On the night of February 20th, 2017, Gree released an announcement that it signed a preferential procurement contract with Yinlong with a deal no large than RMB 20b.

The announcement stated that the company planned to sign an agreement with Yinlong to cooperate in areas such as intelligent equipment, moulds, casting, automotive air-conditioning, motor control, alternative energy vehicles and stored energy. One side has the priority to purchase the other side’s products or service under the same conditions. The total preferential purchasing amount of money should not exceed RMB 20b in a period of one year.

The cooperation also involves technology licensing and open process. The announcement stated that Yinlong should open the following items to Gree Electric Appliances on the premise of signing a confidentiality agreement: production process and technologies for battery materials, batteries, motor control, vehicles and stored energy. Gree Electric Appliances confirmed that the transaction would enable Gree to enter into the alternative energy vehicle industry, stored energy and battery-manufacturing areas, building a new industrial growth point.

Because Dong Mingzhu, President and Board Director of Gree Electric Appliances holds 10% shares of Yinlong, the activity is a related-party transaction. Dong Mingzhu regards Yinlong as a breakthrough of entering into automotive air-conditioning area, planning to sell 30,000 units every year.

Gree Electric Appliances also predicted that the success transaction would bring a large growth in the company’s operating revenue. And the transaction would not generate Gree’s dependence on related-party.