Wankai New Materials Co., Ltd.

Wankai New Materials Co., Ltd. is a manufacturing company listed on the ChiNext board of the Shenzhen Stock Exchange in 2022. The company specializes in the production of raw chemical materials, particularly polyester bottle chips, and has established itself as a significant player in the global market for these products. With its headquarters located in Haining, Zhejiang, Wankai benefits from a strategic position within the Yangtze River Delta Economic Zone, facilitating industrial collaboration and operational efficiencies. The company's primary business lines focus on the production and sale of polyester bottle chips, with an annual production capacity of 3 million tons, ranking it among the top manufacturers worldwide. Wankai has developed strong relationships with major global brands, including Coca-Cola and Nongfu Spring, which enhances its market presence. The company is also expanding its operations internationally, with projects such as a polyester bottle chip production base in Nigeria. Wankai emphasizes innovation in research and development, aiming to enhance its technological capabilities and maintain competitiveness in the evolving market landscape.

(1) Outstanding Scale Advantage As of the end of this reporting period, the company has an annual production capacity of 3 million tons of polyester bottle chips, ranking among the top globally in terms of production capacity scale, which gives it prominent scale advantages. In terms of raw material procurement, the company's large-scale procurement of upstream raw materials enables it to secure more favorable commercial terms, effectively reducing costs. During the product production process, large-scale production is conducive to realizing economies of scale. Compared with global competitors, the company's production facilities have the advantage of high capacity per single unit. The annual production capacity of most single production units is 500,000 tons or more, which can effectively reduce the raw material and energy costs per unit of finished products. This demonstrates outstanding economic efficiency and environmental friendliness, thereby enhancing profitability. (2) High-quality Customer Resources and Brand Advantage Through years of business accumulation, the company's polyester bottle chip products have won the favor of numerous well-known global brand customers, and the company has established good cooperative relationships with globally renowned food and beverage manufacturers such as Nongfu Spring, Coca-Cola, Cestbon, and Wahaha. (3) Location Advantage of the Two-place Layout The company's headquarters is located in Haining, Zhejiang, which is situated in the hinterland of the Yangtze River Delta Economic Zone in China, endowing it with great potential for industrial division of labor and cooperation. With the continuous advancement of the integration of the Yangtze River Delta, the company's location advantage has become increasingly prominent. The Chongqing base highlights its economic and social value. The production capacity of polyester bottle chips in China is characterized by relatively high geographical concentration and an imbalance in development between the east and the west, mainly concentrated in regions such as Jiangsu, Hainan, Guangdong, and Zhejiang. In recent years, the market demand for polyester bottle chip products in China's central and western regions has been steadily increasing. Moreover, the location of the company's Phase I 600,000-ton MEG project under construction is Xuanhan County, Dazhou City, which further strengthens the company's layout advantage in the southwest. The project site is relatively close to the production base of Chongqing Wankai. According to estimates, the freight cost of MEG from Dazhou, Sichuan to Fuling, Chongqing can be reduced by approximately 50% compared with that from existing suppliers in the East China region and Xinjiang region to Fuling, Chongqing. In the future, the nearby supply of MEG can effectively save the transportation cost of raw materials, significantly reduce the unit production cost of the company's polyester bottle chips, and further enhance the market competitiveness of PET products. (4) Excellent Product Development and Technological R&D Capabilities The company attaches great importance to technological accumulation in its daily operations. It has established a Polymer New Materials Research Institute, an Academician and Expert Workstation, and a Postdoctoral Workstation. The company's main business products have formed a large-scale, intelligent, flexible, and green production system. Based on these production technologies, the parent company's research institute and the innovative subsidiary Kaipuqi actively promote the transformation of technological achievements, make forward-looking strategic arrangements in the fields of new polyester materials such as PETG, modified PET, and RPET, and actively incubate and develop new material projects with good market prospects, broad development space, and obvious comprehensive competitive advantages. In terms of intellectual property, as of the disclosure date of this annual report, the company and its subsidiaries have obtained a total of 112 patents, including 32 invention patents, ranking among the top in the industry in terms of the number of patents. (5) Production Technology Advantage The company possesses production facilities and equipment of international advanced standards and has accumulated rich production technology experience through long-term operations. In terms of production equipment, the company uses a complete set of patented equipment for the CP link designed and produced by China Kunlun Engineering Corporation (CTIEI, formerly China Textile Academy) at an international advanced level and the SSP link designed and produced by Swiss Polymetrix (formerly Bühler BUHLER), and employs the distributed control system (DCS) of Honeywell. In terms of production technology, the company has accumulated production technologies with independent intellectual property rights, such as separate esterification of IPA, low-temperature polymerization process, and composite energy-saving thermal insulation, during its long-term production and operation. These technologies ensure the safe, stable, and efficient operation of the production facilities. (6) Rich Experience in Environment-friendly Production and Management System Advantage In terms of safety and environmental protection, the company places great emphasis on environmental protection work and strictly adheres to the ISO14001 environmental management system standard during project construction. The company rigorously treats various pollutants and discharges them only after they meet the standards, achieving green, low-carbon, and clean production. In terms of quality management, the company has passed certifications such as ISO9001/14001 quality and environmental management system certification, HAS23000 halal management system certification, ISO50001 energy management system certification, and Coca-Cola certification, meeting the requirements of the European Union and the US Food and Drug Administration. The company's new material testing center has obtained ISO/IEC17025 (CNAS) laboratory accreditation. In addition, the company has compiled quality, environmental, and safety management manuals, procedure documents, and operation instructions, and established a full-process management system covering inspection of raw and auxiliary materials, supervision of the intermediate production process, inspection of finished products, logistics, after-sales service, etc., ensuring that the company's daily management and quality control operate in line with international standardization models. (7) Internationalization Strategy Advantage The company continues to advance its internationalization strategy, taking the construction of overseas warehouses and overseas production bases as key measures to actively explore the international market, increase its global market share, improve its response speed to serve the overseas market, and break through the anti-dumping barriers for bottle chips in the international market. As one of the "Top 500 Private Enterprises in China's Foreign Trade", the company's products are sold to hundreds of countries and regions around the world. In the future, the company will further respond to national strategies such as the Belt and Road Initiative and the Maritime Silk Road Initiative, and actively explore the potential market demand for polyester bottle chip products in the international market under the promotion of these national strategies.