Chairman's Message on the Sustainability Report

Only by Establishing Shared Values can an Enterprise Develop Sustainably for a Long Run.

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 2020 (“FY2020”).

The global economy was badly hit by the unprecedented crisis brought about by the COVID-19 pandemic in 2020. The sharp decline in factory operating rates of the tire industry led to the decrease in demand for rubber chemicals. Coupled with the lower raw material prices compared to the preceding year, the Group’s net profit declined last year. However, despite the unfavourable environment, the Group achieved a new record high in its sales volume and grew market share, by leveraging its competitive advantages in scale, capital, brand, product quality, environmental protection and markets. In 2020, the Group continued to maintain its leadership positions as the world’s largest rubber accelerator producer and China’s largest rubber chemicals enterprise.

The vision of sustainable development is crucial to the Group being able to maintain its leadership position amid intense competition in recent years. Guided by its strategy of “higher sales volume leading to higher production, which in turn stimulates even higher sales”, and in order to meet the market demand for our products and further expand the market share, the Group has formulated a range of expansion plans. This has laid a solid foundation for further growth in market share and long-term sustainable development.

While actively expanding sales, we also demand efficiency from management. Every workshop, department, and person is expected to take necessary steps to lower all types of consumption, control expenses, eliminate wastage, and strengthen its cash flow management. Our employees actively participated and put forward many suggestions in this regard.

Science and technology are productive forces. We must harness scientific and technological innovations to improve productivity. Through technological improvements and effective management, we will be able to yield higher production and lower inventory level. We have also increased our investment in technology innovation during the construction of new projects. The collaboration between our technical staff and universities has resulted in improvements and breakthroughs in the areas of continuous production, energy conservation and reduced water consumption, pre-treatment of wastewater, waste emission reduction, and equipment upgrade.

Environmental protection and safety are the key areas of risk control that remain critical to the company’s development. To ensure normal production, we have implemented a stringent system of “enhancing environmental protection awareness, ensure strict compliance with various regulations, and promote assessment and accountability”. The hard work and active participation of all have paid off to allow the Group to operate free of environmental protection and safety concerns, and thereby raised the overall environmental protection level of the Group.

In 2020, the Group acquired Heze Yongshun Environmental Protection Technology Co., Ltd for a total consideration of RMB 43 million, and invested in a controlled landfill project. These two projects will provide proper treatment and disposal of dangerous waste generated during the manufacture of rubber chemicals, save waste disposal cost, and reduce the environmental risks faced by the Group. In addition, they are able to treat or dispose of the growing amount of solid waste from Heze city which will also bring additional income for the Group.

While further strengthening the management of objectives and improving their implementation, the Group also emphasizes people-oriented practices to enable employees to unleash their capability and potential. Training is conducted to raise employees’ skills. The Group also creates a safe and healthy working environment, and strengthen the corporate culture and cohesion.

Only by establishing shared values can an enterprise develop sustainably in the long run.

We place special emphasis on fostering shared values. Established for more than 40 years and listed for more than 10 years, China Sunsine has been profitable for more than 20 consecutive years. It has paid taxes to the country, and created value for every link in our value chain — customers, enterprises, employees, shareholders, society, the ecology, etc. This was not achieved overnight, but was done with persistence and pragmatism. This approach ensured that the Group could achieve long-term sustainable growth.

We are ready to face any challenges ahead and to welcome a brighter future. We also look forward to your valuable suggestions. Let’s work together, hand-in-hand, to benefit our community and create a better home for all.

Yours sincerely

Xu Cheng Qiu
Executive Chairman
March 2021

Sustainability Report 2020