ºãÒÝʯ»¯£º2021Äê¶ÈÉç»áÔðÈα¨¸æ£¨Ó¢Îİ棩

One of the world-class green petrochemical

enterprises respected by society

Hengyi Petrochemical Co., Ltd.

Social Responsibility Report

Hengyi Petrochemical Co., Ltd.

One of the world-class green petrochemical

enterprises respected by society

About This ReportPurpose of the ReportThis report is prepared to properly communicate with stakeholders regarding aspects including the concept ofCSR of Hengyi Petrochemical Co., Ltd. and its corresponding performance, and respond systematically to theexpectations and requirements of stakeholders.Release CycleThis is an annual corporate social responsibility report and the third of its kind issued by Hengyi Petrochemical Co.,Ltd. after its listing.Reporting Period

The reporting period is from January 1, 2021 to December 31, 2021. However, in order to enhance the comparabilityand completeness of the report, part of the information is retrospective to previous years or extended to 2022.Reporting DataIf there is any discrepancy between the ?nancial data disclosed in this report and those in the annual report, theannual report shall prevail. Other data is from the Company's internal statistics. Unless otherwise speci?ed, thecurrency of denomination in this report is "RMB".Preparation BasisThe United Nations Sustainable Development Goals (SDGs) for 2030GRI Standards by Global Sustainability Standards BoardISO 26000:2010 - Guidance on Social Responsibility by International Organization for StandardizationChina National Standard GB/T 36000 - 2015 Guidance on Social ResponsibilityGuidelines for the Preparation of Social Responsibility Reports for Chinese Enterprises (CASS-CSR 4.0) by ChineseAcademy of Social SciencesGuiding Opinions on Better Ful?lling Social Responsibilities of State-owned Enterprises by the State-owned AssetsSupervision and Administration Commission (SASAC) of the State CouncilGuidelines of the Shenzhen Stock Exchange for Standardized Operation of Companies Listed on the Main Board bythe Shenzhen Stock Exchange (2020 Revision)Reporting CommitmentsThis report was compiled by the social responsibility reporting team of Hengyi Petrochemical, reviewed bythe Company's relevant senior executives, and approved by the Company's Board of Directors and Board ofSupervisors. Hengyi Petrochemical hereby certifies that the report does not contain any false or misleadingstatements.How to View ReportThis report was prepared in both Chinese and English. The electronic report is available on Hengyi Petrochemical'swebsite at www.hengyishihua.com and CNINFO at www.cninfo.com.cn.

Contents

01 About This Report04 Message from the Chairman06 About Hengyi Petrochemical

20 Corporate Governance22 Compliance Operation24 Investor Management

Governance Escorts theCentury-old Business

Innovation to Enhancethe Value of theIndustry30 Focusing on Quality:

Promoting High-QualityDevelopment34 Product Development:

Building an IndustryBenchmark42 Digital Innovation: Boosting

Intelligent Control46 Supply Chain Integration:

Creating a C2M Closed Loop

Topic 1

08 Building a Dream on an Isolated Islandto Build the Belt and Road TogetherTopic 212 Motivating Employees ad SharingDevelopment to Create a Model ofCommon ProsperityTopic 314 Practicing the Double Carbon Targetto Boost Green Development

Responsibility

77 Indicator Index78 Feedback

60 Employee Rights and Interests64 Career Development68 Employee Caring

Empowering Employeesand Creating a SustainableWorkplace

50 HSE Management51 Risk Management52 Safety Production54 Environmental Protection

Guaranteeing HSE toBuild a Green HomeTogether

74 Education Support75 Pandemic Prevention andControl

Contribution to Society

Message from the Chairman

The year 2021 was the 100th anniversary of the founding of the Communist Party of China. It was also the firstyear of China's 14th Five-Year Plan. In this new historical starting point, Hengyi Petrochemical, guided by the highquality development goal in the next ?ve years, actively responded to and implemented national strategies, soughtdevelopment opportunities in this era, promoted scienti?c and technological innovation, and constantly developedthe spirit of hard work and entrepreneurship, striving forward with encourage and its own mission.Building a Dream on an Isolated Island to Build the Belt and Road TogetherIn the past year, we continued to focus on the Brunei project to promote the in-depth and solid co-building of theBelt and Road. As a key project of the Belt and Road, the Hengyi (Brunei) PMB Petrochemical Project continuouslydrives the development of local companies and supports the growth of local youth, e?ectively achieving mutualbenefit of the Company and local stakeholders and promoting the diversification of Brunei's economy andeconomic and trade development between both countries.Practicing the People-Oriented Principle to Pursue Common ProsperityIn the past year, we firmly adhered to the "people-oriented" principle to promote common prosperity of allemployees in high-quality development. The Company launched the fourth employee stock ownership plan andthe second share repurchase plan, combined with the executive incentive plan, to fully arouse the enthusiasm,initiative and creativity of employees and share the fruits of the Company's development with employees.

Energy Conservation and Emission Reduction to Implement the Action of Double Carbon Target

In the past year, we actively responded to the policy and practiced the "Double Carbon" strategy to achieve thetarget of energy conservation and emission reduction. The Company, according to the national requirement forplanned power consumption, upgraded and transformed related technologies such as equipment, productionlines and processes, so as to achieve the purpose of energy conservation and emission reduction. Meanwhile,to implement the national strategic targets of "Double Carbon" and "Green Production", the Company activelydevelops new energy, promotes the application of waste heat recovery technology, and implements measures suchas 100% coverage of photovoltaic power generation on the roof of the factory area to continuously promote greenproduction, so as to reduce carbon emissions.Governance Escorts the Century-old Business

In the past year, we enhanced corporate governance, adhered to compliance operation, and e?ectively protectedshareholders' equity. Through measures such as improving the internal control system and strengthening the auditof key operations and engineering, the Company continuously deepened compliance operation and reduced theprobability of occurrence of various risks; harboring responsibility for shareholders and creditors, the Companybroadened the communication channels of investors, provided stable and lasting returns to investors based on theconcept of returning to shareholders, and shared the fruits of the Company's development with investors.

Innovation to Enhance the Value of the Industry

In the past year, we persisted in research and development innovation, built high-quality products and continuedto promote digital transformation. The Company is committed to enhancing the value of the industry throughinnovation, actively advances industry-university-research cooperation, and completes "polyester" and"polyamide" dual industry chain, promoting the building of a high-quality industrial ecosystem. To promote digitaltransformation and intelligent manufacturing and achieve the management of the whole process of supply chain,the Company has accelerated digital innovation and built and improved the intelligent information platform. Thisgradually realizes intelligent manufacturing, systematic customer service and digital corporate management,constantly improves customer satisfaction and industry productivity and promotes ecological industrydevelopment.

Adhering to Safety and Environmental Protection to Build a Green EcologyIn the past year, we strengthened safety production, deepened environmental governance, and persisted in thedevelopment of a green economy. The Company, sticking to the safety and environmental work guideline of "safetyfirst, focusing on prevention, integrated control and people-oriented", improves the HSE (Health, Safety andEnvironment) management system, continuously promotes the safety production standardization, actively carriesout the resource and energy conservation action, and constantly deepens pollution and waste governance; theEticont series antimony-free environment-friendly green products developed by the Company can fundamentallysolve environmental pollution and contributes to the sustainable development.Carrying out Charity and Public Welfare to Build a Harmonious Home TogetherIn the past year, we provided support for education and pandemic prevention and control, and contributed to socialprogress. The Company always ful?lls its corporate social public responsibility and actively participates in publicbene?t activities such as education and poverty alleviation, and COVID-19 prevention and control to enhance socialhappiness and build a harmonious home.Hengyi keeps its original faith and ambition. The Company will continue to ful?ll its corporate social responsibilityand strengthen the sense of responsibility, making more contributions to the sustainable development of theenvironment, the civilization and progress of the society, and the healthy development of the industry.

Chairman: Qiu Yibo

About Hengyi Petrochemical

Hengyi Petrochemical (Stock Code: 000703), adhering to the responsibility vision of building a ¡°world-class greenpetrochemical company respectable in the society¡±, is committed to becoming a leading digital chemical fibergroup in China and the world. The Company has developed into a world-leading company integrating industrychain of ¡°crude oil-aromatic hydrocarbons (PX, benzene)-petrochemical products (PTA, PIA, CPL)-polyesters(filament, staple fiber, bottle grade)¡±, developed a unique ¡°polyester + polyamide¡± driving mode, and builta multi-level three-dimensional industrial layout with petrochemical industry chain as the core business anddi?erentiated ?ber products and industrial intelligent technology application as the emerging business to promotethe high-quality and leapfrog development of the Company.

Indicating operations in ChinaIndicating operations in Brunei

Indicating future operationsIndicating downstream applicationsa

Petroleum

Polyethyleneterephthalate PET

Textile, clothing, home textile and other weaving ?elds

Polypropylene

Polyethylene

Ethyleneglycol MEG

Purified terephthalic

acid PET

¼º¾Ûõ£°·CPL

Polyamide PAPolyamide chipBottle grade chip

Draw texturedyarn DTYPolyester?lament FDY

Polyester?lament POY

Polyesterstaple ?ber

Re?ned oil products

DieselGasolineKerosene

Ole?n

PropyleneEthylenep-Xylene PXBenzene

Aromatic hydrocarbon

Re?ned oil

Petrifaction

Chemical ?ber

Polyester industry chain

Re?ning-chemical integration

Polyamide industry chainCaprolactam CPL

Main Products

Focusing on the strategic guideline of "consolidating, highlighting and improving the competitiveness of main operations",the Company works with strategic partners for mutual advantages, and continuously develops its operations to the upstreampetrochemical industry chain. By continuously enriching product ranges and optimizing product structure, the Company alsoe?ectively improves the core competitiveness of main operations, the pro?tability of industry chain products and the abilityto withstand market risks. As of the end of the reporting period, the Company's main products included re?ned oil productssuch as gasoline, diesel and kerosene; petrochemicals such as p-xylene (PX), benzene, puri?ed terephthalic acid (PTA) andcaprolactam (CPL); chemical ?bers such as polyester pre-oriented yarn (POY), fully drawn yarn (FDY), draw textured yarn (DTY),polyester staple ?ber (PSF), polyester (PET) chip and polyester bottle chip. Chemical material products are widely used in therigid demand concerning national economy and people's livelihood.

Focused Direction

The Company continues to increaseresearch inputs to strengthen newproduct development, resourceintegration and market exploitation,and is in active response to thenational strategic targets to peakcarbon dioxide emissions andachieve carbon neutrality under theguidance of "green manufacturing"and "cyclic economy". During thereporting period, the Companyactively built a high-quality industrialecosystem, and was committed todi?erentiated product development,intelligent manufacturing, systematiccustomer service and digital corporatemanagement, continuously promotingthe Company's scienti?c andtechnological innovation and serviceinnovation. Meanwhile, throughcollaborative innovation, the Companybuilds an emerging industry-university-research-application technologyinnovation platform to boostindustry-university-research win-wincooperation and sharing of scienti?cand technological resources.

ProductRe?ned oilproduct

PXPTPIAPOYFDYDTYCPLPolyesterstaple?berPolyesterchipPolyesterbottle chip

Application AreaIt is mainly used as fuel for fuel oil power equipment and heat supply; fuel forautomobiles, motorcycles, speedboats, helicopters, agricultural and forestryairplanes, vehicles with diesel engines (including trains), ships and dieselboilers.It is a kind of hydrocarbon, colorless and clear liquid, with extensive use, amain raw material for producing purified terephthalic acid (PTA), and also usedfor synthesis of plastics, drugs, pesticides and other substances.It is mainly used for producing polyester products, widely used in clothing,decoration, electronics, buildings and other aspects of the national economy.75% for polyester fiber, 20% for bottle grade polyester, 5% for film gradepolyester, and downstream products mainly for civil use.PIA is a white crystalline powder or needle crystal. It is used to producealkyd resin, unsaturated polyester resin (UPR) and other high polyesters andplasticizers; it is also used in the production of filmstrip color developmentpoles, painting, polyester fiber dye modifiers and medicines.It can be used for reprocessing DTY and fiber productswith special styles, and is widely used in clothing andindustrial fields.It is directly used for weaving, such as clothes anddecorative fabrics. It is widely used in clothing andindustrial fields, and also used as raw materials ofisolation articles such as protective suit.It is directly used for weaving, and is widely used inclothing and industrial fields, and clothing fabrics andlining.It is mainly used for producing polyamide fibers,engineering plastics, plastic films and so on, and iswidely used in industrial and civilian fields.It is mainly used in spinning, non-woven, ?lling and otherfields, of which non-woven fabrics can be used as rawmaterials of masks; it can also be used for downstreamdisinfectant wipes, disposable protective articles and so on.It is widely used in indirect spinning, the production oftextile materials such as filament and staple fiber, andcasting of plastic strips and other products.It is mainly used in food packaging such as coke bottles,beverage bottles, water bottles and oil bottles.

Building a Dream on an Isolated Island andDevelop Together to Build the Belt and RoadTogether

Through the Hengyi (Brunei) Pulau Muara Besar Petrochemical Project, Hengyi Petrochemical actively ful?lledits corporate social responsibility by adhering to sincere mutual respect and universal bene?ts and ramping upmutual bene?t and intertwined interests, so as to promote the in-depth and solid co-building of the Belt andRoad and bene?t the people.The Hengyi (Brunei) PMB Petrochemical Project is an integrated re?nery and chemical project that uses crude oiland condensate as raw materials. It is a key project of China¡¯s Belt and Road Initiative and a Sino-Brunei ?agshipproject. In November 2018, Chinese President Xi Jinping paid a state visit to Brunei. During this period, the Hengyi(Brunei) PMB Petrochemical Project was included in the Joint Statement of the People¡¯s Republic of China andBrunei Darussalam.Hengyi (Brunei) PMB Petrochemical Project had a total investment of USD 3.45 billion in the ?rst phase, which wassuccessfully put into operation in November 2019. It has thoroughly taken the ?nal steps in the whole petrochemicaland chemical ?ber industry chain and thus established new records in the global petrochemical industry with theshortest time, most stable process and the best HSE performance in commissioning test runs among mega-capacityoil re?neries.

Topic 1

Project Full Name:Hengyi (Brunei) Pulau Muara Besar Petrochemical ProjectProject Location: Pulau Muara Besar (PMB for short), Brunei Darussalam, BruneiPartners: Hengyi Petrochemical and the government of Brunei

A key project of China's Belt and Road InitiativeThe largest overseas investment construction project of China's private enterprises so farThe largest overseas direct investment project in Brunei in recent yearsA Sino-Brunei ?agship project according to Xi Jinping, the president of ChinaGold Medal of National High-Quality Project in 2020-2021Included inFrom Freehand Brushwork to Elaborate-Style Painting: Theory and Practice ofthe Belt and Road Initiative, Tsinghua University's series of books for lifelong learning

ProjectIntroduction

Project

Honors

Qian Keming, Vice Minister of Commerce,visited the project site during the reporting period

Petrochemical units such as 8 Mt/a atmospheric and vacuum distillation unit, 3.3 Mt/areforming unit, 2.2 Mt/a hydrocracker, 1.5 Mt/a single series aromatics combination unit,

2.2 Mt/a diesel hydrogenation unit, 1.28 Mt/a aviation kerosene hydrogenation unit, 1 Mt/

a flexible coking unit, 120 Kt/a sulfur recovery unit, light naphtha isomerization unit and180 Kt/a Nm3/h PSA, as well as terminals, tank farm, seawater desalination and othersupportive utility works have been constructed. The total production capacity of re?ned oil isapproximately 6 Mt/year. This includes gasoline capacity of approximately 2.7 Mt/year, dieselcapacity of approximately 1.75 Mt/year and kerosene capacity of approximately 1.25Mt/year.

ProjectOverview

Nestling in a blue bay at the northeast corner of Bandar Seri Begawan, the capital of Brunei, is the Pulau Muara Besar (PMB).With the joint e?orts of Hengyi Petrochemical and the government and peoples of Brunei, a world-class petrochemicalindustry base is successfully put into operation on the island.Ships come and go on the busy Brunei Bay. The PMB about ?ve kilometers from land is prosperous and bustling: tall andstraight petrochemical units climb into the sky, and huge silvery pipelines glisten in the sun. This is the Hengyi (Brunei)PMB Petrochemical Project, one of Sino-Brunei flagship projects and China's largest investment project in Brunei. TheHengyi (Brunei) PMB Petrochemical Project succeeded the ?rst time in commissioning test runs in November 2019 and putinto commercial operation in the ?rst phase, which established a new benchmark for the internationalization of China'spetrochemical industry, promoted the diversi?cation of Brunei's economy, and created a model for win-win cooperationbetween China and Brunei.

Building a Dream on a Sea Island and Bearing the Aspiration of Development

To ensure international competitiveness, the Hengyi (Brunei) PMBPetrochemical Project introduced the world's largest monomersingle-series aromatic hydrocarbon unit and the world's sixth?exicoking process unit in the ?rst phase, and achieved a constructionspeed comparable to that of similar projects in China throughscienti?c management and strict organization. "China Wisdom" and"China Quality" add new impetus to the development of its SoutheastAsian neighbor where water is more expensive than oil.As one of the key projects of the Belt and Road Initiative, the Hengyi(Brunei) PMB Petrochemical Project has not only ramped up mutualbenefit and intertwined interests of local stakeholders over thepast two years after completion, but also brought practical socialbenefits and well-being to both peoples, further laying a solidfoundation for deepening cooperation and promoting commonprosperity between both countries across the board.

Driving the Development of Local Companies

During the construction and operation period, the Hengyi (Brunei) PMB Petrochemical Project has supported anddriven the development of local SMEs, maximized economic growth and created more indirect jobs for Bruneipeople. By the end of the reporting period, during the ?rst phase (construction stage) of the project, a total of 109local Brunei suppliers won bids for project contracts, involving local payments of BND 515 million (about RMB 2.385billion) in engineering services, material procurement, import and export logistics, etc., representing 15% of thetotal payment amount.

Supporting the Growth of Local Youth

To bring the benefits of the project across Brunei for a long time, the Company has established a harmoniousrelationship for mutual promotion with Brunei. While actively employing local labor to ful?l its commitment of a40% localization rate at the early stage of operation, Hengyi has laid down a localization strategy to implement thelong-term joint training and scholarship program for local chemical talents and channel greater e?orts in cultivatinglocal elites as a contribution to Brunei's Vision 2035.

Three China-Brunei joint scholarship programs

In March 2014In March 2018In March 2020

In March 2014, the ZhejiangUniversity-Universiti BruneiDarussalam-Hengyi program waslaunched

In March 2018, the LanzhouPetrochemical College of VocationalTechnology-Institute of BruneiTechnical Education (IBTE)-Hengyiwas launched

In March 2020, the LanzhouPetrochemical College of VocationalTechnology-Brunei University ofTechnology (BUT)-Hengyi waslaunched

Measures to support the growth of local youth

In 2012, Hengyi completed the joint venture on the strategic investment fund with the Ministryof Finance and Economy Brunei DarussalamEvery year Hengyi provides 10-15 intern vacancies and 203 scholarships for local students fromUniversiti Brunei Darussalam (UBD), University of Technology Brunei, etc.Since 2020, Hengyi has ramped up cooperation with local colleges through joint cultivationprograms in eight majors for future internship and employment opportunities

Renewal Signing Ceremony of Zhejiang University-UBD-Hengyi Chemical Talent Joint Training Program

IBTE students studied at Lanzhou Petrochemical College of Vocational Technology

The joint scholarship program has witnessed

Bruneian students awarded scholarships,

of whichhave completed their studies and obtained full-time jobs in the Hengyi (Brunei) PMB Petrochemical Project.

Key Performance

To further implement the Company¡¯s employee motivation policy and build the Company into a practicalmodel unit of common prosperity, Hengyi Petrochemical lunched the fourth employee stock ownership plan andthe second share repurchase plan, combined with the executive incentive plan, truly creating value and sharingdevelopment with employees.

Motivating Employees and Sharing Developmentto Create a Model of Common Prosperity

Topic 2

Employee Stock Ownership

In order to practice the people-oriented principle, fully arouse the enthusiasm and creativity of employees,continuously attract and retain excellent management talents and business elites in the industry, and realize theconsistency of the interests of the Company, shareholders and employees, Hengyi Petrochemical is committedto improving its governance structure through ¡°equity incentive + employee stock ownership¡±. Since 2015, theCompany has implemented the employee stock ownership plan four times, the equity incentive plan twice and therepurchase plan twice.

Number of shares awarded in the three phases of employee stock ownership plan

2,0004,0006,0008,00010,00012,000

First Phase of Employee

Stock Ownership Plan

2,481

Second Phase of Employee

Stock Ownership Plan

2,781

Third Phase of Employee

Stock Ownership Plan

11,329

Fourth Phase of Employee

Stock Ownership Plan

11,375

Number of shares traded ('0,000 shares)

Among which, in April 2021, Hengyi Petrochemicalannounced the fourth employee stock ownership plan(draft) and the share increase of controlling shareholdersand some employees of affiliates by developing specialfinancial products, covering directors, supervisors, seniormanagement, regular employees of the Company andits equity holding subsidiaries, and other personneldecided by the Company¡¯s Board of Directors. The fourthemployee stock ownership plan amounted to RMB 2 billion,involving 4,000 persons, more than twice the total of theprevious three phases.

Hengyi Petrochemical held a brie?ng on the fourth

employee stock ownership planShare Repurchase

In October 2021, Hengyi Petrochemical launched the second share repurchase plan. The Company intends to repurchaseshares by centralized bidding transactions within 12 months using its own funds at a price of no more than RMB 15 pershare, the total amount of the repurchase fund will be no less than RMB 500 million and no more than RMB 1 billion, and allrepurchased shares will be used for the implementation of the employee stock ownership plan or the equity incentive plan.This is another share repurchase measure following the Company's ?rst share repurchase plan that began in August 2020and ended in March 2021. While stabilizing and maintaining the Company's share price, it also shows the Company'scon?dence in the future sustainable and stable development and the recognition of the corporate value.

Executive IncentiveIn addition to the employee stock ownership plan and the share repurchase plan, Hengyi Petrochemical launched the?rst and the second executive incentive plans in August 2015 and May 2017, respectively. The incentive objects includedthe Company¡¯s directors, senior managers, core managers and core technical (business) personnel in o?ce during theimplementation of the plan. As of the end of the reporting period, the two executive incentive plans were completed.The executive incentive plan not only helps to fully mobilize the enthusiasm of the Company¡¯s directors, seniormanagers and core backbones and strengthen the sense of responsibility, the sense of mission and the sense ofbelonging of executives and core backbones, but also promotes the Company¡¯s strategic development and maximizethe value of the Company and shareholders.Through the implementation of the employee stock ownership plan, the share repurchase plan and the executiveincentive plan, while innovating the incentive mechanism, the Company hopes to share business fruits with allemployees, striving to build into a demonstration model of common prosperity that creates more value together on theroad of sustainable development.

Responding to Policy Requirements

Practicing the Double Carbon Target to BoostGreen Development

During the reporting period, in active response to the the national strategic targets to peak carbon dioxideemissions and achieve carbon neutrality (hereinafter referred to as the Double Carbon Target), HengyiPetrochemical continuously improved its green production level through technical upgrading and energy controlmeasures to ful?ll its social responsibility of carbon control and emission reduction.

Topic 3

Photovoltaic power generation on the roof of the factory

Hengyi Petrochemical also actively implements thenational strategic goal of green production and valuesthe application of new energy and waste heat recoverytechnology (polyester tail gas waste heat recovery, heatmedium furnace flue gas waste heat recovery, sulfuricacid plant waste heat recovery, cyclohexanone plantoxidation tail gas comprehensive utilization, etc.). Byimplementing measures such as 100% coverage ofphotovoltaic power generation on the roof of the factoryarea and peak-valley electric energy storage application,the Company has continuously promoted greenproduction to reduce power consumption and carbonemissions.

Implementing the Action of Double Carbon Target

According to the market and policy requirements, the Company strictly limited the power and production. Duringthe power and production limitation, the Company, according to the market and policy requirements, the Companystrictly implemented the measures of stopping production of 30% of the total capacity. In accordance with the national

The Company's installation upgrades

requirement for planned power consumption,the Company, upgraded and transformed relatedtechnologies such as equipment, productionlines and processes, and achieved the purposeof energy conservation and emission reductionby rationally arranging periodic operations, self-generating power at peak shifts, coordinatingsteam production at peak shifts betweenturbine air compressor system and electro-aircompressor system, and changing productiontime for staple ?ber process.

Polyester tail gas waste heat utilization plant

Relying on its massive practices in the long period operation of polyester plants, the Company tookmeasures to address the insufficient utilization of polyester tail gas waste and promoted energyconservation and emission reduction.The measures taken by the Company to strengthen the utilization of polyester tail gas include:

Heating fresh ethylene glycol by tail gas through a heat exchanger to save fuel;Raising the temperature of DTY workshop with waste heat, so that a reasonable temperature range canbe maintained in case of a decrease in workshop temperature caused by lower air temperature or fewerworking machines to reduce the power consumption of the heater box;Evaporating tail gas into gaseous state after heat transfer through working ?uids and esteri?cation topush the continuous rotation of screw expander that can drive the generator for electricity generation, so asto achieve the purpose of energy conservation and emission reduction.During the reporting period, through the reuse of polyester tail gas waste heat, the Company saved energyconservation by

4.0% to 6.0% of the total in a single factory.

Case: Improving the Reuse Rate of Polyester Tail Gas Waste Heat

Plant for comprehensive utilization of oxidized tail gas in cyclohexanone plant

To improve the comprehensive utilization rate of oxidized tail gas in cyclohexanone plant, during the reportingperiod, through an advanced puri?cation process of removing organic impurities with catalytic combustion, theCompany treated a large amount of nitrogen-rich waste gas containing certain organic matters (cyclohexane,cyclohexanol and cyclohexanone) generated by cyclohexanone plant, and the produced high-temperaturenitrogen was discharged to the atmosphere after energy recovery by expansion of power generation.This technology is the ?rst of its kind in China and has reached the advanced level at abroad. It can e?ectivelycontrol the emission of waste gas containing cyclohexane, cyclohexanol, cyclohexanone and other organicsubstances. The puri?ed nitrogen-rich gas after recovering waste heat is discharged up to standard, which notonly protects the environment, but also realizes the purpose of resource recovery and reuse.

Case: Comprehensive Utilization Technology of Oxidized Tail Gas in Cyclohexanone Plant,First of its Kind in China

To address energy waste caused by high temperature of flue gas emission in the old process, throughthe laddered recycle of flue gas waste heat of heat medium furnace (flue gas waste heat dischargedat a temperature of 140¡æ-150¡æ), the Company extracts organic matters such as acetaldehyde withhigh content and low boiling point from stripper wastewater to partially replace steam and thus reduceproduction cost.During the reporting period, through the recycle of heat medium furnace ?ue gas waste heat, the Companysaved energy conservation by 5.0% of the total. This technology is advanced in the industry.

Case: Laddered Reuse of Flue Gas Waste Heat of Heat Medium Furnace

To reduce waste gas emissions and energy consumption, the Company uses the reaction waste heat of high-temperature ?ue gas generated by sulfur combustion in sulfuric acid plant as the heating source of nylonpolymerization heat transfer oil, so that the surplus heat source can be used to produce steam for otherequipment, realizing the laddered utilization of waste heat.Compared with the way of heating heat transfer oil by electricity, self-built coal water slurry boiler ornatural gas boiler, this technology avoids the construction of small boilers with high energy consumptionand is the ?rst of its kind in China.

Case: Reuse Technology of Sulfuric Acid Plant Waste Heat, First of its Kind in China

¹«Ë¾ÓëÔ±¹¤

½ØÖ¹µ½2020 Äê 12 Ô 31 ÈÕ£¬¹«Ë¾ÔÚÖ°Ô±¹¤ 21398 ÈË£¬ÆäÖУ¬Éú²úÈËÔ± 16739 ÈË£¬ÏúÊÛÈËÔ± 562 ÈË£¬¼¼ÊõÈËÔ±2404 ÈË£¬²ÆÎñÈËÔ± 179 ÈË£¬¹ÜÀíÈËÔ± 1514 ÈË£»²©Ê¿Ñо¿Éú 3 0 ÈË£¬Ë¶Ê¿Ñо¿Éú497 ÈË£¬±¾¿Æ 5882 ÈË£¬´óר6333 ÈË£¬¸ßÖлòÖÐר 5101 ÈË£¬³õÖм°ÒÔÏ 3555¡£

Governance Escortsthe Century-old Business

Corporate Governance 20Compliance Operation 22Investor Management 24

Hengyi Petrochemical is committed to implementing high-standard corporategovernance. Regarding standardized and effective corporate governance asthe foundation of stable operation, the Company effectively promotes thecontinuous improvement of its internal governance system and risk controlcompetence. The Company also continuously strengthens informationdisclosure, improves the investor communication mechanism, fully protectsthe legitimate rights and interests of investors, and shares development fruitswith shareholders.

Corporate Governance

Hengyi Petrochemical strictly abides by the requirements of relevant laws, regulations and systems, including theCompany Law of the People's Republic of China, the Securities Law of the People's Republic of China, and the RulesGoverning the Listing of Shares on the ChiNext Market of the Shenzhen Stock Exchange in forming an operatingmechanism with clear definition of powers, effective check and balance, scientific decision and coordinateoperation among the organs of power, decision-making and supervision and the management team.

Hengyi Petrochemical is committed to implementing high-standard and systematic corporate governance. Itstrictly complies with the laws and regulatory requirements of the China Securities Regulatory Commission (CSRC)and the Shenzhen Stock Exchange on regulating governance and operations. The Company continues to improveits corporate governance structure, promotes more professional and effective performance of duties by theShareholders' Meeting, the Board of Directors, the Board of Supervisors and the management team, and advanceits modern corporate governance system and governance capacity.

Corporate Governance Structure

Hengyi Petrochemical Co., Ltd.

Shareholders Meeting

Board of DirectorsStrategy and Investment

CommitteeRemuneration andNomination CommitteeRisk Control CommitteeAudit Committee

Board of Supervisors

President Team

Subsidiaries

O?ce of the Board of

Directors

Audit Department

Production Management

Center

Investment Management

Department

Human Resources

Department

Information and Data

CenterOfficeFinancial Management

Department

Material Procurement

Department

Funds Management

Department

Safety and Environmental

Protection Department

The ManagementAs of the end of the reporting period, the Company had nine senior executives. The management consists ofpetrochemical, materials science, ?nance, legal and marketing experts. The team has advanced R&D managementphilosophy and extensive large R&D project management experience, which helps the Company to seize marketopportunities rapidly and accurately and maintain a leading position in the industry.

Shareholders and the Shareholders' MeetingThe Company holds the shareholders meeting in strict accordance with the requirements of relevant laws,regulations and rules, including the Company Law of the People's Republic of China, the Securities Law of thePeople's Republic of China, the Rules for the Shareholders' General Meeting of Listed Companies, the Articles ofIncorporation and the Rules of Procedure for the Shareholders' Meetings. The Company treats all shareholdersequally and protects the rights of shareholders, especially minority shareholders, to know, participate in decision-making and supervise major issues of the Company.

Directors and the Board of DirectorsAs of the end of the reporting period, the Company's Board of Directors consisted of nine directors, including threeindependent directors and one female director. As a standing body of the Company's business decision-making,the Board of Directors is responsible to the Shareholders' Meeting and deliberates major decision-making issuesin the Company's business activities. The Board of Directors has four special committees including a Strategyand Investment Committee, a Remuneration and Nomination Committee, a Risk Control Committee and an AuditCommittee. These special committees are responsible for the Board of Directors and perform their duties under theauthorization of the Board of Directors. With de?nite division of labor, clear rights and responsibilities and e?ectiveoperation, they provide opinions and suggestions for the decision-making of the Board of Directors.

Supervisors and the Board of Supervisors

As of the end of the reporting period, the Company's Board of Supervisors consisted of three supervisors, includingtwo female supervisors. The Board of Supervisors is the supervisory body of the Company and reports to theShareholders' Meeting. It is responsible for overseeing the Company's major issues, ?nancial situation and the legaland compliant performance of duties by directors and senior management. This e?ectively protects the rights andinterests of the Company's shareholders, the Company's interests and the legitimate rights and interests of theemployees. This can also further standardize the Company's operation.

During the reporting period, the Company held

five

Shareholders' Meetings¡£Key Performance

During the reporting period, the Company held

ten

board meetings.Key Performance

During the reporting period, the Company held

seven

meetings of the Board of Supervisors.

Key Performance

Compliance Operation

Hengyi Petrochemical insists on achieving high quality legally and compliantly. Clinging to transparent andcompliant operations, it has developed a compliance management system that meets its business developmentneeds and is a best practice for the petrochemical industry. During the reporting period, Hengyi Petrochemicalfurther integrated and optimized the relevant systems of internal control, risk and compliance management tocomprehensively integrate the internal control system with internal control norms. The Company enhances its riskmanagement capability, immunity and resilience to provide a solid guarantee for realizing its development strategicgoals and sustained and steady development.Internal Control System Building

To effectively improve its internal control system, the Company focuses on the top-level system design andstreamlining, continuously optimizes the internal control process, consolidates the foundation of internal controlmanagement, and raises the e?ciency of internal control management. During the reporting period, the Companyorderly promoted system streamlining for 42 times with business departments from the perspective of riskmanagement. It also rationally optimized the internal control process to enhance internal control management/This has raised the systematic, legal and standardized level of internal control management and ensured therealization of its business objectives.

Measures to optimize the internal process

Hengyi Petrochemical evaluatedand optimized KCP (key controlprocess) and embed internalcontrol into process to promoteclosed-loop management

Hengyi Petrochemicalestablished the OA process,reviewed 997 changes andevaluated process risks tobalance and improve processe?ciency

Audit of Key Operations

Towards the goal of "preventing risks, controlling cost, strengthening management and promoting standardization",Hengyi Petrochemical audited key business areas around the corporate center in a diversified mode of "routineaudit + special audit + continuous supervision + spot check". The Company has performed its internal audit duty toe?ectively improve its risk management.

Key audit areas

Raw MaterialSupply Guarantee

and Trade

FinancialManagement

Sales

Logistics

Production Plant

Procurement

During the reporting period, the Company completed

management and special audits, pointed outfivemanagement highlights, and presented

audit suggestions, with a recti?cation rate of

%.

Key Performance

Strengthening Engineering Audit

Hengyi Petrochemical attaches great importance to engineering audit, standardizes the operation process ofengineering audit, and focuses on the infrastructure of engineering audit to continuously improve the quality ofaudit work. During the reporting period, the Company, adopting ¡°whole process track¡± as the core method,regularly tracked bidding updates and carried out routine inspection on a monthly to ensure that all its activitieswere carried out within the scope permitted by laws and regulations.

Clinging to "Corporate Center"

Harboring "zero tolerance to any and all fraud and corruption acts", the Company has established the Anti-FraudLeading Group headed by the Chairman of Hengyi Petrochemical. The Chairman authorizes the investigation ofreported matters and makes decisions on the handling of employee fraud. The Audit and Legal A?airs Departments areresponsible for internal auditing, work supervision and violation handling. They develop and continuously improvethe Company's internal integrity policies and regulations to strengthen the long-term early warning mechanism forfraud and bribery governance and protect the legitimate rights and interests of the Company and shareholders.Investor ManagementThe Company attaches great importance to information disclosure. It has established a strict and standardizedinformation disclosure process in strict accordance with the information disclosure laws and regulations to discloseinformation in a timely, accurate and standardized manner. Through investor relations activities via multiplechannels such as online teleconference system and offline site research, the Company also actively strengthensexchanges and communication with multi-level investors to show its development highlights, convey investmentvalue, and e?ectively protect the rights of investors to be informed and participate in.In September 2021, Morgan Stanley Capital International (MSCI), an international index supplier, upgradedthe Company's ESG rating to Grade B, projecting not only the e?ectively improved ESG performance,but also the international market's recognition of the Company's social responsibility ful?llment, corporategovernance achievements and sustainable development value.

Whole process track of engineering projects

Hengyi Petrochemical regularly tracks biddingupdates covering shortlisting, evaluation anddeterminationHengyi Petrochemical carries out routine inspection tourto engineering projects of all subsidiaries on a monthlybasis, organically combines with those in review, timelyreports the findings during the inspection, tracks therectification, and requires relevant departments to recordin time as the basis for later settlement, improves themanagement basis and optimize management

Key Performance

Investor RelationsHengyi Petrochemical is committed to enhancing investor communications. The Company has establishedand maintained harmonious and stable investor relations by actively conveying information such as operation,development highlights, investment value and social responsibility through diverse channels, includingperformance brie?ngs, online and o?ine surveys from institutional and individual investors, investor hotline, andWeChat o?cial account.

Information DisclosureThe Company fulfills its information disclosure obligations in strict accordance with relevant laws and regulations. Itimproves the standardized operation level of corporate governance based on actual conditions, strictly implements thelayer-by-layer audit system of information disclosure announcements, and continuously and e?ectively ensures the highquality of information disclosure. The media designated by the CSRC, the website www.cninfo.com.cn and the companywebsite section Investor Relations convey public information in compliance to strengthen communication with investorsand potential investors, and enhances their understanding and recognition of the Company.

In 2021, the Company disclosed

announcements, including

four

periodic reports and

interim reports.

Interaction with IndividualInvestorsThe Company actively conveys information such ascore values, business philosophy and developmentto investors by various communication means.During the reporting period, the company held threeperformance brie?ngs, at which nearly 300 questionsfrom investors were answered. It also activelyresponded to investor concerns by such means asanswering 393 questions on the Easy InteractionPlatform and investor hotlines to enhance interactionwith individual investors at multiple levels.

Investorinteractionchannels

Quanjing OnlinePerformanceBrie?ng

WeChat O?cial

Account

InvestorHotline

Website SectionInvestor Relations

SZSE EasyInteraction

Platform

Key Performance

During the reporting period, the Company won

five

awards in information disclosure and investorrelations management.

Surveys from Institutional InvestorsIn 2021, the Company received on-site or telephone surveys from 403 large and medium-sized institutionalinvestors, hitting 571 exchanges. In addition, the Company actively participated in various brokerage strategymeetings for a total of 72 times, conducted in-depth communication with investors, and answered questions aboutissues including development strategy, operating conditions, industry status and corporate governance, fullydemonstrating its development highlights.

Second Interpretation of Periodic ReportsThe Company actively invites brokerage analysts to extract highlights and write review reports on periodic reportsaccording to issues of concern among investors for second interpretation at key timelines such as disclosure As ofthe end of the reporting period, capital market institutions issued two in-depth reports and 21 top and follow-upreviews on the Company.

Award IssuerName of AwardSecurities Times

Social Responsibility Award of Listed Company in ChinaExcellent Board Secretary of Listed Company on Main Board

Excellent Board Secretary of Information DisclosureChina Association for Public

Companies

Excellent Practice Case of 2020 Annual Report Performance Brie?ngs

by Listed CompaniesNew FortuneThe 17th Gold Medal Board Secretary

Key Performance

Sharing the Company's Development FruitsOffering returns to shareholders is not only an important embodiment of a listed company to fulfill its fiduciaryduty, but also an inherent requirement for the healthy development of the capital market. To share the fruits ofthe Company's development with investors, Hengyi Petrochemical ensures stable performance and continuouspro?t growth based on the practical needs of its business development. In addition, Hengyi Petrochemical providesstable and lasting returns to investors based on the concept of returning to shareholders.

2017-2021 Net Pro?t Attributable to Owners of the Parent Company and Total Cash Dividends

Net Pro?t Attributable to Owners ofthe Parent Company (RMB 100 mn)

Total Cash Dividends (RMB 100 mn)20172018201920202021

¹«Ë¾ÓëÔ±¹¤

½ØÖ¹µ½2020 Äê 12 Ô 31 ÈÕ£¬¹«Ë¾ÔÚÖ°Ô±¹¤ 21398 ÈË£¬ÆäÖУ¬Éú²úÈËÔ± 16739 ÈË£¬ÏúÊÛÈËÔ± 562 ÈË£¬¼¼ÊõÈËÔ±2404 ÈË£¬²ÆÎñÈËÔ± 179 ÈË£¬¹ÜÀíÈËÔ± 1514 ÈË£»²©Ê¿Ñо¿Éú 3 0 ÈË£¬Ë¶Ê¿Ñо¿Éú497 ÈË£¬±¾¿Æ 5882 ÈË£¬´óר6333 ÈË£¬¸ßÖлòÖÐר 5101 ÈË£¬³õÖм°ÒÔÏ 3555¡£

Innovation to Enhancethe Value of the Industry

Focusing on Quality:

Promoting High-Quality Development 30Product Development:

Building an Industry Benchmark 34Digital Innovation:

Boosting Intelligent Control 42Supply Chain Integration:

Creating a C2M Closed Loop 46

Hengyi Petrochemical is committed to enhancing the value of the industrythrough innovation. During the reporting period, Hengyi Petrochemicalchanneled efforts in a high-quality industrial ecosystem. This ecosystemincludes differentiated product development, intelligent manufacturing,systematic customer service and digital corporate management. The Companyalso promotes innovation in technology and services achieves digital upgradingand transformation to improve industry productivity and promote ecologicalindustry development.

During the reporting period, Hengyi Petrochemical and its subsidiaries obtained

granted patents,including

invention patents.Hengyi Petrochemical won the first prize of the 2021 CNTAC Science Technology Progress Award of Textile Vision forits Key Technology and Industrialization of Antimony-free Environmental Friendly Polyester Melt Direct Spinning.The "Key Laboratory of Environmental-Friendly Polyester and Fiber Preparation Technology for Textile Industry"ofZhejiang Henglan Technology Co., Ltd. (Hengyi Research Institute) has passed the certi?cation of CNTAC textile industryinnovation platform in 2021 (the textile industry innovation platform is an important part of the technological innovationsystem of textile industry, and an important scientific and technological innovation base for carrying out high-levelscienti?c research and research on major common key technologies, gathering and cultivating outstanding scienti?c andtechnological talents, and leading the demonstration of the application of scienti?c and technological results).While constantly implementing the independent R&D and project approval for scienti?c and technological innovation,the Company is also actively undertaking major scientific and technological projects of the government. ZhejiangHenglan Technology Co., Ltd. participated in the approval of two national key research and development projects of theMinistry of Science and Technology in 2021, namely green biological manufacturing projects. Meanwhile, the applicationof the Bio-based PEF Green Synthesis and E?cient Catalyst Development Project of Zhejiang Hengyi High-Tech MaterialsCo., Ltd. and the Key Technology Project of E?cient Antibacterial Polyester in situ Polymerization and Composite High-Speed Spinning of Hangzhou Yijing Chemical Fiber Co., Ltd. led by Hengyi Research Institute was approved under the2022 Pioneer Program and Leader Program of the Science and Technology Department of Zhejiang Province for the ?rstbatch of projects. The two projects are closely related to the actual needs of the Company¡¯s production and operation,laying a solid foundation for pursuing more scienti?c research and development resources in 2022, and promoting thehigh-quality development of the industry.

Focusing on Quality:

Promoting High-Quality Development

With "striving for building into a domestic first-class brand and meetingcustomer needs across the board" as its quality strategy goal, HengyiPetrochemical always implements the product control system in the wholeprocess to ensure quality. Since its establishment, the Company has beendedicated to providing high-quality products and services for clients andconsumers. Our factories have passed ISO9001 and our products such aspolyester and nylon chips, polyester ?bers and yarns and recycled ?bers havepassed OEKO-TEX certi?cation to ensure that products received by customershave stable quality and strictly meet the relevant local policy requirements.

Quality Management System Certi?cate for Production of Hengyi High-Tech's PolyesterChip, Polyester Filament and Polyester Staple Fiber

Key Performance

Quality Management SystemTo develop high-quality products, Hengyi Petrochemical has formulated the system of the Internal Control Standardsfor Chemical Fiber Products of Hengyi Companies to control all Hengyi products. This system is suitable for gradingand production process control of polyester chip (PET), polyester pre-oriented yarn (POY), fully drawn yarn (FDY), drawtextured yarn (DTY), polyester staple ?ber (PSF), and ?ber grade polycaprolactam (PA6). To ensure that the quality of ex-factory products meets customer requirements, the Company classi?es all products into three grades: excellent (AA),?rst-class A) and quali?ed (B), and those lower than quali?ed as inferior (C) according to the product quality standards.In terms of indicator monitoring and management, the Company strictly controls the ?uctuation of quality indicators ofproducts and production process according to systems including the Measures for the Management of Product CentralValues to stabilize product quality. The Company also ensures the standardized operation of employees by revising thePost Operation Rules and other documents; and guarantees stable product quality by such means as strengtheningequipment cycle management and abnormal inspection management.

Corporate governancecontrol-related systems

Post Operation Rules

Internal Control Standards for ChemicalFiber Products of Hengyi Companies

Measures for the Management

of Product Central Values

During the reporting period, the Company inspected production management on site for

times, issued

recti?cation orders, and had a

100%

recti?cation completion rate. In 2021, the Company changed the centralvalue

times as required, down some

50%

over the second half of 2020 in terms of monthly average.

Key Performance

Customer Satisfaction

Hengyi Petrochemical has established a diversifiedchannel customer satisfaction research mechanismto help improve Hengyi quality. To accurately improveproduct and service quality and customer satisfaction,the Company collects customer satisfaction information,especially evaluation and opinions on the quality ofproducts manufactured by Hengyi factories, fromdiversi?ed channels such as E-shop, salesperson on-sitevisit and telephone visit.

Hengyi Petrochemical boasts of an industry-leadingafter-sales service system. The Company sets up theAfter-sales Service Department with a sound after-sales service management system and process to beresponsible for accepting product quality problems andcustomer services. In recent years, the Company hasbeen devoted to improving the efficiency and effect ofafter-sales service. It provides technical services in timefor quality problems and feedback raised by customers.By means of quality improvement, return and exchange,the Company meets customer demand for productquality and ensures a continuous improvement ofcustomer satisfaction.

Customer Interview onthe Company's "Brand Service Day"

Diversi?ed customer communication channels

Telephone Visit

SalespersonOn-site Visit

E-shop

CustomerCommunication

Whole Process Quality Control

Hengyi Petrochemical integrates digital production and strengthens whole process quality management.From quality traceability of raw materials and machine parts, exception management of production to qualitymanagement of products, Hengyi Petrochemical applies quality information big data to ensure efficient andaccurate planning, implementation, monitoring, correction and improvement management in the whole process.

To achieve product quality control in the whole process, Hengyi Petrochemical enables material codingtraceability through digital technology, making all kinds of quality-related information such as rawmaterials, machine parts and single ingot of ?nished products traceable through SAP, SCM, single ingot andother systems. This has greatly improved the e?ciency of data analysis and problem handling.

Case: Digital Application of Coding Traceability Helps Quality Control

To develop competitive polyester products and use them widely, during the reporting period, the Companycompleted the formula analysis and industrialization of imported finishes for polyester POY and FDYspinning. The promotion of FDY ?nish is amid a progress replacement from ¡°one spinning position¡± to ¡°oneproduction line¡± and ¡°one workshop¡±.¡¤Development ProgressDuring the reporting period, the development progress of the Company¡¯s spinning ?nish project can bedivided into six stages:

¡¤An evaluation system of ?nish properties was built to improve ?nish development orientation;¡¤ª¢A scienti?c ?nish analysis method was employed to accurately analyze components of the imported ?nish;¡¤The formula of FDY ?nish produced by traditional equipment was dissected;¡¤ª¢Trial self-developed FDY ?nish that had been tested in Henglan¡¯s chip spinning workshop for many times waspopularized in Hengyi High-Tech and Jiaxing Yipeng;¡¤Self-developed POY ?nish was passed spinning test at lab scale;¡¤The pilot-scale ?nish plant was built in August 2021, transformed technically in October and put into o?cialproduction in November 2021.

Case: Industrialization of Polyester Spinning Finish Project

Product Development:

Building an Industry BenchmarkHengyi Petrochemical attaches great importance to scienti?c and technological innovation and insists on creatinggreen and high-quality products. Always keeping the market forward-looking and continuously developinghigh added value and differentiated products, with specific targets for new products, Hengyi Petrochemical hasgradually realized the ¡°diversi?ed, serialized, high-quality and unique¡± product structure.

Dual Industry Chain

PolyesterBy the end of the reporting period, the Company laid out more than 40 projects related to polyester industry chain.

¡¤Key PerformanceDuring the reporting period, the Company's subsidiaries actively implemented the requirement forindustrialized production of spinning ?nishes.Henglan Technology's slice spinning workshop replaced one finish production line, without significantindicator di?erences compared with imported ?nishes or defective feedback from customer complaint;Jiaxing Yipeng completed it in early December 2021 after a month's trial spinning at one spinning position,without defective feedback from customer complaint;Hengyi High-Tech applied ?nish after testing in one spinning position, without any defective feedback fromcustomer complaint.

Progress of POY and FDY ?nish projects

February toSeptember 2021

Trial Spinning inHenglan's ChipSpinning Workshop

2021.11~ÖÁ½ñ

Trial Spinning at One Production

Line in Hengyi High-Tech and

Jiaxing Yipeng

October toNovember 2021

Trial Spinning at OneSpinning Position inHengyi High-Tech and

Jiaxing Yipeng

Development process of spinning ?nish

Smooth and CohesiveWetting and Antistatic

Test Spinning

on Machine

FinishCompounding

Performance

TestFormulaOptimizationMonomer Screening

Finish Analysis

Case: Key Technology and Industrialization of Antimony-free Environmental Friendly Polyester

Melt Direct SpinningPolyester (PET) is one of the most productive and widely applied polymers in the world. Currently antimony(Sb) is the main catalyst used in polyester synthesis. In the dyeing and ?nishing process of textiles, heavy metalantimony in polyester fiber products pollutes water sources after entering wastewater and causes harm toecological environment. With the increasing pressure of environmental protection, excessive antimony emissionhas become a bottleneck restricting the development of textile industry.To develop green polyester manufacturing technology, reduce the emission of heavy metal antimony andrelieve the sewage treatment pressure of downstream printing and dyeing companies, the Company activelycarried out the key technology development project for antimony-free environmental friendly polyester meltdirect spinning during the reporting period.Targeting at bottlenecks to antimony-free environment-friendly polyester links such as catalyst synthesis,polyester polymerization and spinning, this project studies key technologies for titanium catalyst compounding,addition method, polyester polymerization, stable melt transportation and spinnability of titanium polyesterIt has addressed color di?erence of titanium catalyst polyester, optimized the transportation and distributionof polyester melt, spinning and post-processing, and implemented green development concept into products,setting a model for the healthy and sustainable development of chemical ?ber industry.

Industrialization of antimony-free environmental friendly polyester melt direct spinning technology

Case: Development of Zinc Oxide Antibacterial Polyester

Antibacterial polyester fiber refers to fiber with antibacterial function after introducing antibacterial modifiersinto the ?ber matrix or combining with the ?ber surface by various methods. Its antibacterial performance usuallydepends on the performance of the introduced antibacterial agents. Common antibacterial agents mainly includenatural antibacterial agents, organic antibacterial agents and inorganic antibacterial agents. Inorganic antibacterialagents are gaining prominence for high antibacterial e?ciency, broad spectrum and stability.During the reporting period, the Company actively promoted the development of zinc oxide antibacterialpolyester. Combined with the surface modi?cation technology of inorganic nanoparticles, the project chemicallygrafted and modi?ed ZnO nanoparticles at the surface and interface with appropriate modi?ers, and introducedfunctional groups to improve the compatibility with PET matrix and avoid agglomeration during processing.Through systematic study on addition amount, combination method and dispersion of ZnO nanoparticles, thisproject optimizes the dispersion ability and addition mode of ZnO nanoparticles in the polyester matrix, achievinge?cient antibacterial modi?cation of polyester ?ber materials.

R&D mechanism of antibacterial polyester ?ber

R&D workshop of ZnO antibacterial polyester ?ber

Bacteria, organiccompounds,inorganic odor,stink

Carbon dioxide (CO2)Water (H2O)

Bacteria

Zinc ions directlypenetrate into bacteria

Naturallight

NanometerZnO

Case: Green Synthesis of Bio-based PEF

In December 2021, the application of the ¡°Bio-based PEF Green Synthesis and E?cient Catalyst DevelopmentProject¡± of Zhejiang Hengyi High-Tech Materials Co., Ltd. led by Hengyi Research Institute was approved underthe 2020 Pioneer Program.This project is intended to break through key technologies such as the e?cient polymer-grade FDCA preparation,e?cient development of polyester polymerization catalysts, mass production process and equipment design,Based on the objective of focus on R&D plans during the 14th Five-Year Plan, the project prioritizes bio-basedpolymer materials. Taking independent innovation at the core, the project studies the whole industry chainincluding the development and back-end application of low-cost bio-based monomers and polymers to addressthe high cost of bio-based polymer materials and few grades of high-performance engineering plastics.During the reporting period, Hengyi High-Tech ?ne-tuned the product structure and studied the temperatureresistance, mechanical and barrier properties of products. No less than ten high-performance polyester productswere developed and applied downstream. Furanedioic acid polyester can be applied to bottles, membranes,?bers and engineering plastics due to its unique properties.

Green Synthesis of Bio-based PEF

Polyamide

By the end of the reporting period, the Company laid out more than 30 projects related to polyamide industry chain.

Case: Green Manufacture of Bio-based High Temperature Resistant Polyamide MaterialsPolyamide monomer materials are mostly synthesized chemically, causing problems such as reliance of rawmaterials on fossil resources, serious pollution in the synthesis process and great potential environmental safetyhazards. In particular, the core technology of chemical diamine synthesis has long been monopolized by foreignmultinational companies, becoming an important barrier in China's polymer materials industry.To ?ll the gaps of some polyamide monomers and materials in China, break the international monopolyand get rid of the passive "hunger marketing"dominated by international chemical giants in the polyamideindustry for a long time. During the reporting period, the Company promoted the research of key polyamidemonomer substitutes and new nylon, and developed the technical system for continuous polymerization ofbio-based polyamide through projects such as green manufacture of bio-based high temperature resistantpolyamide materials.

R&D Manufacture of Bio-based High Temperature Resistant Polyamide Materials

Industry-University-Research Cooperation

Hengyi Petrochemical actively advances industry-university-research cooperation. Through collaborativeinnovation, the Company builds an emerging industry-university-research-application technology innovationplatform to boost industry-university-research win-win cooperation and sharing of scientific and technologicalresources, enhancing the source power for product R&D and technological innovation.Based on scienti?c and technological innovation platforms including the ZJU-Hengyi Global Innovation ResearchCenter, the Joint Laboratory of Donghua University and Hengyi Petrochemical, China Chemical Fibers Association-Hengyi Foundation, the National Postdoctoral Research Station, the National Enterprise Technology Center andthe Key Laboratory of Textile Industry, Hengyi Petrochemical actively expands exchanges and cooperation withscienti?c research institutes of famous universities such as Zhejiang University, Donghua University, Nanjing TechUniversity and Zhejiang Sci-Tech University. The Company has formed industry-university-research-applicationstrategic cooperation. It always stands at the forefront of scienti?c and technological innovation in petrochemicaland polyester chemical ?ber ?elds.Hengyi Petrochemical pools technical specialists, engineering experts, postdocs and senior R&D engineers inpolyester chemical ?ber and chemical industry for research and development of new products, new technologiesand new processes directly facing the market and customers. They provide strong talent and technical support forimproving existing production technology and equipment and transforming high-tech achievements. The Companyis also equipped with a large number of equipment and test analysis instruments for research and developmentof new products and technologies related to the whole industry chain, helping the transformation of scienti?c andtechnological achievements.

Hengyi Research Institute

By the end of the reporting period, the Company had:

¡¤ exchanged and learned advanced university-enterprise cooperation experience and innovative modes

atabroad for

times;¡¤organized

academic seminars and CST meetings (Technical Committee meetings);

¡¤ engaged in

university-enterprise projects under research, including the E?cient Green Production andIndustrial Demonstration of Bio-based Polyamide Monomer and Materials, the key project under

"GreenBio-manufacturing" in the national key research and development plan, providing technical

support for thetransformation, upgrading and green manufacturing of polyester industry.

Joint Laboratory of DonghuaUniversity and HengyiPetrochemicalNational-recognized EnterpriseTechnology Center

ZJU-Hengyi Global Innovation Research Center

Key Performance

Digital Innovation:

Boosting Intelligent Control

Taking "petrochemical + industrial Internet" as its information strategy, Hengyi Petrochemical promotes the deepintegration of new-generation information and communication technology into petrochemical manufacturingindustry based on industrial Internet advantages of digital intelligence to strengthen the digital, networked andintelligent development of the chemical ?ber manufacturing industry, securing the highly coordinated operation ofthe whole industrial chain.Digital Transformation StrategyBy setting digital strategic goals and promoting digital transformation, the Company strives to create a customer-centered Internet platform for the chemical ?ber industry with "Hengyi Brain" as its intelligent decision-makingcenter. The Company, based on the basic policy of innovation-driven, quality and efficiency improvement, andgreen development, makes good use of the integration and application of information application, advancedmanufacturing, automation and enterprise management technologies, realizes intelligent informationization of thewhole chain integrating R&D and design, logistics, procurement, production control, operation and management,professional services and marketing, achieving product traceability and whole process control.

Strategic Framework for Digital Transformation Strategy of the Industry

PhysicalEquipment

Group-based IntegratedIndustrial Digital Platform

Digital Plant

PetrochemicalPolymer

HengyiHigh-Tech

Haining New

Materials

Hangzhou

Yijing

JiaxingYipeng

Taicang

Yifeng

Suqian

Yida

Manual appearance inspectionHengyi Brain (Command and Decision-making Center)Customer-centered Internet Platform for the Chemical Fiber IndustrySRMSCMCentralized Procurement

Supply Chain

ERP (SAP) (Collabora-tion of Supply, Market-

ing and Finance)

E-shopLogistics TMSCentralized Sales Supply

Chain

Manufacture Execution System (MES)Production

Plan

Lab Management

WarehouseManagement

Quality Traceabilityof Single IngotEquipmentManagement

Energy System

Security

Monitoring

Data Acquisitionand MonitoringFactory/Workshop

Hengyi Petrochemical's digital innovation measures in various ?elds

The Company employs cloudcomputing, virtualization, 5G,home base machines andother technologies to promotethe construction of industrialnetworking, service clusters,information security, etc.,providing technical support andsecurity for software applications.

Relying on the informationinterconnection among intelligentmanufacturing devices such asautomatic winding, automaticpackaging, intelligent externalinspection, AGV trolley, robot andAutomatic Storage and RetrievalSystem, the Company adoptsnetwork communication, Internetof Things, mobility, micro-service,real-time database and othertechnologies to successfullydevelop a single ingot data ?owsystem to realize e?cient logisticsoperation and automatic qualitycontrol of products in workshopwarehouses, achieving processoptimization, information sharingand e?ciency improvementamong production processes.

The Company builds two softwaresystems of e-shop and marketingsupply chain. Externally, Internetmarketing and customer socialexperience management areadopted to facilitate independentorder placing, supply chainservices, full process display ofsales data, and data servicesfor multi-dimensional portraits.Internally, data sharing amongbusiness systems becomesavailable to improve datainteraction e?ciency, eliminateinformation circulation barriers,and form a closed-loop forsupply chain links such as sales,collection, distribution, delivery,vehicle dispatch, shipment, andinvoicing.

InformationInfrastructure

ManufacturingMarketing

Services

Case: Accelerated Digital Upgrade and Innovation from "Manufacturing" to "Intelligent Manufacturing"

To level up digital intelligent management and control, Hengyi Petrochemical develops the ?rst set of automaticshovels in the industry in an operating mode of "manual shovel + automatic shove". It has reduced laborworkload and shortened the shovel operation time.

Hengyi Petrochemical also develops the ?rst set of AI appearance inspection equipment with Baidu in the chemical ?berindustry. Combining industrial visual image detection technology with AI deep learning algorithm, this set is availablefor automatic intelligent appearance detection, elimination and alarm of yarn ingots. Through a 100% appearancedetection rate for yarn cakes, it has detection accuracy and e?ciency. Real-time feedback of detection data informationto the workshop allows for quality improvement of production process.Due to its intelligent analysis and application of quality big data, the AI appearance inspection equipment was reportedby media such as People¡¯s Daily and Xinhua News. It was shortlisted in the 2021 Zhejiang Excellent IntelligentManufacturing Scenarios and the 2021 Pioneer Cases of Industrial Intelligence of People¡¯s Daily. Hengyi Petrochemicalalso won the title of ¡°2021 China Top Ten Industrial Digital Transformation Enterprises¡± awarded by Forbes China.

Hengyi intelligent manufacturing projects

Hengyi AI intelligent appearance inspection

Intelligent Manufacturing Applications

Through the integration of intelligent production, networked collaboration, customized services and digital decision-making, the Company accelerates the digital transformation process and promotes the transformation from"manufacturing" to "intelligent manufacturing" and from single business management to highly coordinated operationof the industrial chain. During the reporting period, Hengyi Petrochemical developed an intelligent inspection robot withBaidu, and innovative projects such as automatic shovel and automatic garter color judgment with research institutes ofuniversities such as Zhejiang University and Hengyi Research Institute. By overcoming industry di?culties, the Companysteps to achieve 100% intelligentization of "machine substitution" in the whole process. In the upcoming three years,Hengyi plans to build a model unmanned factory with another investment of some RMB1.3 billion.

Case: Promoting Intelligent Transformation for Full Penetration of Production and Sales in FactoriesIn response to the national strategy of ¡°Made in China 2025¡± and promote the company-wide construction of digital andintelligent factories, during the reporting period, Hengyi Petrochemical increased investment in intelligent manufacturingand gradually transformed labor-intensive jobs into technology-intensive jobs. By the end of the reporting period, theCompany had invested nearly RMB2.5 billion in intelligence, covering 100% of new factories and 75% of old ones.The Company replaces manual operations such as manual doffing, manual appearance inspection, manual packaging andmanual warehousing with intelligent operations such as automatic doffing, automatic appearance inspection, automaticpackaging and automatic delivery after being automatic stored in a stereoscopic warehouse. This has gradually securedwhole-process automation and improved company-wide production efficiency.

Jiaxing Yipeng's whole-process intelligent logistics system, the ?rst of its kind in the industry, integratesdo?ng, package and stereoscopic warehouse of ?nished products through AGV transfer, ?ber stereoscopicwarehouse for temporary storage and transport line of ?nished products, which is bene?cial to the multi-process operation, information process and intelligent cross-line dispatch for the ?ber spindle.

Before intelligent transformation

Whole-Process Intelligent Manufacturing System

Before intelligent

Business processafter products o?the production lineManual do?ngPaper processsheet

Automatic do?ng

PLC and software

Intelligent appearanceinspection Automaticpackaging linePLC and software

Automatic storagein a stereoscopic

warehouseWCS

Automatic deliveryfrom a stereoscopic

warehouseWCS

Samplingclassi?cation

Manual appearance

inspectionPaper process

sheet

Packaging

Manual packagingPaper process

sheet

Warehousing

Manual warehousingPaper processsheetEXCEL¡¢SAP

Delivery

Manual deliveryEXCEL, SAP

Business processafter products o?the production line

Mode of storageand transportation

Mode of recordPaper

New mode ofstorage and

transportation

Mode of recordIT systemAfter intelligent

transformation

Finished product storage system WMS

E-shop

Quality traceability system of single ingot product

Automatic

do?ng

AGV yarnbox transfer

Manual unwinding,knotting and knitting

Putting yarn boxes in anintermediate warehouse

Putting yarn boxes in anintermediate warehouse

Enabling

robotsAutomatic appearanceinspectionAutomatic packagingand weighingPackages distributedby shuttle vehiclesBeing stored in astereoscopic warehouse

Supply Chain Integration:

Creating a C2M Closed Loop

Hengyi Petrochemical manages the whole process of supply chain. Boasting of a dual-chain development modelof polyester and polyamide, Hengyi Petrochemical realizes the self-supply of downstream raw materials throughupstream refining and chemical integration. This has ensured the stable quality and supply of raw materialsrequired by polyamide and polyester product lines for downstream production.

Case: Build a Scienti?c Decision-making System with "Hengyi Brain" Integrating Productionand Marketing

To improve production e?ciency and realize whole process data ?ow management, Hengyi Petrochemicalbuilds a comprehensive information management platform that covers procurement of raw and auxiliarymaterials and machine parts, incoming quality control, production process control, product inspection,packaging, warehousing, delivery, logistics, transportation, and use by end customers. The whole processdata are carried in SAP, EAM, SCM/SRM, WMS, MES, LIMS, TMS, E-shop and other systems and integrated onthe platform to improve production e?ciency and carry forward business advantages.

Application of Hengyi whole process data ?ow management

E-shopTradingPlatform

Hengyi Brain +Digital Intelligent

Factory

Intelligent

QualityMonitoring

System

IntelligentProduction

StorageSystemLogisticsDistributionPlatform Service

TraceableAfter-salesService ofProductQuality

Case: Building WMS to Realize Intelligent Warehouse ManagementTo improve warehousing management and upstream-downstream coordination efficiency, HengyiPetrochemical develops a warehouse system that meets its warehousing requirements for centralizedand unified management, thereby providing data support for production operation, product sales andprocurement. The system covers warehousing management of all product lines in all factories, mainlyincluding: packaging measurement, inward warehousing, warehouse operation, outward delivery, reversal,basic inquiry, and comprehensive report. The system is compatible with PC and PDA, and supportscomplete interface integration and application with intelligent manufacturing facilities such as SAP,automatic packaging line and stereoscopic warehouse.WMS has greatly improved the Company¡¯s upstream-downstream collaboration e?ciency and intelligentwarehousing management.

¹«Ë¾WMSÖÇÄִܲ¢ÏµÍ³

¹«Ë¾ÓëÔ±¹¤

½ØÖ¹µ½2020 Äê 12 Ô 31 ÈÕ£¬¹«Ë¾ÔÚÖ°Ô±¹¤ 21398 ÈË£¬ÆäÖУ¬Éú²úÈËÔ± 16739 ÈË£¬ÏúÊÛÈËÔ± 562 ÈË£¬¼¼ÊõÈËÔ±2404 ÈË£¬²ÆÎñÈËÔ± 179 ÈË£¬¹ÜÀíÈËÔ± 1514 ÈË£»²©Ê¿Ñо¿Éú 3 0 ÈË£¬Ë¶Ê¿Ñо¿Éú497 ÈË£¬±¾¿Æ 5882 ÈË£¬´óר6333 ÈË£¬¸ßÖлòÖÐר 5101 ÈË£¬³õÖм°ÒÔÏ 3555¡£

Guaranteeing HSE to Builda Green Home Together

HSE Management 50Risk Management 51Safety Production 52Environmental Protection 54

Hengyi Petrochemical always sticks to the safety and environmental workguideline of "safety first, focusing on prevention, integrated control andpeople-oriented" and establishes a concept of safety and environmentaldevelopment. The Company carries out hierarchical management and controlof safety risks and detection and management of hidden dangers aroundthe safety and environmental protection production responsibility system.Hengyi Petrochemical also consolidates safety production standardizationachievements, strengthens HSE (Health, Safety and Environment) educationand training, enriches safety activities, and strictly controls pollution and wastedischarge. This has comprehensively promoted the implementation of safetyand environmental protection management system, standardized safety andenvironmental protection management, prevented and reduced accidents, andimproved its safety and environmental protection.

During the reporting period, the Company's Safety and Environmental Protection Department updated and

issued the List of HSE Laws and Regulations, improving and supplementing

safety and ?re protectionlaws and regulations,

environmental protection and occupational health laws and regulations, andidentifying 263 applicable laws and standards.

HSE ManagementThe Company adheres to the management of business and safety and follows the guidelines of uni?ed leadership,localized supervision, responsibility ful?llment, hierarchical management, classi?ed guidance and full participation.The Company has developed its own HSE management system in strict accordance with the ISO 14001 and ISO45001 requirements. In addition, the Company has strengthened the review of the HSE systems of its subsidiariesto ensure that their HSE systems are in compliance with national laws, regulations and standards as well as thecompany management policies.

Environmental Management System Certi?cate ofHengyi High-Tech

Key Performance

Risk Management

Hengyi Petrochemical continuously carries out risk classification control and potential risk identification andcontrol to timely identify and eliminate various hidden dangers. During the reporting period, the Companyidenti?ed company-level risks such as special operations, project start-up and shut-down, automatic packaging,product storage and transportation, tank farm and major hazard sources (LNG stations) through risk identi?cationand classi?cation, and formulated and implemented control measures. The improvement of the dual preventionmechanism was also promoted in subsidiaries. The Company also intensi?ed and deepened on-site inspection todiscover and eliminate all hidden dangers in time.

Resistance to typhoon by Hengyi and its subsidiaries

In July 2021, to resist Typhoon In-fa, the HSE Committee issued the Notice of E?ective Flood, Waterlogging andTyphoon Control. Carrying forward the spirit of continuous struggles and operations, all subsidiaries mobilizedemployees to prevent the flood and typhoon under the instructions of leaders at all levels according to theNotice to ensure the safety of life and property at top priority. Risk screening and preparations for emergencyrescue were carried out to guarantee su?cient and in place labor and materials.Henglan Technology and Shaoxing Hengming transferred and resettled more than 1,370 construction workers,minimizing risks and coming through the Typhoon In-fa.

Case: Bracing for Disaster Weather to Strengthen Risk Management and Control

By the end of the reporting period, the Safety and Environmental Protection Department had carried out

routine safety inspections and

special inspections.Key Performance

Safety Production

Hengyi Petrochemical attaches great importance to safety production and continuously promotes safetystandardization of the Company and its subsidiaries. By the end of the reporting period, there were one polyesterand hexyl brocade subsidiary up to grade I safety standardization, one to grade II and eight to grade III.In 2021, the Company invested a total of RMB

35.9737

million in safety.

Safety TrainingDuring the reporting period, Hengyi Petrochemical and its subsidiaries actively organized diversi?ed safety trainingactivities to improve the safety awareness and professional quality of all employees and company-level safetymanagement.

Safety training by industry experts

To improve the safety management of the Company and its subsidiaries, during the reporting period, HengyiPetrochemical invited industry experts to carry out safety training for safety specialists and department heads of theCompany and its subsidiaries. After the training, subsidiaries conducted safety training for their employees in batchesaccording to the requirements of the Safety and Environmental Protection Department.In March 2021, Hengyi Petrochemical invited caprolactam electrical experts to carry out training on electrical safetyfor HSE specialists of subsidiaries, relevant leaders of the Power Department and electrical instrument personnel toenhance the awareness of electricity safety management and prevent electrical injuries.In April 2021, Hengyi Petrochemical invited expertsfrom Beijing Research Institute of Automation forMachinery Industry (RIAMB) to carry out training onsafety of automatic packaging line for nearly 300 HSEspecialists, the manager of Spinning Department, thesupervisor of automatic packaging line, team andgroup leaders, and related management personnelof the Production Management Center and theSafety and Environmental Protection Department inchemical ?ber factories. This has improved their safetyawareness and safety management ability to avoidmechanical injuries to operators during the operationof automatic packaging line.

Case: Carrying out Safety Training to Improve Safety Governance

Key Performance

Case: Organizing Safety Education and Training to Improve Safety Awareness and Accomplishmentof All EmployeesTo enhance all-staff safety awareness and safety management ability and strengthen its safety culturebuilding, during the reporting period, Hengyi Petrochemical organized safety education and trainingaccording to the di?erent needs of employees at varying ranks.In March 2021, Hengyi Petrochemical conducted safety management training for over 70 managersabove the team or group leader level in Hangzhou Yichen and Hengyi Polyamide to enhance their safetyawareness and management ability.In June 2021, Hengyi Petrochemical conducted safety training for 123 managers at or above the supervisorlevel in Haining New Materials to enrich their legal knowledge and enhance their safety awareness.In October 2021, Hengyi Petrochemical publicized and interpreted the Amendment (XI) to the Criminal Lawof the People¡¯s Republic of China and the New Production Safety Law of the People¡¯s Republic of Chinaat its regular production and operation meeting. In the same month, the 2021 New Blue trainees weretaught HSE basic courses for them to improve safety awareness, master basic safety knowledge and garneremergency self-help skills.In November 2021, Hengyi Petrochemical organized 163 persons from seven subsidiaries for training toobtain the Polymerization Process Safety Operation Certi?cate.

Safety Campaigns

China had its 20th Workplace Safety Month in June 2021. The Company launched a company-wide workplace safetymonth campaign with the theme of "Implementing Safety Responsibility, Promoting Safety Development" to helpthe Company practice workplace safety and build up safety culture.

Environmental ProtectionWhile reducing costs and increasing e?ciency, capacity and pro?tability, Hengyi Petrochemical always keeps in mind itssocial responsibility as an industry leader. The Company actively ful?lls its environmental protection responsibility bydeveloping green products and strictly controlling pollution and waste to help build a beautiful homeland.

"Police Lecture" Safety Campaign

Featured Safety CampaignTeam and Group Safety Campaign

To supervise the performance of employee safety responsibility and facilitate the implementation of HengyiPetrochemical's safety development goal, during the reporting period, subsidiaries actively carried outthe "Workplace Safety Month Mobilization Meeting". During the workplace safety month, team and groupsafety activities under themes such as "Safety Responsibility Publicity", "Emergency Equipment Drill" and"Accident Case Study" were conducted.Jiaxing Yipeng participated in the 10th Fire Games inXiuzhou District of Jiaxing City and won the secondprize; Taicang Yifeng organized a safety knowledgecontest and a safety month essay writing activity aswarm-ups; Suqian Yida organized a safety knowledgecontest, invited police officers of Suqian trafficpolice detachment to give a tra?c safety lecture andconducted monthly safety advanced team selection.

Case: Enriching Safety Campaigns to Enhance Employee Awareness of Safety Responsibility

Developing Green Products

There are a number of disadvantages of antimony catalysts commonly used in traditional polyester production.For instance, heavy metal antimony which is somewhat poisonous will precipitate toxicity in PET dyeing, thereforepolluting the environment. And then, the waste ?nal PET products will expose ten thousand tons of antimony tonature every year, causing irreversible pollution.In order to meet the national development plan of green production and consumption as well as the developmentconcept that sci-tech innovation creates a better life, Hengyi Petrochemical has listed the environmentally-friendlyantimony-free polyester as a key R&D project. Through independent project approval and independent R&D,with two years' e?orts, the Company has overcome many technical di?culties, replaced antimony catalysts withtitanium catalysts, adopted titanium catalysts and a composite catalyst system with a new coordination chemicalstructure, developed the antimony-free environment-friendly polyester product - Eticont, and realized massproduction, with all indicators meeting national and corporate standards. Eticont is a product with high quality andfully independent intellectual property rights. It can be used to fundamentally solve pollution problems.

Eticont advantages

In 2021, the Company invested a total of RMB

68.1107

million in environmental protection.

Hengyi products are green not onlybecause the manufacturing processis green, but also because the uselink and whole life cycle are green.Clothes made from antimony-containing fabrics, once discarded,will release antimony into water andsoil whether they are burnt or putin a land?ll. Antimony pollution canbe avoided completely if clothes aremade antimony-free. The launch ofantimony-free polyester productsmakes it possible for the wholeindustry to run green.

Building a green life cycle for thewhole industry chain

Antimony-free greenenvironment-friendlypolyester products helpto build a green textilelife cycle

The in?uence of antimony-containing polyester productson the environment in thedownstream of the industrial chainis mainly re?ected in ?nishing afterprinting and dyeing. In the processof ?nished treatment after printingand dyeing, pollution will becaused if the antimony precipitatedexceeds the relevant index value.Antimony-free polyester productsavoid antimony pollution fromsubsequent dyeing and printingfrom the source and guaranteestable production and operation ofthe downstream enterprises.

Solving the environmental pollutionproblems of downstream enterprises

of the industrial chain

Key Performance

During the reporting period, Hengyi Petrochemical won the ?rst prize of the 2021 CNTAC Science TechnologyProgress Award for its Key Technology and Industrialization of Antimony-free Environmental FriendlyPolyester Melt Direct Spinning. With further improved quality, Eticont products in 2021 were widely used inbaby clothes and facial mask ?elds.

Key Performance

Eticont series

Deepening Prevention and Control of Pollution and WasteThe Company attaches great importance to green production and always prioritizes environmental protection toachieve the goal of green sustainable development. During the reporting period, the Company¡¯s environmentalprotection management extended from index control to process management to ensure that waste water and wastegas meet the discharge standards.In 2021, Hengyi Petrochemical mainly conducted the following tasks in environmental pollution prevention andcontrol: (1) Streamlining current environmental management of subsidiaries; (2) participating in the acceptance ofenvironmental protection projects; (3) carrying out environmental remediation and provision work; (4) improvingthe online monitoring system and the monitoring data assessment platform; and (5) actively communicate andcoordinate with government regulatory authorities.

Speci?c Work

Streamlining

currentenvironmentalmanagement ofsubsidiaries

Participating inenvironmental

acceptance

Improving theonline monitoring

system and themonitoring dataassessment

platformCarrying outenvironmentalremediation andprovision work

Activelycommunicatingand coordinatingwith governmentregulatoryauthoritiesOrganizing andtracking the dischargeand monitoringof exhaust gas,discharge liquid,and waste slag,the ?ling of plansfor environmentalemergencies, anddischarge indicatorsof major pollutantsspeci?ed in emissioncerti?cate andemission permit.

Acceptingenvironmentalprotection in JiaxingYipeng's 56,000-ton?ber project andHaining¡¯s 1.5-million-ton ?ber (exceptAB line) project andthermal power project.

The compliance ratesof sewage, rainwater(pH, CODCr, NH3-N)and boiler ?ue gas(particulate matter, SO2,NOx) of all subsidiarieswere 100%.

In active respondto "direct sewagedischarge", HangzhouYichen, HangzhouYijing, Hengyi Polymer,Hengyi Chemical Fiber,Hengyi Caprolactam,Shuangtu NewMaterials, HengyiHigh-Tech, ShaoxingHengming and JiaxingYipeng completedrelevant work.

Coordinating theabnormalities of on-site monitoring dataof its subsidiarieswith the governmentenvironmentalprotection departmentto avoid administrativepunishment

Pollution and Waste Discharge Control

Water Conservation Measures of Hengyi Petrochemical

Water Resource ManagementThe water quality is monitored throughout the project from pre-design, operation to completion. For example,Hengyi High-Tech monitored the chemical oxygen demand and ammonia nitrogen in the water during the pre-design and operation of the project with an annual output of 500,000 tons of environmentally friendly functional?bers to ensure that water quality meet the standard. The Company also carried out a series of measures to helpsave water and improve the utilization rate of water resources.

Underground water pipe is relocated to the ground.For example, the Hengyi Polymers Plant, one of ouroldest plants, has strengthened leakage detectionand reduced waste of water after relocating thepipeline underground to the ground.

Condensed water is reused. Companies such asSuqian Yida and Hengyi High-Tech use condensedwater instead of soft water for waste heat boilers, andthe heat can also raise the inflow temperature, savingboth energy and coal. The amount of water saved isabout 2-3 tons/hour.

Sprinkling and air conditioning are modified forspinning. Sprinklers are replaced and water pumpmotors are additionally provided with frequencyconversion to control water in all plants, whichsave water and electricity while maintainingnormal working conditions.

Novel water economizer is employed. For example,Jiaxing Yipeng changes the ordinary packing watercollector to the M-wave water collector and adds anFRP baffle in the middle of the cooling tower, so as toprotect cooling water from wind and reduce the tapwater consumption.

Tap water is replaced by reclaimed.Tap water is replaced by water cycled fromproduction. Tap water is replaced by reclaimedwater to supplement production recycledwater and ?re water and clean melt ?lters.

¹«Ë¾ÓëÔ±¹¤

½ØÖ¹µ½2020 Äê 12 Ô 31 ÈÕ£¬¹«Ë¾ÔÚÖ°Ô±¹¤ 21398 ÈË£¬ÆäÖУ¬Éú²úÈËÔ± 16739 ÈË£¬ÏúÊÛÈËÔ± 562 ÈË£¬¼¼ÊõÈËÔ±2404 ÈË£¬²ÆÎñÈËÔ± 179 ÈË£¬¹ÜÀíÈËÔ± 1514 ÈË£»²©Ê¿Ñо¿Éú 3 0 ÈË£¬Ë¶Ê¿Ñо¿Éú497 ÈË£¬±¾¿Æ 5882 ÈË£¬´óר6333 ÈË£¬¸ßÖлòÖÐר 5101 ÈË£¬³õÖм°ÒÔÏ 3555¡£

Empowering Employees andCreating a Sustainable Workplace

Employee Rights and Interests 60Career Development 64Employee Caring 68

Hengyi Petrochemical always prioritizes the care for and development ofemployees, and regards employees as its most valuable commodity. TheCompany e?ectively protects the legitimate rights and interests of employeesand helps them improve professional skills and comprehensive qualities andbalance between work and life, striving to create a happy workplace.

Employee Rights and Interests

In accordance with the Labor Law of the People's Republic of China, the Company Law of the People's Republicof China, and other laws and regulations at home and abroad, Hengyi Petrochemical regulates the Company'spersonnel and labor management as well as respect and maintain the legitimate rights and interests of employees.Hengyi Petrochemical is committed to building a diversi?ed, fair and inclusive workforce, and setting a supportingsalary and welfare model based on actual positions to fully mobilize the enthusiasm of employees at all levels.

Diverse WorkplaceThe Company advocates the concept of "respecting employees and appointment on merits", and activelyintroduces interdisciplinary talents to ensure diversi?cation. At present, the Company has formed an internationaland professional management and operation team with expertise to stimulate the vitality and cohesion of talents,laying a solid talent foundation for the development of the industry.

IndicatorUnit2021

WorkforcePerson16,820Percentage of female employees%26.17Percentage of employees at

manager level and above

%1.77Percentage of employees withcollege degree and above

%30.15

Compensation Incentives

Hengyi Petrochemical attaches great importance to building harmonious labor relations. It protects, motivates ande?ectively functions the enthusiasm of both operators and employees. The Company also safeguards the legitimaterights and interests of employees according to law, and provides employees with competitive salary and incentivemechanism in the industry. In addition, the Company makes regular salary adjustments based on its own operatingconditions and the actual situation of the industry and region to make a internally fair salary range. This has fullymobilized the enthusiasm of employees and e?ectively promoted the attraction of high-tech talents.Since 2021, based on the total salary control policy and the general salary adjustment policy for front-lineproduction employees, the Company has encouraged production subsidiaries to stimulate the potential of internalmanagement improvement, enhance employment management, and better function the role of salary incentive.This can e?ciently facilitate personnel e?ciency and secondary cost distribution incentive, thus allowing primary-level employees to get more pay for more work.

During the reporting period, the Company adopted a multitude of salary and system optimization measuresfor front-line polyester and polyamide production employees. It also revised and improved the salarysystem to enhance the salary level and e?ectively raise the its salary competitiveness.Special Inspection and Point SurveysDuring the reporting period, with the purpose of promoting system improvements, Hengyi Petrochemicallaunched the campaign of ¡°Stabilizing the Front Line and Strengthening the Foundation¡± and inspectedthe salary and systems in its three polyester and polyamide subsidiaries, namely Haining New Materials,Shaoxing Hengming and Fujian Yijin. Point surveys were also conducted in related factories. Key problemswere spotted and solutions were discussed for the effective implementation of follow-up improvementmeasures.Implementing Salary Adjustment for Front-line PostsTo fully mobilize the enthusiasm of front-line employees and reduce turnover while improving laborproductivity, a sound mechanism for wage distribution under continuous improvement has been formed inproduction factories. During the reporting period, the salary adjustment for front-line employees in threesubsidiaries totaled RMB40.99 million, including RMB16.61 million of minimum wage adjustment, withaverage monthly salary up by 12%.

Case: Strengthening the Salary Guarantee of Front-line Employees with Multiple Measures

Highlight performance of welfare system

Highlight measures of welfare system

Welfare

Hengyi Petrochemical pays all social insurances for its employees in full and on time in strict accordance with thenational policies and regulations, and continuously improves the welfare security system including social insuranceand provident fund that enables employees to have no worries about the future.

Rate of employmentcontract signing

%

Rate of physicalexamination and health ?lecoverage100%

Rate of employees attendingthe labor union100%

Rate of employee trainingcoverage 100%

Rate of social securityinsurance coverage100%

Attainment rate ofoccupational health andsafety education100%

The Company provides housing foremployees (employee dormitory,standard double room, standardsingle room, couple's room or suiteaccording to different posts and ranks),and provides a certain amount of rentsubsidy for quali?ed employees

The Company provides employees withphysical examinations, including newemployee physical examination, annualphysical examination, occupationaldisease examination, etc., and payssupplementary commercial insuranceand mutual medical assistance for thephysically impaired

The Company provides free shuttlebuses, corresponding subsidiesfor self-provided cars that meetthe conditions of public use, andvehicle subsidies for qualifiedcompany managersThe Company strictly implementsapplicable policies and regulations toensure the days-off and vacation daysof employees, and provides employeeswith corresponding benefits forbirthdays, holidays and job anniversaries

The Company provides an internalrestaurant with abundant dishesand reasonable prices, andfrontline sta? may also enjoy a mealallowanceThe Company also helps employeeswith respect to issues of settlement andschool entrance for children and providesassistance for needy employees

HousingHealth security

TransportationPTO and holidays

DiningLifeassistance

Equal CommunicationIn order to listen to the employees and understand their needs and demands, and ensure practical and e?ectivecorporate governance, Hengyi Petrochemical has developed several communication channels such as RationalProposals, General Manager¡¯s Mail Box, and an o?cial WeChat account. The Company creates an opportunity foremployees to express opinions and participate in management, and encourages them for candid communication.

Hengyi Petrochemical "HyRabbit"

In 2021, Hengyi Petrochemical launched a new media consulting and service platform called HyRabbitdedicated for a Hengyi employees. The platform sets up an Employee Mailbox to facilitate information feedbackfor primary-level employees.

Case: Launching a New Media Platform and Conducting an Engagement Survey

In order to continuously and efficientlyhear the opinions of the primary-levelemployees, Hengyi Petrochemical organizesthe engagement survey on an annual basis,covering all ranks of employees. And theemployees actively participate in and providefeedback in the survey. In 2021, surveyproposals were collected from employeesin terms of compensation and benefits,accommodation, primary-level management,holiday, and various mechanisms. After thesurvey, all entities took concrete actionsto show care for employees and activelyimplemented their proposals to effectivelysafeguard their enthusiasm.

Hengyi Petrochemical Co., Ltd.2021 Social Responsibility ReportCareer Development

Hengyi Petrochemical always adheres to the people-oriented principle and advocates the employee conceptof "joint creation and sharing and joyful development". Hengyi Petrochemical values talent introduction andcultivation and optimizes the organizational structure of employees to attract high-potential and diversifiedprofessionals. The Company also constantly improves career development to build a platform for employee growth.Structure OptimizationDuring the reporting period, Hengyi Petrochemical effectively boosted the reform and optimization of humanresources around the standardization of organizational structure and key post allocation. The Company alsopromoted the turnover of management technical team and strengthened management technician team building toprovide strong human resources guarantee for corporate transformation and upgrading.

During the reporting period, Hengyi Petrochemical accelerated the organizational structure adjustment in thepolyester sector to achieve standardized and unified management. The Company developed the principles forsetting up departments, workshops and sections in polyester factories according to the business scale to promotecentralized management of electromechanical instruments and professional coordination.By the end of the reporting period, Hengyi Petrochemical had completed the structural adjustment of Haining NewMaterials and Fujian Yijin and set up storage and transportation departments in Shaoxing Hengming and Suqian Yida.The Company has also e?ectively implemented the relevant organizational structure adjustment in most factories.

Case: Promoting the Organizational Structure Adjustment for Uni?ed Management

To streamline the management level and clarify management relations, during the reporting period, Hengyi Petrochemicalchanneled great efforts into the staffing standards for management and technology positions to enhance the overallstrength of management (M), technology (T) and operation (O) teams. Clarifying the positioning of MTO teams not onlyhelps to streamline management relations and strengthen the technical strength, but also can effectively increase careerdevelopment channels, boost the orderly turnover of MTO teams and promote their transformation and upgrading.By the end of the reporting period, Hengyi Petrochemical completed the job name and sequence switching of 337employees in all polyester factories. The Company switched the positions of 62 assistant directors and 102 deputyleaders/assistants. It also ensured that the promotion system of all entities is under strict sta?ng control.

Case: Clarifying the Management Relations to Empower the Orderly Turnover of MTO Teams

Employee TrainingHengyi Petrochemical values the cultivation of diversified talents and provides training and learning resources foremployees. Focusing on development planning, the Company e?ectively introduces and reserves talents and launchesteam learning programs to empower the sustainable development of employee career. During the reporting period,Hengyi Petrochemical customized learning programs in its corporate university -- Hengyi University to satisfy thedemand for corporate development and employee growth and achieve win-win cooperation.

Hengyi Petrochemical always values personnel training and development, and makes full use of abundant internaland external studying resources based on its training carrier to promote the cultivation of talents and the growthof the business team, thereby building an ecological supply chain for talents. In 2021, basing its personnel trainingmore on actual operation and business needs, Hengyi Petrochemical ?exibly implemented various programs bothonline and o?ine. Brand programs such as the Dandelion Program were carried out to build a resource pool for theinternalization and inheritance of Hengyi knowledge.New Blue Talent Training ProgramAs the core project of the Company¡¯s talent reserve and future talent training, it enables new college students toquickly become outstanding Hengyi people through systematic training. During the reporting period, the New BlueProgram introduced and trained nearly 160 college students, and its training content covered the topics of inductiontraining, internship in factory, tutor instruction, business adaptation and periodic retraining.Middle-level Promotion ProgramThe Middle-level Promotion Program is intended to empower incumbent middle-level management by introducingrelated instruments and methods based on the actual business and teams of functional departments andsubsidiaries. During the reporting period, the Middle-level Promotion Program was carried out through training ontalent identification and employment, management instruments and self-management for key echelons such aslogistics, R&D and functional headquarters.Middle and High Level Focus ProgramThe Middle and High Level Focus Program was carried out around the Double Carbon Target policy and internal costreduction and e?ciency improvement online for the ?rst time. Middle and high level managers were organized toinnovate and work out solutions from the perspective of actual operation.Dandelion Program to Promote Knowledge Productivity

The Dandelion Program plans to vigorously conduct training of internal trainers and the construction of astandardized curriculum system. Through course development, knowledge accumulation, and practical operationshooting, more than 30 certi?ed lecturers were trained and more than 30 courses were certi?ed in 2021.

Industrial Technology LecturesInternal and external industrial technology resources are integrated for learning and exchange. During the reportingperiod, external experts were invited to give series industry lectures on process technology, technology frontier,industry trends, etc. to continuously help the industry upgrade.

Case: Diversi?ed Training System Helps All-round Employee Growth

Middle-level Promotion Program

Middle and High Level Focus Program

Hengyi University Network School has been in operation for

four

years. There are currently

5,348

online students and a cumulative online learning time of

36,847

hours. The Company has developedand designed

copyright courses, purchased

external excellent courses, and created

special learning projects for employees at all levels, covering technical lectures, production specialties,general capabilities, and professional knowledge.

In addition, through product knowledge, sales case development and sales case contest, sales productcourses, sales typical cases and case courses have been produced. The Company trains sales experts intointernal lecturers, and supports the improvement of sales personnel training system and business ability.

Key Performance

Skill RecognitionSince 2020, Hengyi Petrochemical has independently carried out the assessment of vocational skill levelrecognition. The Company pays attention to professional theoretical knowledge and closely combines with jobrequirements and actual production and operation. Equal importance is attached to theoretical knowledge andpractical skills as well as work performance, professional ethics and craftsmanship.

Case: Expanding the Scope of Skill Recognition and Issuing Skill Level BadgesIn April 2021, on the basis of original skill recognition, Hengyi Petrochemical applied for the level recognitionexamination quali?cation of ?tter and instrument maintenance workers to expand the scope of skill recognition.In November, the Company customized and awarded skill level badges based on internal skill level recognition.This is another crucial step after it was shortlisted in the first batch of vocational skill level recognitioninstitutions in Xiaoshan District. These badges issued in combination with internal skill level recognitione?ectively enhances the sense of honor of employees and creates a sound learning atmosphere.By the end of the reporting period, due to company-wide promotion of vocational skill level recognition, atotal of 942 people had passed the national recognition, including 36 technicians, 351 senior workers, 218intermediate workers and 337 junior workers. Combined with internal skill level recognition, a total of 1,646badges for intermediate workers, 486 for senior workers and 37 or technicians were awarded.

Vocational Skill Recognition Certi?cate

Skill Level Recognition Badge

Employee Caring

Clinging to cultural concepts including "Staying in Hengyi and building a harmonious home" and "Allow employeesto grow with the enterprise", Hengyi Petrochemical launches a series of abundant employee care campaigns tocreate a harmonious atmosphere. This will safeguard both physical and mental health of employees and e?ectivelyenhance their sense of belonging and recognition.

Caring for Female Employees

Hengyi Petrochemical practically cares for the physical and mental health of female employees. The Companydevelops the labor protection and safety production system for them to ensure their relevant rights and intereststo be e?ectively protected. During the reporting period, Hengyi Petrochemical organized various special lectures,examinations and free clinic activities on an irregular basis to enhance the awareness to pay attention to theirphysical and mental health. On each International Women's Day, the Company cares for female employees,including sending condolences, offering holiday benefits, and holding interesting activities such as floral DIY toenhance the happiness of female employees in their work and life.

Floral DIY

Blessings on International Women's Day

Caring for Disabled EmployeesIn active response to the national call for poverty alleviation, Hengyi Petrochemical provides more disabled personswith job o?ers. The Company has employed more than 600 disabled workers. Hengyi Petrochemical designates Mayas the service month for the disabled to further care for vulnerable groups. By organizing series activities to help thedisabled and various healthy cultural and sports events from time to time, the Company facilitates their emotionalcommunication and expression of demands and enriches their spiritual and cultural life.

Activities to care for the disabled

Care for Physical and Mental Health

The physical and mental health of employees is the driver for corporate development. Hengyi Petrochemicalearnestly cares for the physical and mental health of employees. A multitude of measures are adopted to makeemployees assured at work and life.

Health caremeasures for

employees

Setting up a Health Roomequipped with commondrugs in the o?ce space

Providing healthmonitoring instrumentssuch as blood pressuremeter to productionworkshops

Organizing new and oldemployees and sta?involved in special typesof work for physicalexaminationOrganizing healthmanagement activities suchas health lectures and freeclinics from time to time

Physical examination for employees

During the reporting period, Hengyi Petrochemical paid more attention to the health management ofemployees. The Company extended physical examination to primary-level managers and employees. On-sitephysical examination allows employees to know their health status in the Company. Online health lectures andreport interpretation activities were also carried out to build a safety shield for employee health.

Case: Strengthening the Awareness of Health Management and Expanding the Coverage ofPhysical Examination

Care for Employee Family

Hengyi Petrochemical also cares for the families of employees and the growth of their children. During the reportingperiod, activities such as condolences for employees' family members on holidays and summer art camps for theirchildren were held to express care for employees.

Recreational sports and group activities are arranged for enriching the spiritual and cultural life. This can allowemployees to sense the care and warmth of Hengyi Petrochemical and work more happily. While enhancingphysical constitution, these events further reinforce the cohesion and centripetal force within the Company.

Employee track meet"Hengyi Cup" Basketball League

Hengyi letters to employee familiesSummer art camp for children of Hengyi employees

In order to express appreciation the family members of excellent employees at work during the Spring Festival fortheir support and contribution, Hengyi Petrochemical sent Hengyi letters to them. The paper is too short to describemy feelings. These letters bear the missing, sustenance and gratitude of every employee and his/her family.In addition, in order to better care for the growth of next generation, Hengyi Petrochemical organized summer artcamps for children of employees, allowing employees to work without any worry.

Case: Caring for Employee Family to Pass on Corporate Warmth

¹«Ë¾ÓëÔ±¹¤

½ØÖ¹µ½2020 Äê 12 Ô 31 ÈÕ£¬¹«Ë¾ÔÚÖ°Ô±¹¤ 21398 ÈË£¬ÆäÖУ¬Éú²úÈËÔ± 16739 ÈË£¬ÏúÊÛÈËÔ± 562 ÈË£¬¼¼ÊõÈËÔ±2404 ÈË£¬²ÆÎñÈËÔ± 179 ÈË£¬¹ÜÀíÈËÔ± 1514 ÈË£»²©Ê¿Ñо¿Éú 3 0 ÈË£¬Ë¶Ê¿Ñо¿Éú497 ÈË£¬±¾¿Æ 5882 ÈË£¬´óר6333 ÈË£¬¸ßÖлòÖÐר 5101 ÈË£¬³õÖм°ÒÔÏ 3555¡£

Contribution to Society

Education Support 74 Pandemic Prevention and Control 75

Hengyi Petrochemical faithfully fulfills its corporate social responsibility andalways practices a high sense of social responsibility and good corporate ethics.The Company actively participates in social activities such as education andpoverty alleviation, COVID-19 prevention and control to enhance social happiness.

Education Support

The study path of young people has always been the focus of Hengyi Petrochemical¡¯s public welfare. TheCompany fully supports education development and tried our best in poverty alleviation through education. Itprovides assistance to the construction of Hope Primary School to boost cooperation between the east and thewest and help education development with action.

To promote the cooperation between the east and the west and increase support for education, HengyiPetrochemical signed a donation agreement of RMB30 million in August 2020 to support the constructionof Hongde Hope Primary School in Hongsibu District, Wuzhong City, Ningxia Hui Autonomous Region.The donation will be made in batches according to the progress of the project. By the end of the reportingperiod, the Company had donated a total of RMB 21 million.Hongde Hope Primary School plans to cover a total land area of 26,704.4 m2 and a total construction areaof 8,054.09 m2. Hongde Hope Primary School has been fully completed and opened in September 2021,where 219 immigrant students will grow and study here.This donation for poverty alleviation actively responds to the national call. It not only conforms to HengyiPetrochemical¡¯s requirement for actively ful?lling its social responsibility, but also helps improve the localquality of education and living standard. The Company helps Hongsibu District solidly promote the e?ectiveconnection between consolidating and expanding poverty alleviation results and rural revitalization,striving to ful?ll the important task of creating a national enhancement demonstration zone for relocatedimmigrants in the new era.

Case: Providing Assistance to the Construction Hope Primary School to Promote Cooperationbetween the East and the West

Pandemic Prevention and Control

In order to implement the important measures of the CPC Central Committee on the prevention and control of COVID-19pandemic, Hengyi Petrochemical makes every e?ort into normalized prevention and control by promoting COVID-19vaccination in an orderly manner and carrying out internal and external prevention work in special periods.

COVID-19 vaccination site

COVID-19 vaccination is an important action to implement the CPC Central Committee¡¯s prevention andcontrol work. On the basis of being informed, consent and voluntariness, the Company promotes COVID-19vaccination in an orderly manner to e?ectively raise the vaccination rate. This can form a crowd immunebarrier as soon as possible to ensure the health, life safety and production order of employees.By the end of the reporting period, subsidiaries such as Hangzhou Yijing, Hengyi Polymer, Heingyi ChemicalFiber and Yisheng Petrochemical actively implemented COVID-19 vaccination in batches to build animmune barrier with practical action together.

Case: Promoting Vaccination to Resist COVID-19 Together

Temperature measurement and code scanningfor COVID-19 prevention and control

Disinfection for COVID-19 prevention and control

The Company's COVID-19 prevention volunteers

In order to further prevent and control the COVID-19, in December 2021, the Pandemic Prevention and Control LeadingGroup released theNotice on Better Ensuring COVID-19 Prevention and Controlaccording to the provincial andmunicipal work arrangements for stricter prevention and control, requiring all entities and employees to jointly build astrong defense line against COVID-19.In the nucleic acid detection, subsidiaries of the Company were in active response to the call and formed a vanguardof COVID-19 prevention and control to assist medical sta? in guiding employees to collect and upload information. Thenucleic acid test becomes more smoother.Party members and security personnel were also on dutywith masks to check body temperature, health code andcorrectly wore mask of inbound visitors. Persons whodo not work at Hengyi were required to register personalinformation such as name and telephone number toensure traceability in case of any abnormality.All-round high-frequency disinfection were conducted inpublic areas such as o?ce space, canteen and dormitorybuilding on a daily basis. The Company also requiredfor regular indoor ventilation and strict disinfection oftransport vehicles to prevent external pandemic input.

Case: Building a Defense Line against COVID-19 with Multiple Measures

Indicator Index

ContentGRI Standard Index

About This ReportGRI 101/GRI 102Message from the ChairmanGRI 102About Hengyi PetrochemicalGRI 102

Responsibility

Building a Dream on an Isolated Island and Develop

Together to Build the Belt and Road Together

GRI 413/GRI 415

Motivating Employees and Sharing Development toCreate a Model of Common Prosperity

GRI 102/GRI 401

Practicing the Double Carbon Target to Boost Green

Development

GRI 302/GRI 305Governance Escorts the

Century-old Business

Corporate GovernanceGRI 102Compliance OperationGRI 102Investor Management/

Innovation to Enhance theValue of the Industry

Focusing on Quality: Promoting High-Quality

Development

GRI 301/GRI 416/GRI 417Product R&D: Building an Industry BenchmarkGRI 202/GRI 203Digital Innovation: Boosting Intelligent ControlGRI 201/GRI 203Supply Chain Integration: Creating a C2M Closed LoopGRI 203/GRI 204

Guaranteeing HSE to Build a

Green Home Together

HSE ManagementGRI 307/GRI 403Risk ManagementGRI 403Safety ProductionGRI 403Environmental ProtectionGRI 301/GRI 303/GRI 306Empowering Employeesand Creating a Sustainable

Workplace

Employee Rights and InterestsGRI 401/GRI 405Career DevelopmentGRI 401/GRI 404/GRI 405Employee CaringGRI 403/GRI 405Contribution to Society

Education SupportGRI 415Pandemic Prevention and ControlGRI 413Indicator IndexGRI 102

Feedback/

FeedbackDear readers,Thank you for reading the 2021 Social Responsibility Report of Hengyi Petrochemical Co., Ltd. In order to provideyou and other stakeholders with more professional and valuable corporate social responsibility information, pleaseanswer the questions in the feedback form, to help us furt enhance our future social responsibility and sustainabledevelopment management.Please score from 1 to 5 (1 as the lowest score and 5 as the highest score)

1. Your overall evaluation of this report

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

2. Do you think this report can re?ect the signi?cant impact of Hengyi Petrochemical on the economy?

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

3. Do you think this report can re?ect the signi?cant impact of Hengyi Petrochemical on the environment?

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

4. Do you think this report can re?ect the signi?cant impact of Hengyi Petrochemical on the society?

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

5. Do you think this report can re?ect the corporate government of Hengyi Petrochemical?

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

6. Your overall evaluation of information disclosure in this report:

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

7. Your overall evaluation of the text expression quality in this report:

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

8. Your overall evaluation of the design style in this report:

¡õ 1 ¡õ 2 ¡õ 3 ¡õ 4 ¡õ 5

9. Which topics in this report attract you most?

10. Do you have any other comments and suggestions on this report?

Your Contact Details:

Name:

Tel:

Email:

Employer:

Title:

Fax:

You can contact us by call, email or mail at:

Address: Building 3, Hengyi Nan¡¯an Mingzhu, 260 North Shixin Road, Xiaoshan District, Hangzhou City, Zhejiang ProvincePostal Code:311215Tel: [phone]Email: [e-mail]

One of the world-class green petrochemical

enterprises respected by society

Hengyi Petrochemical Co., Ltd.

Social Responsibility ReportHengyi Petrochemical Co., Ltd.