Fujian Kuncai Material Technology Co., Ltd.

Social Responsibility Report

(2024 Fiscal Year)

Fujian Kuncai Material Technology Co., Ltd. (hereinafter referred to as the “Company”) warrants that this report contains no false records, misleading statements, or material omissions, and assumes individual and joint liability for the truthfulness, accuracy, and completeness of its contents.

Part One: Preface

1. This report has been prepared in light of the government’s emphasis on environmental protection, labor rights, and consumer rights, and in consideration of the Company’s specific practices in fulfilling its social responsibilities.

2. The Company issues this report to accurately reflect its fulfillment of corporate social responsibility, further strengthen broad communication with all sectors of society, and promote the Company’s comprehensive and sustainable development.

3. This report was reviewed and approved at the General Manager’s Office Meeting held in January 2025.

Part II: Status of Corporate Social Responsibility Implementation

I. Company Overview

Fujian Kuncai Material Technology Co., Ltd. is a high-tech enterprise with 20 years of expertise in the R&D, production, and sales of pearlescent materials. It is located in the Yuanhong Investment Development Zone in Fuzhou, with a registered capital of RMB 468 million. The company completed and put into operation Phase I and Phase II of its Kuncai facilities in 2009 and 2016, respectively. In April 2017, Kuncai Technology was successfully listed on the Shanghai Stock Exchange, becoming the first “pearlescent material” stock on the A-share market (stock code: 603826). Additionally, the company has established wholly owned subsidiaries—Fujian Fushi New Materials Co., Ltd. and Zhengtai New Materials Technology Co., Ltd.—in the Jiangyin Port City Economic Zone of Fuzhou. These subsidiaries operate the world’s first intelligently designed production lines, independently developed and engineered, with an annual capacity of 1 million tons of titanium oxychloride and 100,000 tons of titanium dioxide. Notably, Fushi’s Phase I project, with an annual capacity of 200,000 tons of titanium oxychloride, went into production in July 2019.

Since its establishment, Kunchai Technology has consistently upheld the innovative philosophy of “starting from zero and striving for breakthroughs,” pursuing cutting-edge product innovation and continuously pushing the boundaries of its capabilities, thereby maintaining a sustained technological edge in the industry. The company has obtained 15 domestic and international invention patents, possesses numerous proprietary technologies, and offers more than 30 product series comprising over 800 distinct formulations. It currently boasts an annual production capacity of 30,000 tons of pearlescent materials and 20,000 tons of synthetic mica. Its pearlescent materials rank first globally in both production and sales, with applications spanning coatings, plastics, automotive, cosmetics, inks, leather, ceramics, building materials, and seed coating industries. Domestically, Kunchai maintains a network of over 30 authorized distributors, while internationally it serves more than 80 distributors. Additionally, the company has established subsidiaries in Europe, the Americas, Australia, and India—Kunchai Europe, Kunchai Americas, Kunchai Australia, and Kunchai India—respectively. Kunchai has successfully integrated into the supplier ecosystems of the world’s top ten automotive coatings companies and leading global cosmetic brands, serving as a key supplier across the coatings, color masterbatch, and related industries. Its end‑customer base includes industry leaders such as DuPont and Nippon Paint, spanning coatings, color masterbatches, cosmetics, and other sectors.

II. Employment Relationship

Promote stability through harmony and foster development through stability; build harmonious labor relations by embedding the creation of such relations into enterprise reform and development, corporate culture building, and day-to-day management, thereby generating a positive resonance effect. Uphold a people‑centered approach and pursue coordinated development: respect and rely on employees, fully mobilize the enthusiasm of managers, trade unions, and the broader workforce to participate in this endeavor, ensuring that both enterprises and workers achieve shared growth. During the course of enterprise reform, cultivate amicable employer‑employee relations, strive to balance the interests of all parties involved, and seamlessly integrate the protection of workers’ legitimate rights and interests with the promotion of harmonious enterprise development—so that employees not only become active participants but also tangible beneficiaries. Prioritize maintaining stability, safeguarding employment, strengthening democratic management, and advancing enterprise development, enabling enterprises and workers to jointly overcome challenges and chart a path of shared progress. Embed ideological and political work, along with cultural development, throughout the entire process of building harmonious labor relations, expanding from specific initiatives to a comprehensive framework. Continuously enhance the level of harmony in labor relations, establishing a model of harmonious labor relations anchored in laws and regulations such as the Company Law, the Trade Union Law, the Labor Law, and the Labor Contract Law, and underpinned by democratic management and institutional innovation. This will boost employee motivation, provide dedicated service to workers, and strengthen their sense of belonging and loyalty. By fostering harmonious labor relations, we can achieve a win‑win outcome—enhancing both economic and social benefits—while contributing to enterprise harmony and social stability.

III. Environmental Relationships

The enterprise has implemented stormwater–wastewater separation, established standardized discharge outlets, and installed pollutant‑discharge signage. The primary source of production wastewater is spray‑coating effluent, which is treated in the existing spray‑coating wastewater treatment facility and then routed to a recirculating water tank, where it is entirely reused in the production process, achieving zero discharge of production wastewater.

The company implements classified collection and recycling of solid waste and strictly adheres to the hazardous waste transfer manifest system, achieving a 100% utilization rate for solid waste and a 100% disposal rate for hazardous waste.

To ensure the safety of state property and employees’ lives, enhance the emergency response capabilities of all departments, positions, and staff in handling sudden environmental pollution incidents, effectively carry out rescue operations when accidents occur, prevent the escalation of incidents, minimize property losses and casualties, and protect the environment from contamination, in accordance with relevant requirements and taking into account the company’s actual circumstances, Fujian Kuncai Material Technology Co., Ltd. commissioned the preparation of the “Emergency Response Plan for Sudden Environmental Incidents of Fujian Kuncai Material Technology Co., Ltd.” in 2022 and filed it with the Fuqing Municipal Bureau of Ecology and Environment.

Throughout the provision of products and services, we place great emphasis on environmental impact, strengthening green and environmentally friendly practices across the entire product lifecycle and value chain. We strive to improve product yield and raw material utilization, implement management measures aimed at “energy conservation, resource reduction, quality enhancement, and efficiency gains,” and minimize all forms of energy consumption. Upholding innovative operations and sustainable development, we maintain a clean and well‑organized factory environment, with fully equipped office and residential facilities.

IV. Social Relationships

Kuncai Company actively fulfills its social responsibilities and supports public welfare initiatives. It assists employees facing serious illnesses or financial hardship in overcoming adversity; proactively organizes blood‑donation drives for its workforce; convenes fundraising and donation campaigns for employees whose families encounter sudden, severe difficulties, bringing warmth to those in need; and provides employment opportunities for people with disabilities. By adopting a comprehensive approach that integrates internal and external efforts, the company earnestly upholds its corporate social responsibility.

The company has consistently upheld the principle of balancing responsibility with integrity, taking proactive steps in areas such as tax compliance, environmental protection, and corporate philanthropy.

The company provides pre-employment training to its employees on safety, environmental protection, occupational health, and relevant laws and regulations, and has established a safety early-warning system. It also gathers pertinent legal and regulatory information, maintains an in-house legal affairs position, and conducts periodic internal training sessions to enhance employees’ legal awareness and safeguard their legitimate rights and interests.

The company actively fulfills its public responsibilities, civic duties, and adheres to ethical standards. In terms of public responsibility, the company prioritizes environmental protection, energy consumption, and occupational safety and health. Through proactive innovation and continuous improvement, it has achieved significant results. Regarding ethical conduct, the company plays an active role as a corporate citizen, balancing the interests of stakeholders, including customers, employees, government, and society at large.

V. Corporate Culture

All levels of the company’s personnel have actively advanced corporate culture development, ensuring that employees thoroughly study and implement the company’s guiding principles. This effort has comprehensively enhanced employees’ overall competence, established a distinct corporate image, secured the recognition of stakeholders, and built robust core competitiveness—each contributing critically to the company’s growth. As a result, the company’s cohesion, unity, and operational strength have been strengthened, while “Kuncai’s” brand awareness, reputation, and social influence have risen significantly, with production and operations consistently delivering outstanding results.

The company adheres to the principle of scientific development, closely aligning its efforts with the requirements of its strategic plan. It further integrates corporate culture building with Party building and ideological‑political work, fully leveraging the organizational role of the Party Committee in cultural development. By utilizing diverse communication channels, the company highlights its latest developments, while a range of recognition programs and mass‑participation activities strengthen employee cohesion. In response to evolving times and the enterprise’s growth, the company places particular emphasis on innovation in content, form, and methodology—using culture as a platform, shaping identity through culture, uniting hearts with culture, and driving performance through culture. This approach aligns all employees around shared values and objectives, fostering a favorable economic and humanistic environment for the enterprise, and harnessing the soft power of corporate culture to propel rapid, high‑quality development. Upholding the mission of “New Era, New Choices, Kuncai, New Aluminum Journey,” the vision of “Green, Low‑Carbon Vehicles, Kuncai’s Lightweight Innovation,” and the core values of “Innovation, Responsibility, Efficiency, and Pursuit of Excellence,” the company ensures that material culture is effectively implemented while safeguarding the transmission of its spiritual culture. This supports employees in understanding and embracing these cultural principles, guiding their behavior in alignment with the organization’s overarching ethos.

“Lucid waters and lush mountains are invaluable assets.” A sound ecological environment is the most universally beneficial form of public welfare. The fundamental guiding principle for fostering harmonious and sustainable development between humanity and nature is to prioritize human well-being, which encompasses both material and spiritual needs as well as the imperative to safeguard a healthy ecological environment.

The company upholds the principle that “reputation stems from quality, and quality arises from effective management,” and firmly believes that “honesty and trustworthiness” are the cornerstone of economic order, the very foundation of an enterprise’s survival, and an intangible asset. Operating in compliance with the law enables entrepreneurs to create value for both their businesses and society, while also fulfilling their historic responsibility. Furthermore, by implementing detailed management guidelines across all departments, the company fosters a corporate culture in which employees uphold reason and abide by the law.

We aim to communicate our corporate social responsibility framework—transparent and authentic—to the public through our 2024 CSR Report, thereby enhancing understanding of Kuncai Company and making a positive contribution to energy conservation and emissions reduction, environmental quality improvement, and the development of a resource‑efficient, environmentally friendly enterprise.

VI. Self-Assessment of Fulfilling Social Responsibility

Kuncai Company consistently reinforces the principle of fulfilling its social responsibilities in production, operations, and management. It remains committed to giving back to society, safeguarding the legitimate rights and interests of its employees, treating suppliers and customers with integrity, and actively engaging in environmental protection, targeted poverty alleviation, and other public‑interest initiatives, thereby fostering harmonious development between the company, society, and nature.

The company has undertaken certain initiatives to fulfill its social responsibilities; however, there remains a gap between its current performance and the relevant regulatory requirements, and the task of accelerating development remains formidable. To address this, the company will expedite its growth, expand production capacity, and enhance competitiveness; strengthen internal management to conserve energy, reduce resource consumption, lower costs, and boost profitability; and prioritize technological innovation while upgrading environmental protection facilities to minimize emissions. Furthermore, the company will continue to uphold social and business ethics, accept oversight from government authorities and the public, and proactively assume its social responsibilities, thereby fostering coordinated and harmonious development—both for the company itself and for society at large.

Fujian Kuncai Material Technology Co., Ltd.

February 8, 2025