Sinopec is paying great importance to the development of industrial chains, by adhering to the principle of transparent procurement; improving management of suppliers and contractors; and cementing strategic partnerships to drive the progress of national industry and boost its sustainable development.

Bidding and tendering management

Sinopec has also improved a "1+6+12" bidding management system; enhanced the management of tenderee representatives; prohibited discriminatory and biased terms in bidding process; regulated bidding management of imported materials; and publicized and implemented relevant laws, regulations and management systems to create an environment for open and fair competition. In 2021, we made public the documents entitled the Promoting Highquality Development with High-quality Supply and the Announcement on Seriously Handling Dishonest Behaviors in Bidding and Tendering, in a bid to create a wellregulated supply ecosystem featuring orderly competition and integrity. Besides, we upgraded the electronic bidding and tendering platform to promote digital supervision of bidding, and established a whole-process supervision system for bidding and tendering. We also intensified efforts to combat bidding-related problems, organized 117 enterprises to complete selfinspection and self-rectification, conducted on-site inspections of 25 key enterprises, and dealt with 98 dishonest suppliers.

Supplier management

In accordance with national laws and regulations on procurement through open bidding, Sinopec has adjusted its guidelines for supply and resource management, and opened its arms to suppliers. We have provided suppliers with opportunities to participate in procurement; improved our mechanism for supplier qualification examination and dynamic assessment of contract performance; and carried out green procurement and supplier training, to jointly maintain a transparent, healthy and honest material supply ecosystem.

Implementing qualification reviews

Sinopec has implemented the supplier qualification review in line with the principle of pre-and post-qualification review; conducted onsite reviews of suppliers providing materials for production equipment, and involving production and construction safety. This has been done in accordance with the requirements for the "onsite review of factories, equipment, products, management, and performance". The on-site reviews involved a total of 1,644 suppliers throughout the year.

Enhancing quantitative evaluations

Sinopec has established the EPEC.com standard system for objective evaluation of the overall strength of suppliers. Our real-time display of the EPEC.com standard data via the EPEC.com platform; and the application of the EPEC.com standard data in the bidding and tendering process, have prompted suppliers to improve their supply services. By the end of 2021, a total of 8,159 suppliers had completed the legal entity credit certification; 13,971 products had passed the product quality evaluation; 44,654 suppliers had conducted the dynamic evaluation of contract performance; and 19,149 suppliers had completed market performance ratings.

Boosting warning and punishment

Sinopec has stressed contract performance for material suppliers of key engineering projects; giving timely warnings and prompts to suppliers with quality and schedule issues; and punished non-compliant suppliers. In 2021, we issued Work Reminder Letters to 46 suppliers and dealt with 138 non-compliant suppliers.

Promoting strategic cooperation

Sinopec issued the Operation Regulation for Strategic Cooperative Suppliers of Materials Procurement (Trial) to standardize the selection, cooperation and evaluation of suppliers and advance strategic procurement. In 2021, we signed 5-year strategic cooperation agreements with 67 suppliers.

Implementing green procurement

Sinopec compiled and issued the Sinopec Green Materials Procurement Catalogue (2021), to guide enterprises in priority procurement of green products; promote the development of the green evaluation standard; guide suppliers to improve green production processes and green raw materials; boost optimal procurement in total green purchasing costs; and drive upstream and downstream enterprises over green supply chains.

Improving training and guidance

Based on material supply management; the supplier resources management system; and bidding and tendering management system, and keeping in line with the current operation environment, Sinopec proposed stricter requirements for suppliers with regard to anticorruption; environmental protection; safety management, and green procurement, in a bid to promoting suppliers' integrity management. In 2021, nine supplier training sessions were held, involving 1,454 person-times.

Contractor management

In keeping with the law, Sinopec has set up a procedure for bidding for warehousing registration; clarified the content of the contractor warehousing registration; organized a compliance review regarding contractors' business licenses, qualification documents, and other documents; and provided information on occupational health and safety management systems, environmental management systems and quality management systems. We have also organized the Sinopec contractor management information platform for online assessment of contractors and subcontractors, so as to identify and record the problems of contractors and their employees; do timely reviews of the assessment results; and promote contractors' overall self-improvement and capacity building. Moreover, we have enhanced the safety management of contractors; established a mechanism for continuous safety man-hour recognition and reward for construction projects; improved safety with the development of standardized construction sites and modular bases; and promoted the development of the HSE culture system for engineering projects. Additionally, we have revised and improved systems for contractor management, and boosted the company's contractor management system.

Driving the development of the industrial chain

Operating the EPEC.com platform

EPEC.com, an industrial product e-commerce platform affiliated to Sinopec, aims at "making procurement more professional". Based on the SC2B e-commerce model featuring "Internet + supply chain", the platform targets four major sectors - procurement; sales; finance; and integrated services, and is committed to realizing value-added procurement and supply chains. Meanwhile, the launch of international business platforms in English, Russian and Spanish has attracted Chinese enterprises to go global and global enterprises to make their presence felt in China.

In October 2021, the EPEC.com Industrial Products Exhibition cum Petroleum and Petrochemical Industry Exhibition was held in Suzhou. The picture shows the booth of EPEC.com

Strengthening strategic cooperation

Sinopec has implemented a strategy of openness and cooperation, and inked cooperation agreements with government agencies, enterprises and universities to expand cooperation for synergies and mutual benefit.

In November 2021, Sinopec signed procurement agreements worth US$41.5 billion with 34 partners from 14 countries and regions at the 4th China International Import Expo

Contributing to China's efforts to become a manufacturing power

Sinopec has taken major equipment localization as an important move to meet its responsibilities as a central enterprise; shoulder its social responsibility; and ensure national energy, technology and economic security. To do this, Sinopec follows the "positive, safe, advanced, and reliable" approach to help tackle key problems in major equipment localization; contributing to China's efforts to transform from "a large manufacturing country" to "a manufacturing power".

In 2021, Sinopec sorted out the "bottlenecks" in the imported goods and materials sector; checked imported major equipment; key materials and core components in service; and developed targeted programs for homegrown alternatives. We also implemented a large-scale mode to tackle hard-nut problems in science and technology; and partnered with key domestic manufacturers to work on 24 key projects with an R&D spending of 20 million yuan. We tapped the potential of cost reduction and cut cost and improved efficiency in equipment localization. By doing so, we saved 140 million yuan in procurement funds and shortened the delivery cycle by more than one third compared with imports of the same kind. Relying on the decentralized control systems developed for the Zhenhai and Hainan ethylene projects with an annual capacity of one million tonnes, we saved about 61 million yuan on imports, saving 38% of the capital. Moreover, the price of the adsorption separation program control valves of the homegrown PX device was only 15% of the imported ones.

As of now, Sinopec has localized major equipment and is ranked among the top central enterprises, making significant contributions to the development of the petrochemical industry and the transformation and upgrading of China's equipment manufacturing industry. By the end of the 13th Five-Year Plan period, 92% of Sinopec's oil and gas exploration and development equipment was domestically produced, versus the 94% localization rate for its refinery equipment with an annual capacity of 10 million tonnes, and 87% for ethylene equipment with an annual capacity of one million tonnes.