April 2010

ISSUE 31April

Events

ChemChina Teams Up with Stern Stewart for EVA-based ManagementBlueStar Awarded 1st Prize for National Enterprise Management Modernization and Innovation Achievements

1

BlueStar Awards Two EmployeesSun Shipeng Saves Two Children from DrowningChen Boyang Donates HSCs to a Leukemia Patient

4

Jiangxi Xinghuo Provides Training for ManagersGRMF's New Vulcanizer CertifiedSRDICI Industrializes Deoxidizing Catalyst for Ethylene Recovery

5

1,000,000 t/a Coking Plant Back on Stream at ChemChina Oil & Gas (Jinan)Shenyang Chemical to Commercialize PVC Paste Resin H-100Jinan Yuxing: Demineralized Water Now Available for 100,000 t/a Rutile TiO2

Shanxi-Nairit Sells New Products to Overseas Market

6

Employee World

ChemChina Holds Production Safety Meeting in TianjinChemChina New Website Unveiled

2

Scorching Summer SunBlueStar Summer Camp, Where My Dreams Came TrueSeeds Find Root and Sprout

8

Spring Approaches with More Greenery7

Project

MCRI Approved as National Key Lab for Marine CoatingsChemChina Awarded Two Big Prizes by China Beijing Equity ExchangeGuizhou Crystal Aids Drought Area

3

April 2010

ISSUE 31 EVENTS

1

ChemChina Teams Up with Stern Stewart for EVA-based Management

On March 26th, ChemChina and Stern Stewart Europe Limited signed an agreement of cooperation on an economic

value-added (EVA) management project in Beijing. As part of the agreement, Stern Stewart will provide EVA training, consu l t ing, EVA-based performance assessment system solutions to ChemChina and its six strategic business units (SBUs). ChemChina President Ren Jianxin, Vice-president Yang Xingqiang and Stern Stewart Global President of Operation Eric Stern were all present at the signing ceremony. ChemChina decided to strategically integrate the EVA benchmark into its business performance assessment, project appraisal, and assets management and cost control initiatives this year. The company believes that its partnership with Stern Stewart is an important part of its efforts to further its across-the-board management transformation. Commenting on the move, Ren said: "This cooperation with Stern Stewart is a strategic move by ChemChina to introduce the practice of EVA-based performance assessment in order to enhance the value-creation capacity of the company in a more scientific way, as is required by the SASAC (State-owned Assets Supervision and Administration Commission of the State Council). It will exert a profound and positive impact on the management transformation of ChemChina and our endeavors to become a more vibrant chemical company. "ChemChina has adhered to the principle of creating value

ww

w.c

hem

chin

a.co

m

for shareholders and creating employment for society. We are taking the lead among all the central SOEs (state-owned enterprises) in introducing EVA-based management solutions from a professional consulting firm - not for short-term provisional purposes but from the long-term perspective of enhancing our awareness of and capacity for value creation, improving growth quality and achieving sustainability." As part of the agreement, Stern Stewart will provide special training to ChemChina HQ, its six SBUs and more than 100 plants across the group. The training will cover a broad range of topics, including the EVA concept, EVA-based operation, key success drivers and future EVA-based management frameworks for ChemChina. A well-known global management consulting firm, Stern Stewart is the creator, brand-owner and a strong advocate of the EVA management system.

BlueStar Awarded 1st Prize for National Enterprise Management Modernization and Innovation Achievements

On March 27th, a briefing on the 16th National

Enterprise Management Modernization and Innovation Achievement Program was

held in Beijing. BlueStar was awarded the first prize for its project entitled "Informatization-Driven Management Improvement for a Large Multinational Company." The specialists and senior officers at the briefing all spoke highly of BlueStar with regard to its achievements in management innovation. They believe that BlueStar, through introducing the best practices from global top chemical producers, has innovated and scored new management achievements based on rigorous informatization efforts, which are quite different from traditional management and informatization endeavors. It is seen as having blazed a new trail for a large number of group companies suffering from the inherent problems of being "tight outside but loose within," or being big but not strong. It is a pioneering effort and

shows how a Chinese company can survive and thrive in the ever increasing competition at home and abroad. BlueStar's achievements feature three distinctive characteristics - first, great efficiency and effectiveness. Through informatization and transformation, the integration and governance of the company has been rapidly overhauled in a short period of time; thus the problem of the relatively backward management impacting high-level multinational business operation was remedied. Secondly, the innovative strategy of parallel informatization projects with each individual project piloted before being rolled out, a strategy that transcends the traditional IT construction model. Third, great creativeness in its philosophy of management transformation as the basis for informatization and management improvement based on informatization. To achieve those objectives, BlueStar boldly set out to establish standard IT solutions, instead of customized ones, centralized management of corporations and work team consolidation, making it something of a pioneer in China.

April 2010 2

ISSUE 31 EVENTSw

ww

.che

mch

ina.

com

On March 26th, ChemChina held a production safety meeting at BlueStar (Tianjin) Co. Altogether 58 key plants with significant environmental liabilities joined

the meeting through a conference call, while more than 50 senior executives from the HQs of ChemChina and its SBUs were present in person at the meeting. At the meeting, ChemChina Vice-president Yang Xingqiang announced an accidental illegal waste water discharge by Jiamusi Helong Pesticides Co., Ltd and detailed the punishment meted out by the Ministry of Supervision PRC. According to the announcement, several managers of the company have been dismissed or demoted by the agency for their negligence or dereliction of responsibility. According to Yang, the company discharged non-treated effluent from the chlor-alkali facility directly into the Songhua River over a long period of time. Senior executives from ChemChina then reaffirmed their resolution to act in accordance with the instructions from the

ChemChina

Holds Production Safety Meeting in Tianjin

monitoring agency, requiring all subsidiary plants to learn from the incident and work in earnest to avoid future environmental pollution. ChemChina President Ren Jianxin stressed the significance and seriousness of production safety and environmental protection and announced a five-point requirement for plants across the ChemChina group. First, the SHE system introduced from Qenos shall be rolled out to all the production sites operated by ChemChina. Secondly, all environmental protection schemes and work plans will be implemented in earnest. Thirdly, safe production practices shall be standardized whilst pollution from energy- and pollution-intensive plants is dealt with. Fourthly, product mix shall be further adjusted and improved, and technological upgrading and revamping accelerated. Last but not least, an IT-based safe production and environmental protection system will be adopted and relevant rules and regulations on discharge monitoring etc. shall be set up and improved. President Ren also called on all the plants to enhance their awareness of environmental protection and corporate social responsibility in order to help ChemChina achieve the objective of zero discharge. The meeting hit a high note when Siping Haohua Chemical and BlueStar (Tianjin) - two pilot plants for the zero discharge initiative - outlined their efforts in safe production and environmental protection through various programs such as PVC mother liquid recycling, boiler de-dusting, neutral water recycling, etc. The meeting ended with a visit to the water treatment system of Sinopec (Tianjin) by all of the onsite attendees.

On March 19th, ChemChina unveiled its new web portal. Presiding over the meeting, ChemChina President Ren Jianxin instructed all functional departments to contribute to the

sound maintenance and improvement of the website and on all SBUs to build and carefully manage their respective company websites, ensuring they are useful platforms for sharing information, rallying thoughts, business publicity and corporate culture development. The new ChemChina portal (www.chemchina.com) will be an important vehicle providing service to global netizens in three languages - English, French and Chinese. It conveys a robust social image and communicates the overall business strength of ChemChina as one of the world's leading chemical producers. Through the partnership with China Daily and China National Chemical Information Center, ChemChina has upgraded its portal as an online platform for introducing business, updating industrial development and publicizing its corporate culture.

ChemChina New Website Unveiled

April 2010 3

ISSUE 31 EVENTSw

ww

.che

mch

ina.

com

MCRI Approved as National Key Lab for Marine Coatings

Cui Lijuan

The National Key Laboratory for Marine Coatings built by the Marine Chemical Research Institute (MCRI)

was recently approved by the Ministry of Science & Technology (MST). The lab is dedicated to improving the R&D and industrialization of marine coatings and bringing related technologies up to a world-class standard in five to ten years. Aimed at building up a high-level R&D platform for marine coatings, the lab will set up a three-tier R&D chain encompassing basic research, application research and engineering testing for marine coatings, focusing mainly on antifouling, anti-corrosion technologies and functional coatings. It will strive to make breakthroughs in the structural design of bionic antifouling coatings, research in the corrosion mechanism of metal and concrete under extremely corrosive environment and preventive methods and the synthesis of high-performance functional resins. As a specialized research institute in marine coatings, MCRI has more than four decades of marine coating R&D experience. It is the only site in China to boast the whole-vessel package solutions to its independently developed vessel coatings which are widely applied to naval and civil ships. MCRI has proved to be a flagship in China's marine coatings sector.

ChemChina

ChemChina was granted the Golden Transaction Award and the Innovative Transaction Award for its equity

transaction at the Victory Ceremony for Equity Transactions of Central SOEs 2009 held by the China Beijing Equity Exchange (CBEX) on March 19th this year. ChemChina attaches great importance to the effective allocation and consolidation of its assets and has actively standardized its equity transfers and assets disposals through policy making and process improvement. The company has also completed a number of equity transactions in recent years through competitive bidding, thus retaining and even increasing the value of state-owned assets. In 2009, ChemChina put 13 deals on the equity exchange for

Guizhou Crystal Aids Drought Area

Chen Guijun, Zhang Hongmei

Guizhou Province has been suffering from a catastrophic drought over the six months since

last autumn. In the province's Qingzhen City, it has affected 160,000 local citizens, 40,000 domestic animals and 13,334 hectares of farmland, with a predicted economic loss of RMB86.26 million from farm crops. On March 22nd, Guizhou Crystal Organic Chemical (Group) Co., Ltd, a ChemChina company located in Qingzhen, donated RMB20,000 in support of the citywide disaster relief efforts.

sale, with a total value of around RMB204 million. Eight of these 13 deals were completed successfully, representing a total value of RMB154 million. In addition, the company auctioned off three bankrupt projects for RMB6.6 million, transferred four project transaction certifications involving RMB358 million of capital and completed the transfer of three transaction certifications of projects for separation of primary and secondary businesses, for RMB16 million. In carrying out those deals, ChemChina tried, for the first time, to auction the assets of the bankrupt enterprises via equity exchange. It is a brand new practice of equity transaction and a remarkable innovation in the disposal of the state-owned assets of bankrupt enterprises.

Awarded Two Big Prizes by China Beijing Equity Exchange

April 2010 4

ww

w.c

hem

chin

a.co

m

ISSUE 31 EVENTS

BlueStar Awards Two Employees

Mao Xueqiang

After the coverage of BlueStar (Tianjin) employees - Sun Shipeng's heroic deed of saving two children

from an icy demise and Chen Boyang's donation of hematopoietic stem cell to a leukemia patient - in the 285th and 286th issues of Information Morning Post (Chemical Industry Section), the news became much talked about and moved numerous ChemChina employees. On March 17th, BlueStar's top management extended commendations to Sun and Chen for their bravery and courage.

Xia Qiang

In the afternoon of January 17th, Sun Shipeng suddenly heard shrill cries for help from a snow-covered pond when

he was fishing beside the pond at the entrance to Muchang Village. Sun dropped his rod right away and looked out in the direction of the voice, seeing a child struggling amid a collapsed thaw hole 50 meters behind him. Without a second thought, Sun dashed over to the child. Feeling that the ice beneath his feet was unsafe, he dropped to his knees and crawled towards the child while pushing away the thick snow deposit in order to save him as quickly as possible. He was just in time, as the child was almost swallowed by the freezing water, but Sun grabbed him and dragged him out of the water. Where was the other boy? Although the pond was more than three meters deep, Sun dived into the frozen water

without a second thought. With the dim light beneath the ice layer, he saw the other child was slowly sinking with two arms stretched out. Sun immediately reached out his arms and finally seized the boy by his clothes after several attempts. By the time he had pulled the child out of water, Sun was already exhausted. Villagers and parents of the two children rushed to the scene and lifted the two onto the shore. In the meantime, Sun, with ice-cold wet clothes from top to toe, busily packed up his fishing gear and left silently, unnoticed. The parents of the two children finally found their savior after eight days of inquiry. The villagers brought BlueStar (Tianjin) a silk banner and a letter of gratitude in acknowledgment of Sun's heroic deed. It was not until that moment that Sun's colleagues knew of his life-saving action.

Mao Xueqiang

On March 6th, BlueStar (Tianjin) employee Chen Boyang was hospitalized at Tianjin No.1 Central Hospital in

company with his family, as a voluntary donor to China's hematopoietic stem cell (HSCs) bank, in preparation for his donation of hematopoietic stem cells. Currently, an 18-year-old leukemia patient far away in Jiangsu Province is waiting for Chen's donations to save his young life. In April 2006 Chen Boyang volunteered to join China's hematopoietic stem cell donor databank when he was studying at Tianjin Polytechnic University. After his graduation in 2007, Chen joined BlueStar (Tianjin). In August 2009, Chen received a message that a preliminary type

matching was successful for his hematopoietic stem cell and that an 18-year-old dying leukemia patient was waiting for his stem cell donation. With his parents' support, between March 10th and 11th, Chen underwent stem cell collection procedure at the Blood Research Institute affiliated with Chinese Academy of Medical Sciences. The 18-year-old male leukemia patient will now soon receive clinical transplantation and embrace his new life. Learning of Chen's donation of hematopoietic stem cells, all his colleagues were moved by his philanthropic heart. On March 9th, BlueStar (Tianjin)'s top management paid a visit to Chen at his hospital.

Sun Shipeng Saves Two Children from Drowning

Chen Boyang Donates HSCs to a Leukemia Patient

April 2010 5

ISSUE 31 PROJECTw

ww

.che

mch

ina.

com

Jiangxi XinghuoProvides Training for

ManagersDu Yanqing

On March 4th, the Jiangxi Xinghuo Organic Silicone Plant started its training and preliminary

preparations for a company-wide drive to become a world-class plant. BlueStar's CMO (Chief Manufacturing Officer), David Allen, delivered a lecture to the plant's middle and senior management on world-class manufacturing (WCM). The plant managers regard this drive as an important opportunity to improve the company's global competitiveness and achieve sustainable development. This project will benchmark the plant against the world-leading companies and look at the overall benefits that the WCM system brings to companies while developing an organizational model and management process suitable for the plant's development. The training course involves 341 trainees and will last ten months. In addition to helping develop the capabilities of all trainees, the process will finally help select qualified production managers.

SRDICI IndustrializesDeoxidizing Catalyst

for Ethylene RecoveryXie Zhaoping

A proprietary deoxidation catalyst for ethylene recovery, developed by Southwest Research

& Design Institute of Chemical Industry (SRDICI), was commissioned at the first attempt at Maoming Petrochemicals' 32,000 m3/h ethylene plant, which uses dry gas as feedstock. The plant met all the requirements of deoxidization indicators after 30 days of continuous operation. Following its deoxidizing technology for purification of coal bed gas, this is another special-purpose deoxidizing catalyst developed by SRDICI, which will play an active role in driving energy conservation, emission reduction and the development of low-carbon economy in China. Ethylene is an important raw material for the petrochemical industry, mainly produced from a light oil cracking process. Dry gas from the catalytic cracking process contains 10% or 15% ethylene, with a tremendous potential for recycling. According to experts, the ethylene recoverable from China's existing catalytic cracking dry gas units could save over 4 million tons of light oil each year. Dry gas produced by the catalytic cracking process contains a large amount of hydrogen, olefins, paraffins and a small amount of oxygen. The recovery of ethylene from dry gas requires the integration of adsorption separation, chemical purification, catalytic reaction, and many other process technologies. Among these, catalytic deoxidization is the critical part of the dry gas-based ethylene recovery process. SRDICI experts developed a special-purpose deoxidizing catalyst for ethylene recovery by tackling two technical bottlenecks - ethylene hydrogenation for formation of byproduct ethane, and carbon deposition on the surface of catalyst resulting from ethylene cracking in the old process. At the same time, this innovation restricts the post-deoxidization residual oxygen content to less than 1 ppm, a sound deoxidization performance with a stable process. After that commissioning, SRDICI supplied the new catalyst to Yanshan Petrochemicals for its dry gas-based ethylene recovery plant.

GRMF's New Vulcanizer CertifiedYang Wenguang

Guilin Rubber Machinery Factory (GRMF)'s new 5000 (200") tire vulcanizing machine recently passed

an expert acceptance check organized by the Guangxi Department of Science and Technology. The expert panel said that the product has an advanced design and innovative structure, with key technical indicators

meeting world-class standards. In early 2008, GRMF signed an agreement in Guilin with a world-renowned tire maker for the joint development and marketing of the 5000 (200") tire vulcanizing machine, the world's largest mechanical curing machine. The contract, worth over RMB100 million, is GRMF's biggest ever.

April 2010 6

ISSUE 31 PROJECTw

ww

.che

mch

ina.

com

1,000,000 t/a Coking Plant Back on Stream at ChemChina Oil

& Gas (Jinan)

Duan Lianshan, Zhang Hongjie

On February 5th, ChemChina Oil & Gas (Jinan) Co., Ltd suspended operation

of its coking plant as scheduled after one year of stable operation in order to secure the higher profitability of its overall business. One month later on March 15th, the plant was restarted in light of the latest market conditions. On March 16th, the facility yielded qualified products, signaling a successful restart.

Shenyang Chemical to Commercialize PVC Paste Resin H-100

Han Jingchao

Shenyang Chemical Co., Ltd recently completed a successful trial production of its new PVC paste resin

product, H-100. A highly polymerized and low-viscosity paste resin developed solely by Shenyang Chemical, H-100 paste resin is a product characterized by superior peeling strength, tensile strength and transparency that is suitable for impregnation, rotational molding and dip molding. It has many applications

in the production of disposable PVC gloves, toys, automotive foot pads, flooring, leather and other compact and transparent products. This industrial-scale production test focused on the feasibility of industrial production, production process control and product quality, producing two batches of products totaling 29 tons, which fully meet the quality requirements. Test results showed that the production process has such advantages as short polymerization time, smooth process, easy filtration of latex and generation of less slag. Shenyang Chemical will now broaden the application of the product and explore its market, in an effort to commercialize the new product as soon as possible.Jinan Yuxing:

Demineralized Water Now Available for 100,000 t/a

Rutile TiO2

Kang Jian, Ren Chun

A demineral ized water system has been developed by BlueStar (Beijing)

Environmental Engineering Co., Ltd for the 100,000 t/a titanium dioxide plant of Jinan Yuxing Chemical Co., Ltd. It produces conforming water, making it possible for Jinan Yuxing Chemical to commission its 75-ton boiler and to beat the clock to meet the tight construction schedule of the rutile titanium dioxide system. Jinan Yuxing Chemical's 100,000 t/a rutile titanium dioxide plant is the largest of its kind worldwide. Water desalination is one of its 26 significant parts and more importantly, the first section of this unprecedented project, with a very tight schedule for project design and construction. The close collaboration between BlueStar (Beijing) and Jinan Yuxing Chemical is said to have been key to its success.

Shanxi-Nairit Sells New Products to Overseas Market

Xue Songtao, Shi Shaojun

After the first successful run of Shanxi-Nairit's 30,000 t/a neoprene rubber plant at the end of last year, the company

continued its efforts and produced five product varieties over the following two months, with various technical parameters approaching world class. On March 12th, the first batch of 15 tons of SN232 product was exported to the U.S. Shanxi-Nairit's world-class neoprene research team are headed by three chemical engineering PhDs and equipped with six specialized labs and 30 auxiliary labs. Investment worth RMB7 million has been made in order to purchase state-of-the-art lab equipment for developing new products and making comprehensive improvements to existing products. Neoprene rubber is extraordinarily resistant to heat, weather, friction and oil and finds many use in the production of rubber goods catering to the wire and cable machinery industry, automotive parts, adhesives, etc. Its fireproof, frost-resistant and anti-aging properties make it one of the irreplaceable synthetic products in the rubber industry.

April 2010 7

ISSUE 31 EMPLOYEE WORLD

Spring Approaches with More Greenery

Liming Institute organized over 50 young people for a tree planting expedition at Luo Pu Park, right beside the Luohe River in Luoyang, Henan Province. Following a plan devised by the local landscaping department, Liming Institute planted over 2,700 Boston ivy saplings along the 300-meter-long riverbank. For many years, Liming Institute has planted several thousand trees in local parks as part of its social responsibility.

As spring approaches, a group of Guangxi Dahua employees took part in voluntary tree planting campaign organized in Baise City in Guangxi on March 18th.

Hunan Xiangwei lost no time in engaging in voluntary tree planting activities in early March. Over 9,000 saplings - including camphor trees, sago cycas, sweet osmanthus, blumea hongkongensis, azalea and Boston ivy - were planted.

April 2010 8

ISSUE 31 EMPLOYEE WORLDw

ww

.che

mch

ina.

com

Memories of BlueStar Summer Camp

Scorching Summer SunFeng Tianhan, Beijing camp member

* Feng Tianhan, 19, is currently a junior student at the Tianjin Foreign Studies University. As a veteran camp member, Feng served as an instructor for the BlueStar summer camp last year.

Although I am now a university junior, I still clearly remember attending the 20-day BlueStar summer camps

in each July and August for many years. The BlueStar summer camp was a big part of the most important period of my childhood, from the year I was eight to when I was thirteen. It has left me with so many distinctive memories and brought me so many nourishing elements that still benefit me today. From, what I recall, my coach was very rigorous; I was always told to wash my clothes by myself; my teachers were

always very kind to me; sanitary inspection in the dorms was conducted periodically; campers were required to put on shows for the group at the evening parties; younger campers were always homesick and got disgruntled; our hats always got sweaty every time we drilled and everyone of us always fell fast asleep when we traveled on the bus. Every time the summer camp ended, campers wept in each other's arms, keeping clothes and hats with autographs of all other campers as souvenir. Ten years have elapsed since I first joined the BlueStar summer camp. Now, I have already grown up, but those unforgettable moments stay fresh in my mind just like they happened yesterday. This summer, another group of children will excitedly carry their packs, wear white T-shirts and blue pants, get aboard a bus, say goodbye to their parents and step into the BlueStar summer camp. They will have a very different summer vacation. From here, one after another, groups of children have stepped out, embracing the outside world.

BlueStar Summer Camp, Where My Dreams Came True

Peng Fei, Shenyang camp member

* Peng Fei, 16, is now a student at No.134 Middle School in Shenyang and was a member of the 12th, 13th and 14th BlueStar summer camps.

I used to be an outgoing, careless, nearsighted and spoonfed girl. Whenever I did something,

I preferred to do it all by myself as I believed that any other's involvement would jeopardize

Seeds Find Root and SproutXing Liyu, Guangzhou camp member

* Xing Liyu, 24, is now a graduate student majoring in philosophy at Zhongshan University and was a member of the 11th BlueStar summer camp.

Looking back at the BlueStar summer camp, I still remember sunny and picturesque days and a carefree and energetic

time when I tasted what it meant to be grown up. The BlueStar summer camp brought me so many unforgettable experiences. I am deeply grateful to the summer camp for broadening my horizons, for giving me a great opportunity to make so many good friends, for giving me so many chances to experience a short yet meaningful journey through hardships towards maturity. At this very moment, when looking back on those days I spent in the BlueStar summer camp, I feel so grateful. I think probably this is

because the 20 days of camp life sowed seeds in my young heart, seeds that have taken root and continued to grow.

G e t t i n g i n j u r e d i s n o t n e c e s s a r i l y s o m e t h i n g horrible, but actually another way to grow up.

my plan. In July 2002 I joined the 13th BlueStar summer camp, where every camper had to take good care of him or herself without the help of their parents. The BlueStar summer camp taught me what it means to be self reliant, collaborative and open-minded, and motivated me to learn harder than ever before in order to become someone useful to society. The BlueStar summer camp is a place I lived my dream and flew higher and farther with my friends just like wild geese in the blue sky.