Chairman's Message on the Sustainability Report

Strive to be people-oriented and establish shared values, so as to realise customer value and social value.

On behalf of the Board, I am pleased to present the sustainability report of China Sunsine Chemical Holdings Ltd. (“China Sunsine”, together with its subsidiaries, collectively the “Group”) for the financial year ended on 31 December 2021 (“FY2021”).

In 2021, although the global economy was still affected by the COVID-19 pandemic, it was gradually recovering from the economic trough in 2020. Tyre manufacturers, especially overseas ones, had gradually started increasing their production volume, resulting in a higher demand for our products. Prices were further pushed up due to market fluctuations in the price of crude oil, resulting in an overall improvement in the profitability of the industry. Leveraging its competitive advantages in scale, capital, brand, product quality, environmental protection and technology, the Group reached another new record in sales volume and achieved greater market share. The Group maintained its leading position as the world’s largest rubber accelerator producer and China’s largest rubber chemicals enterprise. The Group also further increased its competitive advantage over its peers in the industry

Sustainable development is key to maintain the Group’s leading position. The Group’s expansion plans, guided by the strategy of “higher sales volume leading to higher production, which in turn stimulates even higher sales”, are progressively being implemented to satisfy market demands for our products and to further increase our market share.

During 2021, the 30,000 tonnes Insoluble Sulphur project was completed and officially put into operation at the end of the year; the construction of the 30,000 tonnes anti-oxidant TMQ project had also been completed and currently pending government approval for trial production; the 50,000 tonnes phase I of the controlled landfill project has been completed and put into operation, and the construction of another 50,000 tonnes (phase II) has also commenced.

New projects are also in the development and incubation phase. Relying on the Group’s competitive advantages in the industry (arising from its financial and market strength), the Group was able to make strategically forward-looking business plans by accurately anticipating market demands, further strengthening its foothold as the top rubber chemical manufacturer in the industry.

Even as the Group maintained an active oversight over its production, construction, and operational needs, it continued to make strides in the development and management of technological advances.

The Group has set up an academic workstation in collaboration with Tsinghua University to develop and improve the production process relating to the continuous production of accelerator MBT. The Group’s R&D centre has also achieved impressive results in the improvement of TMQ quality, the modification of PSA hydrogen extraction units, and the reduction of DPG wastewater.

We demand creativity and productivity from management. The Group expects all staff, workshops and departments to imbibe the culture of reducing consumption, controlling expenses, eliminating wastage, and plugging any operational gaps in the system.

We continue to face considerable external risks arising mainly from the inherent risks within the chemical industry environment that we operate in, and a complex and uncertain environment fuelled by persistent concerns of a pandemic re-emergence, shrinking demand, volatile fluctuations in the prices of raw materials and foreign exchange rates; and also considerable internal risks arising from the need to ensure compliance with environmental regulations, and maintaining a healthy and safe work force and operating environment.

The Group places much emphasis on the need to raise risk awareness amongst staff and improving early detection and prevention capabilities. When necessary, staff must also be able to respond in an accurate and systematic manner in order to minimise financial and operational impact. Hence, the Group has enhanced the training curriculum in risk awareness and management, on-the-job training and developed a system of checks. Through collective efforts, the Group has strengthened its risk awareness and management abilities. We are proud to report that in 2021, the Group’s business and operations had not been impacted by any safety or environment related situations, and enjoyed a steady improvement in its safety and environment protection record.

Lastly, and most importantly, the Group’s focus remains people-centric and grounded on establishing shared values with a common objective towards maximising customer and social values.

It is both our corporate and the personal mission of every staff to create value for our customers – and we achieve this by being a reliable, long-term supplier of reasonably-priced and quality products, with impeccable after sales service.

It is also our responsibility to create value for our society and we achieve this by ensuring that we consider the impact and benefits in everything we do to our country, our company, our staff, our shareholders and our society in general.

We are consistently striving for sustainable progress and we look forward to you joining us on our journey towards building a glorious sustainable future for China Sunsine!

Yours sincerely

Xu Cheng Qiu
Executive Chairman
April 2022

Sustainability Report 2021