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 March 2024.

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 dedicated experience in the research, development, 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, a total land area of 401,297 square meters, and a total floor area of 212,760 square meters. The company completed and put into operation Phase I and Phase II of its facilities in 2009 and 2016, respectively. In April 2017, Kuncai Technology was successfully listed on the Shanghai Stock Exchange, becoming the first A-share listed company specializing in pearlescent materials (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 output 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 its own boundaries, thereby maintaining a sustained technological leadership position 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 SKUs. 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, seed coating, and other industries. Domestically, the company collaborates with over 30 authorized distributors, while internationally it serves more than 80 distributors. Additionally, Kunchai has established subsidiaries in Europe, the Americas, Australia, and India, respectively. The company has successfully integrated into the supplier networks of the world’s top ten automotive coatings manufacturers and leading global cosmetic brands, and stands 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, covering coatings, color masterbatches, cosmetics, and other sectors.

II. Employment Relationship

Promote stability through harmony and foster development through stability; build harmonious labor relations by integrating 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—ensuring that employees not only take part in this effort but also reap its benefits. Prioritize maintaining stability, safeguarding employment, strengthening democratic management, and advancing enterprise development, enabling enterprises and workers to weather challenges together and chart a path of common progress. Embed ideological and political work and cultural development throughout the entire process of this initiative, expanding from specific points to a comprehensive framework, continuously enhancing the harmony of labor relations. Establish 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, thereby boosting employee motivation, serving workers wholeheartedly, and strengthening 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, standardized discharge outlets, and installed pollutant‑discharge signage. The primary source of production wastewater is spray‑coating effluent, which is treated in an existing spray‑coating wastewater treatment facility before being routed to a recirculating water tank and fully returned to the production process, achieving zero discharge of production wastewater.

The company conducts 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 based on 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 improvement,” 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 persons 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 paying taxes in good faith, protecting the environment, and supporting public welfare.

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 collects 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, health, and hygiene, while pursuing innovation and continuous improvement, achieving significant results. Regarding ethical conduct, the company proactively assumes its role as a corporate citizen, balancing the interests of stakeholders, including customers, employees, government, and society at large.

V. Corporate Culture

The company’s top leaders and key personnel were transferred from XX Company of the Group, deeply influenced by its corporate culture. Employees at all levels have actively advanced corporate‑culture development, ensuring that the broader workforce thoroughly studies and implements the company’s guiding principles. This has led to a comprehensive enhancement of employees’ overall competence, the establishment of a distinct corporate image, the cultivation of stakeholder recognition, and the building of robust core competitiveness—each of these efforts playing a pivotal role in driving the company’s growth. As a result, the company’s cohesion, internal unity, and operational strength have been strengthened, while “Kuncai’s” brand awareness, reputation, and social influence have risen markedly, 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 corporate strategy. 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 changing times and the company’s growth, the focus is on innovation in content, form, and methods—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. By harnessing the soft power of corporate culture, the company accelerates both high‑quality and rapid development. Upholding its mission of “New Era, New Choices, Kuncai, New Aluminum Journey,” its vision of “Green, Low‑Carbon Vehicles, Kuncai Lightweight Manufacturing,” and its 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 company’s overarching goals.

“Lucid waters and lush mountains are invaluable assets.” A sound ecological environment is the most universally beneficial form of public well-being. 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.

Through our 2023 Corporate Social Responsibility Report, we aim to communicate the company’s CSR initiatives in a transparent and truthful manner, thereby enhancing public understanding of Kuncai and contributing positively to energy conservation, 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, conducting business with integrity toward suppliers and customers, actively engaging in environmental protection, implementing targeted poverty alleviation initiatives, and supporting broader social welfare efforts, thereby fostering harmonious development between the company, society, and nature.

The company has undertaken certain efforts in fulfilling 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 its competitiveness; strengthen internal management to conserve energy, reduce consumption, lower costs, and boost profitability; and prioritize technological innovation, upgrade environmental protection facilities, and minimize emissions. Furthermore, the company will continue to uphold social and business ethics, accept oversight from the government and the public, and proactively fulfill its social responsibilities, thereby promoting coordinated and harmonious development—both for the company itself and for society at large.

Fujian Kuncai Material Technology Co., Ltd.
March 8, 2023