February 2011

ISSUE 41February

Technology

Living in ChemChina

Events

ChemChina Gets Outstanding Contribution Award for Lean Six Sigma ManagementISO/TC61 Secretariat Settles in ChinaMembrane Seawater Desalination Technical Innovation Alliance

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BlueStar Gets State Archives Administration CommendationSRDICI Increases Business Revenues through InnovationChemChina Oil & Gas Daqing Involved in Gasoline and Diesel Oil Hydrogenation Plants

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MCRI Patents Spray-coat Flameproof Flexible Polyurea InventionTianhua Institute Gets Anode Protection Acid Distributor Technology Patent AwardChemChina Rubber Catches the Eye of Tire Show

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ChemChina Holds Spring Festival Party6

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Employee World

Five ChemChina Products Recognized as Industry Leading BrandsChina Haohua Launches Purchasing Improvement ProjectJiangxi Xinghuo Becomes State-level Corporate Technical Center

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A Happy Childhood8

Project

Cangzhou Dahua Commissions DNT PlantNeoprene Wastewater Recycling Project Gets ApprovalAeolus Tyre, Yellowsea Rubber on the 2010 List of Top 75 Tire Makers

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February 2011

ISSUE 41 EVENTS

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ChemChina Gets Outstanding Contribution Award for Lean Six Sigma Management

The International Society of Six Sigma Professionals (ISSSP) presented this year's six sigma industry outstanding contribution award to ChemChina at the China Leadership Conference on December 7. The

ISSSP conference has been held in China for three years, and the award was set up to recognize influential organizations that have made an outstanding contribution to developing six sigma management methods in China. ChemChina is the first organization in the country to receive it. In presenting the award to ChemChina, ISSSP said that its continued improvement has been the most significant event in six sigma culture. ISSSP decided to give the outstanding contribution award to ChemChina to recognize its outstanding contribution and achievements in the six sigma industry and its continued improvement especially with respect to planning, and its system building improvements as a pioneer in establishing a uniform six sigma culture standard. There have been 10 ISSSP leadership conferences in the

U.S. The ISSSP leadership conference was held in China for the first time in 2008 to provide a platform for enterprises, specialized companies and industry advisors, especially in the Asia Pacific region to help them learn more about the world's latest six sigma theories and practices. In addition, 14 ChemChina's projects, including one that increased the single-batch yield of CD-3 and another that reduced the amount of refrigeration in an epoxy workshop's reaction system, were included in the China Association of Quality's 2010 list of the best six sigma candidates for the Quality and Technology Award. ChemChina began using lean six sigma ideas and the best global practices to improve its talent development in strategy, manpower, and operational model and to get its subsidiaries to improve management efficiency with more scientific methods for greater competitiveness. In 2010, ChemChina was recognized as one of the first group of pilot enterprises in the China Petroleum and Chemical Industry Federation's (CPCIF) Quality Empowerment Program.

ISO/TC61 Secretariat Settles in China

Xie Zhaoping, Gou Liqun

On N o v e m b e r 2 5 , t h e I n t e r n a t i o n a l Standardization Organization's Technical

Committee on Plastics (ISO/TC61) secretariat was established in Chengdu, Sichuan province, making it the Chinese chemical industry's first ISO organization. The secretariat is important for making China's plastics industry more innovative and to help in setting standards for plastics and related products and in bringing new development opportunities to China's plastics industry under the 12th five-year plan.

Membrane Seawater Desalination Technical Innovation Alliance

According to Zhang Lin, director of the Nat ional Standardizat ion Administrat ion Commission's international department, the secretariat's predecessor was in the U.S. and finished this year. Germany, Russia and China all applied for the position, and the ISO finally decided to establish a China office in light of the rapid development of China's plastics industry. The secretariat is affiliated with China BlueStar Chengrand Chemical Co Ltd, under Commission approval.

Yu Tao

A Membrane Seawater Desalinization Industry Alliance of Technical Innovation was recently set up in connection

with the Hangzhou Development Center of Water Treatment Technology (HDCWTT). It comprises 14 scientific research institutes and major companies, including Zhejiang and Tianjin universities, and Tianjin Motimo Membrane Technology Ltd. The head of HDCWTT, Zheng Genjiang, was elected as the president of the alliance. This alliance will speed up the development of low-cost membrane seawater desalination technology and related equipment and the development of seawater pretreatment technology. These are some of the top seawater desalination priorities in China's Medium- and Long-term Science and Technology Development Program (2006-2020). The alliance was set up by leading members of the seawater desalination industry and consists of prominent domestic desalination equipment manufacturers and top universities and research institutes. The alliance's purpose is to explore better approaches, optimize technological resource allocation, facilitate better cooperation among companies, universities and research institutes, overcome technical barriers and institutional constraints to industry development, and develop an array of leading membrane desalination technology and products through innovative mechanisms.

February 2011 2

ISSUE 41 EVENTS

Five ChemChina Products Recognized as Industry

Leading Brands

At a China Petroleum and Chemical Industry Federation (CPCIF) meeting on November 24 to review the Chinese petrochemical sector's Quality Empowerment Program

achievements for 2010, ChemChina's V polyvinyl alcohol (PVA) resin, BCMC ion-membrane electrolyzer, Dongda polyether polyols, Chengrand polytetrafluoroethylene (PTFE), and Wohu (crouching tiger) neoprene were recognized as 2010's famous brands in the petrochemical industry by CPCIF. ChemChina's lean six sigma management project was recognized at the meeting as one of the petrochemical industry's first pilot projects, as a part of the Quality Empowerment Program. These leading industry brands were recommended by professional associations, local industrial associations, and large groups, and underwent comprehensive evaluations by the Petrochemical Industry Name Brand Evaluation Committee and were reviewed by CPCIF. Eighty-two brands were named leading industry brands.

China Haohua Launches Purchasing Improvement

ProjectGao Riwei, Gan Haiou

On November 20, China Haohua Chemical (Group) Corp held a meeting at ChemChina h e a d q u a r t e r s a b o u t a p u r c h a s i n g

improvement project. Haohua will use the best chemical industry practices and BlueStar's experience while working with an IBM consulting team to apply

managerial innovations to its material purchases and reduce purchase costs to help it achieve income-generation and cost-reduction objectives. The result of this project will lead to further improvements in operational efficiency and purchasing activities and will establish a first-class purchasing organization and improve corporate profitability.

Jiangxi Xinghuo Becomes State-level Corporate Technical Center

Du Yanqing

On November 11, the Nat ional Development and Reform Commission, Ministry of Science and Technology, Ministry of Finance, General

Administration of Customs, and State Administration of Taxation announced that they had recognized the Jiangxi Xinghuo Organic Silicone Plant as a state-level technical center, an appointment that comes with preferential treatment for the company. Jiangxi Xinghuo is China's largest modern silicone maker and plays a leading industrial role in the commercialization of scientific discoveries, and national projects for setting national standards and responding to crises. Silicone monomer production is a core technology that was developed solely by the plant and is the first Chinese technology for silicone monomer synthesis. The plant now has an annual silicone monomer production capacity of 200,000 tons, the largest in the country, and more than 20 patented technologies. Jiangxi Xinghuo has an unequalled competitive edge in the market and an average silicone products market share above 19 percent at home, the highest of any domestic industry. Its dimethylsiloxane cyclic mixture (DMC) and room-temperature-vulcanizing silicon sulfide rubber (RTV-107) have domestic market shares of 42 percent and 61 percent, respectively. The company took the lead in implementing many key

national technological development projects, including a 3,000 t/a PVC plant, lithium borohydride development, a 100 t/a silicone plant, silicone application research, a 10,000 t/a silicone industrial test (a key national technological development), China's largest sanitation-grade silicone oil plant (a national "Torch" program project), a 20,000 t/a silicone monomer project, a 20,000 t/a caustic soda plant renovation project, a 100,000 t/a silicone monomer plant project, several silicone plant expansion projects and some technical renovation projects. The company's value chain has grown and, it is now more able to take risks, make greater profits, and adapt itself better to the changing market situation. With respect to new product and technology development, Jiangxi Xinghuo has long committed itself to increasing market competitiveness through product development. It organized a special team equipped with high technology and spent no less than 5 percent of annual revenues on R&D. In 2009, it had 68 technology development projects, 17 of them with a development cycle of three years or longer and 15 that were cooperating with an overseas partner. Jiangxi Xinghuo hosted or took part in formulating and revising more than 100 technical and managerial standards at the national and industrial level, and it earned the China Award for Contribution to Standards Innovation two years in a row, for 2008 and 2009.

February 2011 3

ISSUE 41 PROJECT

Cangzhou Dahua Commissions DNT Plant

Gu Hong'an, Chen Liping

On October 8, a 60,000 t/a dinitrotoluene (DNT) plant belonging to Cangzhou Dahua Co's Juhai Division passed its first trial. DNT product output

has significantly cut the production cost of toluene diisocyanate (TDI) and has made the company's products more competitive and has made the company more risk resistant. Work on the plant's infrastructure started in May 2009 and was completed in March 2010, with the equipment being installed in August. The company is now implementing the first phase (70,000 t/a) of its 100,000 t/a TDI plant and it has a 160,000 t/a ion membrane caustic soda plant scheduled to begin production in early 2011. Once these projects are fully operating, the company's value chain will be greatly improved, its products will be better, and the product mix more balanced, thereby improving its competitiveness. In the past few years, Cangzhou Dahua has developed a number of large projects involving chemical fertilizers, nitric acid, TDI, DNT, and caustic soda, which, together have resulted in a self-contained, high valued added business portfolio.

Neoprene Wastewater Recycling Project Gets Approval

Zhang Tao

On November 3, a neoprene factory waste treatment and recycling pilot test, undertaken by the BlueStar Environmental Engineering Co

Ltd and Shanxi Synthetic Rubber Group Co Ltd, passed an acceptance check done by the ChemChina department of science and technology. This was part of a development project supported by the ChemChina Technology Fund of 2009. The pretreatment process and membrane integration technology and equipment used in the project were declared suitable for the advanced treatment of neoprene factory effluent by the panel of inspectors. At the same time, a pilot test for advanced treatment of neoprene factory effluent was found to be in line with contractual agreements on all technical indicators and operating in a cost-effective way after a six-month test. This lays a solid technical foundation for an industrial demonstration project that will show the advanced treatment of neoprene waste. After reviewing the process, the panel declared the project results valid.

Aeolus Tyre, Yellowsea Rubber on the 2010

List of Top 75 Tire MakersLv Xiaomei

The 2010 list of the world top 75 tire manufacturers, compiled by the US' Rubber and Plastic News Weekly, was published recently. It included the Aeolus Tyre

Co, Ltd and Qingdao Yellowsea Rubber Co, Ltd, both of which are ChemChina Rubber Corp companies. The list ranks tire manufacturers based on the previous year's sales revenues. The Chinese tire manufacturers stand out on the 2010 list. Although 2009 was the first year in the new century for the global tire industry to see negative growth, the number of mainland companies on the list rose from 19 to 22, which, when coupled with five Taiwanese manufacturers, meant the Chinese listings accounted for more than one-third of the total. This caused heads in the tire industry to turn.

After Shanxi Synthetic Rubber's 30,000 t/a neoprene plant project went into operation, sewage recycling became a much-talked-about way to deal with both water shortages and environmental pollution. The advanced effluent treatment and recycling technology means better treatment of factory effluent to meet emissions standards through biochemical treatment with membrane technology, so the treated water can be used for a medium-pressure boiler. Based on current water usage figures for the Datong area of Shanxi province, if waste water from a 200 t/h advanced treatment plant is used for desalted water in place of underground water, it will result in a savings of 1.6 million tons of underground water being saved as well as 4.7 million yuan in water expenses and effluent fees. Since 2006, when it was established, the ChemChina Technology Fund has supported eight zero-discharge sewage treatment projects at an expense of 2.2 million yuan, and downstream spending of about 28 million yuan. Four of the eight projects have been completed and four of ten patent applications have been approved. In addition, eight related research papers have been published. These resulted in recycled wastewater, reduced consumption of new water, and noteworthy environmental, social, and economic benefits, in addition to having provided a good example for other ChemChina companies.

February 2011 4

ISSUE 41 PROJECT

BlueStar Gets State Archives Administration Commendation

Wang Weizhen

After a rigorous examination by the State Archives Administration evaluation committee, the BlueStar digital file sharing research project took second place

in the administration's technological achievement awards. BlueStar's unified digital file management system was deployed in early 2009. The system gathers information from various resources scattered throughout different business systems in different geographic locations in a digital form and provides reliable information to users, with

orderly corporate file information as the core. This system radically changes the traditional way of managing company files and reduces file clerks' heavy workload. It also allows company employees to use corporate information and knowledge resources more quickly and easily. This reduces management costs, increases management efficiency, and computerizes file resources and file management to allow file networking. This system brought the company 2.35 million yuan worth of additional business.

SRDICI Increases Business Revenues through Innovation

He Hua, deputy director general of the State Intellectual Property Office (SIPO), after visiting SRDICI on December 8, said, "The Southwest Research and Design Institute of the

Chemical Industry (SRDICI) filed 74 patent applications in the past five years and got 39 patents. More than 80 percent of its patents and patented scientific findings have been commercialized, and these account for more than 80 percent of its revenues. SRDICI has made its own way of development through innovation." SRDICI has seen steady growth in both income and profits over the past several years, with 80 percent of that coming from patented technologies and products. Its patented low-pressure carbonyl synthetic acetic acid from methanol process, the first Chinese technology of its kind, has been used by eight companies, including the Yunnan Yunwei Group Co Ltd. It is currently being licensed to a major multinational, the Celanese Corp. These give SRDICI more than 500 million yuan in revenues from technology transfers and licensing. There are now five 200,000 t/a carbonyl synthetic acetic acid plants using SRDICI patented acetic acid technology, turning out acetic acid products that meet national standards and generating a considerable amount of social and economic benefits. In addition to applying its patented N-formyl morpholine production process to industry, SRDICI has built the world's first 1,000 t/a methyl formate industrial demonstration plant, which adheres to global standards in technology and product quality. It produces what are recognized as major new products that are widely used by Chinese petrochemical companies and coking plants, giving it a more than 85 percent share of the domestic market. Its products are also sold in many other countries. In recent years, SRDICI has developed many high-tech businesses that use things like the N-formyl morpholine and dimethyl ether catalyst. Over 2,000 Chinese companies currently use SRDICI patented technologies and products.

Xie Zhaoping

ChemChina Oil & Gas Daqing Involved in Gasoline and Diesel

Oil Hydrogenation Plants

Xing Jiwei

On November 30, after already having successfully developed of an 8,000 m 3/h hydrogen generator and a

350,000 t/a gasoline hydrogenation plant, ChemChina Oil and Gas Daqing plant began producing diesel oil products at a 350,000 t/a diesel oil hydrogenation plant. The Daqing branch's 700,000 t/a gasoline and diesel oil hydrogenation plants cost 365 million yuan and took seven and a half months to build, the shortest time for any project of this sort in all of Asia.

The 700,000 t/a gasoline and diesel oil hydrogenation operation consists of a 350,000 t/a gasoline hydrogenation plant, a 350,000 t/a diesel oil hydrogenation plant, an 8,000 m3/h hydrogen generator and a transformer station. It uses second-generation Chinese catalytic gasoline hydro-desulfurization technology, diesel oil refining and, isomerization and coagulation reduction technology, and energy-efficient steam reforming hydrogen generation technology. All of this was built on the factory premises. With the management and control techniques used during the construction process, the actual cost is expected to be 18 million yuan less than the original estimate. Additional annual profits of 35 million yuan are expected after the entire complex is commissioned.

February 2011 5

ISSUE 41 TECHNOLOGY

MCRI Cui Lijuan

New spray-coated flameproof, flexible, polyurea material developed by the Marine Chemical Research Institute (MCRI) has been given an SIPO patent. This material uses semi-prepolymer polyols to reduce

the use of solid flame retardants in the composition, thereby ensuring system stability and improving the mechanical properties of the material. Spray-coated polyurea elastomer technology is a new solvent-free, pollution-free, fast setting technique that was developed over the past decade to meet environmental regulations abroad and in response to the wide-spread use of low-pollution or pollution-free coating techniques like high solid content coatings, water-based paints, radiating solidifying paints and powder paints. As safety

and environmental awareness grows, countries have increasingly demanding restrictions on flame proofing in areas like construction, transportation, and shipbuilding. Also, flame retardation standards vary from place to place. The sprayed polyurea elastomer coating itself is highly flammable, making fire-resistance improvements mandatory. The traditional method is to add a solid flame retardant to increase systematic viscosity, slow reaction speed, and change the mechanical performance. This material is mainly used as a corrosion preventative in steel equipment and steel structures, in ship interiors or on the floors of factory workshops, and in petrochemical and inorganic chemical facilities. It is also used for corrosion protection for underground oil tanks and oil and gas pipelines.

Tianhua Institute Gets Anode Protection Acid Distributor Technology Patent Award

Wei Zhihua

The 12th China Patent Award's evaluation part was recently concluded and SIPO published its list of patent award winners. Conspicuous on the list

was the innovative anode protection acid distributor technology of the Tianhua Institute of Chemical Machinery and Automation. Tianhua Institute developed and commercialized the anode protection tank tube acid distributor itself, there by changing the situation where nearly all of China's large sulfuric acid distributors had to be imported from abroad. With its cost effectiveness, even acid distribution, large flow-gas passage, and high process adaptability, to corrosion resistance and easy installation, this technology is effectively driving China's sulfuric acid industry and giving China a leading position in the electrochemistry field. New anode protection tank tube acid distributor projects now cover 80 percent of the domestic acid distributor market. As its anode protection tank and tube acid distributor market share grew, Tianhua Institute made additional patent applications and built a protective network with the anode protection tank tube acid distributor at the core. This accelerated the company's patent process and increased its intellectual property rights overall.

ChemChina Rubber Catches the Eye of Tire Show

Lei Fang

The 4th Asian Essen Tire Show and 10th China International Rubber Technology Exposition

was held November 25 to 27, and, once again, ChemChina Rubber Corp's streamlined S-shaped booth, its highly visible logo, and the vibrant colors of staff members' sportswear were the highlight. The low-resistance, environmentally friendly tires were well received, while the aircraft tires, truck tires, semi-steel tires, and giant 3.6-meter-high tires were in full view at the front of the booth.

Patents Spray-coat Flameproof Flexible Polyurea Invention

February 2011 6

ISSUE 41 EMPLOYEE WORLD

ChemChina Holds Spring Festival Party

On the morning of January 31, the 2011 ChemChina Spring Festival Party was held among

cheerful voices, where almost 400 people f rom ChemChina HQ and ChemChina companies got together to celebrate the Spring Festival and greet the coming lunar New Year (February 3).

Ren Jianxin, President of ChemChina, addressed the Spring Festival. Thereafter, singings, sketches, magics, dances and lucky draws were performed one after another, pushing the party to climaxes. People all expressed their best wishes to ChemChina and longings for the future, and gave warm applauses to these exciting shows. Finally, the party concluded in merry and vivid dance series of different times.

The whole party is full of harmony, enthusiasm and joyfulness, which strengthens the cohesion of all ChemChina staff and lays firm foundation for the coming year. People all wish ChemChina a much more beautiful future!

Gather in Beijing, song accompanying with dance, performed by ChemChina Finance Company and ChemChina Agrochemical Corp.

S o u n d o f M u s i c , m u s i c d r a m a , brought by ChemChina's Supervision Depa r tmen t and Managemen t & Information Department.

D a t e w i t h t h e G r a s s l a n d , s o n g accompanying with dance, by China National Chemical Equipment Corp.

Safe Production, sketch, by ChemChina PR Department, Production & Operation Office, and Planning & Development Department.

Prosper i ty o f Dance, dance, by Production & Operation Office and Planning & Development Department.

H o o k - o n S i n g i n g , c h o r u s , b y ChemChina's Science & Technology Department, HR Department.

Sing in Praise of Our Motherland, song accompanying with dance.

To begin with, 11 hosts on behalf of ChemChina HQ and ChemChina companies extended their New Year greetings.

February 2011

ISSUE 41 EMPLOYEE WORLD

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November 22 - 24, the Jiangxi Xinghuo Organic Silicone Plant held a meeting with its major customers at the Xichang Satellite

Launch Center, with the theme "Win-Win Partnership." The discussion was followed by a gala campfire party. Photo by Du Yanqing

Living in ChemChina

As the winter weather made recreational and sports activities less convenient, Shenyang Paraffin Chemical Co personnel

were racking their brains to find ways to enrich the cultural life of their employees with sporting events. Finally, they decided to get the employees involved in a slow-motion bicycle contest. The employees showed great interest in this novel form of recreation and were itching to have a go at it. Photo by Song Lianqin

Jiangsu Anpon Electrochemical Ltd held an English speech contest with the theme "I Love Anpon," and had a good turnout of young

employees, with 18 young college grads giving inspiring speeches, and receiving many rounds of applause. The competition was fierce, but Zhang Zhilv of the agrochemical sales division, came in first. Wan Rong, from the chlor-alkali factory, and Shi Yaodong, from the electrical instrument factory, tied at second place, and Liu Pengcheng, from the thermal power plant, Ma Qianli, from chemical plant No.2, and Song Yuxuan, from the chlor-alkali factory, shared third place.

Hangzhou area hit by unprecedented snowfall and HDCWTT employees lent a hand shoveling snow. Photo by Zhao Danqing

February 2011 8

ISSUE 41 EMPLOYEE WORLD

A Happy Childhood

At the 6th China Guangrao Sunzi International Cultural and Tourism Festival's opening

ceremony, the children of Shandong Huaxing Petrochemical employees put on a traditional opera. Photo by Han Yongtao

Picking Tea LeavesWan Hong, Xinghuo Plant

I was so excited when my teacher announced that he would take us to pick tea leaves on

the hillside. At the tea plantation, I held my buddy's hand and we picked tea leaves together. Under our teacher's guidance, I gently broke off the tender buds between my thumb and forefinger and gradually became more skilled and picked more leaves. Looking around, I found everyone was busy picking leaves, with some bending down and others squatting, all with a serious, dedicated look. About an hour later, the teacher put a stop to the tea-plucking and each of us carried away a bag of leaves, excitedly. What fun, picking tea leaves!

Mom's Birthday PresentWang Yiyang, BlueStar (Lanzhou)

My mom works at the Lanzhou Petrochemical Hospital and always stays at her post no matter how bad the weather may

be. I saw her moving around the hospital on her rounds happily giving injections or replacing IV bags. She treats every patient the same way she treats her family members and has gained the approval of numerous patients and their relatives for her meticulous care. Sometimes, late at night, she has to work overtime to help with an emergency operation or care for the critically ill. She is both a committed worker and a good mother taking good care of the family. My mom's birthday is December 8, but what kind of birthday present should I give her? A cell phone cover? A pair of socks or a scarf? I don't think any of these can compare with a sweet smile, sweet greeting or sweet candy. Any of these is a greater gift as long as I give it from the bottom of my heart. Mom, do you like the birthday present I gave you?

Wild ChrysanthemumsXie Qi, Guangxi Dahua

Mom put several pots of wild chrysanthemums on the balcony, and they blossom into tiny, golden flowers whenever autumn

comes. When the breeze passes by, the flowers slightly shake their tiny heads, giving a unique scene to my home. When the flowers are in full bloom, my mom picks them, dries them and stores them in the refrigerator. The wild chrysanthemum can remove heat and is therefore one of the most common health remedies in my family when cold, dry autumn comes. Mom often takes the dried chrysanthemum petals from the refrigerator and puts them in a ceramic pot, making a pot of chrysanthemum tea as soon as the boiling water is poured. When they are saturated, the dried petals swell and the beautiful golden color permeates the water, giving off a unique herbal fragrance. After the contents of the ceramic pot are strained, they're poured into a small teacup. Have a taste of the tea, bitter at first, but soon followed by a refreshing taste that intoxicates the whole body. Although it may not be as noble or beautiful as the chrysanthemum, the wild chrysanthemum is still plain and accommodating, bringing a slight fragrance to daily life in a silent way, and occasionally radiating a trace of moderate wildness, or even superiority. The humble unaffected wild chrysanthemum flower is what I love most!

"It's snowing." By Cui Wenjia, Shenyang Paraffin Chemical