Chairman's Address

Dear shareholders:​

2020 is an extraordinary year, which is a long journey full of hardships. In the past one year, COVID-19 has spread all over the world, the terminal demand has dropped sharply, the international oil prices have remained low, the plastic bans have emerged and climate change is getting more and more attention, all of which have brought about significant and far-reaching impact on the future of the petrochemical industry, and the entire industry has faced unprecedented complicated business environment. However long the road is, a persistent walker can always reach the destination. During the spread of the epidemic, shouldering the responsibility of acting as one of China’s largest suppliers of medical and health materials, we managed to develop and switch to the production of special materials for melt-blown fabric within 12 days, ensuring the supply of medical materials in a timely manner in contribution to the prevention and control of the epidemic. During the regular prevention and control of epidemic, we actively promoted the work and production resumption of upstream and downstream industries as well as medium and small enterprises to boost the stability of the industrial chain and supply chain. In daily operations, closely focusing on the major needs of the state's highquality development and the people’s desire for a better life, we firmly established the concept of “challenging the advanced level and benchmarking the highest standard“, shared the same target at all levels and made concerted efforts. As a result, we achieved the operation revenue of 74.705 billion RMB and made total tax payment of 15.119 billion RMB. The operating performance was better than expected, and the targets set in the “13th Five-Year Plan” were successfully hit.

We insisted on transformation and development. Following the new development concept of “one flagship, one core, and one base”, we accelerated the pace of industrial transformation and upgrade. The refining sector focused on promoting clean production and product mix optimization and modification. Adhering to the development orientation of “basics + high-end” and with a focus on carbon fiber, the chemical and materials sector developed elastomers, polyolefins, polyesters and new materials, and actively explored new energy businesses. With constant emerging of star products, such as 48K large tow carbon fiber, cutting-edge hightoughness polyester engineering plastics, high-density polyethylene “black material”, we provide customers with advanced high valueadded raw materials and solutions.

We insisted on innovative development. With a technologyleading company as the target, we founded an advanced materials innovation research institute to start a new journey of technological innovation; we benchmarked world-class technology management and created a more flexible and efficient technological innovation management system. Focusing on breakthroughs in key core technologies and strengthening core technological research of carbon fiber, we have obtained proprietary intellectual property rights of carbon fiber precursors and packaged technologies, and have possessed 165 carbon fiber related patents; we strengthened industrial strategic cooperation and innovation, and promoted capitalization and industrialization of technological innovation.

We insisted on green development. With “cleanness, highefficiency, low-carbon, and recycling” as essential characteristics, with the most advanced environmental indicators, the most stringent quality indicators, and the most efficient energy consumption indicators as the standards, we further promoted green enterprise construction. We strengthened the innovation, promotion and application of green clean processes and new technologies, focused on source prevention and control, process control, and integrated treatment; we established a boundary pollutant alarm and odor traceability work mechanism, and the boundary VOCs concentration has been close to the level of chemical parks in developed countries; we promoted the Process Safety Management system (PSM) in an all-around way, achieving safer and more stable production and operation; we conducted the establishment of “green base”, and 47% of SPC’s basic units have completed the establishment.

We insisted on shared development. We upheld the “people foremost” concept, respected the individuality of employees, safeguarded the vital interests of employees, and significantly improved corporate cohesion; we safeguarded the rights and interests of investors and shared the corporate development achievements with stakeholders.

We insisted on integrated development. We proactively involve ourselves in the construction of Shanghai Science and Technology Innovation Center, and focused on making key and core technological breakthrough and industrial innovation; we proactively got involved in the construction of Shanghai “Carbon Valley Green Bay” carbon fiber industrial cluster area and participated in the construction of Shanghai 10 billion-level carbon fiber composite industrial cluster; we promoted the integrated development of enterprise and local government for high-end new materials industry and improved the energy level of regional industrial development.

We insisted on benchmarking against world-class standards and accelerated the development of a market entity with core competitiveness. In 2020, SPC was granted the title of National Civilized Enterprise for six consecutive sessions, the honorary titles such as “CIIF New Material Award” of the 22nd China International Industry Fair, Class A evaluation of Shanghai Stock Exchange information disclosure, “Gold Award of Panoramic Investor Relations (2019)-Outstanding IR (Investor Relations) Enterprise”. “If you persist in doing it regardless of any difficulty, you will achieve success sometime.” We are firmly moving towards the vision of “leading domestically, first-class globally” energy, chemical and new material enterprise. Please support us as always.

2021 is the starting year of the “14th Five-Year Plan” and also a crucial year for SPC to achieve high-quality sustainable development. At the beginning of the new year, as a major industrial project in Shanghai, the “SPC’s 12,000 t/a 48K Large Tow Carbon Fiber Project” officially started construction. Our large tow carbon fiber has successfully embarked on the road of large-scale production from R&D and trial production. At a new starting point, carrying the great mission of “substituting imported products with domestic products and promoting ‘Made in China’”, we will work hard and spare no effort to move forward.​​