We believe the success of SP Chemicals today lies in our competitive strengths, including:-

• Strong Industry Growth Potential
• Strategic Location in the PRC
• Strong Market Position
• Sound Operating Model
• Clear Growth Strategy

• Strong Industry Growth Potential

With the continued economic growth of the PRC, the chemical industry is expected to grow in tandem. SP Chemicals' established track record in the Jiangsu province positions us to ride on the growth of the chemical industry, and to become a dominant market player in the chemical raw materials industry in the PRC.

Our track record in the PRC, as well as the increasing depth and breadth of the Group's business, also gives us an edge over other local companies as we develop our export markets worldwide and position ourselves for globalization.

• Strategic Location in the PRC

Jiangsu province, where our Taixing facility is located, is the second largest producer of caustic soda and one of the larger producers of aniline in the PRC.

Our Taixing facility is strategically located in the China Fine Chemical Industry Taixing Park, a dedicated economic development zone designated as a fine chemicals hub in Jiangsu province. Today, the industrial park has attracted internationally-renowned chemical companies such as Akzo Nobel Chemicals MCA (Taixing) Co. Ltd (a Fortune 500 Company), SNF (China) Flocculant Co., Ltd (a French water treatment agent manufacturer), and Noviant CMC (Taixing) Co.,Ltd.

Being the largest producer of chemical raw materials in the CFCITP, we are best placed to be the principal supplier of caustic soda and chlorine to new and potential downstream producers setting up production facilities in the CFCITP. Most of our PRC customers are located within 300km radius from our production plant. Close proximity to our customers presents us with the added advantage of lower transportation costs and reliability of supply.

Coupled with our own chemical jetty situated close to our plant and warehousing facility, we enjoy greater convenience in importing raw materials and exporting goods to our customers. This is part of our business operating model which ensures logistical efficiencies and cost effectiveness.

• Strong Market Position

Besides being the sole Chlor-alkali producer in the CFCITP, SP Chemicals enjoys a strong market position, given the high barriers to entry – such as our integrated chemical facility which requires high capex and investment dollars, as well as our established and extensive customer base.

Backed by a 16-year track record in the PRC, SP Chemicals’ customer base includes established multinational corporations and state-owned enterprises in various industry segments in the PRC.

Furthermore, SP Chemicals is headed by an experienced management team and supported by a team of PRC and Taiwanese managers, most of whom have more than 16 years of experience each in the chemical industry. We also have a young and educated workforce, of whom more than 70% have obtained at least a technical diploma in chemistry or pre-university education.

• Sound Operating Model

Our prevalent cost consciousness mindset sets SP Chemicals apart from our competitors. We operate our own chemical jetty, situated next to our plant and along the Yangtze river. The jetty allows us to receive our raw materials and deliver our products in larger quantities and at lower transportation cost as compared to land transportation.

The operation of our own Co-generation plant has further increase our cost competitiveness.

• Clear Growth Strategy

In a strategic thrust to expand our chemical raw materials business, SP Chemicals had, in August 2004, unveiled our Medium-Term Strategic Business Plan (“MTSBP”). The core of the plan was to achieve further growth and profitability through an estimated US$216 million investment in a series of initiatives. These initiatives included the construction of our Co-generation plant which commenced operations since May 2006, the doubling of our chlor-alkali and aniline production capacities which came into effect since May 2006, and the production of Vinyl Chloride Monomer (“VCM”) which started commercial operation in 4Q 2007.

With the successful implementation of our MTSBP, the Group is embarking on Phase 2 of our growth plans (“MTSBP II”). These new initiatives are a deliberate effort by the Group to expand our product range, and to integrate vertically up the value chain to control the reliability and costs of our raw materials.

Initiatives under MTSBP II include:

(i) Production Phase Five Expansion Plans (“PP5”) to expand our annual production capacities for caustic soda, chlorine, and aniline to 450,000 tonnes (from 300,000 tonnes), 396,000 tonnes (from 264,000 tonnes), and 135,000 tonnes (from 90,000 tonnes), respectively. PP5 started commercial operation in March 2008.

(ii) Production of 320,000 tonnes per annum of styrene monomer, an intermediate raw chemical used in making polystyrene plastics, protective coatings, polyesters and resins.

SP Chemicals’ wide-ranging business plan will diversify the Group’s business, and bring us closer to our target of becoming a top-tier company in the production and sale of chemical raw materials.