March 2010

ISSUE 30March

Events

ChemChina Secures Sound Start of Business in 2010

1

ChemChina Rubber Corp. Aims at Marketing IntegrationCangzhou Dahua, Chematur Engineering AB Sign Agreement on 100,000 t/a TDI ProjectThird Advanced Chemical Materials Summit to Take Place in Chengdu

4

Spring Festival Gala5-7

ChemChina Holds Point-to-Point Conference Calls with Major PlantsForeign Experts from Jiangxi Xinghuo and Shanxi Rubber Win Commendation

2

Lu Rui and Her Paper-cuts8

Employee World

ChemChina Convenes First Work Conference for Group Administration

3

ChemChina

March 2010

ISSUE 30 EVENTS

1

ChemChina Secures Sound Start of Business in 2010

ChemChina made a good start for the year in January 2010, in terms of production and sales, hopefully creating a strong momentum for the business for the rest of the year. The company achieved sales of

around RMB11.5 billion in the month, 103% better than last year. The operational efficiency of different plants also improved remarkably. All the strategic business units (SBUs) of ChemChina have fully focused on sales, following the launch of its promotional campaign dubbed, "a hundred days of sweat, a whole year's good start" by the group headquarters. The sales competition is now in full swing among the different production sites.

BlueStar for example, whilst promoting sales, is also striving to set up a sound marketing system. The Jiangxi Xinghuo Organic Silicone Plant, taking advantage of its flagship role in the domestic silicone market, has adopted a highly targeted sales strategy aimed at bolstering sliding prices and creating the conditions for a price increase early in the year. Shenyang Chemical Co., Ltd, meanwhile, has enhanced its pricing management and achieved better-than-expected earnings for January. The Nantong Plant, Harbin Petrochemical, BlueStar (Beijing) Chemical Machinery, Beijing Cleaning, China BlueStar International Chemical Company, BlueStar Shandong Dongda Chemical, Jinan Yuxing Chemical, Guangxi Dahua, all initiated a range of flexible sales measures in order to expand their market share and achieve sales and profits both in excess of those forecast.

China Haohua Chemical (Group) Corporation, whilst strengthening sales, carried out similar campaigns to secure a good start to the year in terms of production safety, energy conservation and emission reduction. Taking advantage of its PVC futures business, Haohua took the lead in implementing centralized branding and marketing strategies across East China. Haohua Yuhang Chemical also secured an advantageous market position through its key account and alliance strategy. Dezhou Shihua Chemical successfully implemented an increasingly hands-on management policy by its general manager who added his personal backing to increased market expansion. Taking advantage of the momentum in the urea, melamine and acetic acid markets, Haohua Junhua Chemical stepped up its production scheduling and sales in order to achieve a steady improvement of its operational efficiency. Hebei Shenghua Chemical successfully transformed its sales operational model into one that integrates sales volume, payment and collection time for sales performance assessment. It has developed food-grade caustic soda and HCL with greater added value in the finished products.

At ChemChina Oil & Gas Corporation, the sales force of Huaxing Petrochemical, Changyi Petrochemical and other refineries explored opportunities in the southwest, northwest

and northern areas of China during this year's slow season and partnered with local distributors to enhance competitiveness. To date, five distribution centers are now operational. In a similar fashion, the sales forces of Zhenghe Petrochemical and Jinan Petrochemical looked to develop its interests in oil-rich Northeast China, where they took advantage of the regional price differences to enter into the sector. So far, they have secured new contracts to deliver a proposed 200,000 tons, contributing remarkably to the increased sales of ChemChina Oil & Gas Corp, which has seen sales volume and revenue climbing by 87% and 208% respectively in January compared with the same period last year.

This year has also seen ChemChina Rubber Corporation striving to integrate its increased sales with improved utilization of its overall capacity. Intending to consolidate sales and marketing resources for greater synergy, Aeolus Tyre, Double Happiness Tire and Guilin Rubber have all reorganized to combine their engineering and mechanical tires sales initiatives. This is a key part of the efforts of Double Happiness Tire and Guilin Rubber to tap their spare capacity to increase sales by RMB450 million.

China National Chemical Equipment Corp (CNCE), building on its success in last year's sales campaign, has further optimized the rules of its sales competition and provided breakdowns of targets for all of its 17 subsidiaries. In January, CNCE secured a 29% increase in sales and new orders worth RMB620 million, a rise of 32% y-o-y. Additionally, Sanming Chemical Machinery has been awarded a new order for 48 vulcanizers, which alone contributes almost RMB100 million to the group's sales. The Tianhua Institute won the bid to supply RMB69.75 million of PTA steam-tube rotary dryers to Xianglu Petrochemicals. Its quenching boiler system, designed for and supplied to the 1,000,000 t/a ethylene facility at Tianjin Petrochemicals, is now operating successfully. Chonche Taizhou 7816 secured a RMB25 million contract to supply 7500-ton-grade multi-purpose ships. Meanwhile, CNCE strengthened its market expansion overseas, achieving contracs worth US$12.77 million - or 16% of the year's total.

ChemChina Agrochemical Corporation now takes sales as the first priority for its plants and has been rigorous in relevant performance assessment. The plants have made painstaking efforts to expand foreign markets and prepare for home markets in the first quarter of the year, normally the low season for the agrochemical business. Apart from urea and caustic soda production being suspended at some sites due to shortfalls in the natural gas supply, other businesses are all running at capacity. Sales of TDI and o-toluidine have increased by 160% and 30% respectively, while those of glyphosate, carbofuran and buprofezin have risen by 3, 5 and 3 times respectively.

March 2010 2

ISSUE 30 EVENTS

ChemChina Holds Point-to-Point Conference Calls with Major Plants

Following the working conference of 2009, ChemChina initiated a series of point-to-point conference calls with its major production plants. ChemChina President, Ren

Jianxin, provided instructions and coordination in person for all the different sites to implement concrete measures in order to deliver on the business targets set for 2010. The conference calls were placed with plants of the same or similar businesses from different SBUs at different intervals. This practice is designed to not only improve conferencing efficiency, but also to provide an opportunity for plants under different SBUs to communicate with and learn from each other. Present at the calls were executives and directors from the HQs of ChemChina, SBUs as well as plant managers. During the calls, Mr. Ren emphasized that, while the economy is improving overall, great uncertainties remain. He also called for concerted efforts to guard against the risks and ensure stable and sustained development, while fully anticipating the ongoing difficulties. Mr. Ren stressed the importance of staying focused on the central task of management transformation and working strenuously toward continuous improvement (CI). All managers, from SBUs to direct subsidiaries, from general managers to work team heads, need to be active in continuous improvement, he said. SBUs also need to engage senior advisers to provide specialized CI training for business managers at different levels. Meanwhile, the building of a sound sales system should also be strengthened, Mr. Ren pointed out. SBUs need to engage leading consulting firms to plan for building a sales system that would integrate and solidify the successes and practices of different plants. Account management and after-sales services should be highly valued, he added, in order to satisfy customer demands and create value. He also outlined that the importance of procurement transformation needs being accelerated in order to realize strategic procurement. Explaining his belief, he said: "This in

turn relies partly on accelerated pace in IT construction. To this end, SBUs need to hire and appoint their Chief Information Officers (CIOs) to assist in this task. In addition, the capital management platform at ChemChina Finance Company should be fully leveraged to speed up centralized capital management, reduce financial expenditures and improve the efficiency of capital utilization. "All the plants under the umbrella of ChemChina will be ranked in the future according to profits rather than sales revenues. Plants do not necessarily have to be the biggest but need to be the best in operational efficiency. Therefore, each plant needs to fully tap the potential of its current capacity, optimize human resources and make every effort to improve its earning capability. "Caution needs to be exercised in deciding the expansion of any business along its value chain. Top consulting firms can play their role in helping us find the right orientation. The viability of any project should be based on the potential economic value-added (EVA) it may generate. The EVA-based performance assessment system and all-employee appraisal system need to be established to spur the plants to improve their operation and maximize EVA." Mr. Ren also highlighted the importance of human resource optimization, saying: "SBUs are encouraged to leverage the strength of external advisers in mapping out career development paths for the employees alongside the formulation of complete compensation & benefit and incentive plans. Highly sought-after individuals from across the globe could be introduced as professional managers." Finally, Mr. Ren reaffirmed his resolve to flatten the management hierarchy. According to this policy, a two-tier management system should be implemented at plants wherein work team leaders report directly to the plant manager. In addition, priority should be given to distance vocational education that is tailor-made for work team leaders from central state-owned enterprises (SOEs).

Foreign Experts from Jiangxi Xinghuo and Shanxi Rubber Win Commendation

On the eve of the Spring Festival, thirty employees of Jiangxi Xinghuo Organic Silicone Plant were given

commendations for outstanding performance. Two of the winners were overseas employees - the French BSI senior engineering experts Philippe Thadaume and Jean-Francois Gamet, both of whom work for the company's silicone projects. They are the first foreign experts at the company to receive such a commendation. Mr. Thadaume works as a continuous improvement engineer for the 200,000 t/a organic silicone upstream project, while Mr. Gamet serves as deputy manager of the 120,000 t/a downstream project. Both of them are said to be hard working and devoted and

have made a considerable contribution to the successful implementation of their respective projects by resolving numerous technical problems. After receiving this recognition, they were said to be too delighted to comment, but wore their ribbons of honor for many days at work. Shown in the picture are colleagues of Jean-Francois Gamet congratulating him on his commendation. (Du Yanqing)

The 30,000 t/a chloroprene rubber project, a Sino-Armenian joint venture sited at Shanxi Synthetic

Rubber Group, has now entered the stage of trial production, with additional Armenian technical personnel engaged in the commissioning process. At this year's "best employee" contest, the Armenian expert Artavazd Soghomonyan received an award for his special contribution. Shown in the picture is Mr. Soghomonyan c o n s u l t i n g w i t h other outstanding employees of the c o m p a n y a t t h e meeting venue. (Shi Shaojun)

March 2010 3

ISSUE 30 EVENTS

ChemChina Convenes First Work Conference for Group Administration

On February 27th, ChemChina held its first group administrative work conference including all the staff of ChemChina HQs and executives from SBUs.

In the six years since it was established, ChemChina has been downsizing its organization in order to come into line with modern corporate standards. As a result, the total number of functional departments at ChemChina HQs has been reduced from 14 to 10 while human resource structure, qualifications and management practice have improved remarkably. This work conference is aimed at further improving the work efficiency of ChemChina HQs.

The following organizations made presentations on their organizational structure, functions and responsibilities, major work done in 2009 and areas for improvement and planning for 2010: the General Office, Production & Operation Dept., HR Dept., Financial Dept., Planning & Development Dept., Supervision Dept., PR Dept., Management & Information Dept., Science & Technology Dept. and the Bureau of Internal Affairs.

Following these departmental presentations, ChemChina President Ren Jianxin addressed the conference. According to Mr. Ren, ChemChina has been growing rapidly since its launch in May 2004. Positioned as a company advocating "Traditional Chemicals, Advanced Materials," the company has been expanding in both scale and strength, ranking now 19th among the world's top 100 chemical producers and 28th among the top 500 Chinese companies. It is now the largest Chinese producer of chemical raw materials and products. The company is also one of the five largest

petroleum and chemical businesses in China.

Organizational development at ChemChina HQs has also made great headway alongside its rapid business development. This i s manifested by the improved organizational structure, optimized human resource composition and overall HR quality, enhanced management of functional departments, refined work practices, prominent corporate culture, improved compensation and benefits as well as a positive corporate image that has been widely recognized and well received by society.

Mr. Ren emphasized the importance of all the employees at ChemChina HQs having a thorough understanding of the current situation and further improving the organizational well-being of the business. He said: "Dedication, service awareness and team spirit should be highlighted and encouraged, whilst each individual should improve his self-learning, innovation, coordination, communication and written abilities. A work style embracing diligence, prudence, pragmatism, team play and fair governance should be highly valued and promoted in order to further improve the social image of the company.

"Acting in accord with its people-oriented principle, ChemChina wil l str ive to make further progress in improving compensation and benefits for its employees, creating a sound work environment and providing more training opportunities."

In closing, Mr. Ren urged all the HQs staff to strengthen their awareness of service requirements and responsibility and continue their efforts in the further progress of the company.

March 2010 4

ISSUE 30 EVENTS

ChemChina Rubber Corp.Aims at Marketing

IntegrationWang Hualong

ChemChina Rubber Corporation recently held a meeting to address the need for greater internal coordination,

business realignment, construction of a business platform and necessity of developing a centralized marketing management. Marketing integration is one of the top priorities for ChemChina Rubber Corp this year. In light of the characteristics of the company's OTR (off-the-road) tires, including their high concentration, narrow market and easy combination of companies, as well as the fact that integration will not produce significant impact on existing business interests, ChemChina Rubber Corp's top management has decided to explore marketing integration, starting with OTR tires. Before this, Guilin Rubber and Double Happiness Tire, its two pilot companies, had already begun cooperating in technical dialog and resources sharing in the field of OTR tires. As part of the next step, ChemChina Rubber Corp will accelerate the construction of a marketing platform, set up a sales management center to guide and coordinate all subsidiaries to target common markets and customers and initiate the sharing and unified utilization of market information, production and marketing resources. This will bring synergy into full play and continuously increase market share in order to build the company into a highly profitable and leading rubber and tire maker.

Cangzhou Dahua, Chematur Engineering AB Sign Agreement on 100,000 t/a TDI

ProjectYu Ping

On January 27th, Cangzhou Dahua Co., Ltd announced it had signed a cooperation

agreement with Chematur Engineering AB on a 100,000 t/a TDI project, signaling the official commencement of this project. This project, once put into operation, will increase the company's TDI production capacity to 180,000 t/a, making it the largest TDI producer in the country.

Since 1994 when Cangzhou Dahua first introduced the 20,000 t/a TDI technology from the Swedish company, it has also imported the 30,000 t/a TDI technology and the 50,000 t/a TDI technology from the same partner in more than ten years. The solid partnership has allowed both sides to have a rich experience of cooperation in the formulation of technical plans and equipment installation, creating conditions for accelerating the implementation of the 70,000 t/a TDI project. Cangzhou Dahua's 100,000 t/a TDI project is expected to last 24 months and, once in operation, the plant will generate additional revenues of RMB400 million a year for the company. It will also contribute to the development of the coastal chemical industry cluster in Cangzhou, Hebei Province.

Third Advanced Chemical Materials Summit to Take Place in ChengduThe 3rd International Summit on Advanced Chemical Materials will take place

in Chengdu between May 6th and 8th, under the auspices of the Chengdu Government, ChemChina, DECHEMA, the Association of International Chemical Manufacturers (AICM) and Deutsche Bank. Advanced chemical materials have been included as part of the country's 12th five-year development program for emerging strategic industry. The domestic demand for production capacity and technology in the advanced chemical materials sector is growing rapidly, creating a booming market and unprecedented investment opportunities. This summit will once again be a high-end and cutting-edge meeting and draw together key stakeholders of the advanced chemical material industry to consider the future industrial setup and the development of the industry in China and the globe. This year it will take the theme: "A Guide to New Development for the 12th Five-year Plan Period." The meeting is said to be a great opportunity to explore

possible approaches to development for the industry on the eve of the launch of the nation's 12th five-year development program. This summit will consist of five special forums - Advanced Materials for the Energy Industry, New Biomaterials Development, High-end Advanced Materials Development, a CEO Roundtable Conference, and Industrial R&D and Innovation - for extensive and in-depth analysis of the most-sought-after areas of the advanced materials sector. The CEO Roundtable will draw together decision-makers from both domestic and foreign companies for closed-door discussions, in order to form an industry-wide policy that is likely to be taken seriously as part of any national strategy.

March 2010 5

ISSUE 30 EMPLOYEE WORLD

Spring Festival Gala

On February 11th, ChemChina and its subsidiaries in Beijing held a Spring Festival gala at ChemChina HQs, where its President, Ren Jianxin, delivered an inspiring New Year

congratulatory speech. On behalf of ChemChina, he extended heartfelt thanks to all employees and paid respect to those employees who were still working during the festival. He also wished all employees and their families a pleasant, healthy, happy and peaceful festival. At the gala, all of the departments of ChemChina HQs and its subsidiaries staged a wide range of distinctive performances, all inspired by daily work and life and enchanting the audience.

The children of employees asked President Ren to write down New-Year wishes.

The work report, delivered at each annual working conference, is always the source of buzzwords for all employees. The cross talk performed by the PR Department staff provided a humorous rendition of this year's work report.

A hot dance titled "Nobody," performed by CNCE, also won high praise from all of the audience.

The gala climaxed in an exciting series of songs by BlueStar employees.

The audiences felt as if they had come to the mysterious Qinghai-Tibet Plateau when an exotic dance, entitled "Zhuo Ma," was staged by Haohua staff.

March 2010 6

ISSUE 30 EMPLOYEE WORLD

CNCIC's poem recitation titled "We Fly against the Wind in 2009" reviewed the development of ChemChina in 2009 and

wished the company prosperity in 2010. A drama, "New Journey to the West," performed by staff of ChemChina's Financial Department,

represented ChemChina's ongoing efforts to become a harmonious business.

ChemChina Finance Company's fashion show reflected the evolution of China over the past six decades.

The audience couldn't help but show its delight as one after another fascinating show was staged.

The vivid mime performed by the staff of ChemChina's Management & Information Department, in particular, plunged

the audience into laughter.

The show continued with ChemChina Oil & Gas Corp's jazz dance, generating very strong feeling of vitality

among the audience.

What does ChemChina's work-break exercise look like? Employees of the Production & Operation Department

and the Planning & Development Department of ChemChina showed the audiences the vitality of

ChemChina employees during a work break.

March 2010 7

ISSUE 30 EMPLOYEE WORLD

On New Year 's Eve, BlueStar Harbin Petrochemical 's top management paid a New Year visit to employees who were working on the production lines, thanking them for their hard work and contributions made to the continuous and stable operation of the plants. (Jiang Yu).

On the eve of Spring Festival, Chonche Nanjing 7425 Factory's management paid a New Year visit to retired employees of the company, who seemed glad to hear that the factory's sales target was set at RMB360 million in 2010 and expressed strong confidence in the factory's future. (Shan Chengjun)

Chenguang Institute held a Spring Festival gala, where the leadership and the employees got together to ring in the New Year and ring out the old one. The wonderful stage performances and exciting interactive games lasted throughout the gala, adding a special charm to the occasion and bringing the audience a happy start to the year. (Cheng Limei)

BlueStar Dongda held its 7th evening gathering, where employee performers staged 19 programs with great enthusiasm, including choruses, solos, musical dramas, dances and cross talk. (Zhao Minghua)

On February 2nd, ChemChina Rubber (Guilin) held an exhibition of painting and calligraphy and artworks in celebration of the Spring Festival. On show were 64 photos, 43 paintings and calligraphic works and 72 handmade artworks, attracting numerous employees and their families. (Li Meijun)

March 2010 8

ISSUE 30 EMPLOYEE WORLDw

ww

.che

mch

ina.

com

.cn

Lu Rui and Her Paper-cuts

Lu Rui, a female employee of Aeolus Tyre, submitted a paper-cut, entitled Dancing Lion, to the company's trade union for the fine arts, calligraphy, painting and photography contest.

Lu Rui is a vulcanizing worker with Aeolus Tyre, whose major hobby is paper cutting. Paper cutting is the umbrella term for paper cutting, carving and tearing. Lu Rui loves paper carving, which involves painting, modifying and finalizing selected patterns and removing the unwanted parts with a knife. Lu Rui was fascinated by fine arts in primary school. After entering high school, she not only continued her interest in fine art but also became fascinated with paper cutting. Her father, Lu Jinshui, another employee of Aeolus Tyre, is also fond of art and is well accomplished in clay sculpture, woodcarving and seal cutting. When he found his daughter was interested in paper cutting, he frequently guided her. All her family members supported her and bought her paper-cutting books, drawing materials and various knives. Her father even made knives himself when the required knives were unavailable in the market. As a result of this family influence, Lu Rui often immersed herself in painting, drawing and carving after school. She frequently buried herself in piles of paper in her room after school. When her family came back from a summertime outdoor stroll they would often find her still busy at her artwork without having bothered to have dinner. In August 1995, Lu Rui completed her vocational school and became a vulcanizing worker. She studied new techniques diligently after work, setting herself a high standard. After many years of hard work, she received many honorable titles, including model worker, star employee and master craftsman from the company due to her outstanding performance. In April 2008, she was transferred from the bias tire division to the current radial tire division due to the operational needs of the company. At the end of that year, she was rated as the outstanding employee of the company. Nowadays, Lu Rui still works on her paper-cutting art, attentively carving her favorite works alone at home during her spare time. After years of study, Lu Rui has mastered the art of paper cutting and is capable of making her own innovations. Her paper-cut works of figures, animals, flowers, birds, fishes and insects are lifelike. At her wedding ceremony in October 1999, Lu Rui pasted many of her paper-cut works into her new house, adding luster to her wedding day. In addition to entertaining her family, she sent her works to painting or calligraphy competitions in the company every year and has won awards many times. Ten years later, Lu Rui still loves and pursues the art of paper-cutting.