INSIDE INFORMATION: (1) EXERCISE OF EXCHANGE RIGHT UNDER CONVERTIBLE AND EXCHANGEABLE BOND; (2) EXERCISE OF CALL OPTION; AND (3) CONTINUING CONNECTED TRANSACTIONS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

HAIER ELECTRONICS GROUP CO., LTD.

海 爾 電 器 集 團 有 限 公 司*

(incorporated in the Bermuda with limited liability)

(Stock Code: 1169) INSIDE INFORMATION:

1. EXERCISE OF EXCHANGE RIGHT UNDER CONVERTIBLE AND EXCHANGEABLE BOND;
2. EXERCISE OF CALL OPTION; AND
3. CONTINUING CONNECTED TRANSACTIONS

INSIDE INFORMATION

This announcement is made by Haier Electronics Group Co., Ltd (the "Company") pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong).

EXERCISE OF THE EXCHANGE RIGHT AND THE CALL OPTION UNDER THE CONVERTIBLE AND EXCHANGEABLE BOND

Reference is made to the Company's announcements dated 9 December 2013 and 21 March 2014 in relation to the issue of the subscription shares and the convertible and exchangeable bond (the "CEB") in the principal amount of HK$1,316,036,039 (the "Announcements"). Unless the context requires otherwise, capitalised terms used herein shall have the same meanings as defined in the Announcements.

* For identification purposes only

The board ("Board") of directors (the "Director(s)") of the Company would like to announce that, on 3 January 2017, the Company received:

1. an exchange notice from Alibaba SPV for the exercise of the Exchange Right under the CEB to exchange all the CEB in the principal amount of HK$1,316,036,039 for all the non-voting rights of Haier Electronics SPV I which in turn holds 24.10% economic interest in 青島日日順物流有限公司 (Qingdao Goodaymart Logistics Co., Ltd.*) ("Goodaymart Logistics"), which is an indirect subsidiary of the Company, through Haier Electronics SPV II; and

2. an option notice from Alibaba SPV for the exercise of the call option ("Call Option") under the CEB to acquire the voting rights of Haier Electronics SPV I at the exercise price of HK$5.00,

(the "Transactions").

Upon the completion of the Transactions, all the non-voting and voting shares of Haier Electronics SPV I have been transferred to Alibaba SPV and therefore Alibaba Group currently holds 24.10% economic interest in Goodaymart Logistics through Alibaba SPV. In addition, as disclosed in the Announcement dated 9 December 2013, Alibaba Group holds a further equity interest of 9.90% in Goodaymart Logistics through Alibaba HK. Accordingly, Alibaba Group indirectly holds an aggregate of 34% of the equity interest of Goodaymart Logistics, an indirect subsidiary of the Company. By virtue of its 34% equity interest in Goodaymart Logistics, each of Alibaba Group (being the holding company of Alibaba SPV and Alibaba HK) and the Cainiao Group (as defined below) (being an associate of Alibaba Group) has become a connected person at the subsidiary level of the Company under the Listing Rules immediately following the completion of the Transactions. The transactions between the Group and each of the Cainiao Group and the Alibaba Service Providers contemplated under the Master Services Agreements (as defined below) shall constitute continuing connected transactions of the Company.

CONTINUING CONNECTED TRANSACTIONS

The Board further announces that, on 3 January 2017, Goodaymart Logistics entered into the Logistics Service Master Agreement I with Zhejiang Cainiao Supply Chain Management Co., Ltd.* (浙江菜鳥供應鏈管理有限公司) ("Cainiao", together with its subsidiaries, the "Cainiao Group"), the logistics platform company invested by Alibaba Group pursuant to which Goodaymart Logistics agreed to provide logistics services to the Cainiao Group (the "Logistics Master Agreement I"). The transactions contemplated under the Logistics Service Master Agreement I constitute continuing connected transactions for the Company for the purpose of the Listing Rules.

On the same date, based on the need of the Company's subsidiaries to sell home appliances and other products on Tmall (as defined below), the Company entered into another logistics service master agreement with Cainiao pursuant to which the Cainiao Group agreed to provide general logistics services to the Group ("Logistics Master Agreement II"). The transactions contemplated under the Logistics Service Master Agreement II constitute continuing connected transactions for the Company for the purpose of the Listing Rules.

On the same date, based on the need of the Company's subsidiaries to sell home appliances and other products or services on T-mall, the Company entered into the General Service Master Agreement with 浙江天貓技術有限公司 (Zhejiang Tmall Technology Co.,Ltd.*), 浙 江 天 貓 網 絡 有 限 公 司 (Zhejiang Tmall Network Co., Ltd. *), 淘 寶（中 國 ）軟 件 有限公司 (Taobao (China) Software Co., Ltd.*) and 杭州阿里媽媽軟件服務有限

公司 (Hangzhou Alimama Software Services Co., Ltd.*) (collectively, "Alibaba Service Providers"), subsidiaries of Alibaba Group, pursuant to which Alibaba Service Providers agreed to provide platform services and marketing and software services to the Group (the "General Service Master Agreement"). The transactions contemplated under the General Service Master Agreement constitute continuing connected transactions for the Company for the purpose of the Listing Rules,

(the Logistics Master Agreement I, the Logistics Master Agreement II and the General Service Master Agreement are collectively referred to as the "Master Service Agreements").

LISTING RULES IMPLICATIONS

The highest of the applicable percentage ratios of the annual caps of the continuing connected transactions for each of the three financial years ending 31 December 2019 contemplated under the Master Service Agreements as calculated pursuant to Rule 14.07 of the Listing Rules exceeds 5%.

As (i) Alibaba Group has become a connected person at the subsidiary level of the Company; (ii) the continuing connected transactions contemplated under the Master Service Agreements are on normal commercial terms; (iii) the Board and all independent non-executive Directors of the Company have approved the continuing connected transactions and confirmed that the terms of the continuing connected transactions are fair and reasonable and are on normal commercial terms and in the interests of the Company and the shareholders of the Company as a whole. Pursuant to Rule 14A.101 of the Listing Rules, the continuing connected transactions contemplated under the Master Service Agreements are subject to the reporting and announcement requirements but are exempt from the circular, independent financial advice and shareholders' approval requirements.

Apart from Mr. Zhang Yong who is a director and chief executive officer of Alibaba Group Holding Limited and has abstained from voting on the board resolutions approving the continuing connected transactions, none of the Directors has a material interest in the transactions contemplated under the Master Service Agreements.

EXERCISE OF THE EXCHANGE RIGHT UNDER THE CEB

On 3 January 2017, the Company received an exchange notice from Alibaba SPV for the exercise of the Exchange Right under the CEB to exchange all the CEB in the principal amount of HK$1,316,036,039 for all the non-voting rights of Haier Electronics SPV I which in turn holds 24.10% economic interest in Goodaymart Logistics through Haier Electronics SPV II.

Since Alibaba SPV has exercised the Exchange Right in full, Alibaba SPV will not exercise the conversion rights of the CEB Holder to subscribe for the CEB Shares pursuant to the CEB. Upon completion of the exercise of the Exchange Right, Alibaba SPV no longer holds any outstanding CEB.

EXERCISE OF THE CALL OPTION

As disclosed in the Announcements, in the event that the Exchange Right is exercised, Alibaba SPV or its nominee may also exercise the Call Option to acquire the voting rights in relation to the voting shares of the Haier Electronics SPV I at the exercise price of HK$5.00.

On the same date, the Company received an option notice from Alibaba SPV for the exercise of the Call Option under the CEB to acquire the voting rights of Haier Electronics SPV I at the exercise price of HK$5.00. Upon the completion of the exercise of the Call Option on the same date, all 500 voting shares of the Haier Electronics SPV I have been transferred to Alibaba SPV.

Upon the completion of the Transactions, all the non-voting and voting shares of Haier Electronics SPV I have been transferred to Alibaba SPV and therefore Alibaba Group currently holds 24.10% economic interest in Goodaymart Logistics through Alibaba SPV. In addition, as disclosed in the Announcement dated 9 December 2013, Alibaba Group holds a further equity interest of 9.90% in Goodaymart Logistics through Alibaba HK. Accordingly, Alibaba Group indirectly holds an aggregate of 34% of the equity interest of Goodaymart Logistics, an indirect subsidiary of the Company. By virtue of its 34% equity interest in Goodaymart Logistics, Alibaba Group has become a connected person at the subsidiary level of the Company under the Listing Rules immediately following the completion of the Transactions. The transactions between the Group and each of the Cainiao Group and the Alibaba Service Providers constitute continuing connected transactions of the Company. Goodaymart Logistics will continue to be a subsidiary of the Company following the Transactions.

CONTINUING CONNECTED TRANSACTIONS I. LOGISTICS SERVICE MASTER AGREEMENT I

The Board announces that on 3 January 2017, Goodaymart Logistics entered into the Logistics Service Master Agreement I with Cainiao. The transactions contemplated under the Logistics Service Master Agreement I constitute continuing connected transactions for the Company for the purpose of the Listing Rules.