June 2011

ISSUE 45June

Bluestar Cleaning Enacts Five National StandardsStrategic Alliance for Technical Innovation of Industrial Mold-Proofing and Bacteria-PreventionHaohua Yuhang Chemical Ltd Develops Pioneering TechnologyNew MCRI Coating System Meets Standards

Letter to ChemChina Staff

Thank Your Mother on Mother's Day1

Consolidating Rubber Machinery SubsidiariesZhonghao Chenguang Research Institute Wins National RecognitionGuilin Rubber Machinery Named State-level Innovative EnterpriseChemChina Agrochemical Gets Six-sigma Best Practice Award

4

WCM Program at Nantong PlantAeolus Tyre Helps Canadian Truck Racers WinGuilin Tire Uses Text Messaging to Improve SafetyBluestar Shunyi Employees Donate Goods to Sun Village

Xinghuo Plant Expands Ion Membrane Caustic Soda PlantShandong Dacheng Pesticide Adjusting Product Mix during RelocationShenyang Paraffin Gives SHE System a ReviewAdvanced Tap Water Treatment from Bluestar Environmental Engineering

6

ChemChina's Energy Conservation Awareness WeekChemChina: One of the World's Most Prominent CompaniesChemChina Strategic Agreement with Jinan GovernmentWang Dazhuang and Xiang Xuesong Get National Labor Day Medals

Passionate YouthChemChina Wins Championship at Zhognguancun Badminton Tournament

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ChemChina Safety and Environment Performance Hits TargetChemChina Rubber Assigns ID Cards to TiresChemChina Teleconference on Attracting Outstanding Doctoral Candidates

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Project

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7

Employee World

2

Technology

Events

June 2011

ISSUE 45 LETTER TO CHEMCHINA STAFF

1

Thank Your Mother on Mother's Day

Ladies and gentlemen,

Let me start by telling you a short story: A friend sent me a PowerPoint story about maternal love and it moved me so much that tears came to my eyes as I was finishing it. So, I forwarded it to a few colleagues and

they felt the same way and suggested that I share it with all of you. Maternal love is the most unselfish love on Earth. Parents are always ready to give away everything and sacrifice more if need be just to get what they think is best for their children, in spite of whatever problems they may cause themselves. When their son or daughter grows up and has a career and their own family, how much time do they spend with their parents, in relation to the amount of time they spend on their career and new family? Are they willing to lend a hand or give their aged parents the attention they need? Now, many of our colleagues work from dawn to dusk, even on weekends and holidays and they have to get their elderly parents to look after their new families. Their own parents' efforts and commitment contribute to the "invisible GDP" and should be seen as one of the forces behind our national success. So, in this message, on behalf of ChemChina, I wish to greet all of our mothers and say "thank you" to all of our mothers and am asking you to send flowers to them, cook for them, and say "thank you" to them, no matter how busy you are today. Some people say the Chinese pay a lot of attention to etiquette and filial duty, and the 'Jia He Wan Shi Xing' idea (if the family lives in harmony, everything wil l prosper) has become a part of our company culture. Here, the Jia (or family) is used a metaphor

for ChemChina's big family, and, what applies to the individual, applies to the family, company, community, or country. It's hard to believe that it's possible for a person who neglects his parents and takes their love for granted to be responsible for his own family or the nation. These days, filial behavior is more meaningful than ever, as many Chinese traditions have been l o s t a s more e f fo r t i s s pen t on the economy. According to a Gallup survey, more than 70 percent of Chinese say their lives are unsatisfactory, even miserable. I'm afraid their problem is not with material things, considering the great achievements China has made over the past 30 years. There must be something wrong with our feelings, traditions and culture, including our family relationships and corporate culture. Therefore, we should pay more attention to a harmonious company with improved employee

satisfaction. We should also promote the idea that "we depend on each other to live," which is a principle that each family and every company should uphold. Starting with our parents, we can care for all family members, and we must learn to understand and appreciate others. If we do well with our own family, we will be rewarded by more satisfaction and peace of mind, contributing to a harmonious company and country.

May all our mothers be healthy and happy!

May 6th, 2011

June 2011 2

ISSUE 45 EVENTS

ChemChina's EnergyConservation Awareness Week

Recently, ChemChina issued a corporate circular on the arrangements it had for

National Energy Conservation Awareness Week which runs from June 11 to 17 under the theme "Action Now for A Future Low-carbon Life". Senior management at ChemChina are telling SBUs and ChemChina companies, during this national awareness week, to do the following: publicize energy-saving, low-carbon modes of production, consumption and personal habits; spread the idea of energy efficiency and lower resource consumption; and increase the energy-conservation awareness of ChemChina employees. They also need to sum up the various successful energy-saving efforts under the 11th five-year plan, and make people aware of them. The focus should be on: WCM/continuous improvement; energy saving and emissions-reduction; successful energy-saving technical innovations; and energy efficiency benchmarks at energy-consuming units, to extend ChemChina's energy-conservation efforts.

ChemChina: One of the World's Most Prominent Companies

Ye Jianhua

Global Times newspaper has l isted ChemChina

as one of the world 's 50 most eye-catching Chinese companies during 2010 and 2011. Experts nominated their favorite picks and a final list was drawn up after data from Global Times' Global Public Opinion Poll Survey Center was analyzed.

ChemChina

Strategic Agreement with Jinan Government

Ge Ning

ChemChina signed a strategic partnership agreement with the Jinan municipal government, in Beijing on May 7, concerning construction work and related resource integration for a large

industrial plant in the Jinan Chemical Industrial Park. Secretary of Jinan Party Committee Yan Rongzhu, Jinan Mayor Zhang Jianguo, Deputy Mayor Zhang Zongxiang and ChemChina executives were present at the signing ceremony. The photo shows ChemChina President Ren Jianxin and Jinan Mayor Zhang Jianguo signing the agreement.

Wang Dazhuang and Xiang Xuesong Get National Labor Day Medals

Song Lianqin, Wang Lan

Wang Dazhuang, Bluestar vice-president, Shenyang Chemical's general manager and Party secretary, and Xiang Xuesong, an Aeolus Tyre employee, were both awarded with National Labor Day medals, at a gathering on the

eve of May 1.

Wang has been working with colleagues and subordinates on high-level projects and on implementing corporate his innovation initiatives, while resolving difficulties and sizing up opportunities. As a result of his efforts, the company has improved its product mix, economic scale and operational efficiency. In addition, employees' incomes have gone up substantially, sales revenues have increased by 380%, and profits are up by 350%. The company was named one of the top taxpayers in the city of Shenyang, and in Liaoning province, and recognized for its outstanding contribution to local economic development. Xiang works at Aeolus' Manufacturing Department No1. For the past 16 years, he has made a great difference through his low-profile approach, perseverance, and dedication to his job. He was responsible for making 245,938 tires of various sizes from 2002 and 2010, which was 113,053 tires above his production quota. He met the quality targets for raw tire conformity, first-grade product ratio, and profile analysis. He is the only ChemChina employee to be named "star employee" eight times in a row, and the only tire-manufacturing "technician".

June 2011 3

ISSUE 45 EVENTS

ChemChina Safety and Environment Performance Hits Target

Ji Jianjun

In 2010, ChemChina did the following concerning safety and environment issues: continued to refine its safety rules; installed an SHE management system; standardized

its safety practices and enhanced safety culture; identified and eliminated potential safety hazards; and improved safety performance in accordance with the State Council's Circular on Improving Industrial Safety Performance. As a result, the rate of industrial accidents and the number of work-related fatalities across the entire organization dropped by more than 60 percent, and met the goal of at least a 2 percent decrease in effluent discharges and COD and SO2 emissions.

In addition, ChemChina employees made great efforts to improve safety practices. In particular, management and SHE officers at all levels made every effort to meet the goals of the 11th five-year plan for reducing the number of serious industrial accidents and the volume of effluent discharges and COD and SO2 emissions, thereby contributing significantly to the zero-emissions drive and safety-focused production and operations. However, environmental authorities have identified some problems and issues that still require rectification, such as the number of fatal accidents and volume of effluent discharges.

ChemChina Rubber Assigns ID

Cards to TiresLv Xiaomei

Four ChemChina Rubber companies – Yellow Sea, Aeolus, Double Happiness and Guilin

Tire – have all begun implementing a product traceability system, after Yellow Sea Tire held a meeting recently on the possibility of using a barcode logistics management system. The purpose of this is to get real-time data on each tire's lifecycle and efficient, accurate digital traceability through proven information technology. This is expected to ensure product quality consistency and better after service. This IT system will automatically record data throughout the whole tire manufacturing process to store electronic data on each tire and eliminate some uncertainties in the tire production process. It will also ensure the product quality and remove some drawbacks such as inaccuracy, incompleteness, low traceability and low repeatability in conventional production which uses manual or semi-manual records. This move can significantly improve tire production efficiency and product quality, limit the number of defective products, significantly reduce the return-rate and claims on defective products, and reduce the consumption of human, material and energy resources.

ChemChina Teleconference on Attracting Outstanding

Doctoral CandidatesChen Deliang

ChemChina held a company-wide teleconference on attracting outstanding doctoral students on May 10. Speakers described the rational objectives, and basic

principles of the company's thousand-talented-people program and then went on to elaborate on the mechanism, employment conditions, appraisal, and incentives of the program. ChemChina's leaders gave specific guides for recruiting outstanding doctoral students and details of the basic requirements and employment conditions. Participating companies are told to look for doctoral candidates in strict compliance with the hiring guidelines, including resume screening, interview, testing, physical exam, background validation and registration. ChemChina companies need to follow corporate approval procedures strictly when hiring doctoral students. At the same time, the companies are expected to provide ample career opportunities and assist doctoral employees in their career planning.

June 2011 4

ISSUE 45 EVENTS

Consolidating Rubber Machinery Subsidiaries

Chen Jiansui, Li Zhonghong

The China National Chemical Equipment Corp (CNCE) held a recent meeting at Hunan Yiyang Rubber & Plastics Machinery Group to announce that three of its subsidiaries

- Yiyang Rubber & Plastics Machinery, Guilin Rubber Machinery, and Sanming Chemical Machinery - have been consolidated to make one company. The merger is a strategic move in the domestic rubber machinery manufacturing industry and a firm step toward WCM development. This move will help the company better coordinate resources for a more synergistic effect, and centralize the management of product development, production, marketing, and the supply chain. In this way it can focus on cost reduction and price-performance ratio and look for new opportunities through product innovation, new management approaches, and pooling of talents.

Zhonghao Chenguang Research Institute Wins

National RecognitionWang Yude

Ministry of Science and Technology, State-owned Assets Supervision and Administration

Commission, and All China Federation of Trade Unions recently singled out 153 companies as members of the third group of national innovation-driven enterprises. One of them was Zhonghao Chenguang Research Institute of Chemical Industry.

In July 2009, the Sichuan provincial government designated Zhonghao Chenguang a province-level innovation-driven pilot enterprise. The institute has made greater efforts and put more money into increasing its technical innovation ability since.

Guilin Rubber Machinery Named State-level

Innovative EnterpriseLi Li

Guilin Rubber Machinery was recently added to the third group of State-Level innovation-driven enterprises by the Ministry of Science and

Technology. This means the plant has become a part of the "national team" as an innovative enterprise. Because of this, the company will get national science and technology development program support and generous government support for improving its innovation system, expanding its talent pool, and commercializing its scientific findings. The plant is a pilot company for the national patent protection program. In 2010, it filed 31 patent applications - four for inventions, 27 for utility models – 14 of which were patents granted. Of these, one was for an invention and 13 were utility models. Both the number of applications and the number of patents granted were the highest in the plant's history,. By the end of last year, the company had filed 127 patent applications throughout the company's history and received 95 patents, six of which were for inventions and 89 for utility models. That made it one of ChemChina's most prolific patent generators.

ChemChina Agrochemical Gets Six-sigma Best Practice Award

Cheng Dongming

Three o f ChemCh ina Ag rochemica l Corp ' s accomplishments were designated outstanding

six sigma projects - as part of the 2010 China Quality Association's Quality Technology Awards - at the National Quality Technology Award 2010 Ceremony and the 8th National Six Sigma Conference. The event is organized by the China Association for Quality, China Institute for Quality Excellence and China Council for the Promotion of Six Sigma.

Since the beginning of the continuous improvement project, over 40 senior ChemChina Agrochemical executives have taken part in improvement awareness training classes and the leaders have attended the green-belt training sessions and taken the lead in implementing improvement projects. The green-belt training seminar had 39 employees involved in it (16 of whom then took part in green-to-black belt training sessions), while 179 went through yellow-belt training. So far, the company has implemented13 lean six sigma projects, all of which are moving forward as scheduled and have entered the improvement stage. These projects are expected to increase the company profits by 25.8 million yuan annually when they are completed.

June 2011 5

ISSUE 45 EVENTS

WCM Program at Nantong Plant

Wang Xiaoning

After more than a year of preparation, Nantong Xingchen Synthetic Material Co., Ltd held a

meeting on kicking-off the Bluestar WCM program on April 25. This was the official commencement of the business improvement project aimed at building a WCM enterprise. The Nantong Plant helps workers learn advanced international business practices through two years of continuous improvement and lets them feel the immense potential of improving the plant in production, management, and business strategy. The WCM program involves organizational behavior studies, work-process training, and change-of-plan developments & implementation. The program is set to start on September 5.

Aeolus Tyre Helps Canadian Truck

Racers WinZhu Yudong, Zeng Tao

Aeolus all-steel radial truck tire helped some truck racers win championship in Quebec,

Canada recently thanks to the tires' outstanding road behavior and anti-sideslip performance. This is also the first tournament that Aeolus Tyre has won in North America. This contest is an annual local event, involving ten competitions in 10 different cities, which gives each racer an overall examination of driving skills and vehicle performance. It is very popular with Canadian truck drivers and motor racers. Following this success, Aeolus Tyre may take part in truck tournaments in India and other countries this year.

Guilin Tire Uses Text Messaging to

Improve SafetyYang Bo

Guilin Tire's safety officers have been receiving a continuous stream of safety

reminders via their cell phones since April 6. Guilin Tire required this service from China Telecom's Guilin Branch to help make the company's early warning system more efficient through electronic means. This messaging tool gives safety officers a convenient, efficient line of communication between management and employees and provides a responsive, efficient safety network.

Employees of Bluestar Shunyi Base recently visited Sun Village in Shunyi District where they gave

children there various items such as milk powder, diapers, foodstuff, and other daily-use articles which they purchased with the monetary rewards they got last year. Other items included clothing, toys and books from various homes. The photo shows employees volunteering to work at the village. Photo by Guo Qiang.

Bluestar Shunyi Employees Donate Goods to

Sun Village

June 2011 6

ISSUE 45 PROJECT

inghuo Plant Expands IonMembrane Caustic Soda Plant

Du Yanqing

Jiangxi Xinghuo Organic Silicone Plant began a 190-million-yuan expansion project at its 50,000 t/a ion membrane caustic soda plant on April 21. It is expected to be completed in October and go into operation in December. That will increase the plant's annual ion membrane caustic soda output from the current 70,000 t/a to 120,000 t/a. The project provides support for a 200,000-t/a silicone plant expansion and reconstruction project that is being serviced by Bluestar (Beijing) Chemical Machinery Co., Ltd and Changsha Design and Research Institute. They are the general contractors under Changsha Huaxing Construction Supervision Co., Ltd's supervision, and are using a state-of-the-art membrane polar pitch repolarization natural cycle electrolytic tank. The project is expected to result in considerable economic and social benefits.

handong Dacheng Pesticide Adjusting Product Mix during Relocation

Sun Fei

Shandong Dacheng Pesticide recently completed its planning on relocation and product make-up and is about to move its premises. At the same time, it has been assessing its safety and environmental performance. The 62-year-old state-owned company is under tremendous safety and environmental protection pressure in the densely populated neighborhood where

it is located. The relocation will provide it with a great opportunity of revitalization by restructuring its product mix and business portfolio, phasing out outmoded equipment, and moving up the value chain by making use of government policies. The plan's Phase I calls for the company to relocate nine plants at total cost of 1.2 billion yuan, which include a 90,000 t/a caustic soda plant, 20,000 t/a DDVP plant, and a 20,000 t/a Dipterex and supporting intermediate plant. One project, involving energy-saving improvements on the 90,000 t/a ion membrane caustic soda plant, was completed by Shandong Dacheng Pesticide and Bluestar (Beijing) through an energy management contract (EMC), the first project of its kind in the domestic chemical industry. Dacheng Pesticide and Bluestar (Beijing) shared a monetary reward the government bestowed for contributing to energy saving and emission reduction.

Bluestar invited Qenos experts to do a review of the SHE management performance of Shenyang Paraffin over the past year, with the reviewers giving strong marks for the company's safety performance and saying that its SHE system functioned properly and that any problems they found could be corrected through company efforts. Following the five SHE system elements the company trains safety officers and people in charge of high-risk jobs through vocational materials, provides special subject training to workshop safety officers, managers and equipment managers, and holds SHE quizzes regularly using its own SHE question bank. Photo by Song Lianqin.

Shenyang Paraffin Gives SHE System a Review

dvanced Tap Water Treatment from Bluestar Environmental Engineering

Wang Yuhong

The Bluestar Environmental Engineering Co., Ltd has completed a safe drinking water project for Shanxi Linfen Water Works Ltd and got project owner's acceptance recently. This project is the largest of its kind in China. Bluestar won the bid for this project last June thanks to its strong abilities and unrelenting efforts. This project produces high-quality drinking water by using new filter membrane separation technology through pressure-driven filtration, separation and desalination, providing safe and high-quality drinking water to the neighborhood. The plant can produce 80,000 tons of drinking water each day.

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June 2011

ISSUE 45 TECHNOLOGY

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Bluestar Cleaning Enacts Five National Standards

Wang Yuhong

Five national standards drafted by Bluestar Environmental Engineering Co., Ltd and China National Bluestar (Group)

Co., Ltd were adopted recently and announced in preparation for implementation. The five are: GB/T25146-2010 Acceptance Specifications for Quality of Chemical Cleaning of Industrial Equipment, GB/T 25147-2010 Method for Determining the Metal Corrosion Rate and Total Corrosion Amount in Chemical Cleaning of Industrial Equipment—Weight Method, GB/T 25148-2010 Method for Determining the Descaling Ratio and Cleaning Ratio, GB/T 25149-2010 Method for Determining the Quality of Carbon Steel Passive Film in Chemical Cleaning of Industrial Equipment—Red Spot Method, and GB/T 25150-2010 Method for Determining the Quality of Austenitic Stainless Steel Passive Film in Chemical Cleaning of Industrial Equipment—Blue Spot Method. These five national standards represent a breakthrough in developing China's cleaning industry, demonstrating Bluestar's many years of effort to help develop the industry and get it onto the right track.

Dong Wansen, Ying Dongmei

Strategic Alliance for Technical Innovation of Industrial Mold-Proofing

and Bacteria-Prevention

Eighteen scientific research institutes, colleges, universities, and major companies engaged in mold-

proofing and bacteria prevention recently established the Strategic Alliance for Technical Innovation of Industrial Mold-Proofing and Bacteria-Prevention. The 18 included Guangdong Provincial Microorganism Research Institute, Nanjing University of Technology, and Beijing Tianqing Chemical Ltd and so on.

Haohua Yuhang Chemical Ltd Develops Pioneering Technology

Shua Xuxiang, Yang Kefei

Haohua Yuhang Chemical Ltd has developed two pioneering technologies – hydrochloric acid technology for reducing

mercury ion discharge, and the saline water hydrochloric acid technology for reducing iodine content during ion membrane caustic soda production. Both have been recognized as provincial-level achievements. The company is the first in the country to acquire such technology. Domestic alkali chlorine manufacturers have long had a problem with the production of a large amount of mercury-laden hydrochloric acid waste in the polyvinyl chloride production process. To reduce the mercury content and recycle it, Haohua Yuhang began treating the mercury-laden hydrochloric acid during the PVC production process in early 2010, using an ion exchange method, and to decontaminate the treated liquid. This reduced mercury content in the used acid from 30mg/L to 0.1mg/L. The project could result in earnings of more than 10 million yuan annually for the company. Haohua Yuhang removes iodine from saline water using a reduction blowdown method in accordance with ion membranes for iodine indicators use. The company also established an online analysis system for tracing amount of iodine in saturated saline water, which is useful for monitoring iodine ions in saline water systems and in normal operation of ion membrane electrolytic tanks. This could possibly result in 3 million yuan in savings each year.

New MCRI Coating System Meets Standards

Cui Lijuan

A coating system that combines epoxy base coating (HJ120) and inorganic zinc primer (HJ302) produced

by Marine Chemical Research Institute (MCRI) recently underwent rigorous testing and got a clear bill of health. It met all test requirements in the IMO MSC.215 (82) vessel ballast chamber protective coating performance standard, which was created by International Marine Organization. The coating system is now eligible for use as a protective coating in ballast chambers. Such a coating protects ballast chambers and vessel bottoms can also be applied to other parts for corrosion protection, with no need for roughening even in cases of coating that exceeds time limits. It can cure under a temperature as low as -5 degrees centigrade. One layer of coating results in a dry film thickness of 150 mm to 200 mm and can be turned into light-colored primer to make it very easy to examine paint film defects and coating damage after application.

Central Research Institute of China Chemical Science and Technology (CRICC) heads the alliance's first executive council, while Beijing Tianqin Chemical Ltd, Kunshan Huaxin Daily-use Chemicals Ltd, Dalian Bai'ao Chemical Ltd, and Nanjing University of Technology are deputy heads. The alliance's secretariat is located at the CRICC and chaired by the deputy president of the institute, Wu Zhenyi. CAS Academician Duan Xue was invited to serve as head of the alliance's expert committee. The alliance's mission is to integrate technical innovation resources in the mold-proofing and bacteria-prevention industry, guide the flow of technological resources to major companies, establish a market-oriented, company-focused technical innovation system that brings together industry, academia and the research community to improve the technical innovation ability of the industry and change China from a major producer of mold-proofing and bacteria-prevention agents to a major developer of mold-proofing and bacteria-prevention technology.

June 2011 8

ISSUE 45 EMPLOYEE WORLD

Passionate YouthOn May 4th, the Youth Day, ChemChina companies held a

variety of events to remind their young employees to pay more attention to history and keep abreast with the times

and make a greater contribution to the organization. Yuxing Chemical's activities covered everything from singing and other contests to ping pong and badminton matches. Young employees were organized to clean up the surrounding area to add a bit of glamour to the upcoming Youth Day. Bluestar (Beijing) held a technical skills contest for young lathe operators from production teams. It was a breathtaking performance in a

stimulating atmosphere, and helped contestants improve their skills while giving everyone present a rewarding experience. As Youth Day approached, Shanxi Synthetic Rubber employees adopted the 5S management approach not only in their jobs but also in their daily lives. Zhenghe Petrochemical held a company-wide basketball competition, involving six teams from subsidiaries and youth league branches. ChemChina Oil & Gas Corp's Daqing Branch got its employees involved in a variety of empowerment initiatives to help them grow, both personally and professionally.

Zhenghe Petrochemical's Youth League Branch holds a basketball match. Photo by Li Xuefeng

Daqing Branch ceremony presents May 4th Youth Medal and marks the start of an group training. Photo by Xing Jiwei

Shanxi Synthetic Rubber brings 5S management practices to daily lives of young workers. Photo by Shi Shaojun

Yuxing Chemical's young employees clean up around the factory premises. Photo by

Ren Chun

Technical skills contest at Bluestar (Beijing). Photo by Kang Jian.

ChemChina Wins Championship at Zhognguancun Badminton Tournament

Photo by Yi Shasha

The ChemChina badminton team was declared the winner at the 4th Harmony Cup badminton team invitational tournament, held by the Z-Park Management

Committee. ChemChina's badminton team members have substantially improved their skills over the past two years. The winners of six males and two females defeated their opponents 3:0 in each qualifying round, and made their way to the top four even without deploying their best line-up. The ChemChina team, with the best company players, defeated Sino Steel's team in the final.