealand Limited

Dahua Thailand      Refers To   Dahua Technology(Thailand) Co.,LTD.

Dahua Romania       Refers To   Dahua Technology SRL




                                                                                                 9
                                                                      2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




          Section II Company Profile and Main Financial Indicators

I. Company Information

Stock Abbreviation                      Dahua                          Stock Code                      002236

Stock Exchange                          Shenzhen Stock Exchange

Company Name in Chinese                 浙江大华技术股份有限公司

Abbr. of the Company Name in
                                        大华股份
Chinese

Company Name in English (if any)        ZHEJIANG DAHUA TECHNOLOGY CO., LTD.

Legal Representative                    Fu Liquan

Registered Address                      No. 1187, Bin'an Road, Binjiang District, Hangzhou City, Zhejiang Province

Postal Code of the Registered Address   310053

Office Address                          No. 1199, Bin'an Road, Binjiang District, Hangzhou City, Zhejiang Province

Postal Code of the Office Address       310053

Company Website                         www.dahuatech.com

E-mail                                  zqsw@dahuatech.com


II. Contacts and Contact Information

                                                    Secretary of the Board                  Representative of Securities Affairs

Name                                    Wu Jian                                         Lou Qiongyu

                                        No. 1199, Bin'an Road, Binjiang District,       No. 1199, Bin'an Road, Binjiang District,
Address
                                        Hangzhou City, Zhejiang Province                Hangzhou City, Zhejiang Province

Tel.                                    0571-28939522                                   0571-28939522

Fax                                     0571-28051737                                   0571-28051737

E-mail                                  zqsw@dahuatech.com                              zqsw@dahuatech.com


III. Information Disclosure and Place for Report Preparation

News media designated by the Company for information disclosure                     Securities Times

Website specified by CSRC for the release of the Annual Report                      http://www.cninfo.com.cn

Place for Annual Report preparation                                                 Securities Investment Department




                                                                                                                                    10
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


IV. Changes in Company Registration

Organization Code                                                           91330000727215176K

Changes in Main Businesses since the Company was Listed (if any)            None

Changes in Controlling Shareholders of the Company (if any)                 None


V. Other Relevant Information

Accounting firm engaged by the company

Accounting Firm Name                                 BDO China Shu Lun Pan Certified Public Accountants LLP

Office Address of the Accounting Firm                4F, New Huangpu Financial Plaza, No. 61, Nanjing East Road, Shanghai

Name of Signed Accountants                           Li Huifeng, Du Na

Sponsors engaged by the Company to continuously perform their supervisory functions during the reporting period
□ Applicable √ Not applicable
Financial advisors engaged by the Company to continuously perform their supervisory functions during the reporting period
□ Applicable √ Not applicable


VI. Key Accounting Data and Financial Indicators

Whether the Company needs performed retroactive adjustment or restatement of accounting data in prior years or not
□ Yes √ No

                                                     2018                   2017              YoY Change (%)          2016

Operating Revenue (RMB)                          23,665,688,106.22     18,844,458,053.78                25.58% 13,329,094,010.82

Net Profit Attributable to Shareholders of the
                                                  2,529,426,468.61       2,378,726,820.22                6.34%   1,825,199,447.95
Listed Company (RMB)

Net Profit Attributable to Shareholders of the
Listed Company after Deducting                    2,495,121,029.76       2,340,407,357.44                6.61%   1,719,172,124.08
Non-recurring Gains and Losses (RMB)

Net Cash Flow Generated by Operational
                                                   955,315,978.17         914,231,360.01                 4.49%     470,737,105.34
Activities (RMB)

Basic Earnings per Share (RMB/Share)                            0.87                   0.82              6.10%                0.63

Diluted Earnings per Share (RMB/Share)                          0.87                   0.82              6.10%                0.63

Weighted Average ROE                                        22.16%                 25.47%               -3.31%              24.80%

                                                  End of 2018            End of 2017          YoY Change (%)       End of 2016

Total Assets (RMB)                               26,350,599,778.15     21,333,478,563.97                23.52% 15,366,397,939.88

Net Assets Attributable to Shareholders of
                                                 12,618,758,918.48     10,466,434,375.19                20.56%    8,237,011,399.80
the Listed Company (RMB)




                                                                                                                                 11
                                                                            2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards

1. Differences of net profits and net assets in the financial reports disclosed according to the international
accounting standards and Chinese accounting standards

□ Applicable √ Not applicable


2. Differences of net profits and net assets in the financial reports disclosed according to the overseas
accounting standards and Chinese accounting standards

□ Applicable √ Not applicable
There are no differences of net profits and net assets in the financial reports disclosed according to the overseas accounting standards
and Chinese accounting standards during the reporting period.


VIII. Key Quarterly Financial Indicators

                                                                                                                             Unit: RMB

                                           1st Quarter              2nd Quarter              3rd Quarter             4th Quarter

Operating Revenue                          3,617,652,691.40            6,196,388,661.08      5,216,687,713.72        8,634,959,040.02

Net Profit Attributable to
Shareholders of the Listed                   295,523,140.67             786,393,745.85         481,764,501.06          965,745,081.03
Company

Net Profit Attributable to
Shareholders of the Listed
                                             290,656,854.31             816,827,534.69         515,756,982.03          871,879,658.73
Company after Deducting
Non-recurring Gains and Losses

Net Cash Flow Generated by
                                          -1,286,295,160.14             189,938,323.14        -570,615,032.53        2,622,287,847.70
Operational Activities

Whether there are significant differences between above financial indicators (or sum of them) and relevant financial indicators
disclosed in the Company’s quarterly report and semi-annual report
□ Yes √ No


IX. Non-recurring Gains and Losses Items and Their Amounts

√ Applicable □ Not applicable
                                                                                                                             Unit: RMB

                                                                                                                                Descrip
                                  Item                                          2018             2017              2016
                                                                                                                                  tion

Profits or losses from disposal of non-current assets (including the
                                                                               -257,185.57    -8,066,035.13      1,407,453.81
write-off for the accrued impairment of assets)

The government subsidies included in the current profits and losses
                                                                             78,342,817.78   44,055,931.15 101,679,403.18
(excluding the government subsidies closely related to regular

                                                                                                                                         12
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


businesses of the Company and issued in the quota or quantity based
on the national standards)

Profits and losses resulting from the changes in fair value for holding
trading financial assets and trading financial liabilities, and
investment income from disposal of trading financial assets, trading
                                                                          -83,285,344.55     6,841,311.77    21,720,856.17
financial liabilities, and financial assets available for trading,
excluding the effective hedging businesses related to the regular
business operation of the Company

Profits and losses from the externally entrusted loans                                                          853,418.80

Non-operating income and expenses other than the above                     68,947,139.26    4,327,600.51      1,816,484.30

Other gains and losses items that fit the definition of non-recurring
                                                                              733,001.58      725,549.00        121,205.21
gains and losses

Less: Impact of income tax                                                 13,376,532.24    7,282,387.96     21,481,784.64

     Impact of minority equity (after tax)                                 16,798,457.41    2,282,506.56         89,712.96

Total                                                                      34,305,438.85   38,319,462.78 106,027,323.87        --

Companies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gains and losses items listed in the
said document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in the No. 1
Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to Public - Non-recurring Gains and
Losses, as recurring gains and losses items.




                              Section III Corporate Business Overview

I. The Principal Business of the Company during the Reporting Period

I.      Main businesses and products


1. Main businesses


     The Company is a world-leading video-centric smart IoT solution and service provider. In 2018, based on the in-depth insight

into the future trend, Dahua launched "Dahua HOC (Heart of City)" strategy. Supported by the concept of "Full Sensing, Full

Intelligence, Full Computing and Full Ecosystem (4 Full) capabilities", Dahua provides practical solutions and products for

application at the city, industry and commercial level.

     With the customer demands as orientation, customer success as the goal, and constantly looking into and understanding

customers' businesses as the basis, the Company will continue to enrich the cooperative ecosystem and create values in city operation,

enterprise management, as well as consumer life. Based on the Company's leading position in technological innovation, industry

experience, and customer base, the Company has built a video-centric smart IoT ecosystem to help partners and customers, enabling



                                                                                                                                    13
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


a safer society and smarter living.


2. Solutions and products


     The Company provides customers with video-centric smart IoT solutions and products. Based on the in-depth understanding of

the market and customer demands, the Company has launched a series of industrial solutions and core products targeting at different

industrial features and application scenarios.


(1) Solutions


     Centering on the demand of scenario construction, based on the "Dahua HOC" structure and supported by the concept of "Full

Sensing, Full Intelligence, Full Computing and Full Ecosystem (4 Full) capabilities", the Company provides all-round solutions at the

city, industry and commercial level, and creates values for city operation, enterprise management and individual consumers.

     For city-level and industry-level customers, the Company conducts deepened designs for scenario-based demands of customers

in fields of safe city, smart traffic, smart transportation, smart banking & finance, smart building, smart retail, and others, to form

more abundant and refined scenario-based solutions. Meanwhile, the Company has also expanded and incubated new solutions for

emergency commanding, smart manufacturing, etc. For small and micro-sized business users, the Company takes Imou Cloud as its

basis to build the three-in-one business ecosystem and design multiple household and store scenario applications, and the Company

opens up its cloud capabilities to provide more intelligent, convenient and safe solutions for end users and partners.


A.    City-level business solutions


     With focus on the video-centric IoT strategy and deep commitment to the city-level markets, the Company has innovatively put

forward the overall framework for Dahua HOC, which is structured on the framework of "One Platform - City Big Data Platform,

Two Centers - City Operations and Management Center and City Security Center and N Applications" (abbreviated as 1+2+N). It

focuses on the closed-loop data value chain and the new value generated from data mining, and lays emphasis on the close

connection between the platform and businesses, aiming for "improved efficiency, increased benefit and optimized experience". The

Company is collaborating with the whole industry chain ecological partners to provide systematic smart city solutions and

operational services and facilitate urban digital transformation and sustainable development.

     City Big Data Platform: Uses targeted collection and acquisition of urban operations model data to achieve a closed loop data

value chain and enable data as business services which engage in sensing within needed scenarios, logically deploy computing power

and storage, and realize business and data modeling required for urban operations.

     Operation Management Center: Provides comprehensive supervision, decision-making aid, command and dispatch services for

urban operators to achieve centralized and efficient city management operations.

     City Security Center: Encompasses all levels of security, including client security, network security, and data security to enable

three-dimensional comprehensive protection and serve as protection for smart city applications, transforming network security from

"passive protection" to "active sensing."

     In 2018, as a council member of the National Standardization General Meeting on Smart Cities, the Company participated in the

establishment of 3 important standards on smart cities, the top-level design of smart cities for 15 regions, covering provincial capitals,

                                                                                                                                      14
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


prefecture-level cities, county-level cities and scientific parks and 6 national research projects and their application, won 13

important awards for smart cities, covering big data, AI, and other innovative applications of advanced technologies and top-level

designs, smart city solutions, etc., and established an ecosphere with more than 150 partners.

     Taking the smart city construction in Shuangpai, Hunan Province as an example, centering on building a "smart Shuangpai" and

"demonstration county providing whole-region tourism", based on the concept of "one platform, two centers and four smart

applications" HOC new smart city structure, Dahua satisfies the multi-level, all-round social demands of the locality to build

businesses in a multi-dimensional manner. Through establishing a visual, three-dimensional and integrated AI smart management

system, it serves the construction of "efficient Shuangpai" and "safe Shuangpai" and promotes the refined government management

and modernized governance; through building a unified city big data platform, it breaks the data barriers, realizes cross-sectoral data

integration, and serves the construction of "Internet+ government administration", so as to realize "one website for all affairs, and one

affair done in no more than one time" and play a guiding and demonstration role.




                                                                                                                                      15
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.



B.   Industry-level business solutions


1)   Smart policing solution

     Based on typical business scenarios, by looking into the businesses of all police combat units and targeting at multi-dimensional

pain points of multiple businesses of customers, Dahua HOC smart policing solution is created. Learning experience from hundreds

of actual police affair projects, Dahua HOC smart policing solution has summarized and extracted three key points, i.e. "sensing

online, data computing and taking actions", to form a new mode, "Online Police", realize police resources going online, police

objects going online and affair handling going online and help with the reform of the police organization and police mechanism. It

focuses on enhancing the prediction, warning and prevention abilities, targeted crime fighting and dynamic management abilities and

comprehensively enhancing the ability to realize informatization in everyday practice and the work efficiency of the police.

     Taking the police station in Jianggan District, Hangzhou City as example, Dahua established a whole set of platforms based on

the "Dahua HOC smart policing" structure for Jianggan Police. Supported by IoT multi-dimensional sensing, big data, cloud

computing, AI and other technologies, carried by the smart application platform, it's established through analysis of 5000 scenarios

and 46 practical application models. It's a powerful backup force for fighting against crimes, finding missing personnel and

predicting mass incidents.




2)   Smart traffic control solution

     With the concept of "full sensing, accurate computing and implementation of services" as the principle for top-level designs and

"scenario-based, standardized and case-oriented" as the guidance for deepened designs, Dahua HOC smart traffic control solution

provides support to the construction and development of modern smart traffic control. Always thinking from the perspective of

customers, the Company has enhanced the actual capacity for traffic control, making traffic control more precise and efficient. Based

on data, network and business work flow, Dahua has established management center and transportation security center with

intelligence, command, control and supervision functions integrated to conduct six businesses, including traffic monitoring, traffic



                                                                                                                                   16
                                                                            2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


organization and control, and traffic guidance, help the traffic control authority "guard safety, facilitate smoothness and increase

efficiency", help traffic control departments to establish data ecosystem and partner ecosystem required for continuous development,

and create new modes and systems for smart city traffic governance.




3)    Smart transportation solution

     Centering on the production safety, operation service enhancement and public travel convenience in various sectors of

transportation, Dahua HOC smart transportation solution has established a comprehensive sensing system for traffic data and an

accurate operation system for safety assurance, and a smart data analysis and decision-making system, to comprehensively enhance

the ability to ensure traffic safety and provide quality public services.

     Smart airport solution: targeting at different airport scenarios, it provides a series of scenario-based solutions, such as the

landside, terminals and aircraft movement areas. Centering on core businesses in airports, based on the traditional video networking,

it adopts the core algorithm and smart front-end and back-end platforms of Dahua, to continuously enhance the value of massive

video data and make the airport services more flexible, safer and more efficient. Taking Guangzhou Baiyun Airport as an example,

Dahua's airport safety management solution is comprehensively used in the construction of "safe airport" project in Guangzhou

Baiyun Airport, to ensure the safety of terminals, roads on the landside and other areas under the administration of the airport.

     Smart metro solution: urban railway transport system which involves multiple fields and types of work has many business

problems, such as the management of large amount of devices and data. Based on the advanced video cloud architecture technology,

Dahua smart metro solution has solved the problems of big data access, storage, gathering, fault tolerance under the scenario of urban

railway transport, realized unified management of sub-systems, made the urban railway transport be resource pool based, data be

intelligent and businesses handled on platforms, so as to satisfy the demands under the railway transport scenario. Taking Beijing

Metro as an example, Dahua metro cloud storage system solution is fully applied to Beijing New Airport metro line and TCC metro

command center, which boasts the first metro cloud storage system project in China.

     Smart security check solution: targeting at the three chronic problems of "low efficiency, false safety and tendency to

congestion", it satisfies the business demand of the customers in security check under multiple scenarios, and makes the smart


                                                                                                                                    17
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


investigation and arrest more accurate, the network control more scientific, passenger flow control more efficient and cost of

operation lower.

     Smart on-vehicle solution: by integrating mobile communication, IoT, ADAS and other technologies, it makes the operation of

vehicles safer. Meanwhile, via the back-end big data processing and AI analysis, the application value of vehicles' travel data is

largely improved, which can satisfy the demands of transportation enterprises and industrial regulators.


4)    Smart fire control solution

     Dahua HOC smart fire control solution goes deeply into the independent management of units, fire control supervision, fire

extinction and other business points. Targeting at the application scenarios of fire control, the "full coverage with zero blind area" fire

safety management is realized to make entities perform their duties and strengthen the supervision on fire control. Through the

front-end smart collection of multi-dimensional data, analysis on city-level big data and commanding and dispatching applications at

war, it can realize the precognition, prediction and prejudgment of fire, help with the decision-making in fire control management,

enhance the efficiency of actual commanding and reduce property loss.

     In terms of fire extinction, Dahua has innovatively developed the second-generation smart firefighting and rescue robots to solve

the fire problems in areas that "human cannot reach, get access to, or be rescued", realize the replacement of human by robots and

ensure the life security of fire fighters. It can seamlessly connect with the fire emergency commanding platform, to transmit real-time

information of the fire scene and realize the visualization of the rescue process and intelligence of back-stage commanding.




5)    Smart finance solution

      Dahua HOC smart finance solution has been refined continuously on the basis of the previous video networking solution. It has

loaded various AI technologies, IoT sensing technologies and big data technical applications, and integrated into the physical

scenarios of the financial industry, and solved more than 40 targeted business demands and pain points. Meanwhile, the Company

continues to expand from the security field to the operational field, and actively increase the width and depth of businesses into the

financial field. Currently, the construction of pilot branches for smart finance upgrading has been spread among state-owned banks,

                                                                                                                                        18
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


stockholding banks, city commercial banks and some other financial institutions.

     Taking the security field as an example, the solution has further enhanced the accuracy of warning triggering, reduced omitted

and wrong warning and released human resources; it has realized visualized management of business data in the security field,

enhanced the speed of response to decision-making and the emergency commanding ability; it has also enhanced rapid processing of

early warnings and efficient management of businesses.


6)   Smart judicature solution

     Dahua HOC intelligent judicature solution, on the basis of the information-centric development planning, construction and

application requirements, meets the construction requirements of the intelligent modern civilized judicial system, and based on the

actual application scenarios and by use of intelligent management methods, to realize the digital and visual law enforcement for more

accuracy and impartiality and facilitate the upgrading, transformation and development of core judicial business.

     Dahua judicature solution satisfies the requirements of video confidentiality, storage safety, regulated law enforcement,

abnormal warning, etc., in judicial case handling and execution of punishment. The product design complies with the industrial

standards.


7)   Smart community solution

     Dahua HOC smart community solution targets at smart management design of communities and creates comprehensive

solutions for smart communities. Meanwhile, via AI, visual face-to-face communication can be realized. The deep integration of

multiple systems further realizes information sharing and synergy among systems and the smart application of systems, and provides

proprietors with safe living environment and convenient way of access. At present, the Company has entered into the long-term

strategic partnership or various project cooperation with many mainstream real estate customers.

     Meanwhile, the Company is committed to the development and integration of peripheral sensing products for communities,

providing more valuable structured data for community management, connecting upstream and downstream business partners,

establishing advanced and practical IoT business ecosystem for smart communities, building cloud platforms for communities,

realizing the integration of the community's property management system and security system, providing convenient one-stop APP

services and providing property management with data operation support to help real estate customers enhance the value of their

premises and build high-quality premises.




                                                                                                                                  19
                                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




8)   Smart park solution

     In 2018, Dahua HOC smart park solution expanded the business application to all business scenarios in application parks, such

as production parks, office parks, education parks, industrial parks, logistics parks, medical parks and so on, and satisfied the

demands of managing enterprise personnel, vehicles and objects.

     The solution focuses on upgrading of intelligent capabilities and park security level to deliver the face-recognition access

management for a better user experience. Moreover, the Company has established strategic cooperation ecosphere to upward support

the innovative application development of partners in the ecosystem and realize "fully integrated data, fully visible statuses, fully

manageable businesses, and fully controllable events" in various parks, to help the smart digital transformation of the parks.




9)   Smart retail solution

     Dahua HOC smart retail solution is designed to meet three core business demands under the retail scenario, i.e. safety and loss

                                                                                                                                  20
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


prevention, store management and targeted marketing. Through smart sensing and peripheral integration of cloud, the scheme has

realized the insights into the data related to "persons, goods and sites", connecting data islands and gathering data to form a data brain,

to provide data support for the development, manufacturing and marketing of products. On this basis, it can help retail customers

reduce the loss of commodities, enhance the efficiency of operation management, and reduce labor cost. Meanwhile, based on the

collection and analysis on offline data, it helps the merchants realize targeted marketing, reduce operation cost, increase sales revenue,

and upgrade the shopping experience of consumers, so as to help with the digital transformation of physical retail.




10)   Smart logistics solution

      The Dahua HOC smart logistics solution applies the IoT technologies, machine vision, AI, smart control to the logistics industry.

Through collecting the front-end data of persons, vehicles and objects, it deploys smart robots, enhances the safety management and

prevention abilities in logistics operations and processes, reduces labor cost, and increases the efficiency of logistics operations and

the distribution centers. Meanwhile, it also effectively supports the business process optimization and operation management of the

customers in logistics.

      Taking express delivery and transportation as an example, the Company has deployed video monitoring networking platforms

for multiple customers. The number of connected video channels has exceeded 100,000. In logistics parks or distribution centers,

machine vision code reading technology is used instead of manual code scanning. For example, the DWS multi-function sorting

solution introduced for the logistics industry can realize package measuring and sorting at the same time for better transportation and

management efficiency; The vehicle guidance system can improve the efficiency of the vehicles' passing through the park's entrance

and exit; The platform visual management platform can enhance the operation efficiency, leading to efficiency enhancement of

logistics park operation.




                                                                                                                                       21
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




11)   Smart energy solution

      Dahua HOC energy solution serves industrial process type (electric power, petrifaction, mining, iron and steel) energy

enterprises. The Company has launched smart transformer substations, digital petrochemical and other solutions to help the energy

industry solve problems in emergency commanding, equipment maintenance, personnel management, operation control, production

quality inspection, and other core businesses. The Company provides smart patrol robots, thermal imaging, smart patrol servers,

machine vision, RFID/ROLA/UWB, big data, video cloud and other core products and technologies. Massive instruments, switches,

indicator lights and other objects are transformed into structured data. Through the analysis and computation on big data, the healthy

status of equipment can be comprehensively researched and determined, thus providing powerful guarantee for the production safety

of energy enterprises.


12)   Smart education solution

      Dahua HOC smart education centers on business scenarios in campuses. Through multi-dimensional sensing and collection,

fully smart analysis and comprehensive analysis and computing, it can realize the integration of businesses in smart scenarios and

multiple ecosystems. On this basis, the safety protection solution is provided centering on "persons, vehicles and objects" to enhance

the security protection efficiency and guarantee the safety of teachers and students; the logistics management solution is provided

centering on "eating, living and traveling" to enhance the management efficiency and service quality; the smart classroom solution is

provided centering on "teaching resources, management of teaching affairs, and teaching environment", to support new teaching

methods and promote the construction of information-based education.




                                                                                                                                   22
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




C.    Commercial-level business solutions


     In 2018, Dahua consumer business department launched a new brand strategy and took Imou as the new brand image for

Lechange. New definition is given to Imou: Intelligent Moments of Happiness - smart technologies guard every moment in life and

to create happiness for customers is Imou's eternal pursuit.

     Imou is oriented towards the consumer business which is an important part in the "Dahua HOC" strategy. The Company, based

on Imou for the "three-in-one" business ecosystem of intelligent hardware, intelligent technology and video cloud, puts forward the

application solutions of household care, household security and store security management, etc., which provide smart scenario-based

IoT services for households, stores and small and micro-sized business users. The Company opens up its cloud capabilities to

facilitate third-party developers in their development of feature-rich scenario applications and provide convenient, easy-to-use, safe

and customizable services for end users and partners for an intelligent Internet of Things ecosystem.

     In 2018, Imou launched multiple products for families and shops using AI technologies, including face detection camera, sound

and light alarming camera, POE camera series, wireless NVR, fire control alarm, and the smart video lock, which enables more users

to enjoy the achievements of new technologies and get their life quality enhanced.

     Imou will be built as a global brand. Through the global marketing service network, the products and services of Imou will be

brought to each corner of the world. People of different cultures, languages and skin colors can be protected by smart technologies.


(2) Core products and technologies


     The company, based on the "Dahua HOC" strategy, intensified core technical and products layout at the aspect of "Full Sensing,

Full Intelligence, Full Computing, and Full Ecosystem (4 Full) capabilities" in 2018. By sensing environments, scenarios and content,

combining edge computing and integrating its edge      node business, the company has enriched intelligent front-end sensing devices,

giving full play to the agile response capabilities of front-end intelligence. By connecting data links, exploring business applications,

combining cloud computing and integrating intelligent algorithms and spatio-temporal data, the Company has promoted intelligent

analysis and mining capabilities of big data.



                                                                                                                                       23
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




     To fully promote the implementation of AI technology for full range of smart products, the Company aimed at customers'

demands in front-end, storage and center service to seek innovation and launched intelligent products. By combining with cloud

computing and big data and relying on intelligent algorithms and chip technology, the Company has optimized products and solutions,

enhanced customer value and innovative business modes.


1)   Front-end products


     In 2018, more front-end products were developed to enrich the series with ever more established integration of new technology

and new products. Relying on intelligent algorithms and new technology, the Company launched series of cameras including "Deep

Sense", "Aurora", "Hunter", "Eyeball", and "Watchman", applying advanced technologies such as facial recognition, structured

pedestrian, non-motor and motor vehicle, live detection, multi-channel HD definition video splicing, dual-vision fusion, dual-vision

depth information analysis, integration of thermal imaging and visible light and smart IoT to products according to practical needs to

realize intelligent monitoring and multi-dimensional sensing in multiple scenarios.



                                                                                                                                   24
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


     Smart camera series: Dahua self-developed chips and deep learning algorithm are applied to the facial recognition network

camera series, to realize the priority of facial snapshot, extraction of facial features, classification and tracking of targets. An 8-inch

fully smart dome camera was launched, realizing the extraction of fully structured properties, classification of targets, flow statistics

for "pedestrians, vehicles and non-motor vehicles". The 40-time optical zoom and super long focal distance design is adopted for

capturing details of targets within long distance. A four-sensor camera integrated with a tracking ball was launched, which is a

pioneer product in this industry. The panorama camera is responsible for overall target detection and other cameras rapidly capture

details rapidly. A 4K resolution panorama image will be output to realize the coverage of 180 degree, which is 4 times of that of

ordinary cameras. A dual-camera behavior analyzing product was launched. Dahua self-developed algorithm is adopted to realize

deep analysis of images captured by the two cameras, supporting accurate passenger flow statistics and warning against to persons

approaching, violent movement, falling, retention and abnormal number of persons and other abnormal behaviors.

     Intelligent traffic camera series: the Company launched the eco-camera that can capture traffic violations of "pedestrians,

vehicles, non-motor vehicles", monitor roads, collect traffic information and detect traffic accidents, as well as effectively solve light

pollution from white light flashing. The series won the Best Product award for "2018 China Highway 30 Years Informationization

Award", the Innovative Product award of the 10th China International Road Traffic Safety Products Expo and other awards. The

Company also launched the AI entrance & exit snapshot camera that is integrated with the self-developed AI chip and can support

industry-leading recognition of vehicles without a license plate and multiple-in multiple-out of vehicles. The series won

"Comprehensive Strength Award" at the 2018 Urban Static Traffic and Intelligent Parking Forum".

     Panoramic multi-vision camera series: The Watchman series of panoramic AR products adopt multi-channel video splicing

technology to allow the display of UHD 180°and 360°panoramic images, supporting soft splicing, simultaneous output of initial data,

multi-vision splicing, along with smart large-scenario analysis on people and vehicles status.

     Meanwhile, the Company optimized multi-dimensional sensing capability of the video surveillance products. The "Jumbo"

all-in-one camera can obtain sensing information from facial detection, license plate recognition, vehicle, non-motor vehicle and

pedestrian detection/capture, collection of mobile MAC information, GPS/Beidou positioning, RFID data collection, etc., Such as

thermal camera series, which can realize multi-dimensional data collection like fire information, and object temperature. "Dahua

Blue Sky Guardian Comprehensive Solution for Straw Burning Monitoring" based on its thermal products won the award of A&S

TOP 10 system solution in 2018.




                                                                                                                                        25
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




2)   Storage products


     In 2018, the Company launched several new products including the "Smart" NVR, "Smart" IVSS and HD-over-Coax DVR

based on the deep learning technology, the vehicle-mounted travel data recorder MDJ7100 based on the HDCVI technology and

launched an indoor 55-inch vertical facial recognition attendance machine.

     The "Smart" NVR product adopts deep learning-based facial recognition technology, supporting face access control, face

control, image search by image and other functions. Its perimeter detection function can identify people/vehicle-triggered alarms and

effectively filter shadows of small animals and leaves to improve the alarm accuracy, and also can support quick retrieval and

playback according to face, body, license plate, vehicle model and other properties for greater video searching efficiency.

     With continuous algorithm optimization and improvement of detection and recognition accuracy in "Smart" IVSS product, the

Company deeply analyzed needs in retail, finance, energy, logistics, buildings, education, government and enterprises and other

industries, thus delivering industrial smart business solutions implemented in projects.

     HD-over-Coax DVR, based on HDCVI4.0 technology, realizes coaxial transmission of high definition image with the

maximum resolution up to 4K, digital audio with broadcast audio effect, and control signal.

     The vehicle-mounted product features new structure design with a small built-in HDD damping system and an intelligent

cooling system to satisfy the requirements of vehicles under various complex working conditions.

     Smart cloud information terminal product features an integrated structure with built-in facial recognition collection module,

supporting attendance by facial recognition, accurate advertising by facial recognition, live detection and other functions.




                                                                                                                                  26
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




3)    Central products


     With deployment of the central products on four intelligent fields including face, structured video, vehicle and behavior, the

Company launched S2 series of facial recognition server, "Smart" structured video server, vehicle secondary analysis server,

passenger flow statistics server and other series of intelligent servers. The product development adopts super comparison algorithms,

further promoting product comparison analytical performance and playing a leading role in the industry. Meanwhile, the Company

initiated "one file for one person" function in the industry to give full play to the market competitiveness of products.




4)    Cloud computing and big data products and services


     For urban operation management, we have created an established video cloud product system, delivered services such as cloud

storage, cloud database, container cloud, intelligent cloud, and bid data platform, covering complete data processing links by

combining with the industrial features to satisfy clients' computing and storage needs in different scenarios of the whole network. For

smart policing, smart traffic, smart judiciary, emergency command and other features in business scenarios, we have provided

comprehensive and targeted platform product services based on new technologies such as cloud computing, big data, IoT, and

artificial intelligence.

     For enterprise management, we have created a common product system at enterprise level and launched AI-based industry

platforms, improving operation and management efficiency and fixing the pain points for the clients from enterprise parks, education,

energy, finance and other sectors. We have also gradually launched the industry cloud platform in retail, community, parking, and


                                                                                                                                    27
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


house renting and other fields to provide services to more industry clients.

     As for small and micro enterprises and individuals, LeChange cloud platform has been established for providing cloud storage,

cloud sharing, cloud warning, cloud analysis and other cloud intelligence. An operation data analysis visualized platform supporting

big data analysis and statistical analysis has been established to provide users with real, superior and intelligent product experience.

     For the video-centric ecosystem, we have built an open industry-level platform to support third-party algorithm execution and

third-party equipment and platform access. We have also provided basic video and AI capabilities. Industry partners were enabled

through open interface and we could involve in the partner ecosystem through extensible technical framework, so as to promote

implementation of the end-to-end solution from front-end perception and intelligent analysis to back-end cloud platform and industry

applications. Meanwhile, an open network platform has been established for different application scenarios of industries. The

Lechange cloud SaaS and PaaS solutions were delivered to help partners get their own cloud video capacity with faster speed and

lower cost and jointly create value with partners for win-win result. As at the end of 2018, there have been over 20,000 developers for

LeChange cloud.


5)    Intelligent building products


     The Company launched a whole series of facial recognition access control machines. The integrated access control machine,

turnstile and door phones are equipped with the wide dynamic visible light for facial recognition technology with fast recognition

speed, strong biometric false prevention and large database capacity. It is widely applied in places such as commercial buildings,

residence communities, recreation and stadiums, plants and other sites. Meanwhile, Dahua facial recognition access control products

can offer various authentication methods like fingerprint, password, QR code, ID card, IC card, Bluetooth, and App according to

customer needs, with wide adaptability and usability.

     In 2018, Dahua applied for almost 30 patents for inventions, utility models and design patents for smart building products in

terms of facial false prevention, visitor management, structural technology, wireless communication and appearance design, which

further facilitate the research and development on new technologies and products.


6)    AI algorithms


     In 2018, the Company continued invested in AI to build a super large-scale computing center and data center for algorithm

training and focused on researching and commercializing algorithms in multiple fields. As its core strategy, the Company has

developed the AI algorithms and has bolstered the core competitiveness. At present, the Company mainly focuses on six AI

application fields - smart traffic, facial and behavior analysis, object recognition, robots and multi-sensor fusion. The Company can

provide end-to-end AI solutions and products according to various scenarios of different industries, with the technical strength in

quickly improving algorithm functions and performance. The Company topped the list in over 10 global algorithm competitions in

2018, including 2D/3D detection, tracking, image segmentation, scene recognition, human weight recognition, and image search by

image among other technical fields of AI.

     The Company has made achievements in the six AI application fields as follows:

            Smart traffic field: Dahua has focused on the field of smart traffic application since 2006. At present, its products and



                                                                                                                                       28
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


           solutions include electronic stations, electronic police, entrances and exits, recognition of domestic and overseas license

           plates, big data of vehicles, and other application scenarios. The Company has launched "Smart" series of AI entrance &

           exit snapshot cameras TianQing" series of vehicle secondary analysis servers, servers for vehicle image search by image,

           and other products and solutions. The smart traffic solution realizes the detection, recognition and property analysis of

           "pedestrians, vehicles and non-motor vehicles" and recognition of domestic and overseas license plates in traffic scenario,

           as well as recognition and analysis of traffic violations of all "pedestrians, vehicles and non-motor vehicles" in road

           scenario. When combined with the back-end big data analysis server, the solution can realize the multi-dimensional data

           collision, comparison, searching, and image search by image of vehicles.

           Face recognition field: the complete facial end-to-end intelligent algorithm link has already been formed in the field of

           facial analysis, including face detection, tracking, property, recognition, live detection, etc., with all mainstream products

           launched with industry-leading performance. In practical application, the face intelligent solution can well satisfy

           differentiated demands on all scenarios, help the upgrade of technical method for smart police affairs, and facilitate

           implementation of "customer portrait" in smart retail, "facial authentication" in intelligent park and other projects.

           Behavior analysis field: behavior analysis is mainly applied in analyzing contents of videos in different industries, such as

           body behaviors, situation analysis, image search by image and other applications. At present, the Company launched all

           series of intelligent front-end products, intelligent NVRs and intelligent servers. With fully technical upgrading of the

           traditional solutions, the Company put an emphasis on introducing video structured analysis, behavior analysis, perimeter

           management, flow statistics, situation analysis and other solutions.

           Object recognition field: intelligent analysis on all kinds of objects can be carried out in the field of object recognition. It

           is applied in security check, power supply, water supply, retail, logistics and other industry solutions, enhancing the

           business operation efficiency and management quality.

           Robots field: robots solution is designed for manufacturing, logistics, energy and other industries. At present, multiple

           AGV cluster dispatching, simultaneous positioning and map building, vision navigation and scenario understanding and

           other technologies have been developed and applied in AGV for handling, storage and sorting, indoor/outdoor power

           inspection robots, intelligent drones and other products.

           Multi-sensor fusion field: in the field of Multi-sensor fusion, the multi-vision fusion, millimeter wave radar, infrared

           thermal imaging, 3D building, laser and vision fusion, audio processing and other core technologies have been realized

           and applied in "Watchman" series of panoramic cameras, AR panoramic fusion, radar and dome linkage, dual-vision

           temperature detection, robot and other products and solutions.


7)   Chip technology


     In 2018, the Company's AI chip technology, HDCVI chip technology and digital-analog hybrid chip technology have got

constant investment and achieved good results:

           AI chip technology: Based on the self-developed AI chip, the Company successfully launched "Deep Sense" series of

           economical face detection cameras, "Smart" series of AI entrance and exit snapshot cameras. In 2018, AI chip research

           and development project obtained support of the national science and technology major project of the Ministry of

                                                                                                                                        29
                                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


           Industry and Information Technology and Hangzhou integrated circuit industry development project, laying a solid

           foundation for future development.

           HDCVI chip technology: The scheme integrating HDCVI with front-end and back-end AI technology has been

           successfully realized, which greatly improves the competitiveness of the HDCVI scheme. The 4K real-time front-end and

           back-end chip products are successfully launched. The Company maintained it leadership in the coaxial analog

           high-definition field and successfully developed the HDCVI5.0 technology based on the new-generation transmission

           technology, which realized the lossless transmission of mixed information via multiple media and surpasses the existing

           coaxial transmission technologies in the market.

           Digital-analog hybrid chip technology: With the mass production of the self-developed PoE front-end and back-end

           control chips, the Company has become the first national chip manufacturer to provide the comprehensive PoE solution,

           which greatly improves the competitiveness of NVR, switch, IPC and other products of the Company. Meanwhile, the

           Company increased investment in independent IP research and development, and broke through technical bottlenecks on

           high-complexity IP technologies such as high-speed ADC and DAC, optimizing the digital-analog hybrid chip

           technology.


8)    Video IoT innovative business and products


           Machine vision products

     In 2018, Huaray Technology, a holding subsidiary of the Company, has four series of products: railway carriage and container

scanner, intelligent 3D camera, visual controller and intelligent RFID reader. HuaRay Technology also improves smart logistics

solution, applying the video AI technology in parcel smart sensing, smart sorting and other application scenarios. Relying on the new

generation of pentagonal code reading DWS system, content smart sensing system, and big data smart tracking system for parcels,

the solution realizes deep mining of parcel data, full flow tracing, management and efficient sorting of parcels.

           Huachuang Vision collaborative products

     In 2018, Huachuang Video, a holding subsidiary of the Company, introduced universal-type integrated terminal for grass-roots

organizations, integrated terminal for small conference rooms, split-type terminal for medium and large conference rooms, 10-fold

optical varifocal USB camera, digital omnidirectional microphone and the industry-leading conference Multi-Point Control Units

which support H.265+4K encoding and decoding protocols, among which universal-type integrated terminals has been granted the IF

Award, the highest international honor in the design field. Currently, Huachuang's products can be applied in various scenarios and

meet customer demands and gained wide recognition through the highly-integrated terminal and other advantageous products.

           Other smart IoT products

     Up to now, the Company has developed four types of aerial vehicles, about 20 kinds of mounting and matching remote controls,

ground station and UAV management platform, which, combined with the promotion of industrial solutions, have been applied in

emergency command, police surveillance, forest fire prevention, power line patrol, road patrol, environmental monitoring and other

fields.

     The Company, based on wireless access, data transmission and positioning technology, continuously promotes the R&D and


                                                                                                                                  30
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


application of radio frequency identification technology and launches a series of products such as RFID reader, intelligent mobile,

electronic tag, etc., providing IoT solutions and products for industry applications such as in enterprises, governments, buildings and

for environmental protection, education, judicature., etc.

      The Company launched a comprehensive security protection solution including terminal security, access security, network

security, data security, and security operation center, and released a series of access control gateways, IoT trend sensing products,

video surveillance bastion hosts and video encryption servers that fix the security pain points in the video surveillance;

      Robot Technology, a newly established holding subsidiary of the Company, focuses on three business scenarios, namely AGV

handling, industrial patrol and security patrol. It has launched intelligent patrol solution for substation equipment, warehousing

logistics solutions and in-plant logistics solutions.


3 Major sales model and performance driving factors


      With global sales and service network, the Company builds a diversified customer system of different levels based on different

customer properties and business values. With subsidiaries and representative offices across many countries and regions, the

Company offers products and solutions to different end users including governments, enterprises, and consumers.

      Major performance driving factors include:

      The Company has a wide user base at the city, industry and commercial level, and can provide different customers with

multi-level solutions. Focusing on customer demands, the Company positively follows the industry trend, with transformation of

business model from a single product, comprehensive solutions to comprehensive smart operating service for cities. Dahua Heart of

City (HOC) is a smart city development engine supported by "Full Sensing, Full Intelligence, Full Computing, and Full Ecosystem (4

Full) capabilities". It realizes the construction of a "1 platform, 2 centers, N applications" (1+2+N) new smart city framework for

application at the city, industry, and commercial level. Dahua HOC highlights the application of AI technology in products, which

satisfies needs of the next generation of smart city, helps the Company transform from a product supplier to a comprehensive solution

and service provider for a wide growth space for future development of the Company.

      After years of development in overseas markets, the Company has established a global sales and service network, contributing

to increasing brand recognition and product reputation. The Company always adheres to open, transparent and cooperative attitude

with active communication. The Company sticks to the strategy of internalization development, while the continuous increase in

overseas market is one of the vital factors for future revenue increase.


II.   Industry development trends and the industry position


      In 2018, although the Company is affected by domestic economic deleveraging and foreign trade frictions and the pace of

industry growth has slowed down in the short term, the Company has maintained the overall growth trend.

      As for the changes in customer demands in the market, the granularity of projects has become larger and the decision-making

level has been lifted. Meanwhile, with the rise of intelligence, customers gradually hope that enterprises can provide overall solutions

and professional advises instead of merely selling products. The future smart city should rely on AI, deep learning, IoT and other new

technologies to realize active sensing of the city development, finally achieving "accuracy, innovation, coordination, sharing,



                                                                                                                                     31
                                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


openness" for city governance. The connotations and denotations of video IoT - based security industry have been redefined, with

barriers overcame to open up more room for growth. Meanwhile, a higher requirement on the comprehensive ability of manufacturers

is raised.

     The Company is a world-leading video-centric smart IoT solution and service provider, offering end-to-end video surveillance

solutions, systems and services based on the technological innovation, to create value for urban operation, enterprise management

and individual life. Following the industry development trend, the Company has put forward the "Dahua Heart of City (HOC)"

strategy to make overall plan for full process capability in technological innovation, top-level design, business structure, emergency

alarm and operation service and has built a complete closed loop from development to application for AI, deep learning, IoT and

other technologies in all fields of smart city, to facilitate the development of smart city. According to the global video surveillance

market report released in July 2018 by IHS Markit, Dahua has been the second largest video surveillance company in the industry for

many years, with 12% of the global market share (based on 2017 data).


II. Material Changes to Major Assets

1. Major changes in main assets


                Major Assets                                            Explanation Of Material Changes


                                           Increased by 203.35% compared with that of the beginning of the year, mainly due to the
Equity assets
                                           recognition of the equities of the shareholding companies.

Fixed Assets                               No major changes.

                                           Increased by 47.01% compared with that of the beginning of the year, mainly due to
Intangible Assets
                                           increase of land use rights during this period.

                                           Increased by 284.82% compared with that of the beginning of the year, mainly due to
Projects under Construction
                                           increase of investment in the Dahua smart security surveillance (IoT) production base.

                                           Increased by 57.56% compared with that of the beginning of the year, mainly due to
Non-current Assets Due within 1 Year
                                           increase of long-term receivables due within one year.

                                           Increased by 91.57% compared with that of the beginning of the year, mainly due to
Investment Property
                                           increase of rental fees of private commodity houses.

                                           Increased by 54.39% compared with that of the beginning of the year, mainly due to
Goodwill
                                           acquisitions of business under non-identical control.

                                           Increased by 69.14% compared with that of the beginning of the year, mainly due to
Deferred Income Tax Assets
                                           increase of deductible temporary difference.


2. Major overseas assets

□ Applicable √ Not applicable




                                                                                                                                    32
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


III. Core Competitiveness Analysis

I.    Center on core technology and maintain high R&D investment to build strong capacities in technical innovation


     Innovation is an important source of power and core competitive advantage for the development of the Company. The Company

possesses a national post-doctoral research station, a nationally certified enterprise technology center and nationally innovative pilot

enterprise, and has five research institutes for advanced technology, central, big data, chip and network security. In 2018, the

company's R&D investment accounts for 9.65% of the annual sales revenue, which are focused on artificial intelligence, cloud

computing, big data, chips and other future-oriented core technologies to enhance R&D capabilities and accelerate the technology

commercialization. The Company makes use of the industry-leading innovative capabilities to pursue and grasp new development

opportunities, opening up new growth space.


(1) Artificial Intelligence


     The year of 2018 is one of rapid development for AI algorithm and application. The Company's deep learning-based video

structuring technology can detect people, vehicles and objects in video footage and extract various attributes, with many performance

indicators reaching world-class level and supporting more than 40 functions; At the same time, the Company enhances the layout of

industry algorithms to vigorously improve the performance of algorithms for various sub-industries. With the vehicle big data

technology of the Company, nearly 300 vehicle brands and more than 5000 vehicle models can be identified along with

industry-leading recognition of wide-angle license plate. The number of overseas countries whose license plates can be identified has

been largely increased. In the smart security check sector, the X-ray automatic detection scheme for hazardous article was launched

at first with multiple indicators of the detection rate constantly enhanced to maintain its leading superiority.

     In 2018, the Company ranked first in 13 lists in respect of 2D human body detection, 2D/3D vehicle detection, scene flow,

optical flow, road segmentation in drivable areas, segmentation cases (cases with vehicles, pedestrians, and so on), multiple object

tracking (vehicles, human bodies), PRCV 2018 competition for large-scale searching of pedestrians (image, system test) for KITTI

VISION respectively. The facial recognition algorithm ranked first among domestic manufactures in 2018 NIST facial recognition

competition for natural scenarios. In the "AI Recognition Competition for Image Characteristics of Vehicles on Road" hosted by the

Ministry of Public Security, the Company ranked first in the detection of characteristics of muck trucks and facial recognition for

drivers, ranked second in event detection through videos, and ranked third in detection of passengers in a vehicle.


(2) Cloud computing and big data


     The Company has constantly enhanced services in cloud storage, cloud database, smart analysis, stream media and formed a

comprehensive video cloud technology system. The actual intelligent application based on video & image intelligence and data

intelligence allows the access to IoT equipment, data of business platform and third-party data sources. The types of data include 6

sensing objects, 34 sensing scenarios and 43 sensing devices. According to evolution of the scenarios and loading of multiple smart

algorithms for persons, vehicles and objects to support the integrated application, and based on the integration of edge intelligence

and cloud intelligence, a unified pool for intelligent resources is built for deploying of intelligent resources according to the complex

demands of business. The full-network installation and deployment of smart algorithms and computing power will be further realized

                                                                                                                                      33
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


according to demands of smart cities.


(3) Chip technology


      The first AI chip independently developed by the Company has been applied to multiple intelligent products and solutions,

which greatly facilitates the extension of the Company's solutions and products. Meanwhile, according to the industry development

characteristics, the Company designs and develops two AI chips by way of customization, professionalism and differentiation, which

will be used in many fields such as camera, storage, intelligent server and industrial robot, etc.


II.     Have deep insight into customer demands to deliver comprehensive solutions and build operation service capacity


      Focusing on customer demands, the Company has constantly expanded and upgraded its business modes, so as to independently

offer comprehensive solutions and operation services in entire industrial chain of video surveillance. Meanwhile, the Company has

always established sensing systems centering on customers' scenarios and has constantly enhanced the networking capacity of

computation and intelligence in products and solutions, so as to maximize customer value.

      In 2018, the Company further streamlined the standardized solutions and provided tailored solutions for safe city, smart traffic,

smart retail and other key industries. It also launched a series of smart front-end and server products to satisfy the smart application

scenarios of the next generation, and comprehensively support the implementation of Dahua HOC. Dahua Heart of City (HOC) is a

smart city development engine supported by Full Sensing, Full Intelligence, Full Computing, and Full Ecosystem (4 Full) capabilities.

It realizes the construction of a "1 platform, 2 centers, N applications" (1+2+N) new smart city framework for application at the city,

industry, and commercial level. Dahua HOC not only pays attention to "4 Full" capabilities of products and solutions, but also

endows network with "4 Full" capabilities from a global perspective, thus driving professional, efficient and intelligent operation.


III. Deepen the globalized marketing system, and establish a global marketing and service network


      The Company has a global marketing and service network with more than 200 offices in 32 provinces and municipalities in

China and 54 subsidiaries and representative offices. The products and solutions are applied in over 180 countries and regions in the

world, and the supply chain center set up in Europe can provide fast and high-quality end-to-end services for customers.

      For the domestic market, the Company is oriented toward the city-level and industry-level markets with focus on value

industries and scenarios, providing solutions more centered around customer business scenarios; For the channel markets, the

Company maintains close cooperation with many channel partners to facilitate the healthy and benign market environment and

constantly promote channel development and refined channel management. As for the overseas market, through cultivating an

international marketing and management team and building localized marketing and services centers and opening Dahua brand image

stores and Dahua element stores, the Company will further enhance the brand coverage of Dahua abroad and seize the international

market.


IV. The "dedicated to success" corporate culture in support of the Company's long-term sustainable development


      "Customer-centered and dedicated to success" is placed at the core of the corporate culture. The Company, through

customer-oriented business processes and organization construction, regards creation of customer value as the work guidance and


                                                                                                                                       34
                                                                      2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


performance evaluation criteria for every employee. Meanwhile, the Company adheres to the value orientation of "dedicated to

success" for continuous optimization of the performance evaluation and salary distribution system and promotes diversified

short-term and long-term incentive packages to award high-performance staff with sustainable salary and moral encouragement. The

Company has a management team with a strong sense of mission and global strategic vision, and boasts of a strong talent team in the

core technology fields of AI, big data, chips, etc.

     On March 6, 2018, the company's first interim shareholders' general meeting in 2018 approved the "Management Methods for

Business Startup and Investment of Core Staff (draft)" that the Company implemented the investment plan for startup businesses by

core staff to share benefits and risks and encourage the entrepreneurial spirit and innovation capabilities of core employees. On

September 14, 2018, the Company's fourth interim shareholders' general meeting approved the "Proposal on 'the Company's

Restricted Stock Incentive Plan for 2018 (Draft) and its Abstracts". On November 1, 2018, the seventeenth meeting of the Company’s

sixth board of directors approved the “Proposal on Granting Restricted Stocks to the Incentive Objects”, by which 3145 incentive

objects have been awarded, greatly enhancing the staff cohesion and stability and playing a positive role in the long-term stable

development of the Company in the future.




                                                                                                                                35
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




         Section IV Discussion and Analysis on Business Circumstance

I. Overview

     Against the highly volatile international situation in 2018, the video-centric IoT industry has slowed down in its growth rate in

the short term due to multiple factors such as domestic economic transformation and overseas uncertainty, etc. Supported by AI, IoT,

cloud computing, big data and other technologies, the value of intelligent products and solutions is quickly improved. The market

space for the video-centric smart IoT field grows further.

     The Company, from an overall perspective, introduced the "Dahua HOC" strategy to coordinate the abilities in all processes

such as technological innovation, top-level design, business structure, emergency alarm and operation service, facilitate intelligent

transformation of various cities and the industry, and help with the cooperative, open, safe and sustainable development of various

cities and the industry.

     During the reporting period, the Company has achieved RMB 23.666 billion in operating income, representing an increase of

25.58% on a year-on-year basis; net profit attributable to the shareholders of listed companies was RMB 2.529 billion, representing

an increase of 6.34% on a year-on-year basis.The profitability of the Company continued to rise. Main business strategies of the

Company include:

(1) Stepping up the targeted R&D investment to continuously improve the core technological capability and build a

differentiated technology framework oriented towards "Full Intelligence, Full Computing, Full Sensing and Full Ecosystem

(4 Full)"

     The Company is committed to taking technological innovation as the core, and investing heavily in R&D. The investment to

R&D in 2018 was RMB 2.284 billion, representing an increase of 27.67% on a year-on-year basis, and accounting for 9.65% of the

operating income. The company kept a greater focus on advanced technical fields, such as AI, cloud computing and big data, chip,

machine vision and robot to realize rapid implementation and iteration for meeting customers' demands.

     The Company pays much attention on customers' data security and privacy protection, so it has established a network security

research institute to carry out research on device, network and system security technologies and fully implement product security

development processes. Its IP video product has got the first TV Rheinland GDPR certification in the industry. The Company has

provided insights into the industrial and technical trends and constructed a differential technology system oriented toward "Full

Sensing, Full Intelligence, Full Computing and Full Ecosystem (4 Full)", with the aim to improve the capability to come up with

comprehensive end-to-end solutions oriented to the pain points of customers and build application solutions for particular scenarios,

supporting a new round of quick intelligence implementation in the industry.

(2) Having in-depth understanding of customers' businesses, enriching the customer interface and supporting the success of

customers

     Continuously guided by customer demands, the Company has explored the demands of the market and customers in an in-depth

                                                                                                                                   36
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


manner. Based on the properties and business demands of different customers, the Company has established and improved the tiered

customer management strategy and refined customer management mechanism. By getting closer to customers, the Company has

provided targeted solutions and products, to firmly realize the values of customers' businesses, so as to make them successful.

     In the industry market, the Company provides solutions oriented toward customers by focusing on valuable regions, valuable

industries, valuable scenarios, and going deeply into various segmented industries. As to the applications in cross-industry scenarios,

the Company provides comprehensive solutions through the cooperation in the ecosystem. Building on industry development and

market insight, the marketing strategies for various segmented industries are gradually formed; the industry market has been

expanded and deepened with the operation capabilities in major projects improved. In terms of channel management, the Company

has enhanced the integration of online and offline channels, made channels sink deeper, continuously promoted the establishment of

new channels and established a tiered channel customer management system.

(3) Steadily promoting overseas market development while exploring the domestic market in an in-depth manner

     The domestic market is the foundation for our business development. The Company has a wide user base at the city, industry

and commercial level, and can provide different customers with multi-level solutions.

     As to the overseas market, the Company has gradually enhanced the driving force of overseas subsidiaries in localized

operations through cultivating international marketing and management teams, establishing local marketing and service centers. It

has continuously optimized the revenue structure and gradually realized the expansion in the global market and the upgrading of

businesses.

(4) Continuously increasing investment in innovative businesses to promote business growth

     Based on the in-depth understanding of customers' diversified demands, and the multi-dimensional sensing technology, the

Company continues to develop the machine vision, robots, smart fire control, video conference system, professional drones and other

emerging businesses.

     Machine vision business: guided by the wave of intelligent manufacturing, machine vision business offers omnidirectional

vision products to the manufacturing automation field based on more than a decade of video and intelligent technological

accumulation of the Company in the video monitoring field.

     Video conference system business: based on the in-depth understanding of the market, the Company has further enlarged

product lines. The Company's video conference system has been widely used in the comprehensive urban smart solutions.

     Smart fire control business: in the comprehensive application field of smart fire control, the Company has accomplished the

R&D and practical application of Dahua HOC smart fire control solutions and realized the top-level planning and deepened design of

smart fire control for units, subdistricts, districts/counties and the entire city, to provide customers with guarantee in smart security

warning and enhance the informatization and intelligence level of fire control.

     Professional drone business: currently, professional drones are widely used in emergency commanding, police surveillance,

forest fire control, power line patrol, environment monitoring and other fields. The data from drones can be connected with the data

of the police system, city administration system, forestry and other industries. Meanwhile, through smart analysis and application, the

Company has realized facial recognition, license plate recognition, structural data extraction, and so on.


                                                                                                                                      37
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


     Robot business: the Company has organized a core talent team, successively made breakthroughs in movement control,

movement navigation, centralized dispatching, task assignment and other core technologies, which have been widely applied in

logistics, fire control, police affairs and other fields.

(5) Promoting global layout and establishing R&D sub-centers and supply chain sub-centers

     The Company has a global business layout, and a wide marketing network and business coverage both in domestic and overseas

markets. In 2018, the company had plans to set up an intelligence base and R&D center in the West for the layout of core technical

personnel in artificial intelligence, big data and cloud computing, etc. to meet the Company's growing business needs; The Company

continuously optimizes supply chain management, improves product delivery capacity, and speeds up product iteration; And the

establishment of the European Supply Center, as one of the important measures to accelerate the "globalization + localization"

strategy, we aim to provide faster delivery experience and better customer service to European markets through local assembly and

centralized logistics services, and to provide better products and services to global partners and users.

(6) Continuously enhancing refined management capabilities, and realizing high-quality development

     The Company continues to carry out systematic business reform and management optimization, strengthen the customer

management abilities and enhance the capabilities for providing solutions and operation services. Centering on customers, the

Company continues to optimize the LTC/IPD/ISD/ITR and other processes, establish process-based organizations, with a focus on

solving pain points in the processes, realizing the smoothness of end-to-end processes and enhancing the speed of response to

customers.




II. Main Business Analysis

1. Overview

See "I. Overview" in "Discussion and Analysis on Business Circumstance".


2. Income and Costs

(1) Operating income structure

                                                                                                                        Unit: RMB

                                               2018                                      2017

                                                      Proportion to                             Proportion to      YoY Change (%)
                                 Amount                                    Amount
                                                  Operating Revenue                          Operating Revenue

Total Operating              23,665,688,106.2
                                                                 100%   18,844,458,053.78                   100%            25.58%
Revenue                                       2

Classified by Industry

Security Industry            23,665,688,106.2                 100.00%   18,844,458,053.78               100.00%             25.58%



                                                                                                                                    38
                                                                             2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                             2

Classified by Product

                           12,214,951,613.1
Solutions                                                    51.62%       9,835,663,501.07                  52.20%                   24.19%
                                             6

Product                    9,762,853,684.85                  41.25%       7,593,336,542.79                  40.29%                   28.57%

Other                      1,687,882,808.21                    7.13%      1,415,458,009.92                   7.51%                   19.25%

Classified by Region

                           15,087,657,708.7
Domestic                                                     63.75%      12,037,252,733.24                  63.88%                   25.34%
                                             5

Overseas                   8,578,030,397.47                  36.25%       6,807,205,320.54                  36.12%                   26.01%


(2) The industry, product, or region that accounts for over 10% of the Company's operating revenue or
profit

√ Applicable □ Not applicable
                                                                                                                                 Unit: RMB

                                                                                    Increase or         Increase or         Increase or
                                                                                    Decrease of         Decrease of         Decrease of
                                                                                     Operating        Operating Cost     Gross Profit over
                                                                  Gross Profit
                Operating Revenue           Operating Cost                       Revenue over the         over the              the
                                                                    Margin
                                                                                  Corresponding       Corresponding       Corresponding
                                                                                   Period of the     Period of the Last Period of the Last
                                                                                     Last Year              Year                Year

Classified by Industry

Security
                   23,665,688,106.22        14,871,181,066.69           37.16%             25.58%              27.76%                 -1.07%
Industry

Classified by Product

Solutions          12,214,951,613.16         7,201,889,474.98           41.04%             24.19%              28.89%                 -2.15%

Product             9,762,853,684.85         6,128,694,957.17           37.22%             28.57%              28.54%                  0.01%

Classified by Region

Domestic           15,087,657,708.75         9,822,914,231.08           34.89%            25.34%               29.47%                -2.08%
Overseas            8,578,030,397.47         5,048,266,835.61           41.15%            26.01%               24.57%                 0.68%
When the statistical caliber of the company's main business data is adjusted in the reporting period, the company's main business data
should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in the most recent year.
□ Applicable √ Not applicable


(3) Is the company's physical sales income greater than the labor income?

√ Yes □ No


                                                                                                                                           39
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


       Industry                                                                                                       Year-on-year
                            Item Name                   Unit                 2018                  2017
    Classification                                                                                                 increase or decrease

                        Sales volume         Unit/set                          54,750,353            44,333,106                23.50%
Security industry
                        Production output    Unit/set                          57,109,913            46,876,080                21.83%

Reasons for over 30% changes in related data on year-on-year basis
□ Applicable √ Not applicable


(4) Performance of major sales contracts signed by the Company as of the reporting period

□ Applicable √ Not applicable


(5) Operating Cost Structure

Industry and Product Classification
                                                                                                                           Unit: RMB

                                                  2018                                      2017                        Year-on-year
   Industry
                     Item Name                            Proportion to                            Proportion to         increase or
Classification                         Amount                                    Amount
                                                         Operating Cost                            Operating Cost         decrease

Security
                  Operating Cost   14,871,181,066.69            100.00%       11,639,494,423.21           100.00%               27.76%
industry

                                                                                                                           Unit: RMB

                                                  2018                                      2017                        Year-on-year
   Product
                     Item Name                            Proportion to                            Proportion to         increase or
Classification                         Amount                                    Amount
                                                         Operating Cost                            Operating Cost         decrease

Solutions         Operating Cost    7,201,889,474.98              48.43%       5,587,449,096.24            48.01%               28.89%

Product           Operating Cost    6,128,694,957.17              41.21%       4,767,931,685.71            40.96%               28.54%

Others            Operating Cost    1,540,596,634.54              10.36%       1,284,113,641.26            11.03%               19.97%


Has the scope of consolidation changed during the reporting period?

√ Yes □ No

     a) The Company invested to establish 12 domestic subsidiaries including Zhejiang Vision Technology Co., Ltd., Dahua
Zhongcheng (Beijing) Technology Co., Ltd., Zhejiang Huaxiao Technology Co., Ltd., Xi'an Dahua Zhilian Technology Co., Ltd.,
Tianjin Dahua Information Technology Co., Ltd., Hunan Dahua Zhilong Information Technology Co., Ltd., Zhejiang Dahua Robot
Technology Co., Ltd., Beijing Huayue Shangcheng Information Technology Service Co., Ltd., Zhejiang Dahua Jinzhi Technology Co.,
Ltd., Shanghai Huashang Chengyue Information Technology Service Co., Ltd., Wuxi Dahua Ruipin Technology Co., Ltd., Hangzhou
Huajuan Technology Co., Ltd. and 9 overseas subsidiaries including Dahua Technology Netherlands BV, Dahua Technology Morocco
SARL, Dahua Technology S.R.L, DAHUA VISION LLC, Dahua Technology New Zealand Limited, 1151551 B.C.Ltd., DAHUA
TECHNOLOGY CHINA (PVT) LTD, Dahua Technology Pakistan (private) Limited, DAHUA TECHNOLOGY (THAILAND) CO.,
LTD. The above subsidiaries have been incorporated in the consolidation scope since the date of establishment.



                                                                                                                                       40
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


     b) In February 2018, the Company completed the shareholding merger of Lorex Technology Inc and Dahua Technology Italy
SRL, owning 100% stake of them and having substantial control over it, so they were incorporated in the consolidation scope.
     In November 2018, the Company completed the shareholding merger of Sichuan Dahua Guangxun Photoelectric Technology Co.,
Ltd., owning 100% stake of them and having substantial control over it, so they were incorporated in the consolidation scope.
     c) This year, Guangxi Dahua Zhongzhi Technology Co., Ltd., Yancheng Zhongchuang Dahua IOT Technology Co., Ltd., Jiangsu
Dahua Zhiyun Information Technology Co., Ltd. And 1151551 B.C.Ltd. were canceled, without being incorporated in the consolidation
scope since the date of cancellation.


(7) Major changes or adjustments to the company's business, products, or services during the reporting
period

□ Applicable √ Not applicable


(8) Major Clients and Suppliers

The Company's Major Clients

Total sales amount of the top five customers                                                                      1,875,901,281.59

Proportion of the total sales amount of the top five customers to
                                                                                                                                 7.93%
the total annual sales

Proportion of the total sales amount of the related parties in the
                                                                                                                                 0.00%
top five customers to the total annual sales

Profiles of the Company's top five customers

    No.                  Name of Customer                       Sales Amount (RMB)              Proportion to the annual sales

1          Company 1                                                     649,872,001.87                                          2.75%

2          Company 2                                                     416,431,918.63                                          1.76%

3          Company 3                                                     354,060,992.03                                          1.50%

4          Company 4                                                     235,293,800.70                                          0.99%

5          Company 5                                                     220,242,568.36                                          0.93%

Total                             --                                    1,875,901,281.59                                         7.93%

Other Information Notes for Major Clients
□ Applicable √ Not applicable
(8) Major suppliers

Total Purchase Amount of Top Five Suppliers (RMB)                                                                 3,079,872,506.40

Proportion of the total purchase amount of top five suppliers to the
                                                                                                                            21.26%
total annual purchase amount

Proportion of the total purchase amount of the related parties in top
                                                                                                                                 0.00%
five suppliers to the total annual purchase amount

Profiles of the Company's top five suppliers

    No.                     Supplier Name                     Purchase Amount (RMB)        Proportion to the Total Annual Purchase


                                                                                                                                     41
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                                                                 Amount

1            Company 1                                                     1,431,895,445.67                                          9.88%

2            Company 2                                                      435,544,917.09                                           3.01%

3            Company 3                                                      423,340,474.10                                           2.92%

4            Company 4                                                      397,174,139.65                                           2.74%

5            Company 5                                                      391,917,529.89                                           2.71%

Total                                --                                    3,079,872,506.40                                      21.26%

Other Information Notes for Major Suppliers
□ Applicable √ Not applicable


3. Expenses

                                                                                                                            Unit: RMB

                                                                     Year-on-year Increase
                                     2018             2017                                         Statement on Significant Changes
                                                                           or Decrease

                                                                                                Mainly due to the expansion of the
Sales Expenses               3,365,380,947.78 2,416,699,706.00                      39.26%
                                                                                                company's sales volume and the market.

Administration Expenses           632,968,594.64   519,518,000.34                   21.84%

                                                                                                Mainly due to the increase in exchange
Financial Expenses            -123,167,962.74      167,431,921.69                 -173.56%
                                                                                                gains

Research and
                             2,283,872,502.53 1,788,888,879.43                      27.67%
Development Expense


4. R&D Investment

√ Applicable □ Not applicable
Company's R&D investment

                                                    2018                                 2017                       Change Ratio

Number of R&D personnel                                        6,880                                     6,267                       9.78%

Percentage of R&D personnel                                   50.56%                                    53.15%                   -2.59%

R&D investment (RMB)                                 2,283,872,502.53                     1,788,888,879.43                       27.67%

The proportion of R&D investment to
                                                               9.65%                                    9.49%                        0.16%
operating income

Capitalized R&D investment                                          0.00                                  0.00                       0.00%

Proportion of capitalized R&D
                                                               0.00%                                    0.00%                        0.00%
investment to R&D investment

The reason for the significant change in the proportion of the total amount of R&D investment to operating income compared with
last year



                                                                                                                                         42
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


□ Applicable √ Not applicable
Reasons and rational explanations on the substantial change in capitalization rate of R&D investment
□ Applicable √ Not applicable


5. Cash Flow

                                                                                                                         Unit: RMB

                                                                                                                      Year-on-year
                            Item Name                                           2018                  2017            Increase or
                                                                                                                       Decrease

Subtotal of Cash Inflow from Operating Activities                        23,648,130,137.58       17,873,518,699.53           32.31%

Subtotal of Cash Outflow from Operating Activities                       22,692,814,159.41       16,959,287,339.52           33.81%

Net Cash Flow Generated by Operating Activities                             955,315,978.17          914,231,360.01             4.49%

Subtotal of Cash Inflow from Investment Activities                          170,142,702.70          117,691,286.89           44.57%

Subtotal of Cash Outflow from Investment Activities                         916,786,739.20          412,603,885.09          122.20%

Net Amount of Cash Flow Generated by Investment Activities                 -746,644,036.50         -294,912,598.20          153.17%

Subtotal of Cash Inflow from Financing Activities                         8,800,798,371.20        5,310,239,934.34           65.73%

Subtotal of Cash Outflow from Financing Activitiess                       8,424,286,645.98        4,865,390,334.24           73.15%

Net Cash Flow Generated by Financing Activities                             376,511,725.22          444,849,600.10          -15.36%

Net additions to Balance of Equivalents                                     639,604,809.66          987,502,208.32          -35.23%

Description of the main factors affecting the significant changes in related data over the same period of last year
√ Applicable □ Not applicable
1. Cash inflow from operating activities saw a year-on-year rise of 32.31%, which is mainly due to the expansion of company sales
and increase in received payment.
2. Cash outflow from operating activities saw a year-on-year rise of 33.81%, which is mainly due to the expansion of company sales
and the increase in the corresponding expenditure.
3. Cash inflow from investment activities saw year-on-year rise of 44.57%, which is mainly due to the increase in investment
recovered from the reverse repurchase of treasury bonds in the current period.
4. Cash outflow from investment activities saw year-on-year rise of 122.20%, which is mainly due to the increase in investment to
construction in progress, asset and equity acquisition in the current period.
5. Cash inflow from funding activities saw a year-on-year rise of 65.73%, which is mainly due to increased borrowings in the current
period.
6. Cash outflow from funding activities saw a year-on-year rise of 73.15%, which is mainly due increased refunds in the current
period.
Reasons for the significant difference between the net cash flow generated by the company's operating activities in the reporting
period and the net profit in the current year
□ Applicable √ Not applicable




                                                                                                                                     43
                                                                            2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


III. Non-main Business Analysis

□ Applicable √ Not applicable


IV. Analysis of Assets and Liabilities

1. Significant changes in assets composition

                                                                                                                                   Unit: RMB

                             End of 2018                           End of 2017             Proportion
                                           Proportion                         Proportion Increase
                                                                                                        Statement on Significant Changes
                           Amount           To Total          Amount           To Total    and
                                             Assets                              Assets     Decrease

Cash and Bank
                      4,160,153,847.06        15.79%       3,612,937,164.14       16.94%      -1.15% No Significant Change
Balances

Accounts                                                                                                Mainly due to the expansion of
                     10,191,372,777.38        38.68%       7,539,944,756.69       35.34%       3.34%
Receivable                                                                                              Company sales

Inventory             3,035,579,709.14        11.52%       2,806,142,598.65       13.15%      -1.63% No Significant Change

Investment                                                                                              Main due to self-owned property
                       346,831,376.55          1.32%         181,050,142.29        0.85%       0.47%
Property                                                                                                rental

                                                                                                        Mainly due to the rights and
Long-term Equity
                       185,872,021.58          0.71%          61,272,885.41        0.29%       0.42% interests confirmation for joint
Investment
                                                                                                        stock companies

Fixed Assets          1,407,471,330.83         5.34%       1,248,305,165.77        5.85%      -0.51% No Significant Change

                                                                                                        Mainly due to increased
Projects under                                                                                          investment in Dahua Smart
                        226,191,587.11         0.86%          58,779,225.41        0.28%       0.58%
Construction                                                                                            Security (IOT) Manufacturing
                                                                                                        Base

Short-term Loan       1,851,709,561.83         7.03%       1,770,924,255.90        8.30%      -1.27% No Significant Change

Long-term Loan         179,000,000.00          0.68%         230,000,000.00        1.08%      -0.40% No Significant Change


2. Assets and liabilities measured at fair value

√ Applicable □ Not applicable
                                                                                                                                   Unit: RMB

                                                                                           Purchase
                  At the          Changes in Fair                        Impairment
                                                      Cumulative Fair                     Amount of      Sales Amount of    At the End of
   Item      Beginning of the Value Gains and                            Loss of the
                                                      Value Changes in                        the         the Reporting     the Reporting
  Name           Reporting         Losses in the                          Reporting
                                                          Equity                           Reporting             Period           Period
                  Period          Current Period                           Period
                                                                                            Period



                                                                                                                                            44
                                                                                 2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Financial
                  62,450,000.00      38,602,602.30                                                              62,450,000.00 38,602,602.30
Liabilities

Are there any significant changes in the measurement attributes of the company's main assets during the reporting period?
□ Yes √ No


3. Restrictions on asset rights as of the end of the reporting period

       As of December 31, 2018, the Company pledged monetary funds of RMB 469,159,816.01 for bank loans, issuing letters of
guarantee and commercial acceptance bills; pledged notes receivable of RMB 1,606,595,655.43 for issuing bank acceptance bills;
pledged long-term accounts receivable of RMB 333,613,018.77 for long-term loans of bank.


V. Investment analysis

1. Overview

√ Applicable □ Not applicable

  Investment In The Reporting Period (RMB)               Investment Over The Corresponding Period Of Last Year             Rate Of Change

                    573,964,874.71                                         1,113,976,115.63                                       -48.48%


2. Significant equity investments acquired during the reporting period

□ Applicable √ Not applicable


3. Major non-equity investments underway during the reporting period

√ Applicable □ Not applicable
                                                                                                                                          Unit: RMB

                                                                                                                        Reasons
                                  Involv                                                                     Cumulat      For
                         The
                                    ed                                                                         ive      Unreach
                        Investm                Amount                                                Anti                          Disclo
                                  industr                     Cumulative Actual                              Income       ed
               Invest   ent In              Invested In The                       Capita    Item     cipat                          sing    Disclosi
   Item                            y in                       Investment As Of                                As Of     Planned
               ment      The                   Current                               l      Name      ed                           Date ng Index
  Name                            invest                         The End Of                                  The End Progress
               Mode      Fixed                Reporting                           Source Progress Inco                              (If     (If Any)
                                  ment                        Reporting Period                               Of The      And
                        Assets                  Period                                               me                            Any)
                                  project                                                                    Reportin Anticipa
                        Or Not
                                     s                                                                       g Period     ted
                                                                                                                        Revenue

                                                                                                                                            Juchao
Dahua                             Video
                                                                                                                                            Informat
Intelligen Self-c                 surveil                                         Self-ra                                         Decem
                                                                                                                                            ion
ce (IoT)       onstru    Yes      lance     193,537,262.06 1,011,578,841.90 ised            50.58%                       N/A      ber 02,
                                                                                                                                            Website
Industrial     ction              industr                                          funds                                          2014
                                                                                                                                            http://cni
Park                                y
                                                                                                                                            nfo.com.

                                                                                                                                                  45
                                                                       2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                                                                           cn/

Dahua
                                                                                                                           Juchao
West
                              Video                                                                                        Informat
Smart
           Self-c            surveil                                     Self-ra                                  July     ion
Base and
           onstru     Yes     lance     50,943,152.09     50,943,152.09 ised         5.09%                  N/A   16,      Website
Dahua
            ction            industr                                     funds                                    2018     http://cni
West
                                  y                                                                                        nfo.com.
R&D
                                                                                                                           cn/
Center

Dahua
Smart                         Video
Security   Self-c            surveil                                     Self-ra
(IOT)      onstru     Yes     lance    102,115,375.87    110,183,237.44 ised         13.77%                 N/A
Manufact    ction            industr                                     funds
uring                             y
Base

Total         --       --         --   346,595,790.02 1,172,705,231.43     --         --      0.00   0.00   --      --           --


4. Financial assets at fair value

□ Applicable √ Not applicable


5. Utilization of raised funds

□ Applicable √ Not applicable
No use of funds in the reporting period of the Company


VI. Major Assets and Equity Sales

1. Major assets sales

□ Applicable √ Not applicable
No major assets sales in the reporting period of the Company


2. Major equity sales

□ Applicable √ Not applicable


VII. Analysis of Major Subsidiaries and Investees

√ Applicable □ Not applicable
Major subsidiaries and joint-stock companies with a net profit impact of over 10%.
                                                                                                                         Unit: RMB


                                                                                                                                      46
                                                                            2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Comp Com
                     Main        Registered                                                                Operating
 any pany                                         Total Assets          Net Assets    Operating Income                     Net Profit
                 Business          Capital                                                                   Profit
Name Type

               The
               development
               , production,
               installation
               and sales of
               electronic
               and
               communicat
Dahua Subs ion
Syste idiar products; the
m        y     design,         500,000,000.00   3,806,285,042.13 1,231,086,785.21 1,733,294,029.23 20,275,392.33 27,584,975.67
Engin Com construction
eering pany and
               installation
               of computer
               system
               integration
               and
               automated
               control
               engineering

               The
               development
               , sales, and
               technical
               services
               related to
               computer
         Subs software, as
Dahua
         idiar well as the
Vision                                          18,991,040,578.2                                          319,563,148.1 239,719,169.4
         y     design,         646,810,000.00                        1,004,392,739.83 20,535,514,855.52
Techn                                                            5                                                     8                4
         Com development
ology
         pany , production
               and sales of
               security
               equipment,
               electronic
               products and
               communicat
               ions



                                                                                                                                        47
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


              products

              Production
              and sales of
              electronic
              products and
              auxiliary
              equipment;
              technologica
              l
              development
              , technical
              consultation
              and services,
              achievement
        Subs transference
Dahua idiar of computer
                              1,110,000,000.0
Zhilia y      software,                          4,333,344,310.38 1,009,658,111.72 2,375,777,103.45 62,545,434.99 46,928,649.30
                              0
n       Com electronic
        pany products,
              communicat
              ions
              products,
              and digital
              security
              products;
              self-owned
              house lease;
              catering
              service;
              import and
              export of
              goods.

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

                                                  Method of Acquisition and Disposal of     Impact on Overall Production Management
              Company Name
                                                 Subsidiaries during the Reporting Period                and Performance

                                                                                            No significant impact on overall
Tianjin Dahua                                   Established with investment
                                                                                            production, operation and performance

                                                                                            No significant impact on overall
Dahua Zhilong                                   Established with investment
                                                                                            production, operation and performance

                                                                                            No significant impact on overall
Vision Technology                               Established with investment
                                                                                            production, operation and performance



                                                                                                                                    48
                                                                      2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                                     No significant impact on overall
Zhongcheng Technology                    Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Huaxiao Technology                       Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Xi'an Dahua                              Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Wuxi Ruipin                              Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Robot                              Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Beijing Huayue                           Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Shanghai Huashang                        Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Jinzhi                             Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Huajuan Technology                       Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Morocco                            Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Uzbekistan                         Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Netherlands                        Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Sri Lanka                          Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Pakistan                           Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua New Zealand                        Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Thailand                           Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
Dahua Romania                            Established with investment
                                                                                     production, operation and performance

                                                                                     No significant impact on overall
1151551 B.C.Ltd                          Invest to establish/cancel
                                                                                     production, operation and performance

Guangxi Dahua Zhongzhi Technology Co.,                                               No significant impact on overall
                                         Deregistration
Ltd.                                                                                 production, operation and performance




                                                                                                                             49
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Yancheng Zhongchuang Dahua IoT                                                           No significant impact on overall
                                            Deregistration
Technology Co., Ltd.                                                                     production, operation and performance

Jiangsu Dahua Zhiyun Information                                                         No significant impact on overall
                                            Deregistration
Technology Co., Ltd.                                                                     production, operation and performance

Major holding companies and joint stock companies
No significant holding companies and joint stock companies information should be disclosed during the reporting period.


VIII. The structured entity controlled by the Company

□ Applicable √ Not applicable


IX. Prospects for the Future Development of the Company

A. Company Development Strategy


     The Company is the world's leading provider of video-centric smart IoT solutions and operation services. Based on

technological innovations, with customer demands as orientation and customer success as the goal, the Company creates values in

city operation, enterprise management, as well as consumer life. Based on the Company's leading position in technical innovation,

industry experience, and customer base, we aim to create a video ecosystem centered on smart IoT information services to make

society safer and life smarter.

     Based on the insights into the future trend, the Company introduced the "Dahua HOC" strategy in 2018 to facilitate intelligent

transformation of various cities and the industry, and help with the cooperative, open, safe and sustainable development of various

cities and the industry.


B. Prospects for Future Strategy


     1. Improving the capability to come up with comprehensive end-to-end solutions oriented to the pain points of customers

based on the HOC structure

     The Company will construct a differential technology system oriented toward "full sensing, full intelligence, full computing and

full ecology" and improve the capability to come up with comprehensive end-to-end solutions oriented to the pain points of

customers based on the HOC structure. The Company will follow the market trend of "customer demands as orientation, customer

success as the goal", so as to create a project-driven organization with strong matrix, open up solution marketing, R&D and delivery

functions, and cultivate the capability to come up with differential solutions oriented toward customers' scenarios. The Company will

gradually realize the two-way opening-up and synergy of solutions and products, to promote the integration of solutions and

products.

     2. Continuously increasing investment in R&D and facilitating technical innovation

     The Company will further explore insights into the industrial and technical trends and increase the investment in advanced

technologies, such as AI, cloud computing and big data, chip and other future core technologies to enhance R&D capabilities. By

                                                                                                                                      50
                                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


virtue of the leading technologies in the industry and the market scale, the Company will accelerate the commercialization of

technologies, maintain its leading position in video technology, multi-dimensional sensing, AI, big data analysis and other core

technical fields, and develop more solutions and products oriented toward customer demands.

     3. Continuously enriching the customer interface to enhance the ability to create values for customers

     The Company will build a tiered customer sand table, establish a three-dimensional customer relationship management system

and improve the systematic marketing abilities based on the matching with customer values, to continuously enrich the customer

interface. In the industry market, the Company will focus on valuable industries and enhance the expansion and deepening in the

industry market. In addition, the Company will build a cooperative ecosystem to provide integrated solutions that create values for

customers. In terms of channel management, we will strengthen channel sinking and channel relationship management, establish a

tiered channel customer management system, and enhance the development and operation of new channels.

     4. Exploring the domestic market in an in-depth manner while promoting overseas business localization and optimizing

revenue structure

     The Company will continue to optimize the construction of global marketing network, expand the overseas market on the basis

of the exploration in the domestic market, proceed orderly with the construction of overseas branches, and improve the localized

operation capabilities. The Company will enrich the product lines for overseas market, speed up the update and iteration of overseas

products, promote continuous breakthrough in project market, and gradually increase the proportion of its revenue in overseas market

revenue.

     5. Building systematic delivery and service capabilities oriented toward the global market

     The Company will, based on the integration plan, build a high-efficiency and low-cost supply system oriented toward the global

market to realize flexible supply and improved quality. For the front-line businesses, the Company will build delivery and service

capabilities in domestic provinces/overseas regions, create a professional and efficient delivery platform, and enhance delivery

efficiency and customer satisfaction.

     6. Taking video capabilities as the core and increasing the investment in innovative businesses to cultivate new growth

points

     Centering on the video business, the Company has incubated machine vision, robots, smart fire control, video conference system,

industry-level drones and other emerging video IoT businesses. The Company will continue to integrate resources such as AI, cloud

computing and big data, IoT, etc., and explore the application of those resources in the video IoT field. In the future, the Company

will continue to explore different business models around video services and tap new growth points from its innovative business.

     7. Focusing on the pain points in businesses and processes to strengthen management improvement, improving

operational efficiency, and enhancing the ability to continuously create values for customers

     The Company will continue to advance the business transformation and management optimization aiming at creating values for

customers, and gradually open up the LTC\IPD\ISD\ITR process to achieve the efficient operation of the end-to-end process system.

The Company will open up the LTC business process to the front-line businesses, strengthen the management of channels and


                                                                                                                                       51
                                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


projects and enhance efficiency and benefit. Through IPD, the Company will strengthen market insight targeting at typical customers

and scenarios, solidify demand management, and enhance accuracy of product investment and effectiveness of R&D. Through ISD,

the Company will enhance the customer delivery and service ability and further enhance the overall delivery efficiency. Through

establishing the end-to-end ITR management system, the Company will connect the technical service organizations of all levels to

clarify the solution procedures for domestic and overseas pre-sales/in-sales/after-sales problems.

     8. Further improving the incentive system for talents and the development of corporate culture

     The company will adhere to the corporate culture of "customer-centered and strive-oriented" to build the core power of

enterprise development. The Company always adheres to the value orientation of "Striver-oriented and win-win with fighters",

continuously optimizes the performance evaluation and salary distribution system, and promotes diversified incentive measures

including both short term and long term ones to provide high-performance talents with sustainable salary and spiritual incentive.


X. Reception of research, communication, interviews and other activities

1. Registration Form for reception of research, communication, interviews and other activities during the
reporting period

√ Applicable □ Not applicable

  Reception Time       Reception Method Reception target type                  Index of the basic information of research

                                                                   For more information, please see the investor relations activity
January 10, 2018      Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
January 11, 2018      Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
26 January 2018       Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
January 29, 2018      Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
January 30, 2018      Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
March 14, 2018        Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
March 15, 2018        Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
March 19, 2018        Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
March 21, 2018        Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn

                                                                   For more information, please see the investor relations activity
March 26, 2018        Field Investigation Institution
                                                                   list in http://www.cninfo.com.cn


                                                                                                                                      52
                                                                      2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                 For more information, please see the investor relations activity
27 April 2018   Field Investigation Institution, individual
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
May 08, 2018    Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
May 09, 2018    Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
May 10, 2018    Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
May 11, 2018    Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
May 17, 2018    Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
May 18, 2018    Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
May 30, 2018    Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                Field investigation,
                                                                 For more information, please see the investor relations activity
May 31, 2018    telephone              Institution
                                                                 list in http://www.cninfo.com.cn
                communication

                                                                 For more information, please see the investor relations activity
June 06, 2018   Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                Field investigation,
                                                                 For more information, please see the investor relations activity
June 07, 2018   telephone              Institution
                                                                 list in http://www.cninfo.com.cn
                communication

                                                                 For more information, please see the investor relations activity
June 19, 2018   Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
June 20, 2018   Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                Field investigation,
                                                                 For more information, please see the investor relations activity
June 26, 2018   telephone              Institution
                                                                 list in http://www.cninfo.com.cn
                communication

                Telephone                                        For more information, please see the investor relations activity
June 27, 2018                          Institution
                communication                                    list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
July 02, 2018   Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn

                Telephone                                        For more information, please see the investor relations activity
July 08, 2018                          Institution, individual
                communication                                    list in http://www.cninfo.com.cn

                                                                 For more information, please see the investor relations activity
July 17, 2018   Field Investigation Institution
                                                                 list in http://www.cninfo.com.cn


                                                                                                                                    53
                                                                       2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                  For more information, please see the investor relations activity
July 18, 2018       Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
August 23, 2018     Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
August 29, 2018     Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
August 30, 2018     Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 06, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 07, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 12, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 13, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 14, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 18, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 19, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 20, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 26, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
September 27, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
October 26, 2018    Field Investigation Institution, individual
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
October 31, 2018    Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
November 01, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
November 19, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn

                                                                  For more information, please see the investor relations activity
November 20, 2018 Field Investigation Institution
                                                                  list in http://www.cninfo.com.cn




                                                                                                                                     54
                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                    For more information, please see the investor relations activity
November 21, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
November 29, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
November 30, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
December 03, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
December 10, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
December 11, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
December 12, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
December 17, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
December 18, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn

                                                    For more information, please see the investor relations activity
December 19, 2018 Field Investigation Institution
                                                    list in http://www.cninfo.com.cn




                                                                                                                       55
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




                                          Section V Significant Events

I. Distribution of Common Stock Profits of the Company and Capitalization of Capital
Reserves

Distribution policies of the common stock profits during the reporting period, especially the formulation, implementation or
adjustment of the cash dividend policies
√ Applicable □ Not applicable
     On April 27, 2018, the Company's 2017 Annual General Meeting of Shareholders reviewed and approved the Shareholder
Return Planning for the Next Three Years (2018-2020), which clearly stipulates the decision-making procedures for dividend
standards, proportions and profit distribution policies that will be executed in strict rotation, guaranteeing the continuity and stability
of the profit distribution policies and adequately protecting the legitimate rights and interests of small and medium investors.

                                                  Special notes on cash dividend policies

Whether they comply with the requirements of the Company's articles of incorporation
                                                                                             Yes
or the resolutions of the General Meeting of Shareholders:

Whether the dividend standards and proportions are distinct and clear:                       Yes

Whether the relevant decision-making procedures and mechanisms are complete:                 Yes

Whether the independent directors performed their duties and played their due role:          Yes

Whether the minority shareholders have the opportunity to fully express their opinions
                                                                                             Yes
and appeals, and whether their legitimate rights and interests have been fully protected:

Whether relevant conditions and procedures are compliant and transparent when the            No adjustments or changes on cash
cash dividend policies are being adjusted or changed:                                        dividend policies

The Company's common stock dividends distribution plan (preplan) and capital reserve capitalization plan (preplan) in the past three
years (including this reporting period)
     1. The profit distribution preplan of the Company in 2016 is: taking the 2,899,411,405 total capital shares by December 31, 2016
as the basis, cash dividend of RMB 1.00 (tax included) for each 10 shares was distributed to all shareholders, with a total amount of
RMB 289,941,140.50, and no bonus share sent and no capitalization of capital reserves.
     2. The profit distribution preplan of the Company in 2017 is: taking the 2,898,756,130 total capital shares by December 31,
2017 as the basis, cash dividend of RMB 2.00 (tax included) for each 10 shares was distributed to all shareholders, with a total
amount of RMB 579,751,226.00, and no bonus share sent and no capitalization of capital reserves.
     3. The profit distribution preplan of the Company in 2018 is: taking the 2,997,621,930 total capital shares by December 31,
2018 as the basis, cash dividend of RMB 1.00 (tax included) for each 10 shares was distributed to all shareholders, with a total
amount of RMB 299,762,193.00, and no bonus share sent and no capitalization of capital reserves.
The Company's cash dividends for common stocks in the past three years (including this reporting period)
                                                                                                                                Unit: RMB

                                     Net profit          The ratio of    The Amount The Proportion Total Amount            The Ratio of
              Cash Dividend
                                   Attributable to     Cash Dividends      of Cash          of Cash          of Cash       Total Amount
   Year        Amount (tax
                                  Common Stock        to the Net Profit Dividends in    Dividends in       Dividends          of Cash
                 included)
                                  Shareholders of      Attributable to   Other Ways Other Ways the         (including        Dividends


                                                                                                                                          56
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                  Listed Companies         Ordinary       (such as         Net Profit      other ways)      (including
                                       in the         Shareholders of       share        Attributable to                   other ways) to
                                    Consolidated            Listed       repurchase)        Ordinary                       the Net Profit
                                      Financial          Companies in                    Shareholders of                  Attributable to
                                  Statement of the the Consolidated                          Listed                          Ordinary
                                  Year for Dividend       Statements                     Companies in                     Shareholders of
                                    Distribution                                               the                            Listed
                                                                                          Consolidated                     Companies in
                                                                                           Statements                           the
                                                                                                                           Consolidated
                                                                                                                            Statements

2018            299,762,193.00 2,529,426,468.61                 11.85%            0.00            0.00% 299,762,193.00            11.85%

2017            579,751,226.00 2,378,726,820.22                 24.37%            0.00            0.00% 579,751,226.00            24.37%

2016            289,941,140.50 1,825,199,447.95                 15.89%            0.00            0.00% 289,941,140.50            15.89%

The Company's profits during the reporting period and the parent company's distribution of common stock shareholders' profits are
positive but a cash dividend distribution preplan for common stock is not proposed.
□ Applicable √ Not applicable


II. Preplans on Profit Distribution and Capitalization of Capital Reserves during this
Reporting Period

√ Applicable □ Not applicable

Number of bonus shares per 10 shares (shares)                                                                                             0

Number of dividend payout per 10 shares (RMB) (tax included)                                                                           1.00

Number of capitalized shares per 10 shares (shares)                                                                                       0

Equity base in the distribution preplan (shares)                                                                             2997621930

The amount of cash dividends (RMB) (including tax)                                                                        299,762,193.00

The amount of cash dividends (RMB) in other ways (such as
                                                                                                                                       0.00
share repurchase)

The total amount of cash dividends (including in other ways)
                                                                                                                          299,762,193.00
(RMB)

Distributable profits (RMB)                                                                                              7,670,983,116.33

The ratio of the total amount of cash dividends (including in
                                                                                                                                       100
other ways) to the total amount of profit distribution

                                                           Latest cash dividend

If the Company's development stage is not easy to define but there are significant capital expenditure arrangements, when the
profits are being distributed, the proportion of the cash dividends in this profit distribution should be at least 20%

                           Details of the preplans on profit distribution or capitalization of capital reserves

       As audited and confirmed by BDO China Shu Lun Pan Certified Public Accountants LLP, the net profit attributable to



                                                                                                                                          57
                                                                              2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


shareholders of the parent company in 2018 was RMB 2,529,426,468.61. According to the Articles of Incorporation, the statutory
surplus reserve transferred was RMB 274,822,162.55; as of December 31, 2018, the profit actually available for distribution to
shareholders by the Company is RMB 7,670,983,116.33, and the profit actually available for distribution to shareholders from the
parent company is RMB 7,930,928,526.31.
      The Company's profit distribution preplan for the year of 2018 is: on the basis of the Company's 2,997,621,930 shares in total
capital by December 31, 2018, all shareholders will be distributed 1 yuan in cash (including tax) for each 10 shares, and the total
amount of cash dividends is 299,762,193.00 yuan, with no bonus shares and no capitalization of capital reserves. The remaining
undistributed profit after the distribution of dividends will be carried forward to the next year.


III. Performance of Commitments

1. Commitments made by the Company's controlling shareholders, shareholders, related parties,
purchasers and purchasing companies and have been fulfilled during the reporting period and those that
have not been fulfilled by the end of the reporting period

√ Applicable □ Not applicable

               Party
                          Commit
Commitm       making
                               ment                            Content                                 Time           Term    Performance
     ents    commitme
                               Type
                   nts

                                                                                                                             As of the
Commitm                                                                                                                      disclosure
                                      The number of shares transferred each year during
ents made                                                                                                                    date of this
             Fu Liquan,               his/her term of service shall not exceed 25 percent of
during                                                                                                                       announcement
             Zhu          Commit the total number of shares he/she holds in the Company;
initial                                                                                                                      , the
             Jiangming ment on he/she shall not transfer his/her shares in the Company                            Long-ter
public                                                                                             15 July 2007              aforementione
             , Chen       restricte within half a year after he/she leaves the Company;                           m
offerings                                                                                                                    d
             Ailing,      d shares within the next twelve months, the number of shares
or                                                                                                                           commitments
             Wu Jun                   sold through the stock exchange listing transactions
refinancin                                                                                                                   are still in
                                      shall not exceed 50% of the total shares he/she holds.
g                                                                                                                            strict
                                                                                                                             execution.

                                                                                                                             As of the
                                      (1) He/she will not directly engage in operational
                                                                                                                             disclosure
                                      activities that constitute horizontal competition with the
Other                                                                                                                        date of this
                          Commit stock company's business; (2) for companies he/she
commitme                                                                                                                     announcement
                          ment on held or indirectly held, he/she will fulfill the obligations
nts to       Fu Liquan,                                                                                                      , the
                          horizont under this commitment through agencies and personnel                           Long-ter
minority     Chen                                                                                  30 June 2007              aforementione
                          al          (including but not limited to directors and managers);                      m
shareholde Ailing                                                                                                            d
                          competit (3) if the stock company further expands its range of
rs of the                                                                                                                    commitments
                          ion         products and business scope, he/she and the company
Company                                                                                                                      are still in
                                      held by him/her will not compete with the expanded
                                                                                                                             strict
                                      range of products or businesses of the stock company.
                                                                                                                             execution.

Whether      Yes


                                                                                                                                            58
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


the
commitme
nt is
fulfilled
on time


2. If there is a profit forecast for the Company's assets or projects, and the reporting period is still within
the profit forecast period, the Company shall make an explanation on the fulfillment and its reasons

□ Applicable √ Not applicable


IV. Non-operational Capital Occupation over Listed Companies by Controlling Shareholders
and Their Related Parties

□ Applicable √ Not applicable
During the reporting period, there is no non-operational capital occupation over listed companies by controlling shareholders and
their related parties.


V. Explanations Made by the Board of Directors, the Board of Supervisors and Independent
Directors (If Any) on the "Non-standard Audit Report" from the Accounting Firm during the
Reporting Period

□ Applicable √ Not applicable


VI. Changes in Accounting Policies, Accounting Estimates and Accounting Methods
Compared with the Previous Year's Financial Report

□ Applicable √ Not applicable
During the reporting period, there are no changes in accounting policies, accounting estimating and accounting methods.


VII. Explanations on the Retroactive Restatement of Any Significant Accounting Errors
during the Reporting Period

□ Applicable √ Not applicable
During the reporting period, there are no significant accounting error corrections that need to be retrospectively restated.


VIII. Changes in the Scope of Consolidated Financial Statements Compared with the Previous
Year's Financial Report

√ Applicable □ Not applicable
        a) The Company invested to establish 12 domestic subsidiaries including Zhejiang Vision Technology Co., Ltd., Dahua
Zhongcheng (Beijing) Technology Co., Ltd., Zhejiang Huaxiao Technology Co., Ltd., Xi'an Dahua Zhilian Technology Co., Ltd.,
Tianjin Dahua Information Technology Co., Ltd., Hunan Dahua Zhilong Information Technology Co., Ltd., Zhejiang Dahua Robot
Technology Co., Ltd., Beijing Huayue Shangcheng Information Technology Service Co., Ltd., Zhejiang Dahua Jinzhi Technology


                                                                                                                                    59
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Co., Ltd., Shanghai Huashang Chengyue Information Technology Service Co., Ltd., Wuxi Dahua Ruipin Technology Co., Ltd.,
Hangzhou Huajuan Technology Co., Ltd. and 9 overseas subsidiaries including Dahua Technology Netherlands BV, Dahua
Technology Morocco SARL, Dahua Technology S.R.L, DAHUA VISION LLC, Dahua Technology New Zealand Limited, 1151551
B.C.Ltd., DAHUA TECHNOLOGY CHINA (PVT) LTD, Dahua Technology Pakistan (private) Limited, DAHUA TECHNOLOGY
(THAILAND) CO., LTD. The above subsidiaries have been incorporated in the consolidation scope since the date of establishment.
     b) In February 2018, the Company completed the shareholding merger of Lorex Technology Inc and Dahua Technology Italy
SRL, owning 100% stake of them and having substantial control over it, so they were incorporated in the consolidation scope.
     In November 2018, the Company completed the shareholding merger of Sichuan Dahua Guangxun Photoelectric Technology
Co., Ltd., owning 100% stake of them and having substantial control over it, so they were incorporated in the consolidation scope.
     c) This year, Guangxi Dahua Zhongzhi Technology Co., Ltd., Yancheng Zhongchuang Dahua IOT Technology Co., Ltd., Jiangsu
Dahua Zhiyun Information Technology Co., Ltd. And 1151551 B.C.Ltd. were canceled, without being incorporated in the
consolidation scope since the date of cancellation.


IX. Appointment and Dismissal of Accounting Firms

Currently appointed accounting firms



Names of domestic accounting firms                                      BDO China Shu Lun Pan CPAs (special general partnership)

Remuneration to domestic accounting firms (Unit: ten thousand
                                                                                                                                 130
RMB)

Years of continuous audit service of domestic accounting firms                                                                    15

Names of Certified Public Accountants from domestic accounting
                                                                                                             Zhong Jiandong, Du Na
firms

The continuous period of audit service for certified public             One year of continuous service for Zhong Jiandong and four
accountants in domestic accounting firms                                                        years of continuous service for Du Na

Whether to reappoint accounting firms for current period
□ Yes √ No
Appointment of accounting firms, financial advisers or sponsors for internal control auditing
□ Applicable √ Not applicable


X. Suspension of Listing and Termination of Listing after Disclosure of the Annual Report

□ Applicable √ Not applicable


XI. Bankruptcy and restructuring

□ Applicable √ Not applicable
No such case as bankruptcy and reorganization related event during the reporting period.




                                                                                                                                     60
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


XII. Significant Lawsuits and Arbitrations

     During this reporting period, the Company has no major lawsuits or arbitrations. Other lawsuits that do not meet the criteria of
disclosure for major lawsuits are as follows:
     The subsidiary company, Zhejiang Dahua Technology Co., Ltd, signed a sales contract with Hangzhou Sailidi Import & Export
Co., Ltd (hereinafter referred to as "Sailidi Company") that Sailidi Company purchased products from Dahua Technology. Up to
December 31, 2018, there are still 66,920,644.38 yuan in accounts payable. In August 2018, Dahua Technology filed a lawsuit to the
People's Court of Binjiang District in Hangzhou, requesting Sailidi Company to pay the remaining amount and the liquidated
damages for overdue payment and interests. In September 2018, Dahua Technology applied to the People's Court of Binjiang District
for property preservation, requesting to freeze the bank deposit of 50 million yuan from Sailidi Company's legal representative Zhu
Yuequan, or to seal up or seize property of corresponding value and provide guarantee. The People's Court of Binjiang District
granted the application for property preservation. On January 11, 2019, the People's Court of Binjiang District in Hangzhou
conducted a public hearing and on January 17, 2019, it issued a court verdict of (2018) Zhejiang 0108 Minchu No. 4451 that
requested Sailidi Company to pay Dahua Technology the overdue payment of 27,878,975.60 yuan and corresponding interest loss of
1,021,088.16 yuan (calculated until the date of December 31, 2018) after the verdict came into effect, with Zhu Yuequan assuming
joint and several liability. Until the financial reporting date, this case was still in the execution stage. According to the inventory of
seized property, the Company's estimated recoverable amount is 10 million yuan. The net realizable value of other seized property is
of significant uncertainty, thus the Company makes provision for bad debts of 56,920,644.38 yuan based on the difference between
the present value of estimated future cash flow and its book value.


XIII. Penalties and Rectification

□ Applicable √ Not applicable
No such case as penalty and rectification during the reporting period.


XIV. Integrity of the Company, Its Controlling Shareholder and Actual Controller

□ Applicable √ Not applicable


XV. Implementation of the Company's Equity Incentive Plan, Employee Stock Ownership
Plan or Other Employee Incentive Measures

√ Applicable □ Not applicable
     1. On May 16, 2017, the Company's 2016 Annual General Meeting of Shareholders reviewed and approved the Zhejiang Dahua
Technology Co., Ltd. Phase III Employee Stock Ownership Plan (Draft) and its summary, and decided to implement the Phase III
Employee Stock Ownership Plan. On June 1, 2017, the Company's third employee stock ownership plan completed the stock
purchase through the "DAHUA No. 3 Directional Asset Management Plan of Caitong Securities Asset Management", with an
average purchase price of 16.83 yuan per share and total purchase amount of 47,000,000 shares.
     2. On November 12, 2018, the Company's 18th meeting of the 6th Board of Directors reviewed and approved "the Suggestive
Proposal on Extension of the Impending Expiration of the Company's Third Employee Stock Ownership Plan Duration". The Board
of Directors agreed to extend the Company's third employee stock ownership plan for one year according to the voting results of the
shareholders' meeting. That is, the duration was extended for one additional year on the basis of the original termination date, until
May 15, 2020.
     3. On August 28, 2018, the Company's 15th meeting of the 6th Board of Directors of the company reviewed and approved "the



                                                                                                                                         61
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Restricted Stock Incentive Plan (Draft) of Zhejiang Dahua Technology Co., Ltd in 2018" and its summary, which intends to use the
method of private placements to grant for the first time 109,574,100 restricted stocks at the price of 8.17 yuan per share to 3,423
employees, including part of the Company's directors, senior executives and other managers and key staff, and reserve 12,174,900
shares for reserved incentive objects at the same time.
     4. On September 14, 2018, the Company's 4th interim shareholders' meeting in 2018 reviewed and approved "the Restricted
Stock Incentive Plan (Draft) of Zhejiang Dahua Technology Co., Ltd in 2018" and its summary, authorizing the Board of Directors to
handle relevant matters on the Company's stock incentive plan。
     5. On November 1, 2018, the Company's 17th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Related Issues of Adjusting the Restricted Stock Incentive Plan of 2018" and the "Proposal on Granting Restricted Stocks to
Incentive Targets". In view that some of the original incentive targets no longer met the incentive conditions due to dimission, and
some of them waived the restricted stocks that the company intended to grant for personal reasons, the Board of Directors adjusted
the number of incentive targets and the quantity of stocks to be granted. The number of incentive targets was adjusted from 3,423 to
3,237, and the total number of restricted stocks to be granted was adjusted from 121,749,000 shares to 117,468,100 shares. At the
same time, the Board of Directors confirmed the granting conditions and concluded that the conditions had been reached and decided
to grant restricted stocks to the incentive targets for the first time. The granting date was November 1, 2018.
     On November 29, 2018, the Company published the "Announcement on the Completion of Restricted Stocks Granting in 2018".
In view that some of the original incentive targets no longer met the incentive conditions due to their dimission, and some of them
waived the restricted stocks that the company intended to grant for personal reasons, the Company adjusted the number of incentive
targets and the quantity of stocks to be granted. The number of incentive targets was adjusted from 3,237 to 3,145, and the total
number of restricted stocks to grant was adjusted from 105,293,200 shares to 98,865,800 shares, and the quantity of 12,174,900
shares of reserved restricted stocks remained unchanged. The 98,865,800 shares that the Company has granted to 3,145 people for
the first time through the restricted stock incentive plan in 2018 have been issued in Shenzhen Stock Exchange on November 30,
2018.
     7. On December 27, 2018, the Company's 5th interim shareholders' meeting in 2018 reviewed and approved the "Proposal on
Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy back and cancel restricted shares
held by the incentive targets who have left the Company and one deceased personnel. The buy-back price was 8.17 yuan per share,
the same as the granting price, and the registered capital was reduced accordingly. The above buy-back and cancellation was
completed on March 4, 2019, and the modification procedures at the Bureau of Industry and Commerce are still in progress.


XVI. Significant Related-party Transactions

1. Related transactions relevant to daily operations

□ Applicable √ Not applicable
No such case as significant related-party transactions connected with daily operations.


2. Related transactions in acquisition or sale of assets or equities

□ Applicable √ Not applicable
No such case as related-party transactions arising from the acquisition or sale of assets or equity.


3. Significant related-party transactions arising from joint investments on external parties

√ Applicable □ Not applicable



                                                                                                                                       62
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


For details, see "5. Other Significant Related-party Transactions" in this section.


4. Related-party creditor's rights and debts

□ Applicable √ Not applicable
No such case as significant related credits and debts during the reporting period.


5. Other major related transactions

√ Applicable □ Not applicable
     1. On January 25, 2018, the Company's 5th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Adjusting the Joint Investment Plan with Related Parties and Related Transactions (I)", which agreed to adjust the capital
contribution to Zhejiang Huaan Technology Co., Ltd (tentative name) with the related legal person of Zhejiang Huashi Investment
Management Co., Ltd, the related natural person of Wei Meizhong and 15 unrelated natural persons. After the adjustment, the
Company will contribute RMB 25.5 million with its own funds, accounted for 51% of the registered capital. In March 2018, this
company was established and the approved company name by the Bureau of Industry and Commerce was Zhejiang Huaxiao
Technology Co., Ltd.
     2. On January 25, 2018, the Company's 5th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Adjusting the Joint Investment Plan and Related Transactions with Related Parties (II)", which agreed to adjust the capital
contribution to Zhejiang Huazhi Technology Co., Ltd (now renamed Zhejiang Dahua Robotics Technology Co., Ltd) with the related
legal person of Zhejiang Huashi Investment Management Co., Ltd and the unrelated persons. After the adjustment, the Company
invested 25.5 million yuan with its own funds, accounting for 51% of the registered capital; Huashi Investment contributed 24.5
million yuan in cash, accounting for 49% of the registered capital. In August 2018, this company was established.
     3. On January 25, 2018, the Company's 5th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Waiving the Right of Proportional Capital Increase and Related Transactions with Joint Stock Companies", which agreed to waive
the right of proportional capital increase of eight investors, including Ningbo Jinghang Equity Investment Partnership, Ningbo Gulin
Equity Investment Partnership and Hangzhou Yixun Investment Management Partnership, to Zhejiang Leap Technology Co., Ltd,
and the amount of related transactions for waiving the right of proportional capital increase was 41,483,000 yuan. The modification
procedures at the Bureau of Industry and Commerce for the above matters were completed in March 2018.
     4. On April 17, 2018, the Company's 8th meeting of the 6th Board of Directors reviewed and approved the "Proposal on Capital
Increase and Related Transactions with Holding Subsidiary Companies" that the Company and the related person, Mr. Fu Liquan,
increased proportional capital contributions to the holding subsidiary of Hangzhou Huacheng Network Technology Co., Ltd. Among
them, the Company increased capital by 20.4 million yuan with its own funds, and the Company's controlling shareholder, Fu Liquan,
increased capital by 19.6 million yuan. After the capital increase, the registered capital of Huacheng Network will increase from 10
million yuan to 50 million yuan. The modification procedures at the Bureau of Industry and Commerce for the above matters were
completed in April 2018.
     5. On May 31, 2018, the Company's 11th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Accepting assignment of Part Equities of Subsidiary Companies and Waiving Priority of Assignment and Related Transactions",
which agreed to: (1) Being assigned 6% of the equities of Huarui Technology held by the related legal person of Zhejiang Huashi
Investment Management Co., Ltd and waiving the priority of assignment of 49% of equities of Huarui Technology transferred from
the related legal person of Huashi Investment, the related natural person of Zhang Xingming and other related persons to the related
legal person and core employees' business startup and investment shareholding platform of Ningbo Huayu Investment Management
Partnership (hereinafter referred to as "Ningbo Huayu"); (2) Waiving the priority of assignment of 49% of equities of Zhejiang
Huachuang Video Technology Co., Ltd transferred from the related legal person of Huashi Investment and other unrelated natural


                                                                                                                                       63
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


persons to Ningbo Huayu; (3) Waiving the priority of assignment of 49% of equities of Zhejiang Dahua Security Networking
Operation Service Co., Ltd which were intended to be transferred from the related legal person of Huashi Investment and the related
natural person of Wu Jun and other unrelated persons to Ningbo Huayu. In July 2018, matters related with transferring the above
three kinds of equities were all completed.
     6. On May 31, 2018, the Company's 11th meeting of the 6th Board of Directors reviewed and approved the "Proposal on Joint
Investment and Related Transactions with Related Parties", which agreed to establish Wuxi Dahua Ruipin Technology Co., Ltd with
joint contribution with the related legal person of Huashi Investment. Among them, the Company invested 25.5 million yuan with its
own funds, accounting for 51% of the registered capital, while Huashi Investment invested 24.5 million yuan in cash, accounting for
49% of the registered capital. In June 2018, the company was established.
     7. On June 21, 2018, the Company's 12th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Waiving the Priority of Assignment and Related Transactions", which agreed to waive the priority of assignment of 49% of equities
of Hangzhou Huacheng Network Technology Co., Ltd transferred from the Company's controlling shareholder, Fu Liquan, to the
related legal person and core employees' business startup and investment shareholding platform of Ningbo Huayu. In July 2018,
matters regarding such equity transfer were completed.
     8. On November 12, 2018, the Company's 18th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Waiving the Right of Proportional Capital Increase and Related Transactions in Shareholding Companies", which agreed to waive the
right of proportional capital increase of seven investors, namely, Shanghai Electric, Industrial Securities Investment Management,
Everfront Phoenix Mountain Ltd, Ningbo Sequoia Jiesheng Equity Investment Partnership (Limited Partnership), Ningbo Hualing
Investment Management Partnership (Limited Partnership), Hangzhou Xintu Technology Co., Ltd and Chen Jinxia, to Zhejiang Leap
Technology Co., Ltd. The amount of related transactions for waiving the right of proportional capital increase was 139,947,900 yuan.
The modification procedures at the Bureau of Industry and Commerce for the above matters were completed in November 2018.
Website for disclosing the interim report on significant related-party transactions

                         Announcement Name                                 Disclosure Date         Website for the Disclosure

Announcement on Adjusting the Joint Investment Plan and Related
Transactions with Related Parties (I), Announcement on Adjusting
the Joint Investment Plan and Related Transactions with Related
                                                                         26 January 2018     http://www.cninfo.com.cn
Parties (II), Announcement on Waiving the Right of Proportional
Capital Increase and Related Transactions with Joint Stock
Companies

Announcement On Increasing Capital In Holding Subsidiaries And
                                                                         18 April 2018       http://www.cninfo.com.cn
Related-party Transactions

Announcement on Accepting Assignment of Part Equities of
Subsidiary Companies and Waiving the Priority of Assignment and
                                                                         June 01, 2018       http://www.cninfo.com.cn
Related Transactions, Announcement on the Joint Investment with
Related Persons and Related Transactions

Announcement on Giving up the Priority to Accept Transfer and
                                                                         22 June 2018        http://www.cninfo.com.cn
Related-party Transactions

Announcement On Giving Up The Shareholding Company's Right To
Increase Capital With The Same Percentage And Related-party              November 13, 2018 http://www.cninfo.com.cn
Transactions




                                                                                                                                     64
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


XVII. Significant Contracts and Performance

1. Matters on trusteeship, contracting, and leasehold

(1) Matters on trusteeship

□ Applicable √ Not applicable
No such case as custody during the reporting period.


(2) Contracting

□ Applicable √ Not applicable
No such case as contracting during the reporting period.


(3) Leasing

√ Applicable □ Not applicable
Explanations on leases
During the reporting period, some of the Company's own real estate properties were used for rental, and the leased real estate
property was used for office, warehouse and production workshops. There were no other major real estate leasing.
Cases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reporting period
□ Applicable √ Not applicable
No such leases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reporting
period.


2. Significant guarantees

√ Applicable □ Not applicable


(1) Guarantees

                                                                                                             Unit: ten thousand RMB

                External Guarantees from the Company and its Subsidiaries (excluding guarantees to the subsidiaries)

              Announcement                                                                                                   Guarantee
                  date of                                           Actual                                             Due         for
Guaranteed                     Guarantee    Actual occurrence                     Type of
               disclosure of                                       guarantee                     Term of guarantee      or       related
   party                          amount           date                          guarantee
              the guarantee                                         amount                                             not parties or
                    cap                                                                                                           not

                                                Company's guarantees to subsidiaries

              Announcement                                                                                                   Guarantee
                                                                    Actual                                             Due
Guaranteed        date of      Guarantee    Actual occurrence                     Type of                                          for
                                                                   guarantee                     Term of guarantee      or
   party       disclosure of      amount           date                          guarantee                                       related
                                                                    amount                                             not
              the guarantee                                                                                                  parties or

                                                                                                                                         65
                                                                  2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                 cap                                                                                                   not

 Zhejiang                                                                Joint   liability 2016.06.06-2020.03.30 No Yes
                                             6/6/2016        10,000.00
  Dahua                                                                  guarantee
              August 21,
  System                   50,000.00                                     Joint   liability Two years after the No Yes
                2018
Engineering                                 10/10/2017       6,000.00    guarantee       maturity of the debts in
 Co., Ltd.                                                                               the master contract

                                                                         Joint   liability Two years after the Yes Yes
                                        05/17/201705/18/2017 30,000.00 guarantee         maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability Two years after the Yes Yes
                                             5/23/2017       20,000.00 guarantee         maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability Two years after the Yes Yes
                                             7/9/2017        10,000.00 guarantee         maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability Two years after the Yes Yes
                                             7/21/2017       8,000.00    guarantee       maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability Two years after the Yes Yes
                                            11/24/2017       30,000.00 guarantee         maturity of the debts in
                                                                                         the master contract
 Zhejiang
                                                                         Joint   liability Two years after the Yes Yes
  Dahua
              August 21,                    11/28/2017       5,000.00    guarantee       maturity of the debts in
  Vision                   600,000.00
                2018                                                                     the master contract
Technology
                                                                         Joint   liability Three years after the Yes Yes
 Co., Ltd.
                                            11/30/2017       20,000.00 guarantee         maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability Two years after the Yes Yes
                                            11/30/2017       50,000.00 guarantee         maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability Two years after the Yes Yes
                                             12/4/2017       30,000.00 guarantee         maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability 2016.06.06-2020.01.15 No Yes
                                             6/6/2016        29,000.00
                                                                         guarantee

                                                                         Joint   liability Two years after the No Yes
                                             8/10/2017       60,000.00 guarantee         maturity of the debts in
                                                                                         the master contract

                                                                         Joint   liability Two years after the No Yes
                                            10/13/2017       22,000.00
                                                                         guarantee       maturity of the debts in


                                                                                                                             66
                                                            2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                                    the master contract

                                                                    Joint   liability Two years after the No Yes
                                         1/15/2018    11,000.00 guarantee           maturity of the debts in
                                                                                    the master contract

                                                                    Joint   liability 2018.3.20-2021.3.19      No Yes
                                         3/27/2018    50,000.00
                                                                    guarantee

                                                                    Joint   liability 2018.4.13-2020.4.12      No Yes
                                         4/13/2018    24,000.00
                                                                    guarantee

                                                                    Joint   liability 2018.5.4-2019.4.16       No Yes
                                          5/4/2018    30,000.00
                                                                    guarantee

                                                                    Joint   liability Three years after the No Yes
                                         7/25/2018    10,000.00 guarantee           maturity of the debts in
                                                                                    the master contract

                                                                    Joint   liability Three years after the No Yes
                                          8/1/2018    20,000.00 guarantee           maturity of the debts in
                                                                                    the master contract

                                                                    Joint   liability Three years after the No Yes
                                          8/2/2018     2,000.00     guarantee       maturity of the debts in
                                                                                    the master contract

                                                                    Joint   liability Three years after the No Yes
                                         8/21/2018    10,000.00 guarantee           maturity of the debts in
                                                                                    the master contract

                                                                    Joint   liability Three years after the No Yes
                                          9/3/2018    10,000.00 guarantee           maturity of the debts in
                                                                                    the master contract

                                                      27,452.80 Joint       liability Two years after the No Yes
                                         9/21/2018    (40 million guarantee         maturity of the debts in
                                                      US dollars)                   the master contract

                                                                    Joint   liability 2018.11.26-2020.11.26 No Yes
                                         11/26/2018   22,000.00
                                                                    guarantee

                                                                    Joint   liability 2016.06.06-2020.06.30 No Yes
                                          6/6/2016    20,000.00
 Zhejiang                                                           guarantee

  Dahua        August 21,                                           Joint   liability 2018.09.01-2020.09.01 No Yes
                            100,000.00    9/1/2018    50,000.00
Zhilian Co.,     2018                                               guarantee
   Ltd.                                                             Joint   liability 2018.10.12-2021.10.12 No Yes
                                         10/12/2018   30,000.00
                                                                    guarantee

  Dahua                                                             Joint   liability Two years after the Yes Yes
               August 21,
Technology                  200,000.00   8/24/2017    20,000.00 guarantee           maturity of the debts in
                 2018
   (HK)                                                                             the master contract



                                                                                                                        67
                                                                  2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


  Limited                                                   34,316.00 Joint       liability 2017.12.15-2020.12.15 No Yes
                                         15 December 2017   (50 million guarantee
                                                            US dollars)

                                                                          Joint   liability Two years after the No Yes
                                             4/9/2018       20,000.00 guarantee          maturity of the debts in
                                                                                         the master contract

  Guangxi
   Dahua
                August 21,
Information                  10,000.00                       No such case during the reporting period
                  2018
Technology
  Co., Ltd.

   Dahua
                August 21,
Technology                    350.00                         No such case during the reporting period
                  2018
 USA Inc.

  DAHUA
                August 21,
 EUROPE                      10,000.00                       No such case during the reporting period
                  2018
    B.V

   Dahua
Technology      August 21,
                              500.00                         No such case during the reporting period
 Singapore        2018
  Pte.Ltd.

   Dahua
                August 21,
Technology                    200.00                         No such case during the reporting period
                  2018
UK Limited

   Dahua
Technology      August 21,
                             1,600.00                        No such case during the reporting period
  Poland          2018
  sp.zo.o.

   Dahua
Technology      August 21,
                             1,600.00                        No such case during the reporting period
  Hungary         2018
    Kft.

   Dahua
Technology      August 21,
                             3,500.00                        No such case during the reporting period
India Private     2018
  Limited

   Dahua
Technology
                August 21,
   Brasil                    1,000.00                        No such case during the reporting period
                  2018
 Comercio
  Serv Em


                                                                                                                           68
                                            2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


 Seguranca
 Elertonica
    Ltda

Dahua Italy     August 21,
                             800.00     No such case during the reporting period
    s.r.l.        2018

   Dahua
Technology      August 21,
                             350.00     No such case during the reporting period
Middle East       2018
    Fze

   Dahua
technology      August 21,
                             4,000.00   No such case during the reporting period
mexico.s.a.       2018
  De c.v.

   Dahua
                August 21,
Technology                   4,000.00   No such case during the reporting period
                  2018
Peru S.A.C.

   Dahua
                August 21,
Technology                   1,000.00   No such case during the reporting period
                  2018
  Rus Ltd

   Dahua
Technology      August 21,
                             500.00     No such case during the reporting period
 Australia        2018
  Pty Ltd

   Dahua
Technology
                August 21,
South Africa                 500.00     No such case during the reporting period
                  2018
Proprietary
  Limited

   Dahua
                August 21,
Technology                   100.00     No such case during the reporting period
                  2018
Canada Inc.

   Dahua
 Guvenlik
Teknolojileri
                August 21,
 Sanayi Ve                   200.00     No such case during the reporting period
                  2018
  Ticaret
  Anonim
   Sirketi

   Dahua
                August 21,
Technology                   300.00     No such case during the reporting period
                  2018
SRB d.o.o.



                                                                                                  69
                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


   Dahua
Technology     August 21,
                             100.00                  No such case during the reporting period
  Bulgaria        2018
   Eood

   Dahua
               August 21,
   Iberia                    200.00                  No such case during the reporting period
                  2018
  S.L.(U.)

   Dahua
  Security     August 21,
                             200.00                  No such case during the reporting period
 Malaysia         2018
 Sdn. Bhd

   Dahua
Technology     August 21,
                             200.00                  No such case during the reporting period
Kazakhstan        2018
    LLP

 Pt. Dahua
   Vision      August 21,
                             300.00                  No such case during the reporting period
Technology        2018
 Indonesia

   Dahua
Technology
               August 21,
   Korea                     350.00                  No such case during the reporting period
                  2018
 Company
  Linited

   Dahua
               August 21,
Technology                   200.00                  No such case during the reporting period
                  2018
   S.R.L.

   Dahua
               August 21,
technology                   100.00                  No such case during the reporting period
                  2018
France Sas

  LOREX        August 21,
                             350.00                  No such case during the reporting period
Corporation       2018

  "Dahua       August 21,
                             100.00                  No such case during the reporting period
Vision" LLC       2018

   Dahua
Technology
               August 21,
    New                      200.00                  No such case during the reporting period
                  2018
  Zealand
  Limited

Total amount of guarantees                         Total amount of guarantees
                                      992,800.00                                                        316,452.80
to subsidiaries approved                           to subsidiaries actually


                                                                                                                70
                                                                            2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


during the reporting period                                          occurred during the
(B1)                                                                 reporting period (B2)

Total amount of guarantees                                           Total balance of guarantees
to subsidiaries approved by                                          actually paid to subsidiaries
                                                       992,800.00                                                         497,768.80
the end of the reporting                                             at the end of the reporting
period (B3)                                                          period (B4)

                                                 Subsidiaries' guarantees to subsidiaries

Total amount of guarantees                                           Total amount of guarantees
approved during the                                                  actually occurred during the
                                                       992,800.00                                                         316,452.80
reporting period                                                     reporting period
(A1+B1+C1)                                                           (A2+B2+C2)

Total amount of guarantees                                           Total balance of guarantees
approved by the end of the                                           actually paid at the end of
                                                       992,800.00                                                         497,768.80
reporting period                                                     the reporting period
(A3+B3+C3)                                                           (A4+B4+C4)

Total amount of actual guarantees (A4+B4+C4) as a percentage
                                                                                                                             39.45%
of the Company's net assets

Including:

Balance of guarantees to the shareholders, actual controllers and
their related parties (D)

Balance of debt guarantees directly or indirectly offered to
                                                                                                                          481,768.80
guaranteed objects with asset-liability ratio exceeding 70% (E)

Amount of the guarantees with the total volume exceeding 50%
of the net assets (F)

Total amount of the above three guarantees (D+E+F)                                                                        481,768.80

Notes on unexpired guarantees with guarantee responsibilities
occurred or possible joint liabilities within the reporting period
(if any)

Notes on providing external guarantees in violation of specified
procedures (if any)


(2) Illegal external guarantees

□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.


3. Entrusting Others to Manage Cash Assets

(1) Entrusted Financing

√ Applicable □ Not applicable


                                                                                                                                  71
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Entrusted financing during the reporting period
                                                                                                               Unit: ten thousand RMB

                                                                                                               Overdue Outstanding
         Specific Type            Funding Source            Entrusted Amount          Unexpired Balance
                                                                                                                      Amount

Bank financial products             Equity Fund                   3,900

Total                                                             3,900

Specific matters on high-risk entrusted capital management with a large amount for a single item, or with low security, poor liquidity
and no capital preservation guarantee.
□ Applicable √ Not applicable
Cases of entrusted financing expected to be unable to recover the principal or cases that may result in impairment
□ Applicable √ Not applicable


(2) Entrusted Loans

□ Applicable √ Not applicable
No such case as entrusted loan during the reporting period.


4. Other Significant Contracts

□ Applicable √ Not applicable
No such case as other significant contract during the reporting period.


XVIII. Social Responsibilities

1. Fulfillment of Social Responsibilities

        The Company adheres to the core concept of "customer-centered and striver-oriented" and the values of "integrity, dedication,
responsibility, innovation, cooperation and openness" to pursue economic benefits and protect shareholders' interests; Meanwhile the
Company actively creates value for its employees and gets engaged in environmental protection and other public welfare endeavors
to promote the harmonious integration between the Company, the society, interested parties and the environment. For details of the
Company's social responsibility fulfillment during the reporting period, please refer to the "2018 Social Responsibility Report"
published on www.cninfo.com.cn on the same day.


2. Social responsibility fulfillment regarding targeted poverty alleviation

In the reporting year of the Company, there has been no targeted poverty alleviation activity, or follow-up targeted poverty alleviation
plan.


3.Environmental Protection-related Matters

Whether the listed company and its subsidiaries belong to the key pollutant discharging units announced by the environmental
protection department
No

                                                                                                                                        72
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


     The Company does not belong to the key pollutant discharging units announced by the environmental protection department.
For details, please refer to Chapter 6 Going Green and Environmental Protection of 2018 Social Responsibility Report published on
www.cninfo.com.cn on the same day.


XIX. Explanations on Other Significant Matters

√ Applicable □ Not applicable
     1. On January 24, 2017, the Company's holding sub-subsidiary, Nanbei United Information Technology Co., Ltd. and its
wholly-owned subsidiary, Zhejiang Dahua System Engineering Co., Ltd. signed a Cooperation Agreement on PPP Investment in Safe
City Project of Shache County with the People's Government of Shache County in Kashgar, Xinjiang, which is just a framework
agreement on the PPP project. The agreement stipulates that the service content is the pre-feasibility study of the project and the
design of the project, etc. For the implementation of the specific project, it still needs to fulfill related decision-making and approval
procedures, such as government procurement.
     On July 21, 2017, the Company received the Notification of Award issued by the project purchasing unit, which confirmed that
the wholly-owned subsidiary Zhejiang Dahua System Engineering Co., Ltd. (the consortium leader), with the holding sub-subsidiary
Nanbei United Information Technology Co., Ltd. (member of the consortium) is the winning bidder for the Safe City Construction
Project (PPP) in Shache County. The winning bid amount of the project is RMB 4.31479 billion (the final amount is based on the
signed contract), which is the total amount for construction and operation within 10-year project cooperation period.
      On August 4, 2017, the Company's 34th session of the 5th Board of Directors' meeting reviewed and approved the Proposal on
Investing to Establish a PPP Project Company in Shache County, Xinjiang, and the Company submitted a bid based on the
requirements for the Shache County City Construction Project (PPP), and the winning consortium jointly funded the establishment of
the project company, with a registered capital of RMB 335,567,200. Among them, Zhejiang Dahua System Engineering Co., Ltd.
contributed RMB 234,897,040, accounted for 70% of the total contribution; Nanbei United Information Technology Co., Ltd.
contributed RMB 100,670,160, accounted for 30%. In August 2017, the project company was established and the name of the
company approved by the industrial and commercial bureau was Xinjiang Dahua Xinzhi Information Technology Co., Ltd.
      On April 18, 2018, the project winning bidder received the request from the Public Security Bureau of Shache County to stop
the implementation of the "Safe City Construction (PPP) Project of Shache County". Near a half of the construction progress in the
project construction period has been completed, but no expenses for subsequent equipment replacement, operation and maintenance
have been incurred. The actual investment in the construction period will be further accounted and confirmed with the government.
     The bid winner's project participation and construction is in compliance with the requirements of relevant laws and regulations
of PPP, but there exists the risk that the project will not be able to proceed on and lead to the decrease of the Company's future
certifiable income. The Company will actively cooperate with relevant government departments in their work, and timely perform
the obligation of information disclosure in accordance with the subsequent progress of the project and the provisions in relevant laws
and regulations and the Articles of Association.
     2. On February 24, 2018, the Company disclosed the Announcement on Subsidiary's Release of External Guarantees. The
Company's subsidiaries, System Engineering, Dahua Zhicheng and Yunnan International Trust Co., Ltd. signed the Pledge Contract
on December 6, 2017. The System Engineering and Dahua Zhicheng as a pledger provided a pledge guarantee for the debt under the
Trust Loan Contract signed between Guangxi Baixing Holdings Co., Ltd. as a debtor and Yunnan International Trust Co., Ltd. as a
creditor (with the trust loan principal of RMB 0.23 billion). The collateral in this guarantee was System Engineering and Dahua
Zhicheng's accounts receivable income rights. This guarantee responsibility was released on February 22, 2018.
     3. On March 6, 2018, the Company's first interim shareholders' meeting in 2018 reviewed and approved the "Management
Methods for Business Startup of Core Employees (Draft)" that the Company decided to implement the business investment plan for
startup business by the Company's core employees.
     4. On May 17, 2017, the Company's 31st session of the 5th Board of Director's meeting reviewed and approved the Proposal on


                                                                                                                                         73
                                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Increasing Investment in Holding Subsidiaries, and it's agreed that the Company will increase its investment in Dahua Zhilian by
RMB 610 million with its own funds. In this time of investment increase, China Development Bank Development Fund Co., Ltd.
gives up the right to increase the investment in the same proportion. When the increment is accomplished, the registered capital of
Dahua Zhilian will increase from RMB 500 million to 1.11 billion. The proportion of equities held by the Company will be 90.09%.
Matters regarding capital increase were completed on June 26, 2018.
     On July 16, 2018, the Company's 13th meeting of the 6th Board of Directors reviewed and approved the "Proposal on the
Construction of 'Dahua Western Smart Base and Dahua Western R&D Center" in Xi'an" which agreed that the company would invest
about 800 million yuan in the project which covers an area of about 133.64 acres and mainly focuses on construction research and
development, office space and supporting facilities, etc. The overall construction period of the project is about 42 months.


XX. Significant Events of the Company's Subsidiaries

□ Applicable √ Not applicable




                                                                                                                                      74
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




   Section VI Changes in Shares and Information about Shareholders

I. Changes in Shares

1. Changes in shares

                                                                                                                          Unit: share

                           Before the Change                Increase or Decrease in the Change (+, -)            After the Change

                                                                          Shares
                                                                          converte
                                        Percenta      Shares      Bonus                                                      Percenta
                            Number                                        d from       Others      Subtotal      Number
                                           ge       newly issued shares                                                         ge
                                                                          capital
                                                                          reserves

I. Shares with limited
                         1,196,864,751 41.29%        98,865,800                      -126,267,771 -27,401,971 1,169,462,780 39.01%
sales condition

3. Other domestic
                         1,196,864,751 41.29%        98,813,800                      -126,267,771 -27,453,971 1,169,410,780 39.01%
shares

     Shares held by
domestic natural         1,196,864,751 41.29%        98,813,800                      -126,267,771 -27,453,971 1,169,410,780 39.01%
persons

4. Foreign shares                                        52,000                                         52,000      52,000      0.00%

     Shares held by
foreign natural                                          52,000                                         52,000      52,000      0.00%
persons

II. Shares without
                         1,701,891,379 58.71%                                        126,267,771 126,267,771 1,828,159,150 60.99%
restrictions

1. RMB ordinary
                         1,701,891,379 58.71%                                        126,267,771 126,267,771 1,828,159,150 60.99%
shares

III. Total               2,898,756,130 100.00%       98,865,800                                    98,865,800 2,997,621,930 100.00%

Reasons for changes in shares
√ Applicable □ Not applicable
     1. At the beginning of each year, the number of shares locked by executives of the Company shall be reverified according to 75%
of the total number of shares held by executives.
     2. On November 30, 2018, the 98,865,800 shares of restricted stocks granted by the Company to 3,145 incentive targets in the
form of private placements were publicly listed in Shenzhen Stock Exchange.
Approval for changes in shares
√ Applicable □ Not applicable
     1. On September 14, 2018, the Company's 4th interim shareholders' meeting in 2018 reviewed and approved "Restricted Stock


                                                                                                                                  75
                                                                              2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Incentive Plan of Zhejiang Dahua Technology Co., Ltd in 2018 (Draft)" and its summary which authorized the Board of Directors to
handle relevant matters on the Company's stock incentive plan.
     2. On November 1, 2018, the Company's 17th meeting of the 6th Board of Directors reviewed and approved the "Proposal on
Adjusting Related Issues of the Restricted Stock Incentive Plan of 2018" and the "Proposal on Granting Restricted Stocks to
Incentive Targets". In view that some of the original incentive targets no longer met the incentive conditions due to dimission, and
some of them waived the restricted stocks that the company intended to grant for personal reasons, the Board of Directors adjusted
the number of incentive targets and the quantity of stocks to be granted. The number of incentive targets was adjusted from 3,423 to
3,237, and the total number of restricted stocks to be granted was adjusted from 121,749,000 shares to 117,468,100 shares. At the
same time, the Board of Directors confirmed the granting conditions and concluded that the conditions had been reached and decided
to grant restricted stocks to the incentive targets for the first time. The granting date was November 1, 2018.
     3. On November 29, 2018, the Company published the "Announcement on the Completion of Restricted Stock Granting in
2018". In view that some of the original incentive targets no longer met the incentive conditions due to their dimission, and some of
them waived the restricted stocks that the company intended to grant for personal reasons, the Company adjusted the number of
incentive targets and shares. The number of incentive targets was adjusted from 3,237 to 3,145, and the total number of restricted
stocks to be granted in the first batch was adjusted from 105,293,200 shares to 98,865,800 shares, and the 12,174,900 shares of
reserved restricted stocks remained unchanged. The 98,865,800 shares that the Company has granted to 3,145 people for the first
time through the restricted stock incentive plan in 2018 have been issued in Shenzhen Stock Exchange on November 30, 2018.
Transfer for changes in shares
√ Applicable □ Not applicable
On November 30, 2018, the first granted shares of the Company's restricted stocks incentive plan in 2018 went to public in Shenzhen
Stock Exchange.
The progress on share buy-back
□ Applicable √ Not applicable
The progress on reduction of re-purchase shares by means of centralized bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share ("EPS"), diluted EPS, net assets per share, attributable to common
shareholders of the Company, and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or are required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable


2. Changes in restricted stocks

√ Applicable □ Not applicable
                                                                                                                                Unit: share

               Number Of                                Number of            Number of
                                     Number of
               Shares With                               Increased           Shares with
 Name of                          Unlocked Shares
              Limited Sales                             Shares with         Limited Sales     Reasons for Limited
Sharehold                         with Limited Sales                                                                 Date of Unlocking
              Condition At                             Limited Sales       Condition at the          Sales
     er                        Condition in Current
             The Beginning                              Condition in         End of the
                                       Period
             Of The Period                             Current Period          Period

Fu Liquan        919,748,180              77,786,195                   0       841,961,985 According to the         According to the


                                                                                                                                         76
                                                   2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                  relevant provisions of relevant provisions of
                                                                  executives shares       executives shares
                                                                  management              management

                                                                  Per relevant            Per relevant
                                                                  management              management
Wu Jun       54,267,937    2,264,773          0      52,003,164 regulations of equity     regulations of equity
                                                                  incentives and senior   incentives and senior
                                                                  managers' shares        managers' shares

                                                                  According to the        According to the
Zhu                                                               relevant provisions of relevant provisions of
            145,096,117   28,425,000          0     116,671,117
Jiangming                                                         executives shares       executives shares
                                                                  management              management

                                                                  Per relevant            Per relevant
                                                                  management              management
Li Ke                0            0    2,015,000      2,015,000 regulations of equity     regulations of equity
                                                                  incentives and senior   incentives and senior
                                                                  managers' shares        managers' shares

                                                                  According to the        According to the
Chen                                                              relevant provisions of relevant provisions of
             71,262,376   17,815,266                 53,447,110
Ailing                                                            executives shares       executives shares
                                                                  management              management

                                                                  Per relevant            Per relevant
                                                                  management              management
Chen
              1,181,963           0     260,000       1,441,963 regulations of equity     regulations of equity
Yuqing
                                                                  incentives and senior   incentives and senior
                                                                  managers' shares        managers' shares

                                                                  Per relevant            Per relevant
                                                                  management              management
Wu Jian        999,250            0     280,251       1,279,501 regulations of equity     regulations of equity
                                                                  incentives and senior   incentives and senior
                                                                  managers' shares        managers' shares

                                                                  Per relevant            Per relevant
                                                                  management              management
Wei
              1,078,351           0     156,649       1,235,000 regulations of equity     regulations of equity
Meizhong
                                                                  incentives and senior   incentives and senior
                                                                  managers' shares        managers' shares

                                                                  Per relevant            Per relevant
                                                                  management              management
Wu
               496,710            0     140,000         636,710 regulations of equity     regulations of equity
Yunlong
                                                                  incentives and senior   incentives and senior
                                                                  managers' shares        managers' shares




                                                                                                                  77
                                                       2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                                                                       Per relevant            Per relevant
                                                                       management              management
Xu
                       0             0      530,000         530,000 regulations of equity      regulations of equity
Zhicheng
                                                                       incentives and senior   incentives and senior
                                                                       managers' shares        managers' shares

                                                                       Per relevant            Per relevant
                                                                       management              management
Yan Gang         276,262             0      261,000         537,262 regulations of equity      regulations of equity
                                                                       incentives and senior   incentives and senior
                                                                       managers' shares        managers' shares

                                                                       Per relevant            Per relevant
                                                                       management              management
Ying Yong        999,250             0      420,187       1,419,437 regulations of equity      regulations of equity
                                                                       incentives and senior   incentives and senior
                                                                       managers' shares        managers' shares

                                                                       Per relevant            Per relevant
                                                                       management              management
Zhu
                       0             0      715,169         715,169 regulations of equity      regulations of equity
Jiantang
                                                                       incentives and senior   incentives and senior
                                                                       managers' shares        managers' shares

                                                                       Per relevant            Per relevant
                                                                       management              management
Zhang Wei        140,625             0      740,000         880,625 regulations of equity      regulations of equity
                                                                       incentives and senior   incentives and senior
                                                                       managers' shares        managers' shares

                                                                       Per relevant            Per relevant
                                                                       management              management
Zhang
                 938,560             0      650,000       1,588,560 regulations of equity      regulations of equity
Xingming
                                                                       incentives and senior   incentives and senior
                                                                       managers' shares        managers' shares

                                                                       Per relevant            Per relevant
                                                                       management              management
Zhao
                       0             0      740,000         740,000 regulations of equity      regulations of equity
Yuning
                                                                       incentives and senior   incentives and senior
                                                                       managers' shares        managers' shares

Other
                                                                       Per regulations on      Per regulations on
incentive              0             0    92,075,800     92,075,800
                                                                       equity incentives       equity incentives
targets

Total       1,196,485,581   126,291,234   98,984,056   1,169,178,403             --                      --




                                                                                                                       78
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


II. Issuance and listing of securities

1. Securities (excluding preferred share) issued in reporting period

√ Applicable □ Not applicable

 Name of the
                                       Issuance Price                                                    Number of         Transaction
 Stock and Its                                            Quantity of
                     Issue Date          (or Interest                         Listing Date          Approved Listed        Termination
  Derivative                                               Issuance
                                            Rate)                                                     Transactions              Date
   Securities

Stocks

DAHUA            November 01, 2018          8.17            98,865,800 November 30, 2018                    98,865,800

Description of the issuance of securities (not including preferred stocks) during the reporting period
     According to the "Restricted Stock Incentive Plan of Zhejiang Dahua Technology Co., Ltd in 2018(Draft)" and its summary,
which has been reviewed and approved at the 4th interim shareholders' meeting of the Company in 2018, the "Proposal on Adjusting
Related Issues of the Restricted Stock Incentive Plan of 2018" and the "Proposal on Granting Restricted Stocks to Incentive Targets"
which have been reviewed and approved at the 17th meeting of the 6th Board of Directors. In November 2018, the Company granted
98,865,800 shares of restricted stocks to 3,145 incentive targets, with a subscription price of 8.17 yuan per share. These stocks were
listed on Shenzhen Stock Exchange on November 30, 2018.


2. Explanation on changes in total number of the Company's shares & the structure of shareholders and
the structure of assets and liabilities

√ Applicable □ Not applicable
     In November 2018, the Company granted 98,865,800 shares of restricted stocks to 3,145 incentive targets. On November 30,
2018, the above restricted stocks were listed on Shenzhen Stock Exchange. The Company's general capital was changed from
2,898,756,130 shares to 2,997,621,930 shares.


3. Existing shares held by internal staff of the Company

□ Applicable √ Not applicable


III. Particulars about the shareholders and actual controller

1. Total number of shareholders and their shareholdings

                                                                                                                                Unit: share

                              Total number of                   Total Number of
Total Number                                                                                        Total number of preferred
                              common                            Preferred Shareholders
Of Common                                                                                           shareholders (if any) (refer to
                              shareholders at the               (If Any) (Refer to Note
Shareholders                                                                                        Note 8) with resumed voting
                     124,431 end of previous            114,076 8) Whose Voting Rights          0                                        0
At The End Of                                                                                       rights at the end of previous
                              month before the                  have been Recovered at
The Reporting                                                                                       month before the disclosure
                              disclosure date of                the End of the Reporting
Period                                                                                              date of the annual report
                              the annual report                 Period


                                                                                                                                         79
                                                                             2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


                              Shareholding list of shareholders with over 5% shares or top ten shareholders

                                                   Number of                    Number of        Number of           Pledges or freezings
                                                                   Changes
                                     Shareholdi shares held at                  shares held      shares held
        Name of        Nature of                                    in the
                                         ng       the end of the                with limited       without
       Shareholder    Shareholder                                  reporting                                     State Of Shares    Number
                                     Percentage     reporting                      sales         limited sales
                                                                    period
                                                     period                     conditions        condition

                      Domestic
Fu Liquan             Natural           37.13% 1,112,981,880 -9634100           841,961,985 271,019,895 Pledge                     130,942,000
                      Person

                      Domestic
Zhu Jiangming         Natural             5.19%    155,561,490 0                116,671,117       38,890,373 Pledge                 24,154,000
                      Person

Hong Kong             Overseas
Securities Clearing   Legal               2.80%      84,036,071 52745799                     0    84,036,071
Co. Ltd.              Person

                      Domestic
Chen Ailing           Natural             2.38%      71,262,813 0                53,447,110       17,815,703 Pledge                 11,170,000
                      Person

                      Domestic
Wu Jun                Natural             2.31%      69,250,886 8460000          52,003,164       17,247,722
                      Person

                      Domestic
China Securities      Non-state-o
                                          1.32%      39,611,241 4061284                      0    39,611,241
Finance Co., Ltd.     wned Legal
                      Person

Central Huijin Asset State-owned
Management Co.,       Legal               1.05%      31,448,750 0                            0    31,448,750
Ltd.                  Person

Zhejiang Dahua
Technology Co.,
Ltd. - Phase III      Others              0.88%      26,247,928 -20752072                    0    26,247,928
Employee Stock
Ownership Plan

                      Overseas
GIC PRIVATE
                      Legal               0.74%      22,308,251 16748237                     0    22,308,251
LIMITED
                      Person

BOC - Core Growth
Stock Type Security
Investment Fund of Others                 0.60%      17,844,249 729935                       0    17,844,249
China International
Fund Management


                                                                                                                                             80
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Description of the association
                                      Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of
relationship or concerted action of
                                      Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert.
above-mentioned shareholders

                                 Shareholding list of top ten shareholders without limited sales condition

                                      Number of shares held without limited sales condition at the end             Type of shares
       Name of Shareholder
                                                            of the reporting period                          Type of shares    Number

                                                                                                          RMB common
Fu Liquan                                                                                   271,019,895                       271,019,895
                                                                                                          stock

Hong Kong Securities Clearing                                                                             RMB common
                                                                                             84,036,071                        84,036,071
Co. Ltd.                                                                                                  stock

                                                                                                          RMB common
China Securities Finance Co., Ltd.                                                           39,611,241                        39,611,241
                                                                                                          stock

                                                                                                          RMB common
Zhu Jiangming                                                                                38,890,373                        38,890,373
                                                                                                          stock

Central Huijin Asset Management                                                                           RMB common
                                                                                             31,448,750                        31,448,750
Co., Ltd.                                                                                                 stock

Zhejiang Dahua Technology Co.,
                                                                                                          RMB common
Ltd. - Phase III Employee Stock                                                              26,247,928                        26,247,928
                                                                                                          stock
Ownership Plan

                                                                                                          RMB common
GIC PRIVATE LIMITED                                                                          22,308,251                        22,308,251
                                                                                                          stock

BOC - Core Growth Stock Type
Security Investment Fund of                                                                               RMB common
                                                                                             17,844,249                        17,844,249
China International Fund                                                                                  stock
Management

                                                                                                          RMB common
Chen Ailing                                                                                  17,815,703                        17,815,703
                                                                                                          stock

                                                                                                          RMB common
Wu Jun                                                                                       17,247,722                        17,247,722
                                                                                                          stock

Explanation on associated
relationship or persons acting in
concert among top ten
                                      Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of
shareholders without limited
                                      Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert.
shares, and between top ten
shareholders without limited
shares and top ten shareholders

Whether the Company's top ten common shareholders or top ten common shareholders without limited shares agree on any
repurchase transaction in the reporting period
□ Yes √ No
None of the Company's top ten common shareholders or top ten common shareholders without limited shares agreed on repurchase in

                                                                                                                                        81
                                                                           2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


the reporting period.


2. Particulars about the controlling shareholder

Nature of the controlling shareholder: Natural person-owned
Type of the controlling shareholder: Natural person

                                                                                            Whether he/she has obtained the right of
              Name of the controlling shareholder                         Nationality
                                                                                                residence in another country or region

Fu Liquan                                                         China                   Yes

                                                                  In the recent five years, Mr. Fu Liquan has acted as the chairman
Main occupation and title                                         and president of the Company and is currently the chairman of the
                                                                  Company.

Shares held in other listed companies by controlling or holding
                                                                  N/A
in the reporting period

Change of the controlling shareholders in the reporting period
□ Applicable √ Not applicable
No change has happened to the controlling shareholder in the reporting period of the Company


3. The actual controller of the Company and persons acting in concert

Nature of the actual controller: Domestic natural person
Type of the actual controller: Natural person

                                                                                                                     Whether he/she has
                                                                                                                      obtained the right
         Name of the actual controller                Relationship with the actual controller          Nationality     of residence in
                                                                                                                     another country or
                                                                                                                           region

Fu Liquan                                       Himself                                              China           Yes

                                                Acting in concert (including agreement,
Chen Ailing                                                                                          China           Yes
                                                relatives, under same control)

                                                In the recent five years, Mr. Fu Liquan has acted as the chairman and president of
Main occupation and title                       the Company and is currently the chairman of the Company; Ms. Chen Ailing is
                                                director of the Company.

Information about other listed companies at
home and abroad controlled in the last ten      N/A
years

Change of the actual controller in the reporting period
□ Applicable √ Not applicable
No change has happened to the actual controller in the reporting period
Block Digram for Property Right and Control Relationship between the Company and Actual Controllers


                                                                                                                                           82
                                                                      2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable


4. Particulars about other corporate shareholders with shareholding proportion over 10%

□ Applicable √ Not applicable


5. Particulars on share reduction restricted for controlling shareholders, actual controller, restructuring
party or other commitment entities

□ Applicable √ Not applicable




                                                                                                                            83
                                                         2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




                         Section VII Information of Preferred Shares

□ Applicable √ Not applicable
There are no preferred shares in the reporting period.




                                                                                                               84
                                                                          2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.




         Section VIII Information about Directors, Supervisors, Senior

                                           Management and Employees

I. Shareholding Changes of Directors, Supervisors and Senior Management

                                                                                                       Number
                                                                        Number of        Number of
                                                                                                       of Shares                  Number of
                        Positio                  Starting Terminatio Shares Held at       Shares                    Other
                                                                                                       Decrease                  Shares Held at
  Name          Post      n       Gender Age Date of n Date of the Beginning of Increased in                       Changes
                                                                                                       d in the                  the End of the
                        Status                    Tenure    Tenure      the Period       the period                (share)
                                                                                                        Period                      Period
                                                                          (share)         (share)
                                                                                                        (share)

            Chairma Incum                        April 01, August 23,
Fu Liquan                         Male      52                          1,122,615,980                  9,634,100             0 1,112,981,880
            n           bent                     2005      2020

            Vice
            Chairma Incum                        April 01, August 23,
Wu Jun                            Male      47                            60,790,886       8,200,000                260,000         69,250,886
            n, Vice     bent                     2005      2020
            President

            Director, Incum                      May 03, August 23,
Li Ke                             Male      47                                       0     1,620,000                800,000          2,420,000
            President bent                       2017      2020

            Director,
Zhu         Executiv Incum                       April 01, August 23,
                                  Male      52                           155,561,490                                         0     155,561,490
Jiangming e Vice        bent                     2005      2020
            President

Chen                    Incum                    April 01, August 23,
            Director              Female    52                            71,262,813                                         0      71,262,813
Ailing                  bent                     2005      2020

            Independ
                        Incum                    January August 23,
He Chao     ent                   Male      60                                       0                                       0                0
                        bent                     07, 2014 2020
            Director

            Independ
Wang                    Incum                    January August 23,
            ent                   Female    54                                       0                                       0                0
Zexia                   bent                     07, 2014 2020
            Director

            Independ
Huang                   Incum                    May 22, August 23,
            ent                   Female    41                                       0                                       0                0
Siying                  bent                     2017      2020
            Director

Song        Supervis Incum                       April 03, August 23,
                                  Female    37                                       0                                       0                0
Maoyuan or              bent                     2008      2020

Song Ke     Supervis Incum Male             41 August      August 23,                0                                       0                0



                                                                                                                                         85
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


           or          bent                    07, 2015 2020

Zuo        Supervis Incum                      April 03, August 23,
                                Female    41                                     0                                  0               0
Pengfei    or          bent                    2008      2020

Chen       Vice        Incum                   May 20, August 23,
                                Male      45                             1,575,951                           260,000       1,835,951
Yuqing     President bent                      2010      2020

           Secretary
           of the                              Decemb
                       Incum                             August 23,
Wu Jian    Board,               Male      45 er 01,                        999,335                           530,000       1,529,335
                       bent                              2020
           Vice                                2005
           President

           CFO,                                Novemb
Wei                    Incum                             August 23,
           Vice                 Male      48 er 01,                      1,300,000                  50,000   260,000       1,510,000
Meizhong               bent                              2020
           President                           2007

Wu         Vice        Incum                   May 20, August 23,
                                Male      63                               502,280                           260,000        762,280
Yunlong    President bent                      2010      2020

                                               22
Xu         Vice        Incum                             August 23,
                                Male      53 March                               0                           530,000        530,000
Zhicheng President bent                                  2020
                                               2018

                                               Decemb
           Vice        Incum                             May 20,
Yan Gang                        Male      50 er 06,                        276,349                           330,000        606,349
           President bent                                2010
                                               2012

Ying       Vice        Incum                   May 20, August 23,
                                Male      50                               999,250                           670,000       1,669,250
Yong       President bent                      2010      2020

                                               22
Zhu        Vice        Incum                             August 23,
                                Male      37 March                          60,225                           670,000        730,225
Jiantang   President bent                                2020
                                               2018

                                               Decemb
Zhang      Vice        Incum                             August 23,
                                Male      48 er 06,                        187,500                           740,000        927,500
Wei        President bent                                2020
                                               2012

Zhang      Vice        Incum                   May 20, August 23,
                                Male      42                             1,131,413                 190,000   740,000       1,681,413
Xingming President bent                        2010      2020

                                               22
Zhao       Vice        Incum                             August 23,
                                Male      42 March                               0                           740,000        740,000
Yuning     President bent                                2020
                                               2018

Shen       Vice        Resign                  May 20, 01/25/201
                                Male      58                               379,170                           150,000        529,170
Huiliang   President ed                        2010      8

Total           --        --       --    --         --       --       1,417,642,642    9,820,000 9,874,100 6,940,000 1,424,528,542




                                                                                                                              86
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


II. Changes of Directors, Supervisors and Senior Management

√ Applicable □ Not applicable

      Name               Title           Type               Date                                    Causes

                                    Appointment
Xu Zhicheng        Vice President                    22 March 2018      Appointed As Vice President
                                    and dismissal

                                    Appointment
Zhao Yuning        Vice President                    22 March 2018      Appointed As Vice President
                                    and dismissal

                                    Appointment
Zhu Jiantang       Vice President                    22 March 2018      Appointed As Vice President
                                    and dismissal

                                                                        Resigned voluntarily as vice president but still undertook
Shen Huiliang      Vice President Resigned           25 January 2018
                                                                        work in management of the Company


III. Positions

Professional backgrounds, major work experiences and current main responsibilities in the Company for incumbent directors,
supervisors and senior management of the Company
     Mr. Fu Liquan, Chinese nationality, has the right of permanent residence in Cyprus, was born in 1967, and holds master degree
in Business Administration of Zhejiang University. As one of the main founders of the Company, he served as chairman and president
of the Company. In 2018, his employment was renewed by China Security Association as an expert of the Expert Committee of
China Security & Protection Industry Association. He is currently the chairman of the Company and director of China Information
Technology Industry Federation. He has won the honors of Advanced Individual in Scientific Research and Standardization of
Zhejiang Security Technology Protection Industry, Outstanding Figure Award of China Security - Tribute to the 40 Years Anniversary
of Reform and Opening Up, Top Ten Influential Zhejiang Entrepreneurs, Model Worker of Hangzhou, One of the 40 Figures of
Industry Innovative Development of Zhejiang for the 40 years Anniversary of Reform and Opening Up, Excellent Enterprise
Operator with Outstanding Contributions to the Information Economy, Excellent Constructer of Socialism with Chinese
Characteristics in the New Era of Non-Public Economy in Zhejiang Province, Outstanding Contributions Award in "Ingenuity for a
Safe China", Global Security Contribution Award, Top Ten Figures in Security and Protection Industry, and the Best CEO of listed
companies of Forbes, etc. He is the controlling shareholder and actual controller of the Company.
     Mr. Wu Jun, Chinese nationality, born in 1972, with a bachelor's degree, engineer, served as vice chairman and vice president of
the Company and general manager of Zhejiang Dahua System Engineering Co., Ltd. in the recent five years. He now serves as vice
chairman and vice president of the Company and executive director of Zhejiang Dahua System Engineering Co., Ltd.
     Mr. Li Ke, Chinese nationality, born in 1972, with degree of master degree in engineering of University of Electronic Science
and Technology of China, served as R&D engineer, general manager for product solution department, marketing vice president, and
regional president of Huawei Technologies Co., Ltd. from June 1996 to January 2017, and now serves as director and president of the
Company.
     Mr. Zhu Jiangming, Chinese nationality, born in 1967, has the right of permanent residence in Cyprus, holds bachelor degree
and works as an engineer. As one of the main founders of the Company, he served as vice chairman of the Company and business
operations director and general manager of Hangzhou Motorola Technologies Co., Ltd., and now serves as director and executive
vice president of the Company, executive director of Zhejiang Huatu Microchip Technology Co., Ltd. and chairman of Zhejiang Leap
Technology Co., Ltd. He was awarded the title of advanced technology worker in Hangzhou in 2003-2004, and employed as
"Zhejiang Provincial Security Technology Protection Industry Expert" by Zhejiang Provincial Security Technology Protection
Industry Association in 2006.

                                                                                                                                     87
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


     Ms. Chen Ailing, Chinese nationality, born in 1967, has the right of permanent residence in Cyprus, and holds bachelor degree.
As one of the main founders of the Company, she served as director and CFO of the Company, and now serves as director of the
Company. She is the spouse of Mr. Fu Liquan, the controlling shareholder and actual controller of the Company.
     Mr. He Chao, Chinese nationality, born in 1959, holds postgraduate degree. He once served as President of Sir Run Run Shaw
Hospital of School of Medicine in Zhejiang University, its Secretary of the Party Committee and Vice President. He is currently a
professor and doctoral supervisor of Zhejiang University, Senior Vice President of Guahao (Hangzhou) Technology Co., Ltd, and
independent director of the Company. He was awarded "Outstanding Professor of American TCM Association" in 2010, was listed
into "Young and Middle-Aged Outstanding Contribution Experts of Zhejiang Province" in 2011 by Zhejiang Provincial People's
Government, and won special allowance of the State Council in 2015.
     Ms. Wang Zexia, Chinese nationality, born in 1965, holds doctoral degree and now works as a professor. She once served as
head of the accounting department of Hangzhou Dianzi University, vice-president and president of the School of Finance and
Economics, president of the School of Accounting. She is currently part-time director of Accounting Society of China, vice director
of the Auditing Professional Committee, president of the Higher Education Branch of Accounting Society of China, vice chairman of
the Accounting Society of Zhejiang Province, Executive Director of the Zhejiang Auditing Society, Independent Director of Zhejiang
Weiming Environmental Protection Co., Ltd, Zhejiang Kaier New Materials Co., Ltd, and Independent Director of the Company.
     Ms. Wong Sze Wing, Hong Kong of China, born in 1978, obtained the degree of MBA from Hong Kong University and degree
of EMBA (Executive Master of Business Administration) from China Europe International Business School. She is the certified
public accountant and senior member of Hong Kong Institute of Certified Public Accountants. She has been serving as the Chief
Financial Officer of Yingde Gases Group Co., Ltd since July, 2010. She once served as vice Chief Financial Officer of Yingde Gases
Group Co., Ltd and Secretary of Joint Company, Chief Financial Officer of Chengtian Entertainment Group (International) Holdings
Limited and Aihui Music Video Production (China) Co., Ltd., Manager of PricewaterhouseCoopers Ltd; She Currently serves as
independent director of Chengtian Jiahe Entertainment Group (International) Holdings Limited, Rich Healthcare Holdings Co., Ltd,
Wangsu Science and Technology Co., Ltd and Jiangxi Ganfeng Lithium Industry Co., Ltd, and independent director of the Company.
     Ms. Song Maoyuan, Chinese nationality, was born in 1982and graduated from university. She has served as supervisor and
secretary to president of the Company in the recent five years. She now serves as chairman of the Board of Supervisors and secretary
to president of the Company.
     Mr. Song Ke, Chinese nationality, born in 1978, holds a master degree, served as manager of IT Department of Hangzhou H3C
Co., Ltd. He now serves as supervisor and general manager of IT Center of the Company.
     Ms. Zuo Pengfei, Chinese nationality, born in 1978, holds a bachelor degree, has served as supervisor and chairman of the labor
union of the Company, and assistant to general manager of Zhejiang Dahua Zhiwang Technology Co., Ltd. In the recent five years.
She is currently the supervisor of the Company, the chairman of the labor union, the director of human resources employee relations,
and the supervisor of Hangzhou Xiaohua Technology Co., Ltd.
     Mr. Wu Jian, Chinese nationality, born in 1978, holds master degree, served as secretary of the Board of Directors and vice
president of the Company in the recent five years, and now serves as secretary of the Board of Directors and vice president of the
Company, member of China Software Industry Association and vice chairman of Zhejiang Software Industry Association.
     Mr. Wei Meizhong, Chinese nationality, born in 1971, holds MBA degree of Central South University, is an International
Certified Internal Auditor, Certified Tax Agent, Certified Public Valuer and Certified Public Accountant. He has served as CFO and
vice president of the Company in the recent five years and now serves as CFO and vice president of the Company.
     Mr. Chen Yuqing, Chinese nationality, born in 1974, with MBA degree, engineer, has served as vice president and general
manager of Overseas Marketing Center of the Company in the recent five years. He is currently the vice president of the Company
and the general manager of Zhejiang Dahua Technology Co., Ltd.
     Mr. Wu Yunlong, Chinese nationality, born in 1956, has obtained bachelor degree from Xiamen University and EMBA degree
from Zhongnan University of Economics and Law, and he is a professor-level senior engineer. He is appointed by China Security
Association as an expert of the Expert Committee of China Security and Protection Industry Association; He serves as vice



                                                                                                                                     88
                                                                        2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


secretary-general of Zhejiang Security Technology Protection Industry Association and director of its Expert Committee, Executive
Director of China Security Association, Vice President and Expert of Zhejiang Security Association, Director of the Security and
Technical Defense Committee, Vice President of Hangzhou Security Association and Distinguished Professor of Zhejiang Police
Officer Vocational College. He has served as vice president of the Company and general manager of Zhejiang Dahua Security
Connected Operation Services Co., Ltd. in the recent five years. He now serves as vice president of the Company and general
manager of Zhejiang Dahua Security Connected Operation Services Co., Ltd.
     Mr. Xu Zhicheng, Chinese nationality, was born in 1966. From September 2013 to June 2015, he has successively served as
deputy general manager of marketing, general manager and supervisor of the Company. Since June 2015, he has been the general
manager of the Company's Internal Audit Department. He is currently the vice president of the Company and the general manager of
the Internal Audit Department.
     Mr. Yan Gang, Chinese nationality, born in 1969, with master degree, has served as vice president, general manager of Quality
and Customer Service Department and general manager of Production Guarantee Department of the Company in the recent five years.
He now serves as vice president and general manager of Quality and Customer Service Center of the Company.
     Mr. Ying Yong, Chinese nationality, born in 1969, with MBA degree, has served as vice president, general manager of Domestic
Marketing Center and general manager of Human Resources Department of the Company in the recent five years, and now serves as
vice president and general manager of Human Resources Department of the Company.
     Mr. Zhu Jiantang, Chinese nationality, was born in 1982 and graduated from college with the bachelor degree. From March
2012 to January 2015, he has successively served as Product Director of R&D and Deputy General Manager of R&D Center. Since
January 2015, he has been the general manager of the Company's Supply Chain Management Center. He is currently the vice
president of the Company and the general manager of the Supply Chain Management Center.
     Mr. Zhang Wei, Chinese nationality, born in 1971, served as president of Monitoring Product Department of Wuhan Jinglun
Electronics Co., Ltd., product and marketing director of BOCOM Security (China) Co., Ltd., product director of Vimicro, general
manager of Internet of Things Application Business Unit of Vimicro, and supervisor of the Fourth Board of Supervisors of Zhejiang
Dahua Technology Co., Ltd. He is currently the vice president of the Company.
     Mr. Zhang Xingming, Chinese nationality, born in 1977, holds master degree, has served as vice president and general manager
of R&D Center of the Company in the recent five years. He is currently the vice president of the Company and the general manager
of the R&D center and the general manager of Zhejiang Huatu Microchip Technology Co., Ltd.
     Mr. Zhao Yuning, Chinese nationality, was born in 1977 and graduated from National University of Singapore with a master
degree in science. From July 2000 to June 2017, he has successively served as technical engineer, regional sales manager, national
general manager, vice president and president of regional sales department of Huawei Technologies Co., Ltd. He now serves as vice
president of the Company and general manager of overseas marketing center
     Position held in shareholders entities
□ Applicable √ Not applicable
Position held in other entities
√ Applicable □ Not applicable

                                                                           Position Held in Other     Renumeration Received from
   Name                           Name of Other Entity
                                                                                   Entities                Other Entity or Not

Fu Liquan Zhejiang Dahua Vision Technology Co., Ltd.                    Executive Director            No

Fu Liquan Zhejiang Dahua Security Service Co., Ltd.                     Director                      No

Fu Liquan Hangzhou Huacheng Network Technology Co., Ltd.                Chairman                      No

                                                                        Executive Director and
Fu Liquan Zhejiang Dahua Investment Management Co., Ltd.                                              No
                                                                        General Manager



                                                                                                                                     89
                                                                     2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Fu Liquan Leapmotor Automobile Co., Ltd.                             Director                   No

Fu Liquan Xinjiang Dahua Xinzhi Information Technology Co., Ltd.     Chairman                   No

            Inner Mongolia Dahua Zhimeng Information Technology
Fu Liquan                                                            Chairman                   No
            Co., Ltd.

Fu Liquan Zhejiang Huafei Intelligent Technology CO., LTD.           Chairman                   No

Fu Liquan Hangzhou Xiaohua Technology CO., LTD.                      Executive Director         No

Fu Liquan Guangxi Dahua Zhicheng Co., Ltd.                           Chairman                   No

Fu Liquan Guizhou Huayi Shixin Technology Co., Ltd.                  Director                   No

Fu Liquan Xinjiang Dahua Huayue Information Technology Co., Ltd. Chairman                       No

Fu Liquan Zhejiang Huashi Investment Management Co., Ltd.            Executive Director         No

Fu Liquan Xinjiang Dahua Zhixin Information Technology Co., Ltd.     Chairman                   No

Fu Liquan Zhejiang Leapmotor Technology Co., Ltd.                    Director                   No

                                                                     Executive Director and
Fu Liquan Zhejiang Dahua Zhilian Co., Ltd.                                                      Yes
                                                                     General Manager

Fu Liquan Zhejiang HuaRay Technology Co., Ltd.                       Chairman                   No

Fu Liquan Xinjiang Dahua Zhihe Information Technology Co., Ltd.      Chairman                   No

Fu Liquan Xinjiang Dahua Information Technology Co., Ltd.            Executive Director         No

Fu Liquan Guangxi Huacheng Technology Co., Ltd.                      Chairman                   No

Fu Liquan Zhejiang Huachuang Vision Technology Co., Ltd.             Chairman                   No

Fu Liquan Guizhou Meitan Dahua Information Technology Co., Ltd.      Executive Director         No

            Zhejiang Dahua Security Network Operation Service Co.,
Fu Liquan                                                            Chairman                   No
            Ltd.

            Ningbo Huayang Investment Management Partnership
Fu Liquan                                                            Executive Partner          No
            Enterprise (Limited Partnership)

            Hangzhou Gulin Equity Investment Partnership (limited
Fu Liquan                                                            Executive Partner          No
            partnership)

            Ningbo Huaqi Investment Management Partnership
Fu Liquan                                                            Executive Partner          No
            (Limited Partnership)

Fu Liquan Zhejiang Dahua Robot Technology Co., Ltd.                  Executive Director         No

Fu Liquan Wuxi Dahua Ruipin Technology Co., Ltd.                     Director                   No

                                                                     Executive Director and
Fu Liquan Hangzhou Huajuan Technology Co., Ltd.                                                 No
                                                                     General Manager

Fu Liquan Xinjiang Dahua Intelligence Technology Co., Ltd.           Supervisor                 No

            Beijing Huayue Shangcheng Information Technology
Fu Liquan                                                            Executive Director         No
            Service Co., Ltd.

Fu Liquan Shanghai Huashang Chengyue Information Technology          Executive Director         No



                                                                                                                           90
                                                                     2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


            Service Co., Ltd.

Fu Liquan Zhejiang Fengshi Technology Co., Ltd.                      Executive Director         No

Fu Liquan Xi'an Dahua Zhilian Technology Co., Ltd.                   Executive Director         No

Wu Jun      Guangdong Dahua Zhishi Technology Co., Ltd.              Director                   No

Wu Jun      Zhejiang Dahua System Engineering Co., Ltd.              Executive Director         Yes

Wu Jun      Hangzhou Yuneng Technology Co., Ltd.                     Executive Director         No

Wu Jun      Zhejiang Dahua Security Service Co., Ltd.                Director                   No

            Ningbo Huakun Investment Management Partnership
Wu Jun                                                               Executive Partner          No
            (Limited Partnership)

Li Ke       Leapmotor Automobile Co., Ltd.                           Director                   No

Li Ke       Zhejiang Leapmotor Technology Co., Ltd.                  Director                   No

Li Ke       Zhejiang Huaxiao Technology Co., Ltd.                    Executive Director         No

            Zhejiang Dahua Security Network Operation Service Co.,
Li Ke                                                                Director                   No
            Ltd.

Li Ke       Hangzhou Huacheng Network Technology Co., Ltd.           Director                   No

Li Ke       Zhejiang Huachuang Vision Technology Co., Ltd.           Director                   No

Li Ke       Wuxi Dahua Ruipin Technology Co., Ltd.                   Director                   No

Li Ke       Zhejiang HuaRay Technology Co., Ltd.                     Director                   No

Li Ke       Xi'an Dahua Zhilian Technology Co., Ltd.                 Manager                    No

Zhu
            Zhejiang Dahua Vision Technology Co., Ltd.               Supervisor                 No
Jiangming

Zhu
            Zhejiang Dahua Security Service Co., Ltd.                Director                   No
Jiangming

Zhu                                                                  Executive Director and
            Hangzhou Xintu Technology Co., Ltd.                                                 No
Jiangming                                                            General Manager

Zhu
            South North United Information Technology Co., Ltd.      Director                   No
Jiangming

Zhu
            Zhejiang Huatu Microchip Technology Co., Ltd.            Executive Director         No
Jiangming

Zhu
            Zhejiang Lancable Technology Co., Ltd.                   Chairman                   No
Jiangming

Zhu
            Leapmotor Automobile Co., Ltd.                           Chairman                   No
Jiangming

Zhu
            Zhejiang Huafei Intelligent Technology CO., LTD.         Director                   No
Jiangming

Zhu         Hangzhou Menghao Investment Management Partnership
                                                                     Executive Partner          No
Jiangming (Limited Partnership)


                                                                                                                           91
                                                                     2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Zhu
            Hangzhou Xunwei Robotics Technology Co., Ltd.            Director                   No
Jiangming

Zhu
            Zhejiang Leapmotor Technology Co., Ltd.                  Chairman                   No
Jiangming

Zhu         Ningbo Jinghang Equity Investment Partnership (Limited
                                                                     Executive Partner          No
Jiangming Partnership)

Chen
            Zhejiang Lancable Technology Co., Ltd.                   Director                   No
Ailing

Chen
            Zhejiang Huashi Investment Management Co., Ltd.          General Manager            No
Ailing

Chen
            Zhejiang Huanuokang Technology Co., Ltd.                 Executive Director         No
Ailing

Chen        Ningbo Huali Investment Management Partnership
                                                                     Executive Partner          No
Ailing      (Limited Partnership)

Chen        Ningbo Huayan Investment Management Partnership
                                                                     Executive Partner          No
Ailing      (Limited Partnership)

Chen        Ningbo Huadi Investment Management Partnership
                                                                     Executive Partner          No
Ailing      (Limited Partnership)

Chen        Ningbo Huaqian Investment Management Partnership
                                                                     Executive Partner          No
Ailing      (Limited Partnership)

Chen        Ningbo Hualing Investment Management Partnership
                                                                     Executive Partner          No
Ailing      (Limited Partnership)

He Chao     Guahao (Hangzhou) Technology Co., Ltd.                   Senior Vice President      Yes

He Chao     WeDoctor (Hainan) Health Industry Development Co., Ltd. Supervisor                  No

            Shanghai Rensheng Medical Cosmetology Outpatient Co.,
He Chao                                                              Chairman                   No
            Ltd.

He Chao     Hangzhou Xiaoshan Weiyi Outpatient Co., Ltd.             Director                   No

He Chao     Beijing Weyi General Clinic Co., Ltd.                    Director                   No

He Chao     Lingkang Pharmaceutical Group Co., Ltd.                  Independent Director       Yes

Wang                                                                 Chairman and General
            Hangzhou Mingze Cloud Software Co., Ltd.                                            No
Zexia                                                                Manager

Wang
            Zhejiang Weiming Environment Co., Ltd.                   Independent Director       Yes
Zexia

Wang
            Zhejiang Kaier New Materials Co., Ltd.                   Independent Director       Yes
Zexia

Huang
            Wangsu Technology Co., Ltd.                              Independent Director       Yes
Siying

Huang       Orange Sky Golden Harvest Entertainment (Holdings)       Independent Director       Yes


                                                                                                                           92
                                                                      2018 Annual Report of Zhejiang Dahua Technology Co., Ltd.


Siying     Limited

Huang
           Rich Healthcare Holdings Limited                           Independent Director       Yes
Siying

Huang
           Jiangxi Ganfeng Lithium Co., Ltd.                          Independent Director       Yes
Siying

Huang
           Yingde Gases Group Company Limited                         CFO                        No
Siying

Huang
           Yingde Investment (Shanghai) Co., Ltd.                     Supervisor                 Yes
Siying

Song                                                                  Chairman of the Board of
           China Standard Intelligent Security Technology Co., Ltd.                              No
Maoyuan                                                               Supervisors

Song
           Zhejiang Dahua System Engineering Co., Ltd.                Supervisor                 No
Maoyuan

Song
           Guangdong Dahua Zhishi Technology Co., Ltd.                Supervisor                 No
Maoyuan

Song
           Zhejiang Dahua Investment Management Co., Ltd.             Supervisor                 No
Maoyuan

Song
           Guizhou Huayi Shixin Technology Co., Ltd.                  Supervisor                 No
Maoyuan

Song
           Hangzhou Maycur Technology Co., Ltd.                       Supervisor                 No
Maoyuan

Song
           Hangzhou Huajuan Technology Co., Ltd.                      Supervisor                 No
Maoyuan

Song
           Xi'an Dahua Zhilian Technology Co., Ltd.                   Supervisor                 No
Maoyuan

Zuo
           Hangzhou Xiaohua Technology CO., LTD.                      Supervisor                 No
Pengfei

Chen
           Zhejiang Dahua Vision Technology Co., Ltd.                 General Manager            No
Yuqing

Wei
           Cein Biological Technology (Beijing) Co., Ltd.             Director                   No
Meizhong

Wei
           South North United Information Technology Co., Ltd.        Chairman                   No
Meizhong

Wei
           Shenzhen Conwin Security Electronics CO., Ltd.             Director                   No
Meizhong

Wei        Hangzhou Qianhudao Meixin Investment Management            Executive Director and
                                                                                                 No
Meizhong Co., Ltd.                                                    General Manager

Wei
           Hangzhou Wanpuhua Internet Financial Services Co., Ltd. Director                      No
Meizhong


                                              &nbs