Investment Environment Assessment Report of Rizhao City

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China Rizhao Contents

1 Overview of 02 Rizhao City

2 Investment 15 Advantages of Rizhao City

3 Voice of 38 Investors

4 Key Investment 50 Information

5 Appendix 55

City Overview

Origin of the Geographical Area and Jurisdiction Name Location Population

Rizhao got its name Located in the central Land area: It has jurisdiction over “Oriental Sun City” coastal areas of 5,359 square kilometers Donggang District, Lanshan because “the first Chinese mainland, it is Sea area: District, Ju County, Wulian ray of sunlight” seated in the southeast 6,000 square kilometers County, and additionally shines on this city and of Shandong Province, Coastline: sets up three agencies of it is a new coastal the shore of the Yellow 168.5 kilometers long the municipal government, open city, port city Sea and the southeast Population: namely Rizhao Economic- and tourist city. flank of the Shandong 2,959,500 (by the end Technological Development Peninsula, and faces of 2015) Area (National Level), Japan and the ROK Shanhaitian Tourist Resort, across the Yellow Sea Rizhao International Ocean in the east. City.

Rizhao City is located in the central coastal Rizhao City is located in the southern areas of Chinese mainland flank of the Shandong Peninsula

Shandong Rizhao City Province

Rizhao City

Administration Zone Map of Rizhao City

Rizhao City

City Card

• The Eastern Bridgehead of New Eurasian Land Bridge

• The Winner of the UN-Habitat Scroll of Honor Award Rizhao won the UN-Habitat Scroll of Honor Award • The Winner of Top 100 Investment Environment Cities in China

• The Chinese Outstanding Tourism City

• The Winner of the China Habitat Environment Prize

• The Winner of the Scientific Development and Innovation Prize for Chinese Cities

• The Winner of Chinese Top Ten Green Cities The black pottery of Rizhao has a history of more than • The National Sustainable Development 5,000 years Experimental Zone

• The National Sanitary City

• The National Environmental Protection Model City

• The National Garden City

• The National Model Green City Rizhao is the hometown of Mr. • The Chinese Financial Ecological City Samuel Chao Chung Ting, the Nobel Prize winner • The Capital of Water Sports

• The Winner of the World Clean Energy Awards

• The National Cold-Chain Logistics Development Demonstration City

• The Cross-Border Electronic Commerce Comprehensive Experimental Area at the Provincial Level Rizhao is the main birthplace of “Longshan culture”

Macro economy – Economic aggregate grows steadily, industrial structure is optimized obviously, and service and high-tech industries develop rapidly

Economic aggregate grows steadily  In 2015, the gross regional domestic product in Rizhao City reached 167.08 billion yuan; during the 12th Five-Year Plan period, the average annual Unit: 100 million GDP growth reached 8.31%, ranking the forefront of 1800 Shandong Province.  In 2015, the gross regional domestic product per 1600 capita in Rizhao City reached 58,110 yuan and was converted to 9,330 US dollars based on the annual 1400 average exchange rate, up 6.9% over the previous year, 1.58 times the figure at the end of the 11th 1200 Five-Year Plan, an average annual growth of 9.6%. 1000 2011 2012 2013 2014 2015

Source: Rizhao Bureau of Statistics

Industrial structure is optimized obviously  During the 12th Five-Year Plan period, the city’s thre e industries ratio was adjusted to 8.4:48.7:42.9 from 9.2:54.4:36.4, with a development trend toward the t Rizhao Industrial ertiary industry development from the primary and se condary industries. Structure Changes - Agricultural production remains stable. In 2015, t Unit: % he city’s total output value of agriculture, forestry, ani 8.4 mal husbandry and fishery reached 25.629 billion yu an, an increase of 4.3% from a year earlier. Among t 9.2 hem, the characteristic agriculture has achieved new 42.9 36.4 results, the ecological construction of the forestry has 2011 2015 been accelerated and the agricultural production con ditions have been improved. 54.4 48.7 - Industrial production ran smoothly and transfor mation and upgrading were promoted steadily. At the end of 2015, the number of the city’s industrial en terprises above designated size was 624 and the city achieved 58.69 billion yuan of industrial added value Primary Industry Secondary Industry s above designated size, an increase of 8.43%. Signi Teritary Industry ficant achievements were made in scientific and tech nological innovation and the proportion of high-tech i Source: Rizhao Bureau of Statistics ndustry output values to the industrial output values above designated size increased by 1.14 percentage points over the previous year. - The service industry develops rapidly. Tourism, modern logistics, finance and so on developed with a sound momentum, and the breakthrough developme nt of exhibition economy, e-commerce, commerce an d trade, catering, education and training, health care, services for the aged and so on was achieved.

Macro economy – The investment in fixed assets becomes increasingly active and investment structure is continuously optimized

Rizhao City has witnessed a steady rise in the investment in fixed assets  In 2015, the investment in fixed assets of Rizhao City reached 140.781 billion yuan, an Rizhao’s GDP during 2011-2015 increase of 14% from a year earlier; during the 12th Five-Year Plan period, the cumulative Unit:: 100 million investment in fixed assets reached 551.468 billion yuan, an average annual growth of 1800 18.6%.  In 2015, the number of construction projects of 1600 the investment in fixed assets of Rizhao City was 1,935. Among them, there were 1,429 1400 new projects, and 97.746 billion yuan was invested; there were 288 investment projects 1200 worth more than 100 million yuan, and 59.598 billion yuan was invested; there were 5 1000 provincial key projects, and 4.29 billion yuan 2011 2012 2013 2014 2015 was invested.

Source: Rizhao Bureau of Statistics

Investment structure is continuously optimized Rizhao Industrial Investment Ratio  The investment focus gradually shifts from the secondary industry to the tertiary During 2011-2015 Unit：% industry. The investment ratio of the primary, 2015 2.5 secondary and tertiary industries in Rizhao 40 57.5 City changed from 2.3: 43.3: 54.4 in 2011 to 2014 1.7 41 57.3 2.5: 40.0: 57.5 in 2015 and the investment proportion of the tertiary industry continued to 2013 3.2 40.6 56.2 increase. 2012 3.7 42.1 54.2  The high-tech industry investment increases significantly. During the 12th Five- 2011 2.3 43.3 54.4 Year Plan period, Rizhao City’s investment in high-tech industry increased from 5.662 billion 0% 20% 40% 60% 80% 100% yuan to 8.493 billion yuan, an average annual Primary Industry Secondary Industry increase of 8.4%, accounting for 6.0% of the total investment in fixed assets. Tertiary Industry

Source: Rizhao Bureau of Statistics

Macro economy – The consumer market and the resident income grow steadily

The consumer market grows steadily  In 2015, the total retail sales of social consumer goods in Rizhao City achieved 60.387 billion yuan, an increase of 23.843 billion yuan over 2011, and during the 12th Five-Year Plan period, an average annual growth was 13.38%.  From the consumption of urban and rural residents, in 2015, urban retail sales reached 48.852 billion yuan, an increase of 10.1%; rural retail sales reached 11.536 billion yuan, an increase of 10.9%.  From the consumption patterns, retail sales reached 55.765 billion yuan in 2015, an increase of 22.053 billion yuan in 2011; food income reached 4.623 billion yuan, an increase of 1.791 billion yuan over 2011. The income of urban and rural residents grows steadily  Per capita disposable income of the city residents was 19,547 yuan, an increase of 9.1%, and after deducting price factors, the actual growth was 7.8%.

Rizhao Total Retail Sales of Consumer Goods during 2011 to 2015

Unit: 100 million yuan

800 603.87 535.98 600 420.1 476.2 365.44 400 200 0 2011 2012 2013 2014 2015 Source: Rizhao Bureau of Statistics Resident Incomeof Rizhao City in 2015 All Citizens Urban Residents Rural Residents Names of Absolute Over the Over the Over the Index Absolute Absolute value previous year previous previous value (yuan) value (yuan) (yuan) (%) year (%) year (%) Disposable 19547 9.1 26217 8.2 12319 9.3 income Income from wage and 14142 10.1 20176 7.5 7603 15.0 salary Net income from 4202 4.4 4348 8.2 4044 0.3 operations Net income from 683 4.5 1231 2.9 89 9.6 property Transfer of 520 29.7 461 80.2 583 5.5 net income

Source: Rizhao Bureau of Statistics

Macro economy – The level of openness is continuously improved and the pace of foreign exchange is accelerated

The level of openness is continuously improved.

 Rizhao made more frequent economic and trade contact with Australia, Brazil, the United States, the ROK, Japan, Russia, Singapore and other countries.

The total import and export volume of foreign trade increases rapidly.

 In addition to the fact that the total import and export value decreased by 56.3% caused by the influence of the sharp decline in international commodity prices, the risk of trade finance and so on in 2015, during the 12th Five-Year Plan period, the import and export volume of Rizhao City increased constantly to 15.185 USbillion in 2015.

The scale of the use of foreign capital continues to expand.

 The actual amount of foreign investment reached 578 million US dollars in 2015; during the 12th Five- Year Plan period, the total amount of foreign capital was 2.482 billion US dollars and foreign sources continued to broaden.

The overseas investment developed rapidly.

 In 2015, the external investment in Rizhao City achieved 284 million US dollars, and compared with 2011, the foreign investment increased by 4 times.

Rizhao Foreign Trade Volume from 2011 to 2015

Unit: 100 million US dollars

400

300

200 291.6 299.8 213.67 168.51 100 110.51

39.07 38.85 38.8 47.89 41.34 0 2011 2012 2013 2014 2015

Volume of Export Volume of Import

Macro economy – The level of openness is continuously improved and the pace of foreign exchange is accelerated (continued)

Use of foreign capital and overseas investment in Rizhao City in 2015 (unit: US dollars)

Use of Foreign Capital (Total Amount Year Overseas Investment of Foreign Capital)

The year 2011 380 million 66 million

The year 2012 421 million 91 million

The year 2013 530 million 132 million

The year 2014 573 million 274 million

The year 2015 578 million 284 million

Source: Rizhao Bureau of Statistics

Rizhao Main Export Product Rizhao Main Import Product Distribution in 2015 Distribution in 2015

31.6% 34.1% 31.0% 21.0%

16.1%

4.3% 3.6% 4.8% 10.7% 6.2% 6.7% 14.3% 7.5% 7.7%

Steel Iron Ore Aquatic Product Soybean Mechanical Equipment Gearbox Wood Engine Coal Tapioca Chips Textile and garment Others Citric Acid and Derivatives Others

Source: Rizhao Bureau of Statistics

Natural environment – Rizhao City has a good ecological environment, rich resources, and the advantage of the sea and provides good basic conditions for the development of various industries

Resource conditions in Rizhao City are superior

 Rizhao City boasts good light conditions, adequate light, rich heat resources and suitable climate.  Rizhao City is rich in land resources, and its total land area is 8,025,127.7 mu and agricultural land is 6,433,271.4 mu, of which arable land is 3,461,468.1 mu, accounting for 43.13% of the total area, garden plot accounts for 9.22% of the total area and forest land accounts for 14.17% of the total area.  Rizhao City boasts a complex geographical structure and intense magma activities, which leads to the formation of abundant nonmetal, groundwater, mineral water and other mineral resources. So far 56 kinds of minerals have been found.

Rizhao City makes full use of marine advantages

 Rizhao City is rich in ocean and seacoast resources. The city’s total length of coastline is 99.6 km, with 33 coastal reefs, wide coastal tidal flats, fertile water and a wealth of marine biological resources.  Port conditions are superior. Rizhao City has two ports, namely Rizhao Port and Lanshan Port, where port logistics and foreign trade have been developing rapidly, and formed a port-centered industry group with an open external environment

Rizhao City is rich in tourism resources

 Rizhao has high quality clean beach resources, “sun” culture tourism resources, ancient and modern celebrities and ancient sites, etc. Its tourism resources are very rich and distinctive, with “sea, mountain, ancient sites, forest”, so Rizhao has advantages of the holiday travel and sightseeing tour  Alternating rock with sand, the shore of Rizhao has rich natural resources and human resources, such as beautiful scenery and many historical sites, and has a certain potential for the development of tourism.

Strategic positioning – During the 13th Five-Year Plan period, Rizhao City will speed up the construction of an emerging city with marine characteristics and build a comprehensive well- off society ahead of schedule During the 13th Five-Year Plan period, Rizhao City will make great efforts to enhance the overall strength, regional competitiveness, innovation and vitality of Rizhao, with the aim of building “an ecological city, an industrial city, a tourism city, an open market and a talent city”, to speed up the construction of an emerging city with marine characteristics and build a comprehensive well-off society ahead of schedule

Speed up the construction of an emerging city with marine characteristics Build a comprehensive well-off society ahead of schedule

Practice the ecological city and build beautiful Rizhao with beautiful mountains and clear waters Fully implement the concept of “green development”, and constantly consolidate and enhance the ecological advantages of “blue sky, blue sea, golden beach”, so that a good ecological environment can become the most popular well-being of people’s livelihood

Practice the talent city and lead the development by innovation Fully “recruit talents and attract wisdom, science and technology”, gather innovative elements, enhance innovation, and improve the innovation system in order to promote the “public entrepreneurship and innovation” and build an innovative city

Practice the open market and create new regional competitive advantages Build a new pattern of opening to the outside world driven by “double ports”, multi-support and coordinated foreign trade, foreign investment, foreign exchange

Practice the tourist city and create a coastal tourist destination city With building a “national regional tourism demonstration zone” as the starting point, create a marine leisure resort city, the sun culture holy land of the East and an oriental starting point of the Silk Road cultural tourism

Practice the industrial city and accelerate the construction of the modern industrial system Build a new service-oriented modern industry system with modern agriculture as the basis, advanced manufacturing as the pillar and high-tech and strategic emerging industries as the leader

Source: Rizhao Municipal People’s Government

The overall goal – The main indicators of national economic and social development in Rizhao City during the “13th Five-Year Plan period”

Rizhao City put forward the main objectives of economic and social development during the “13th Five-Year Plan period”, around realizing “quadruple” total output values and per capita income of rural and urban residents ahead of schedule, building a comprehensive well-off society ahead of schedule, and changing the situation of “coastal late development and underdevelopment”

The key indicators of national economic and social development in Rizhao City during the 13th Five-Year Plan period

Average Growth during Year Unit The Target in 2020 the 13th Five-Year Plan Period (%)

Gross regional domestic Yuan 255 billion Around 9 product

General public budget Yuan 20.5 billion Around 11 revenues The urbanization rate of the population of permanent % 63 [8.2] residents

The proportion of R&D spending to the gross regional % 2.13 [0.9] domestic product

The proportion of output value of high and new technology % Above 25 [Above 5] industries

The per capita disposable Yuan 30,000 Around 9 income of the population

The rate of woody plant cover % 45 [4]

Note: The growth rate of gross regional domestic product is calculated at comparable prices; [ ] refers to the cumulative amount within 5 years. Source: The Summary of the 13th Five-Year Plan of National Economic and Social Development in Rizhao City

Space layout – Co-ordinate the development of land and sea and form an urban space layout of “twin cities, double areas and multiple clusters”

During the 13th Five-Year Plan period, Rizhao City will co-ordinate the development of land and sea, and gradually improve the functional layout of the port - city – district to form an urban space layout of “twin cities, double areas and multiple clusters”  Twin cities • Main city: administrative, commercial, financial and tourism center areas where port logistics, high-tech, coastal tourism, modern services and other industries are actively developed • Lanshan City: an important marine outfall of South Shandong Economic Zone, the main space carrier for Rizhao to develop the port-centered industry, and a sub-center which gives an impetus to the development of the cities and towns in south Shandong  Double areas • Shanhaitian Tourist Resort: the main carrier of coastal tourism, and mainly for coastal tourism, rural tourism, living and other functions • Sun Culture Tourist Area: build and form a tourist area with remarkable ecological and cultural characteristics  Multiple clusters • Create three key towns, namely Heshan Town, Houcun Town and Beiguo Town, and strengthen the overall planning and functional convergence with urban development relying on their own development advantages

Source: Rizhao City Master Plan (2015-2030)

Industrial layout - Break through the park and gather together the city’s industrial development

In the aspect of the industrial layout, Rizhao changes “a garden, a plan” into “multiple gardens, a plan”, divides it into four categories, namely tourism park, airport park, heavy chemical industry transformation park and high-tech industrial park, and forms an industrial layout blueprint of nine major parks  Rizhao Economic-Technological Development Area: expand automobile and parts industry, health food processing, modern logistics; promote the development of paper printing and packaging; actively cultivate marine equipment, biological medicine industry and e-commerce  Rizhao High-tech Industrial Development Zone: expand new generation electronic information, business incubation and e-commerce industry; cultivate the development of intelligent manufacturing, new materials, biological medicine and service outsourcing industries  Lanshan Economic Development Zone: expand the development of iron and steel and its supporting industries, and modern logistics industry; enhance the development of oil storage and transportation, fine chemical, and timber deep processing industries; cultivate the marine economic industry featuring marine food processing  Shibei Economic Development Zone: focus on the development of modern agricultural equipment, automotive, electronics, home appliances and other industries  Ju County and Haiyou Economic Development Zone: expand the development of oil storage and transportation and fine chemical industry; enhance the development of fine processing industry for distinctive agricultural products; cultivate the development of environmental protection equipment and new energy industries  Rizhao Port District: relying on port transport facilities, focus on the development of third-party port logistics, information service, cold chain logistics, special logistics, reverse logistics industries which adapt to the port-centered industry, as well as supporting trade, display trade and financial industries  Rizhao Konggang New Area: expand the development of aviation equipment, aviation integrated logistics (reserved bonded logistics), aviation service industries; cultivate the development of trade fair, headquarters economy and eco-agriculture industries  Shanhaitian Tourist Resort: focus on the development of cultural tourism, leisure vacation, healthy aging life, headquarters economy and other industries  Wulian Mountain Tourist Resort: focus on the development of leisure vacation, mountain sports, health maintenance for the aged, cultural and folklore experience and other industries

Wulian Mountain Tourist Resort Rizhao Shibei Economic Development Zone Ju County and Haiyou Economic Rizhao Shanhaitian Tourist Resort Development Rizhao High-tech Zone Industrial Development Zone Rizhao Konggang New Rizhao Economic- Area Technological Development Area

Rizhao Port Lanshan Economic District Development Zone

Superior Location Advantage -Strategic Link City

Beijing- Tianjin- Hebei Rizhao, a link city of the “Belt and Road” and the east bridgehead of the New Eurasian Land Bridge, is Blue Economic Zone of Shandong located in the conjunction area of Peninsula the Pacific Rim Economic Circle Rizhao City and the New Eurasian Pan Yellow Sea Economic Circle Continental Bridge Economic Zone, being the pivot and an important port city of the Pan Yangtze River Delta Yellow Sea Economic Circle and the Pacific Rim Economic Circle.

Pacific Rim Economic Circle

Pearl River Delta

Beijing-Tianjin-Hebei metropolitan circle: Beijing, Tianjin, Tangshan, Shijiazhuang, Baoding, etc.

Reaches Beijing-Tianjin-Hebei metropolitan circle in the north

China's central and The Pacific Rim Area: western regions: Pacific (Australia, New Xi'an, Lanzhou, Zealand, etc.), East Asia Urumqi, etc. Links central and Faces the (Japan, South Korea), western regions Rizhao Pacific Rim Five Central Asian and five Central Area in the North America (such as countries: Asian countries east the United States, Turkmenistan, in the west Canada, Mexico, etc.) Kyrgyzstan, and South America Uzbekistan, (Chile, Peru, etc.) Connects the Yangtze River Tajikistan, Delta and the southeast Kazakhstan coastal developed cities in the south China Yangtze River Delta Region: Shanghai, Jiangsu, Zhejiang, etc. China’s southeast coastal cities: Shanghai, Guangzhou, Shenzhen, Ningbo, Nanjing, Hangzhou, Xiamen, Fuzhou, etc.

Convenient Traffic Conditions - Open Ports with Great Advantages

Rizhao has a 300-million-ton port and has established “one-stop” customs clearance and “one-stop” service system: two national first-class open ports: Rizhao Port and Landbridge Port, with a throughput capacity ranking the 8th among China’s ports and the 11th in the world.

Port Characteristics

300-million-ton Comprehensive Port: in 2015, Rizhao Port has completed the cargo throughput of 361 million tons, and container throughput of 2.8134 million TEU, having a throughput capacity ranking the 8th among China’s ports and the 11th in the world. The overall planning of the port will have 280 berths with the overall capacity of more than 750 million tons, and the container volume of over 10 million TEU. It will be developed into a comprehensive port giving priority to coal, ore, oil and other bulk cargo and container transport. The port can directly reach the main areas at home and abroad through railway and highway: Rizhao Port has the qualifications of rail transit, and the goods can pass the central and western regions, Central Asia and West Asia to directly reach Rotterdam in the Netherlands and other European ports through the railway directly passing the port; goods can pass Ganqimaodu westwards to be exported to Mongolia through the Watang-Rizhao Railway; they can be delivered to all parts of China through the Rizhao-Lankao Expressway, Shenyang-Haikou Expressway and four national highways directly reaching the port. A number of international routes have been opened or are to be opened: the Rizhao-Pyeongtaek regular passenger & cargo ship liner, Rizhao Route for China-South Korea land & sea multimodal goods transport, Rizhao-Busan Container Route. Rizhao Port Group and Australia GSS Company cooperate to plan to open Rizhao-Shanghai-Australia direct container route in July 2016.

Container advantage: Rizhao Port has four special container berths for the world's most advanced container ships, and its special container yard has an area of more than 600,000 square meters. The throughput of containers in Rizhao Port was 2,813,400 TEU in 2015. Specified port promotion work is in progress and containers for grains are easier to apply for.

One-stop customs clearance and one-stop service: efficient and convenient customs clearance, saving business costs.

日 Rizhao Port 照 Landbridge Port

Plan the railway network of “three horizontal railways and two vertical ones”. Rizhao has the Yanzhou-Rizhao Railway, Jiaozhou-Xinyi Railway, Watang-Rizhao Railway and other railways. The Qinghai-Rizhao-Lianyungang Railway and the Lunan High-speed Rail pass Rizhao, forming the "three vertical and two vertical" railway network.

Railway Line

The Yanzhou-Rizhao Railway: It starts from Yanzhou Station of the Beijing-Shanghai Railway and ends in Rizhao Station. It passes Xinxiang in Henan, Heze, Jining, Linyi and Rizhao in Shandong.

The Jiaozhou-Xinyi Railway: It starts from Jiaozhou Station of the Jiaozhou-Jinan Railway and passes southwards Zhucheng, Wulian, Juxian, Yishui, Yinan, Linyi, Tancheng and reaches Xinyin Station of the Lianyungang-Lanzhou Railway. With a total length of 306.6 km, it is a railway connecting the Jiaozhou- Jinan Railway and the Lianyungang-Lanzhou Railway. The Watang-Rizhao Railway: It starts from Watang Town, Xingxian Country, Shanxi Province in the west and reaches Rizhao Port in Shandong Province in the east, passing Shanxi, Henan and Shandong with a total length of 1,260 km. The Qinghai-Rizhao-Lianyungang Railway: It began to be built formally in December 2014 and is supposed to be completed in 2018. The whole main line will be 194.39 km and the total investment is 23.8 billon yuan. After completion, the goods delivery capacity of the whole line is 35 million tons every year and 80 pairs of passenger trains will be run every day and the CRH train with a speed of 200 km/h will be run. The Lunan High-speed Rail: It was first built in December 2015 and is supposed to be completed and opened for traffic by the end of 2019. This the high-speed railway will pass through the southern Shandong. It will start from Lankao South Station of the Zhengzhou-Xuzhou High-speed Railway, pass Heze, Jining, Qufu, Linyi and other stations and reach Kuishan Station of the Rizhao railway hub; the Lunan High-speed Railway is 479 km in length and the driving speed is 350 km/h. By then, the Lunan region can connect the Beijing-Shanghai High-speed Railway through the Lunan High- speed Railway and reach Jinan, Beijing and others in the north and reach Yangtze River Delta and other places quickly in the south. The Rizhao-Weifang Railway: under planning.

The Rizhao- Weifang Railway Weifang The Watang- Status of the railway Rizhao Railway Under construction The Qinghai-Rizhao- Lianyungang Railway Under planning The Lunan High- speed Rail The Yanzhou- Passenger Line Rizhao Railway The Jiaozhou-Xinyi Railway

Convenient traffic Conditions - A comprehensive expressway network of “three horizontal railways and two vertical ones” connecting all major cities in China

 Road traffic mileage of about 10 thousand km. The road traffic mileage of Rizhao reaches 8,274.38km, including the national road of 298.65km, the provincial road of 375.14km and the rural road of 7,600.59km.  It has arranged a comprehensive expressway network of “three horizontal railways and two vertical ones” . In the region, there are Rizhao-Lankao Expressway, Shenyang- Haikou Expressway and Rizhao-Weifang Expressway; Dongjiakou-Fanxian Expressway and Dongjiakou - Wulian Expressway are under planning. In future, a comprehensive expressway network of “three horizontal railways and two vertical ones” will be formed.

Name Current Situation The expressway, which was put into used in December 2010, stretches from Shenyang- Shenyang to Haikou, via Dalian, Yantai, Rizhao, Shenzhen and other cities, with a total Haikou length of 3,710km. It is the sole expressway passing through southeastern coastal Expressway areas. It stretches from Rizhao (Shandong) to Lankao County (Henan). The main control Rizhao-Lankao points along the expressway: Rizhao, Qufu, Jining, Heze and Lankao. The traffic Expressway mileage is 472km. Construction of the expressway commenced in May 2013 and is expected to completed in 2017. The total length is 184.654km. After completion of the expressway, Rizhao-Weifang the time of journey from Rizhao to Weifang will decrease by 3 hours to 1 hour. It meets Expressway the core zones in the Bohai Economic Rim northward and areas in the Yangtze River Delta southward. Dongjiakou- Fanxian Under planning Expressway Zaozhuang- Lanshan Under planning Expressway

Shenyang- Haikou Expressway

Dongjiakou- Fanxian Rizhao- Expressway Weifang Status of the expressways Expressway Under construction Under planning Dongjiakou Rizhao

Rizhao-Lankao Expressway Zaozhuang- Lanshan Expressway

Convenient traffic Conditions - Flights from and to domestic and foreign key cities have been successively launched

 There are 8 routes with flights from and to 15 cities and 16 airports, in cooperation with 8 airline companies. Flights from and to domestic and foreign key cities will be launched successively.

- After new routes are launched in spring and winter, there will be flights from and to 15 citities, namely Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Chongqing, Xi`an, Tianjin, Xiamen, Haikou, Dalian, Harbin, Shenyang, Zhengzhou and Taiyuan, thus covering hub airports in North China, East China, South China, Southwest China, Northwest China, Northeast China and Central China; meanwhile, according to openness of ports, flights from and to Korea, Japan and Taiwan will be launch in time.

Harbin

Shenyang Beijing Dalian Taiyuan

Xi`an Ri Zhengzhouzh aoShanghai Chongqing

Xiamen Guangzhou Shenzhen Haikou

Short-term 4C-Class Long-term 4E-Class Planning Planning

By 2025, it will achieve the annual passenger By 2045, it will achieve the passenger throughput of 0.9 million person-times, throughput of 3.7 million person-times processing of 4.5 thousand tons of cargo and (including 0.5 million person-times for mail, the annual aircraft movements of 10,000. international flights), processing of 30,000 tons It will develop into a 4C airport, and construct a of cargo and mail, the annual aircraft 2,600-meter runway and a terminal of 22,000 movements of 34,100. It will control airfield m2, for domestic and international flights. It will indicators according to 4E-class requirements. have 6 parking stands covering an area of It will extend the runway by 600m eastward 2,411.7mu, with a total investment of RMB and construct a parallel taxiway of the same 1.364 billion. length. It will expand the terminal by 46,000 m2 westwards and construct 24 parking stands in total.

Industry - Adhering to the principle of prospering the city through industries, promoting industrial transformation and upgrading

Output value of industrial enterprises above designated size in the hi-tech  Stable industrial economy In the first half of 2016, the added value of industrial enterprises above designated industry in Rizhao size in the city increased by 8.43% year-on-year, which was 1.8% more than the province and ranked fourth in the province; in April, industrial profits increased by Unit: hundred million yuan 1.3% compared with the first half of the year, revering a nine-month decline. 600 537.23 518.92 40%  Continuous upgrade of traditional industries. 480.76 During the “12th Five-year Plan” period, the proportion 401.27 406.41 of the output value of the hi-tech industry to the gross 400 output value of industrial enterprises above designated size increased by over 1% annually. The proportion 20% exceeded 20% in 2015. “100 Key Industrial Projects” 200 17.97% 18.98% was carried out on a rolling basis, and greater effort 16.94% 20.12% was made to carry out investment and reconstruction. 14.60% RMB 13.5 billion was invested in 2015. The proportion of the added value of six high energy-consuming 0 0% industries decreased by 7.4% in 2015. 2011 2012 2013 2014 2015  Cultivation and strengthening of strategic emerging industries. Based on the manufacturing industry, Outputoutput value value Rizhao focuses on cultivation of four high-end equipment manufacturing industries, namely the ocean Proportionproportion to the togross the output gross value outputof industrial value enterprises of aboveindustrial designated size engineering equipment industry, the environmental enterprises above designated size protection machine industry, the intelligent machine industry and the modern agricultural machinery industry. Industrialization and informatization are deeply integrated. The Rizhao Cloud Computing Center Project (Phase I) is completed, realizing Core tasks of industrial transformation and connection to China Telecom, China Netcom and upgrading in Rizhao China Mobile Tietong, with the bandwidth of 10 Gigabit. Rizhao cooperate with Tencent, LeTV, Ankang, Dnion Rizhao Economic-Technological and other large-sized customers in establishing a cloud computing platform, a sharing and backup cloud Breakthrough Development Area, Rizhao Hi-tech platform, an industrial cloud service platform and 3 development Industrial Development Zone, Lanshan industrial cloud experience centers. The Biomedical of 5 major Economic Development Zone, Ju Technology Industrial Park (Phase I) has been industrial County Economic Development Zone completed, which concentrates Jiejing Group, Yotabio, Jiahong Biological and other bio-pharmaceutical and parks and Shibei Economic Development biochemical engineering projects. With dependence on Zone the petrochemical industry, the special steel industry and other industries, Rizhao develops new materials Reconstructi which are mostly high-performance fine steels and on and Metallurgy, auto and parts, constructs the Rizhao high-quality steel base. 5 improvement petrochemical, grain, oil and food, pulp projects, including Guangxin Chemical project with the annual production capacity of 0.2 million tons of of 7 and paper, printing and packaging, polypropylene, are in the final stage. RMB 1.15 billion traditional building materials, textile and clothing has been invested in Baohua New Materials (Phase II). industries  Continuous strengthening of port-centered industries. Rizhao has development the annual Cultivation of High-end equipment manufacturing, production capacity of 12 million tons of steel, 0.75 4 strategic new generation of information million automobiles, 1 million engines, 1 million emerging technology, bio-pharmaceutical and automatic transmissions, 2.18 million tons of pulp and new materials paper, and the annual processing capacity of 8.5 industries million tons of soybean, 14.5 million tons of oil products, 2.4 million tons of edible sugar and 0.573 million tons of marine products. The annual output Cultivation of 20 key enterprises and values of automobile, steel, grain and oil, transformation of 300 enterprises above petrochemical, pulp and paper, fishing, building designated size into joint-stock companies materials and electricity industries have exceed RMB 10 billion Source: Rizhao Bureau of Statistics

Service industry - High quality and efficient development of the service industry, with orientation towards the modern service industry

 Continuous increase in the rate of contribution from the service industry to the economy. During the “12th Five- year Plan” period, the service industry of Rizhao maintained stable and rapid growth. The added value of service reached RMB 71.714 billion in 2015, with an annual increase of 12.6%; the rate of contribution from the service industry to the economic growth increased, and the proportion of the added value of the service industry to the regional total output value increased from 36.4% to 42.9% in 2015, preliminarily showing the effect of adjustment of the industrial structure.  Transformation and upgrading of the modern service industry, accelerated development of the emerging service industry, optimization and enhancement of the traditional service industry. With location advantages and marine advantages, Rizhao accelerates development of the modern logistics industry. A modern logistics system integrating sea, land and air transportation is preliminarily established. The Central Asia International Logistics Park was constructed jointly with enterprises from the five countries in Central Asia. The cultural industry shows a shown a good development trend, with existence of 1 key cultural enterprise, 4 key cultural projects and 1 key park (base) at the provincial level, 7 provincial demonstration bases of the cultural industry, and the RMB 20 million funds for development of the cultural industry. Effort is made to develop e-commerce. In 2014, Rizhao was approved to become a provincial cross-border comprehensive e-commerce pilot area. Wulian Country and JD execute a rural e-commerce strategic cooperation agreement. Rizhao further promotes the strategic cooperation with Alibaba, so as to advance construction of the“Partner” foreign trade export platform, and oversea locations of 3 enterprises including Rizhao Steel. Greater support is provided for the aged care service industry, with establishment of the equity investment guidance funds at provincial and municipal levels for the aged-care service industry, and continuous promotion of integrated development of aged care service, medical, insurance, education, fitness, tourism and other relevant fields  Rizhao comprehensively implements the “one policy for one industry” initiative for the service industry, so as to optimize the development environment. The municipal government has successively published the Opinions on Promoting Revitalization of the Cultural Industry, the Implementation Opinions on Accelerated Promotion of Transformation and Upgrading of the Aged Care Service Industry, the Implementation Scheme as to Accelerated Development of the Health Service Industry, the Opinions on Accelerated Development of E- commerce and other documents, putting forward transformation and upgrading schemes for service industry in a targeted, planned and classified manner

Development of the Service Industry of Rizhao Unit: 100 During the “12th Five-year Plan” Period million yuan 800 717.14 45% 667.03 600.29 600 516.02 42.9% 446.05 41.4% 40% 40.0% 400 38.2% 36.4% 35% 200

0 30% 2011 2012 2013 2014 2015

Output Value Proporation of GDP

Source: Rizhao Bureau of Statistics

Service industry - High quality and efficient development of the service industry, with orientation towards the modern service industry

Key projects of the service industry during the “13th Five-Year Plan” period

Lanshan Chemical Logistics Park, Shijiu Port Logistics Park, Logistics Park of the Development Zone, Lanshan Logistics Park, International Commodity Distribution Center Logistics of Rizhao Port, Huaxin Rizhao Petroleum Reserve Project, Rizhao National Petroleum industry Reserves, Grain and Oil Industry (Logistics) Park, Ju County Cold-chain Logistics Park Project, and Farmfield&Song Cold-chain Logistics Project

Cultural and Creative Industry Park, Wulian Mountain Buddhist Cultural Industry Project, Cultural Dantu Site Cultural Industry Park, Bailu Bay Cultural and Creative Industry Park Project, industry Taiji Cultural Experience Area Project and Huaxianzi Eco-cultural and Creative Park Project

Internet operators and UWB “internet plus” projects based on cloud-management-client, E-commerce “Smart Village” Project of YouLiang Cheng E-commerce Platform for benefiting farmers, and Xinghe Technology Park Project

Rizhao Old People Rehabilitation and Nursing Home Project, Ju County Project for Old Aged-care People Apartment Construction, Rizhao Jiahao Yintai Old People Apartment, Wulian industry Songyuehu High-end Aged Care Project, and Alike Synthesis Project for Aged Care and Health Preservation

Health Shibei Medical Treatment and Aged Care Center of the People’s Hospital of Rizhao industry

Smooth implementation of the “tourism-rich city” strategy. The tourism industry shows a good development trend in the whole region. Led by construction of the major tourism project, Rizhao integrates tourism resources, focuses on development of coastal resources, mountain scenic spots and “three key points” of rural tourisms. During the “12th Five-year Plan” period, Rizhao had 76 tourism projects under construction, with investment of over RMB 10 billion. With continuous increase in the influence of Rizhao as a tourism city increases, Rizhao has successively won such titles as UN-habitat Scroll of Honor Award, China’s Excellent Tourism City, etc. Achievements in cultivation of the new business form of tourism are significant, with completion of three health care, recreation, health preservation and tourism projects, namely Sino-Canadian International Health Management Center, Natural Village Health Preservation Base and Wulian Xinshi Hot Springs Resort in the city

© 2017 KPMG Advisory（China） Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative("KPMG 23 International"), a Swiss entity. All rights reserved. 02 Investment Advantages of (II) Solid industrial base Rizhao City By taking port-centered advantage, Rizhao has formed a cluster of five leading industries, namely the steel and supporting industry, the automobile and parts industry, the petrochemical storage, transportation and processing industry, the pulp, paper, printing and packaging industry and the grain, oil and food processing industry  By taking advantage of port advantages, Rizhao basically forms a cluster of port-centered industries, namely the steel and supporting industry, the automobile and parts industry, the petrochemical storage, transportation and processing industry, the pulp, paper, printing and packaging industry and the grain, oil and food processing industry.  The port-centered industries have developed the production capacity of 12 million tons of steel, 0.75 million automobiles (including agricultural vehicle), 0.4 million engines, 1.7 million tons of pulp and paper, 5 million tons of soybean oil and the processing capacity of 5 million tons of oil products, and the production capacity of a 250,000 million DWT ship.

Industry Size

Steel and supporting 13.1 million tons of steel and 13.5 million tons of crude steel. The steel industry industry achieved the output value of RMB 3,541.2 billion in 2015.

Automobile and parts 0.75 million automobiles, 1 million engines and 1 million automatic transmissions. The automobile and parts industry achieved the output value industry of RMB 54.706 billion in 2015. Landbridge Port Petrochemical is able to annually processes 10 million tons Petrochemical storage, of crude oil. It has 2 liquid chemical depots with the gross reserve of 0.6 transportation and million m3. In the mid-year, over 0.8 million tons of petroleum products are processing industry sold.

Pulp paper, printing and Annual production capacity: 1.7 million tons of wood pulp, 0.17 million tons packaging industry of high-grade ivory boards and 0.3 million tons of liquid packing boards.

Grain, oil and food Rural population of 2.425 million, 1.51 million rural laborers and cultivated processing industry area of 3.26 million mu.

Port-centered industry cluster

Steel and Automobile and supporting industry parts industry Industry

Petrochemical Pulp paper, printing storage, transportation and and packaging processing industry industry

Grain, oil and food processing industry

Automobile and parts industry: It continues to be the biggest port-centered industry and improve the overall level of the automobile manufacturing industry Development base With increasing advantages, the automobile and parts industry has become the biggest port-centered industry for consecutive years, surpassing the steel industry

 In 2015, the automobile and parts industry achieved the output value of RMB 54.706 billion compared with the 19.294 billion output value of the steel industry, thus enlarging the gap by RMB 10.331 billion compared with last year  Cluster-based development: The city has 2 vehicle manufacturing enterprises, 3 electrical vehicle manufacturing enterprises and over 300 parts manufacturing enterprises. Currently, the industry has developed the annual production capacity of 0.75 automobiles, 1 million auto engines, 1 million automatic transmission, 300 sets of automotive dies, 12 million pistons, 1.75 million sets of automotive trims, 1 million knuckles, 0.3 million sets of brakes, 2.6 million sets of brake pumps and other key products  Enhancement of technical R&D: The city has 1 national enterprise technology center, 10 provincial enterprise technology centers, 8 municipal enterprise technology centers and 15 Shandong famous brands

Development direction  Rizhao further improves the capacity to produce engines and core parts of transmissions, accelerates extension of the chain of the auto engine industry, promote transformation and upgrading of existing agricultural vehicle parts manufacturing enterprises to auto accessory enterprises. Rizhao focuses on accelerating R&D of new energy automobiles and parts and improving the overall level of the automobile manufacturing industry  With dependence on “two major” automobile and parts industry parks, Rizhao establishes a “strategic technology alliance”. It makes effort to incubate leading enterprises and strengthen the industrial cluster through alliance with automobile vehicles, scientific research institutions and enterprises in the industry, thus forming a competitive synergy of technology and size and enhancing the industrial size and the comprehensive strength of leading and key enterprises  Rizhao actively introduces domestic and foreign large-sized automobile manufacturing groups, so as to take their advantages to strengthen the industry. It properly carries out work to secure establishment of Korea-invested supporting enterprises

• Hyundai Wia Automotive Engine (Shandong) was jointly established by Kia Motors, Hyundai Wia, Rizhao Port Group Co., Ltd. and Hyundai Motor Company in November 2006. It has over 1,700 employees. It is the biggest project of utilization of foreign investment in the equipment manufacturing industry in Shandong. It mainly engages in engine assembling and production of parts. • The company increased the engine production volume by 0.3 million and paid local taxes of more than RMB 0.1 billion in 2015

Steel and supporting industry: Orienting towards high-end, high-quality and high-value-added products, promoting industrial structure adjustment

Development base With Rizhao Steel as the leader, the steel and supporting industry of Rizhao forms a good development base and continuously carries out transformation and upgrading for becoming a high-end, high-quality and high efficiency industry  Industrial chain improvement: The city has 40 enterprises above designated size, forming a deep processing industry chain with Rizhao Steel as the leader and Wanfang, Jinghua, Zhufu and other enterprise as the supporters. Shandong Iron&Steel Group and Rizhao Steel are oriented towards high-end, high-quality and high-value-added products. They carry out industrial structure adjustment and form a distinctive and complementary product system which features division of labor and differential development  Green development: Rizhao Steel achieves continuous improvement in the equipment level, enhancement of the independent innovation capacity and a significant energy conservation and emission reduction effect. In 2015, It produced 13.39 million tons of steel, 12.41 million tons of crude steel, 12.46 million tons of steel products. It achieved 568.03kg standard coal consumption per ton of steel, 377.4 kg standard coal unit consumption in the iron-making process, the 49.11 kg standard coal unit consumption in the steel rolling process, 3.07 tons of fresh water consumption per ton steel, all of which are lower than the averages of the province. All main pollutant emission complies with environmental protection requirements

Development direction  Rizhao enhances the role of Rizhao Steel and Shandong Iron&Steel Group as a leading enterprise, properly develops supporting enterprises, so as to construct a coastal high-quality steel industry agglomeration area, a world-class high-quality steel production base and a circular economy demonstration area of the steel industry. By 2020, the steel industry will develop the annual production capacity of 21.5 million tons as a whole  Lanshan Steel Deep Processing Industry Park should give full play to geographic advantages and make effort to motivate Wanfang, Jinghua, Huazhe and other steel deep processing enterprises to improve the quality and capacity  According to park positioning, all county industrial parks in areas integrate element resources with focus on the Rizhao high-quality steel base, introduce relevant projects on a targeted basis, enhance the advantages of automobile, marine equipment, household appliances, magnetic materials and other traditional industries and promote development of emerging industries

• Estabished in 2009, Shandong Iron&Steel Group, Rizhao mainly engages in early- stage preparation of the Rizhao high-quality steel base, project construction, subsequent production and operation. • Effort is made to put the Rizhao high-quality steel base into production in 2017. The base will mainly produce 3,800mm and 4,300mm medium and heavy plates for marine equipment, 1,850mm cold-rolled sheets and other products, with annual production of 8.1 million tons of iron, 8.5 million tons of steel and 7.9 million tons of rolled steel © 2017 KPMG Advisory（China） Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative("KPMG 26 International"), a Swiss entity. All rights reserved. 02 Investment Advantages of (II) Solid industrial base Rizhao City

Petrochemical storage, transportation and processing industry: Taking advantage of marine resources to construct a petrochemical industry chain integrating upstream and downstream industries

Development base With the advantage of large crude oil and liquid-chemical terminals of the Rizhao Port, Rizhao develops an industrial cluster with the output value exceeding RMB 0.1 trillion and endeavors to develop a petrochemical base which is important in Shandong and even nationwide.  Industrial carrier: Rizhao currently has two petrochemical industry parks passing planning environmental impact assessment, namely Lanshan Chemical Industry Park and Rizhao Haiyou Industry Park covering a planned area of 61.8 km2, with public sewage treatment works  Industry chain development: Rizhao has developed a industry chain consisting of Landbridge, Shida, Jinshi and Chengxi with focus on primary oil product refining, and Guangxin, New Sanming, Lanxing, Wode and other chemical companies with focus on production of polypropylene, polystyrene, silane coupling agent, etc. It has the processing capacity of 14.5 million tons of oil products and the production capacity of 0.4 million tons of polypropylene, 0.05 million tons of phthalic anhydride, 0.1 million tons of dimethyl ether, 0.24 million tons of polystyrene and 4 thousand tons of silane coupling agent

Development direction  By reference to the model of Singapore Jurong Island Chemical Park, Rizhao properly improves and optimizes the Lanshan Petrochemical Industry Park and the Ju County Haiyou Industrial Park, motivates chemical enterprises to “enter” the parks, promotes safe, green and intensive development of the petrochemical industry. As a result, the cleanliness of oil products and the discharged pollutant indicator are better than national and industrial standards. The proportion of production of China V gasoline and diesel exceeds 75%  Rizhao practically and properly carries out work to apply for and secure the crude oil import qualification, so as to make the best of the existing production capacity  Rizhao makes full use of cracking feedstock from the oil refining equipment and gives priority to development of high-value-added fine chemicals. Rizhao actively introduces new fine chemical projects which are technologically advanced, constructs a petrochemical industry chain integrating upstream and downstream industries and establishes a chemical industry base at the provincial level and even the national level

• Landbridge Group is a comprehensive enterprise with focus on energy and infrastructure industries as well as a large-sized enterprise group with four business lines, namely petrochemical, port logistics, real estate tourism and international trade. It owns many industrial entities and has over 10 subsidiaries and joint stock companies in 4 countries. Its domestic and foreign total assets reaches RMB 51.6 billion. It is one of the private-owned enterprise groups in Shandong. • It successfully acquired Western Energy Services Corporation, a listed company in Australia, in 2014. It secured the 99-year lease of the Port of Darwin of Australia through competitive bidding in 2015. It successfully acquired the Margaret Island Port, the biggest port in Panama, in 2016. This plays an active role in realizing synergetic development of a port cluster along the“ Belt and Road”.

Grain, oil and food processing industry: Taking advantage of the port to construct a Chinese coastal grain and oil industry base integrating reserve, transit shipment, processing and management of grain and oil Development base The food industry of Rizhao achieves a rapid growth and has a complete range of categories mainly including 9 major categories, namely deep processing of marine products, processing of edible oil, grain, meat products, fruits and vegetables, tea leaf, sugar and wine, food additives and feed.  Production capacity: Rizhao has the aquiculture area of 387.75 km2 and the tea growing area of 0.15 million mu; the annual processing capacity of 0.57 million tons of aquatic products, 8.5 million tons of soybean, 2.4 million tons of sugar, 0.17 million tons of meat, 0.25 million tons of fruits and vegetables and over 10 thousand dried tea. Rizhao ranks second in China in terms of soybean processing capacity; the green team production area is the largest green production base in the province and has always been called “No.1 Tea in North China”; it ranks first in China in terms of artificial seafood export volume  Branding development: Rizhao has 29 provincial brands, 30 provincial famous brands and 18 geographical indication brands; 39 leading agriculture industrialization enterprises above the provincial level; and 2 overseas listed companies, namely Changhua and Hengbao Development direction  Rizhao actively introduces international advanced separation technologies, uses large advanced complete equipment and constructs a Chinese coastal grain and oil industry base integrating reserve, transit shipment, processing and dealing of grain and oil  It promotes development of the food industry, with focus on new-type urbanization, through improvement in small town functions and enhancement of small town features. It focuses on development of grain and oil processing, aquatic product processing, meat, fruit and vegetable products and other industries  It lays stress on improving the product quality and extending the industry chain, makes greater R&D input for food safety, green food and functional food, improves development of cold-chain logistics and brand building, promotes formation of a strategic alliance of key enterprises and enterprises in upstream and downstream industries, incubate large enterprise groups, so as to form a competitive industrial cluster

• Shandong Hengbao Food Group Co., Ltd. is a modern food processing group integrating planting and breeding, production, processing and international trade, with an area of 0.1 million m2, the total asses of over RMB 0.35 billion, over 1,000 employees, 2 large cold storages with the capacity of 10,000 tons, a standard vegetable base of 8,000 mu and a fruit base of 2,000 mu • Its shares were listed in Malaysia in January 2010

• The company was established in 2003, on the basis of the provincial technology development center of Shandong JieJing Group and the provincial technical research center of seaweed process engineering. It mainly engages in production of new products of the marine biotechnology, development of new technology, application and transformation of scientific and technological achievements • It is the sole Chinese enterprise which is able to extract from kelps and carry out mass production of fucoidan sulphate and other brown seaweed extracts with mature technology and to carry out mass production of chitosan oligosaccharide, using pharmaceutical chitosan © 2017 KPMG Advisory（China） Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative("KPMG 28 International"), a Swiss entity. All rights reserved. 02 Investment Advantages of (II) Solid industrial base Rizhao City

Pulp paper, printing and packaging industry: Based on production of pulp and paper, Rizhao accelerates packaging, printing and other supporting industries and guides large-scale, group-oriented, professional and digital development of the industries Development base The pulp, paper, printing and packaging industry has become one of the pillar industries of Rizhao Economic- Technological Development Area  Production Capacity: The industry achieved the main business income of RMB 8.48 billion, the total profit and tax of RMB 0.218 billion, production of 1.755 million tons of pulp, 0.4 million tons of machine-made paper and paperboard, in 2014, and production of 1.637 million tons of pulp in 2015. Currently, the city has 10 papermaking and paper product production enterprises above designated size (including Asia Symbol and Huatai), with about 4,000 employees.  Park development: Currently, Rizhao Economic-Technological Development Area has 46 pulp, paper, packaging and printing enterprises (including 6 enterprises above designated size), with over 2,400 employees in total. Between January and August 2016, the pulp, paper, printing and packaging industry grew against the trend, achieving the industrial output value of RMB 5.7 billion, a year-on-year increase of 13.7%.  Industry chain development: Main products are LBKP, high-grade ivory board, liquid packing board, mixture of needle pulp and broad leaf pulp, unbleached kraft paper, household paper and cultural paper Development direction  Rizhao plans to develop the chain of the pulp, paper, printing and packaging industry with Asia Symbol as the leader. In order to become No.1 papermaking base in China and No.2 papermaking base in Asia, Rizhao will endeavor to develop the pulp and paper production capacity of 4 million tons and ensure that the average comprehensive energy consumption, water consumption, pollutant emission amount per unit pulp and paper product and other indicators in the industry are maintained at the advanced level, by 2020  Rizhao promotes application of informatization technology, new energy conservation and environment protection technologies, realizing environmentally friendly pulping and papermaking. Rizhao improves the recycling level of resources in vertical and horizontal industry chains and reduces the pollutant discharge amount, with focus on efficient, comprehensive and recycling use of resources, through active application of environmental protection technologies  Rizhao develops flexible packaging, individually designed products, digital printing and printing digitalization projects, and continuously expands the room for growth of the printing and packaging industry, so as to meet the demands for packaging and printing in the marine product, fruit and vegetable, pharmaceutical and other relevant industries in Rizhao

• Established in 2002, Asia Symbol (Shandong) Pulp and Paper Co. Ltd. is one of the biggest wood pulp production enterpise in China as well as one of the biggest foreign-invested enterprises in Shandong. a benchmarking enterprise in upgrade, technical progress and green development of the pulp and paper industry. With the world’s biggest wood pulp production line featuring leading-edge technology, equipment and the advanced level of environmental protection, the company is a benchmarking enterprise in upgrade, technical progress and green development of the pulp and paper industry. The company is invited to draft national standards for the bleached sulfate wood pulp industry and the national standards for the coated ivory board industry. • Main products of the company: High-grade chemical wood pulp, liquid packing board, food-grade board and cigarette board. Environmental protection investment of the company reaches RMB 4 billion. It ranks first among single pulp and paper factories in China, in terms of total environmental protection investment or proportion of such investment to the total investment © 2017 KPMG Advisory（China） Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative("KPMG 29 International"), a Swiss entity. All rights reserved. 02 Investment Advantages of (III) Complete development elements Rizhao City

Multi-layered human resource guarantee

Rich resources of higher education institutions  Numerous higher education institutions and talents. Rizhao has 6 higher education institutions with over 90 thousand students and over 2,000 employees with a senior professional title, continuously providing basic talents for industrial development  Park planning and resource concentration. Rizhao plans to establish Rizhao University Science Park with a planned area of 10 km2 to guide concentrated development of science and education resources, for motivating universities to develop education and properly carry out scientific research. Currently, there are 7 higher education institutions and vocational schools, including Qufu Normal University.

Significant achievement in talent introduction  Rizhao actively promotes talent and technology introduction. China Ocean Talent Market, Shandong Branch was established. It successfully holds High-end Foreign Experts in Rizhao, High-end Talent in Hometown and other activities, with focus on demands in key fields and industries and lack of high-end talents, for the purpose of introducing high-level innovative talents and teams specified in“1,000 Talents Plan”， “Taishan Scholars Project”， etc. In 2015, it introduced 40 high-level innovative teams, 20 entrepreneur teams, 162 innovative talents and 62 technical patents

Sound talent service system

 Rizhao publishes theImplementation Opinions on “Effort for Talent Introduction Beyond the Park” and other talent policies, further enhancing talent introduction work  Rizhao establishes a talent introduction support fund to provide high-level talents with business start-up funds, scientific research funds, housing, living and other subsidies in a timely manner, and resolves difficulties of high-level talents in household registration, evaluation of professional titles, school education of children, social security, etc.  Rizhao initiates establishment of the Talent Innovation Development Institute and the Enterprise Development Research Institute. It establishes the “talent introduction service desk” and the talent service platform, providing whole-process services of policy consulting, job-searching, entrepreneurship, project application, etc.

Resources of higher education institutions in Rizhao

School Size Ordinary university 3 Higher vocational college 3 Ordinary secondary specialized school 13 National key secondary vocational school 5 National reform and development demonstration 3 school for secondary vocational education Technician college 1

Adult higher education institution 1

Sound technological innovation system

 Continuous improvement in establishment of scientific and technological innovation platforms. Rizhao actively carries out “full coverage” and “quality and efficiency improvement ” activities of R&D platforms, with focus on supporting and leading industrial innovation and development, and the target of improvement in the R&D ability and level, so as to strengthen the endogenous power and the facilitating effect of innovation platforms, thus effectively promoting scientific and technological innovation and development of the hi- tech industry of the city. Currently, the city has 31 innovation platforms above the provincial level.

 Formation of a four-level innovation carrier system. Rizhao has established Tsingcrea Technology Group (Rizhao) Pioneer Park, Rizhao Jinghua Entrepreneurship Incubation Base for Undergraduates, Science and Technology Incubation Center of Rizhao Economic- Technological Development Area, Hi-tech Area Business Incubation Center and other incubators, forming a four-level innovation and entrepreneurship carrier system consisting of the entrepreneurship nursery, incubator, accelerator and industrial park.

 Accelerating realization of breakthrough in core and key technologies Rizhao accelerates realization of breakthrough in key and core technologies, with focus on key processes in leading industrial upgrade, so as to promote comprehensive innovation centered on scientific and technological innovation. By 2020, the proportion of research and experimental development expenditures of the city to the gross production value will reach 2.13%; and the proportion of the output value of the hi-tech industry to the total output value of enterprises above designated size will exceed 25%.

Construction of innovation platforms in Rizhao

Innovation platform Quantity

National enterprise technology center 2

Provincial engineering technology research center 21 Provincial demonstration project technology 3 research center

Provincial academician workstation 5

Municipal engineering technology research center 104

Rizhao has 2 national technology enterprise incubators

Tsingcrea Technology Group (Rizhao) Pioneer Park with the total investment of RMB 0.32 billion, the Technology Building of 26 thousand m2, the pilot plant, supporting apartment and business centers of 7,500 m2 have been put into use, enabling the park to concurrently serve 150 medium and small-sized enterprises. Currently, there are over 70 enterprises in the park.

The Hi-tech Area Business Incubation Center has established 1 electronic information industry park, 1 international service outsourcing demonstration base and 24 pilot plants, covering an area of over 300 thousand m2; 85% of incubated enterprises engage in service outsourcing, e-commerce, new Rizhao Hi-tech Area information, new medicine, new materials, energy conservation and Business Incubation environmental protection and other strategic emerging industries, and achieve Center an annual output value of over RMB 1 billion.

Great financial support

 When increasing financial input, Rizhao continuously improves performance of financial funds. Through establishment of special funds on a classified basis, Rizhao promotes transformation and upgrading of traditional industries, accelerates development of the modern service industry and provides great financial support for construction of a modern industrial system.

Establishment of special funds for industrial development in Rizhao

Special funds Size and scope of funds

RMB 0.5 billion; within 3 years from 2016, Rizhao will use 60% of its share of annual Park development newly-increased taxes to establish a park development fund, based on cancellation of fund handover to the higher authority of net incomes from land transfer

In 2015, Rizhao integrated the blue economic zone fund, the service industry fund, the Rizhao equity cultural industry fund, the scientific and technological innovation fund, financial resource investment construction fund and other funds, totaling RMB 0.1 billion. The integrated funds were guidance fund used as start-up funds for the guidance fund. It will establish 2-3 different sub-funds. By 2017, the size of the guidance fund will exceed RMB 0.3 billion Rizhao integrates the original industrial optimization and upgrade fund, the energy conservation and emission reduction fund, the medium-sized and small enterprise Fund for industrial development guidance fund and other funds, totaling RMB 0.1 billion, so as to support enterprise medium-sized and small enterprises in implementing four types of projects, namely development energy conservation and emission reduction, technical transformation, industrial structure optimization and upgrade, independent hi-tech innovation and development. Industrial The RMB 3 billion industrial transformation and upgrading (high-end manufacturing transformation industry) fund (RMB 0.5 billion for Phase I) focuses on supporting key fields in the and upgrading aviation industry, the high-end manufacturing industry in Rizhao, other industries and fund producer services specified in the Rizhao government plan From 2012, Rizhao has allocated a port of service industry support funds to separately Fund for establish a fund for development of the modern logistics industry. Such fund supports development of key logistics projects of leading logistics enterprise of a certain size, construction of the modern public information platforms of a logistics park, key logistics project loans with logistics industry discounted interest, etc.

Guidance fund for From 2016, Rizhao has used the financial funds to establish the guidance fund for tourism tourism development, and annually increase the fund according to increase in financial development resources and development of the tourism industry

The scheme for establishment of the RMB 10 billion guidance fund for development of Fund for the aviation industry (RMB 1 billion for Phase I) is formulated. The municipal guidance development of fund invests RMB 0.2 billion to support planned construction of the Konggang New Area the aviation and accelerate construction of a national demonstration zone of the general aviation industry industry cluster Fund for RMB 20 million. With increase in the financial revenue, Rizhao supports key cultural development of industry project in key fields; establishes a small and micro entrepreneurship support the cultural fund for the cultural industry, in order to support small and micro cultural industry project industry created by reputable individuals, based on personal credit

Talent The scope of support from the special fund covers projects of foreign talent introduction, introduction fund talent projects, talent carrier construction and talent service assurance.

Open market environment - frequent economic and trade cooperation with a dozen countries

 In 2015, Rizhao achieved the gross export value of USD 15.185 billion and carried out frequent economic and trade exchanges with Australia, Brazil, the United States, Korea, Japan, Russia, Singapore and other countries.

Main exports of Rizhao and proportion of export value

Steel Aquatic Transmission Engine Textile Citric acid and product derivative 34.1% 7.7% 7.5% 4.8% 10.7% 3.6%

Total Import Total Export Total Import and Export Year on Year on Value Value Year on Year Value Year Year

USD 15.185 Decrease USD 4.134 Decrease by 11.051 Decrease by billion by 56.3% billion 13.7% billion 63.1%

Main imports of Rizhao and proportion of import value

Iron ore soybean Mechanical Timber Coal Cassava equipment 21% 16.1% 6.7% 6.2% 4.3% 14.3%

Main exporters of Rizhao and Main importers of Rizhao and proportion proportion U.S U.S.

Korea Korea 9.0% Japan 16.6% Australia 38.0% Russia 29.7% 22.1% Brazil 14.0% Singapore Thailand UAE 12.8% 3.1% 17.3% Indonesia Vietnam 4.8% 14.0% 3.1% Others 7.7% Other s 3.4% 4.4%

Open market environment - new progress in utilization of foreign investment and outward investment

 New progress in utilization of foreign investment. In 2015, Rizhao approved 15 new foreign investment projects, contractual foreign investment of USD 0.196 billion, an increase of 16.69%. The foreign investment received was USD 0.578 billion, an increase of 0.95%. Sources of foreign investment actually received are mainly Singapore and Korea. The foreign investment from Singapore and Korea accounted for 64.9% and 24.6% respectively.

 Rapid development of overseas investment. In 2015, Rizhao achieved the outward investment of USD 0.284 billion, an increase of 138%. There were 7 main overseas investment projects newly filed (approved) in 2015.

Canada Timber Exploitation Project of Japan Medical Riguang Real Estate Supplies Production Project of Sanqi Medical U.S. Sales Project of Rizhao Jiaohua Real Estate

U.S. Sales Company Project of Malaysia Bauxite Shandong Zhongda Sports Project of Rizhao Industry Group Shangwei Energy

Australia Darwin Port Acquisition Project of Landbridge Group

Australia Real Estate Development Project of Rizhao Yongfa Real Estate

Location of main overseas investment projects newly filed (approved) in 2015.

Construction of urban infrastructures

 Convenient and green urban transportation: Rizhao carries out urban road unblocking projects, with construction and reconstruction 34 urban road, construction of expressway, elevated highway, underpass road projects; and improves public transport, with construction of BRT and public transportation lanes, provision of 733 urban buses (including 350 new energy buses) and development of “green public transportation”. By 2020, the proportion of urban public transportation will exceed 50%, and the number of buses for every 10 thousand people will be 16

 Perfect public utilities: The percentage of population with access to pipeline gas in the downtown area reaches 85%; the percentage of population with access to central heating in the downtown area is 76%; the area heated by combined heat and power generation, fuel gas and other clean energy heating accounts for over 95%; the total length of the urban drainage pipelines is 1,472.25km, with the newly increased sewage treatment capacity of 38 thousand tons/day; Rizhao responds to the “External Power Supply to Shandong” initiative, realizing 220kv ring network power supply

 Information infrastructure construction: Rizhao promotes development of the radio & television business and telecommunication business, with establishment of a policy and a technical system which adapt to integration of telecommunication network, broadcast network and internet. It accelerates construction of the “Smart Rizhao” platform, and carries out integration of information resources, establishment of a “cloud computing” center and a basic information database, and development a city-wide wireless network. It constructs a digital city management system project, completes 9 core sub-systems and advances the smart-city pilot project in Ju County.

 Comprehensive improvement in urban environment: Rizhao has the public green area of 1,493 hectare with the 22.49m2 public green area per capita, and achieves the 43.18% coverage rate of green area in developed area and the 40.94% rate of green area in developed area. Currently, the downtown area has 23 parks and zoos. Rizhao enhances pollution treatment, with construction of the “six ecological projects”, namely ecological enterprise and area, ocean, basin, mountain, corridor and village projects, thus realizing “the blue sky with white cloud, the night sky with twinkling stars” for 298 days in a year

 Efficient urban management: Rizhao establishes a management system featuring “two-level government, three-level management and four-layer network”. It has published “three lists” of administrative examination and approval, administrative powers and responsibility of government departments, defining rights and responsibilities. It published the first urban management measures in the province, establishing a long-term mechanism. It encourages enterprises and citizens to participate in urban construction and management, so as to realize common governance, management and construction of the city, and sharing of achievements of the city

Beautiful habitat environment - blue key, blue sea and golden beach

Warm and humid climate Beautiful environment Complete supporting Livable Numerous scenic spots facilities

• The climate is warm and • There are blue sky, blue • 81 cultural organizations. humid, without chilly sea and golden beach in • Two large general winter and hot summer the city. There is an hospitals namely the and with an annual excellent beach People’s Hospital of average temperature of continuing for 64 km on Rizhao and the Rizhao 12.6℃ and the mean the coast of about 100 Hospital of TCM, and 644 annual precipitation of km. medical and health 817.6mm • Currently, Rizhao has 7 institutions. • With clean air and water, AAAA scenic areas • New sports and fitness Rizhao is known as the completed and 2 AAAAA projects for national most livable place. In scenic areas under fitness activities. 2009, it won the “UN- construction. Bamboo • Planned sports and habitat Stroll of Honor tourism, tea tourism and leisure parks with a yacht Award”. fishery tourism and other club. rural tourism products • Sufficient sources of flourish. middle and high-grade housings with a reasonable price in beautiful environment.

Rizhao has published a series of preferential policies to support development of parks and enterprises

 Rizhao has published a series of preferential policies, with parks as the breakthrough point, talents as the support and technology as the power, so as to create a good business conditions and atmosphere for enterprises in the city, and enable enterprises to introduce, retain talents and achieve good performance.

List of Rizhao Key Investment Promotion Policies

Category Document

Park development Implementation Opinions on “Effort for Talent Introduction Beyond the Park”

Several Policies on Accelerated Leapfrog Development of the Service Industry

Opinions on Accelerated Development of Commercial Circulation

Industrial promotion Opinions on Accelerated Development of the Modern Logistics Industry Implementation Opinions on Accelerated Development of the Aged Care Service Industry

Opinions on Accelerated Development of the Modern Insurance Service Industry

Notice as to Implementation of the Document (LZF No.14 [2015]), Application of Financial Policy Measures for Promoting Transformation of the Economic Development Model, Structure Adjustment and Enhanced Construction of Financial Sources in the City Opinions on Reduction of Burden of Enterprises for Supporting Enterprise Development

Opinions on Further Promotion of Employment and Entrepreneurship Enterprise cultivation Opinions on Effort to Promote Accelerated Development of Private Economy of the City Opinions on Effort to Promote Entrepreneurship and Construction of a Livable Rizhao by All

Scientific and Technological Innovation Support Policy (a supplement to the Implementation Opinions on “Effort for Talent Introduction Beyond the Park”)

Talent Introduction Policy (a supplement to the Implementation Opinions on “Effort Talent introduction for Talent Introduction Beyond the Park”)

Note: For specific policy measures, refer to Appendix II of this Report

Leading Enterprises in Key Industries of Rizhao

 Through years of development, Rizhao has concentrated leading enterprises, which play a leading role in their respective fields, laying a solid foundation for industrial development of Rizhao.

Key Industries Representative Enterprises

Steel and supporting Rizhao Steel Holding Group Co., Ltd. and Shandong Iron&Steel Group, Rizhao industry Iron&Steel Co., Ltd.

Hyundai Wia Automotive Engine (Shandong) Co., Ltd., Hyundai Powertech Automobile and parts Automatic Transmission (Shandong) Co., Ltd., KEFICO Automotive Systems industry (Beijing) Co. Ltd. and Himile Group

Petrochemical storage, transportation and Landbridge Group, Blue Sea Group, Jinsu Wealth and Guangxin Chemical processing industry Pulp, paper, printing and Asia Symbol packaging industry

Grain, oil and food Shandong JieJing Group, Shandong Huakang Honey Products Co., Ltd. and processing industry Shandong Rongxin Aquatic Food Group Co., Ltd.

Biotechnology industry RZBC Group and CP Kelco Shandong Biological Company, Ltd.

Modern service industry Tianze Cold-chain Logistics Co., Ltd.

High technology Shandong Bittel Intelligent Technology Co., Ltd. industry

Rizhao Steel Holding Group Co., Ltd. - the most competitive private iron and steel enterprise in China

Rizhao Steel Rizhao Steel Holding Group Co., Ltd. is the most competitive private steel enterprise in China

• Rizhao Steel is a large-sized steel enterprise integrating sintering, puddling, steelmaking, rolled metal, pickling, coating, tubulation, oxygen production and power generation. Established in 2003, the company currently has 17 thousand employees. It produced 13.39 million tons of materials and achieved the sales revenue of RMB 32.5 billion, the profit and tax of RMB 1.712 billion in 2015. • It has passed the excellent performance management system certification, the HSE management system certification and obtained certificates and permits in many countries. Its products have been widely applied to automobile, motorcycle manufacturing, household appliance manufacturing, general machinery, communication and transportation, oceanographic engineering, shipbuilding, building, packaging and processing and other high-end and traditional industries • In the press conference of “Top 100 Taxpayers 2015”, Rizhao Steel Holding Group Co., Ltd. ranked first for the eighth year running, with payment of tax of RMB 1.504 billion.

Investors’ Voice The Government of Rizhao has maintained regular communication with the company, actively help the company resolve problems in investment and operation. For example, the government regularly carries out bank-enterprise cooperation promotion activities, for facilitating connection and execution of a credit agreement between the company and the Bank of China, Rizhao Branch, effectively resolving fund demand problems in development of the company

- Yan Xiuxun, secretary of the Party Committee, Rizhao Steel

Steel Hot-rolled plate product series Slitting strip product series products New sheet product series ESP new product series... Main produ cts Cement quenched slag Coal ash Non-steel Double-doped powder Converter steel slag Blast-furnace ground slag products Blast-furnace Water- powder

Hyundai Powertech Automatic Transmission (Shandong) Co., Ltd. - the first professional transmission enterprise in China

Hyundai Powertech The first professional transmission enterprise in China

• Hyundai Powertech Automatic Transmission (Shandong) Co., Ltd. was jointly established by Hyundai Motor Group, Kia Motors Corporation, Hyundai Powertech and Hyundai Motor Group (China) Ltd. on November 3, 2010, with the total investment of USD 0.29 billion. It engages in production and sale of auto automatic transmissions and their parts. • With actions and industrial advantages of Hyundai Motor Group, the company’s products are supplied to Beijing Hyundai and Dongfeng Yueda Kia Motor and installed on Beijing Hyundai Sonata, ix35, Elantra, Dongfeng Yueda Kia K5, SportageR, K3 and other high and medium-end car models. Construction of the Phase II project was started in September 2012, with the investment of USD 0.12 billion. The No.2 factory carried out mass production in August 2013. The company produced 1 million transmissions cumulatively by December 2013. It began to provide FCA US LLC with transmissions in January 2014. Currently, the two factories are able to produce 1 million transmissions/year, basically meeting 5-year development demands.

Investors’ Voice Rizhao has unique location advantages. Municipal leaders actively establish a platform of cooperation and exchange with Japan and Korea, further promoting broader and deeper exchange and cooperation between Rizhao and Japan, Korea. Hyundai Powertech Automatic Transmission (Shandong) Co., Ltd., as a model in the auto parts manufacturing field in China and Korea, benefits a lot from cooperation between China and Korea.

- The management of Hyundai Powertech Automatic Transmission Co., Ltd.

Hyundai Wia Automotive Engine (Shandong) - the world’s biggest engine factory as well as the biggest project of utilization of foreign investment in the equipment manufacturing industry in Shandong

Hyundai Wia Automotive Engine (Shandong)

The biggest engine factory in the world

• Hyundai Wia Automotive Engine (Shandong) was jointly established by Kia Motors, Hyundai Wia, Rizhao Port Group Co., Ltd. and Hyundai Motor Company in November 2006. It covers an area of 591 mu and has over 1,700 employees. It is the biggest project of utilization of foreign investment in the equipment manufacturing industry in Shandong. It mainly engages in engine assembling and production of parts. • The biggest engine production base of Hyundai Motor Group in foreign countries. The company increased the engine production volume by 0.3 million and paid local taxes of more than RMB 0.1 billion in 2015 • Significant promotion of industrial development Since it was established in 2006, it has cumulatively invested about USD 1.5 billion, equipping the factory with the annual production capacity of 1 million engines and 3.52 million light alloy products, achieved the output value of over RMB 60 billion and attracted over 20 Korea-invested enterprises including Powertech, Dymos and Altech, thus making Rizhao Economic-Technological Development Area to become the “National Demonstration Base of the Automobile (Parts) Industry”

Investors’ Voice Most employees of the company come from the local or adjacent regions. Rich labour resources, lower labor costs, tax preference provided by the state tax department and the local taxation bureau as well as livable environment in Rizhao support enterprises in attracting and retaining employees.

- Wen Xianggao, general manager of Hyundai Wia Automotive Engine (Shandong)

Engine Business Light Alloy Business The Shandong engine factory is the forward base Hyundai Wia is specialized in production of the leading globalization of Hyundai Wia. It mainly basic and most important casting parts in the auto produces: industry. It introduces cutting-edge technologies • GAMMA engine and processes, overcomes limitation of traditional • Nu engine techniques, and wins the praise from whole vehicle enterprises in the world, with the excellent quality

Landbridge Group - a pioneer in Sino-Australian cooperation

Landbridge Group Landbridge Group is a private transnational enterprise incubated by Rizhao

• Landbridge Group is a comprehensive enterprise group with focuses on infrastructure and energy industries. It owns many industrial entities and has the total domestic and foreign asset value of RMB 51.6 billion. It develops four business lines, namely port logistics, petrochemical, cultural tourism and overseas industries.

Government support for overseas development of enterprises

• The Government of Rizhao actively encourage enterprises to “go global”, so as to participate in international division of labor. • Landbridge Group successfully acquired Western Energy Services Corporation, a listed company in Australia, in 2014. • It secured the 99-year lease of the Darwin Port of Australia through competitive bidding in 2015.

Investors’ Voice A Sino-Australian industrial park in Rizhao and a Australian-Sino industrial park in Darwin were established to realize port-to-port cooperation. Subsidiary agricultural products, marine products, beef, mutton, dairy products, etc. are imported from Australia; meanwhile, under the background of development of North Australia, we can export rolled steel, cement and other products to the Darwin Port, participate in their infrastructure construction, thus further promoting the Sino-Australian economic cooperation.

- Ye Cheng, chairman of Landbridge Group

Landbridge Group • Zhongyou Oil Product Sales Co., Ltd. • Rizhao Landbridge Port Co., Ltd. • Port Petroleum Co., Ltd. • Landbridge Jinjiang Hotel • Port Petrochemical Co., Ltd. • Port Petroleum Co., Ltd.

Asia Symbol (Shandong) Pulp and Paper Co., Ltd. - the biggest wood pulp production enterprise in China

Asia Symbol Asia Symbol is one of the biggest wood pulp production enterprise in China as well as one of the biggest foreign-invested enterprises in Shandong

• Asia Symbol (Shandong) Pulp and Paper Co. Ltd. is a modern large-sized pulping and paper-making joint venture enterprise controlled by Asia Pacific Resources International Holdings Ltd. owned by Royal Golden Eagle. • With the world’s biggest wood pulp production line featuring leading-edge technology, equipment and the advanced level of environmental protection, the company is a benchmarking enterprise in upgrade, technical progress and green development of the pulp and paper industry. • Asia Symbol achieves the black liquor extraction efficiency of 99.7% and the alkali recovery rate of 99.3% and the water resource recycling rate of 95%; all industrial wastewater and sanitary sewer are collected in the sewage treatment plant of the company for processing; and the solid waste recycling rate reaches 88%. Waste water, waste gas, solid waste treatment and other environmental protection indicators reach the world’s industry-leading level.

Investors’ Voice The high efficiency and flexibility of the Government of Rizhao and its active support for foreign- invested enterprises reassure Asia Symbol to establish its base in Rizhao Since establishment, Asia Symbol has invested RMB 1.8 billion in Rizhao, creating the industrial output value of over RMB 45 billion.

- The management of Asia Symbol

Main Products • Cultural paper • Magazine and book • Food box • Shopping bag • Liquid packaging • Toilet paper

RZBC Group Co., Ltd. - the leading company in the global citric acid industry

RZBC Group One of the world’s biggest citric acid and citrate production and management enterprises

• Established in 1993, RZBC Group Co., Ltd. has always focused on development, production and sale of citric acid and citrate products. Through development of over 20 years, the company achieves the annual production of 25 0,000 tons, accounting for more than 23% of the total production in China and over 13% in the world. It has developed into a professional citric acid manufacturer with cutting-edge technology, a large production scale, and high-quality products, in the citric acid industry in the China and even the world. • The company has many cutting-edge core technologies in the citric acid industry. It is the reviser and drafter of such national standards as the Citric Acid, the Effluent Standards of Water Pollutants for the Citric Acid Industry and the Social Responsibility Management in the Citric Acid Industry. The RZBC brand also becomes a leading brand in the international market, with its products popular in over 100 countries and regions including EU, the United States, Japan, the Middle East, Africa. It has established a long-term cooperation relation with Coca-Cola, Pepsi, Kraft Foods, Nestle, Danone, GSK and other international famous food and drug enterprises

Investors’ Voice Provincial, municipal and county leaders regularly lead heads of the development and reform commission, the economic and information commission and other authorities to investigate operation, development and project construction of the company, so as to understand difficulties in development. They not only provide many preferential policies for the company in terms of IPR innovation and technology R&D, but also help the company actively apply for hi-tech enterprise qualification and participate in international cooperation projects.

- Kou Guangzhi, chairman of RZBC Group

Main Products • Anaerobic granular sludge • Citric acid and citrates Citric acid anhydrous • High protein feed Citric acid monohydrate Anhydrous citric acid • Active pharmaceutical Sodium citrate Citric acid monohydrate ingredients ... Sodium citrate ...

Shandong Huakang Honey Products Co., Ltd. - the biggest honey producer and supplier in China

Shandong Huakang Honey Products Shandong Huakang Honey Products Co., Ltd. is the biggest bee product manufacturer in Shandong

• Established in March 2000, Shandong Huakang Honey Products Co., Ltd. mainly engages in purchase, processing, domestic and foreign sale of bee products. It is the biggest bee product manufacturer in Shandong, with 160 employees, the total assets of RMB 0.32 billion and the annual sales revenue of over RMB 0.36 billion. • The company has become one of the biggest honey producer and supplier in China. Its annual export volume of bee products exceeds 3,000 tons. Its products are mainly exported to many countries or regions including Japan, EU, the Middle East and Southeast Asia. “Wengwengle” (registered brand) honey products have been sold in over three thousand supermarkets or shopping places in China. • The company has passed quality/environment/food safety management system certification. Certain products has passed EU organic food certification. It won “Shandong famous brand”, “Shandong famous trademark” and other honorary titles. It is the “key leading enterprise of Shandong agriculture industrialization ”, the “leading enterprise in the bee product industry in China” as well as the “AAA” grade credit enterprise. It has establish a “national standard bee-keeping demonstration zone”.

Investors’ Voice In construction of the Wengweng Paradise, provincial, municipal and county leaders regularly reached the site for guidance and requested relevant project leaders to actively coordinate resources, in order to help the enterprise resolve difficulties in construction land indicators and fund raising and to advance the project.

- Zhang Qi`an, chairman of Wengweng Paradise of Shandong Huakang Honey Products

Wengweng Paradise is the biggest bee culture theme park in China. It integrates beekeeping, cultural experience of bee products, honey delicacy and tourist activities, and links development of sightseeing, countryside recreation, rural tourism experience, sale of tourist commodities.

Tianze Cold-chain Logistics Co., Ltd. - an international integrated industrial park for marine products

Rizhao Tianze Tianze Cold-chain Logistics Cold-chain Tianze Cold-chain Logistics is a major business arrangement of Shandong Logistics Co., Huayuan Group Ltd.

• The Tianze Cold-chain Logistics Park with the total investment of RMB 1 billion covers an area of 1,097 mu. Phase I has a building group of 0.6 million m2, the low-temperature cold storage with the capacity of 0.4 million tons, the job shop of 0.2 million m2, the commercial supporting facility of 0.15 million m2. It is the sole bonded cold storage in Rizhao. • In the park, a market transaction center, a warehouse and cold storage and a agricultural product inspection center will be established to promote reconstruction and upgrade of the traditional aquaculture. It will be developed into an international integrated industrial park of marine products which integrates processing, transaction, storage, customs bond, e-commerce and logistics distribution.

E-transaction hall Aquatic product processing area

Investors’ Voice The Rizhao Port is accessible, and policy support provided by the government is great. Location advantages, transportation advantages and convenient transportation of Rizhao facilitate import and domestic distribution of goods.

- The management of Tianze Logistics

Planning Layout of Tianze Cold-chain Logistics Park

CP Kelco Shandong Biological Company, Ltd. - a global leading hydrophilic colloid manufacturer

CP Kelco A leading hydrophilic colloid manufacturer in the world

• Headquartered in Atlanta, Georgia, USA, CP Kelco is a leading hydrophilic colloid manufacturer as well as the sole Gellan manufacturer in the world, with offices and facilities across the globe. Featuring an extensive range of specialty hydrocolloid solutions, CP Kelco leverages its capabilities to bring concepts and ideas to real-world products in a broad range of applications. • CP Kelco Shandong Biological Company, Ltd. is a wholly foreign-owned enterprise established by CP Kelco through share acquisition in March 2006. According to the strategic development plan of the company, it has developed into a world-class colloid production base which produces biogums, with focuses on xanthan gum. The company has passed ISO9001:2000, HACCP, HALAL, U.S. OUKOSHER and other international authoritative certification.

Investors’ Voice The government of Rizhao pays great attention to supporting enterprises in introducing international high- end technical talents, constructs a mature human resource platform for connecting enterprises and talents, including special job fair, preferential policies for talent attraction, active support for enterprises to resolve living problems of talents, such as assisting foreign employees to register a permanent residence and providing convenience for school education of their children.

- The management of CP Kelco Shandong Biological Company, Ltd.

Main Products • Carrageenan • Cellulose gum • Gellan • Microparticulated whey protein • Diutan gum • Refined locust bean gum concentrate • Pectin • Welan gum • Xanthan gum

Shandong Bittel Intelligent Technology Co., Ltd. - No.1 national brand in the hotel industry of China

Shandong Bittel No.1 national brand in the hotel industry of China

• Established in 1989, Shandong Bittel Intelligent Technology Co., Ltd. (Bittel) is an integrated solution provider with over 20 years of experience in design, manufacturing and management of electronic products, and 18 years of successful experience in providing products and services for hotels. It integrates independent design, R&D, production and sale and provides integrated solutions of communication, informatization, intellectual products and systems for hotel rooms in the world. • The company owns a factory area of over 100 mu, a R&D Center, a laboratory, a production area, a storage center and an office area totaling 12,000 m2, 7 lines of production of precision electronics. It established a provincial technical center in 2013. Currently, it has over 400 employees. 80% of them have over 5 years of work experience. • Products under its self-owned brand are exported to over 30 countries and regions including the United States, Russia, Australia and Italy and recognized by Marriott, Shangri-La, Starwood, Howard Johnson, Accor, InterContinental, Hilton, Gloria and other international hotel management groups.

Investors’ Voice Over 30 years of development in Rizhao, the company has always been greatly supported by municipal government leaders, especially in product import and export. Municipal government leaders actively make coordination to enable the company to pass certification, review, evaluation and other processes of Qingdao Customs, and help the company formally obtain the Decision on Application of Class A Management issued by the Qingdao Customs of the People’s Republic of China.

- The management of Shandong Bittel Intelligent Technology Co., Ltd.

Main customers of the company

Human Resource Costs

Labor resources

• Rich labor resources with the population of 2.93 million in Rizhao.

• 6 higher education institutions and 17 secondary vocational schools, with over 60,000 students.

Average salaries of workers

• The minimum salary in an enterprise: RMB 1,450/month

• General worker: RMB 2,500/month

• General managerial personnel: RMB 3,500/month

• Senior managerial personnel: RMB over 4,000/month

Resignation

• So long as the company provides appropriate benefits and is well-managed, very few employees resign.

Dormitory and canteen management

• Generally, there is a canteen in the factory.

• There are a neighborhood center of an supporting industry and a modern entrepreneurship service center and other facilities.

Trade union

• If an enterprise has over ten employees, it should establish a trade union.

• Main activities: Recreational and sports activities, production assurance, rights protection, etc.

• Types of trade union: Enterprise trade union, industrial trade union, etc.

Human Resource Costs (Continued)

Social Security

• Endowment insurance (20% of the contribution paid by the enterprise and 8% by the employee)

• Unemployment insurance (2% of the contribution paid by the enterprise and 1% by the employee)

• Medical insurance (7% of the contribution paid by the enterprise and 2% by the employee)

• Employment injury insurance (0.5%, 1% and 2% of the contribution paid by a Class 1 enterprise, a Class 2 enterprise and a Class 3 enterprise respectively)

• Maternity insurance (1% of the contribution paid by the enterprise)

Social security contribution base

• The minimum contribution base for the basic endowment insurance of enterprise employees was RMB 2,623/month for the period from June 2015 to May 2016 in Rizhao, and the maximum one is RMB 13,115/month.

Living condition for foreign employees

• Rizhao has a good living environment. Foreign employees can rent a very good house. There are foreign businessman service centers and other basic facilities.

Educational facilities

• 147 ordinary secondary schools, over 200 primary schools and 960 kindergartens

Resource Factor Costs

Water supply

Type of water Municipal water source

Water rate Basic household water-consumption: RMB 1.76/m3; Block 1 (first 125 m3 or any part thereof): the comprehensive water rate is RMB 3.06/m3; Block 2 (125-206 m3): the comprehensive water rate is RMB 3.94/m3; Block 3 (over 206 m3): the comprehensive water rate is RMB 6.58/m3. Industrial water consumption: The basic water rate is RMB 3.68/m3; the comprehensive water rate is RMB 3.39/m3(the water rates are RMB 3.11/m3 for industrial water consumption in the Hi-tech zone and RMB 2.81/m3 for domestic water consumption)

Water quality Rizhao is a water-rich region in Shandong, with the 1.64 billion m3 volume of water analysis data resources. There are many rivers and reservoirs in the city. Its drinking water quality reaches the national primary standard. In the park, there are one water plant with the daily water supply capacity of 0.1 million tons and two water works with the daily water supply capacity of 0.05 million tons.

Sewage treatment

Fee The sanitary sewage treatment fee is RMB 0.85 yuan/m3 and the general industrial wastewater treatment fee is RMB 1.15yuan/m3.

Sewage The park has No.1 Sewage Treatment Plant, No.2 Sewage Treatment Plant, the treatment treatment plants plant of the Green Source Industrial Wastewater Treatment Center, with the daily sanitary Distribution sewage treatment capacity of 170 thousand tons and the daily industrial wastewater treatment capacity of 50 thousand tons.

Natural gas

Industrial use: RMB 3.55/m3; residential use: RMB 2.63/m3 (RMB 3.253 yuan/m³ for industrial use in the hi-tech zone and RMB 2.913/m³ for residential use)

Jiaozhou-Rizhao Gas Transportation Pipeline Terminal with an investment of RMB 0.58 billion is located in the development zone, which can meet demands of enterprises for gas.

Resource Factor Costs (Continued)

Steam

For production: RMB 200.2/ton (0.5pa)

For office and domestic heating: RMB 24/m3

Communication

Enterprise: USD 3,000 annual fee (10M bandwidth ) Individual: RMB 18/month Cable digital television: RMB 300/year Optical cable: 10 thousand yuan /100mbs/year

Power supply

Power plant West of Beijing Road and North of Yanhai Road location and distance

Voltage 1-10KV 35-110KV ≥ 110KV

Electric Rate Commercial power: 1-10KV, RMB 0.6474; 35-110KV, RMB 0.6324; 110-220KV, RMB 0.6174; 220-500KV, RMB 0.6024

Hours In areas with electric power from Shandong Power Grid, the electric rate is determined according to hours. The electric rate is increased by 70% in critical peak hours, by 60% in on-peak hours, and according to the readings in mid-peak hours.

I: The electric rate is equal to the base rate increased by 70% in critical peak hours II. The electric rate is equal to the base rate increased or decreased by 60% in on- peak hours and off-peak hours Critical peak hours: 10:30－11:30 and 19:00－21:00 On-peak hours: 08:30-10:30, 18:00-19:00 and 21:00－23:00 Off-peak hours: 23:00－07:00 Mid-peak hours: 07:00－08:00 and 11:30－18:00

Appendix I: Carrier of Industrial Development

(I) Six Parks (II) Two Platforms

Appendix II: Overview of Investment Policies 05 Appendix I (I) Six Parks: (1) Rizhao Economic-Technological Development Area

Rizhao Economic-Technological Development Area: national economic development zone

 Rizhao Economic-Technological Development Area was founded in August, 1991, upgraded into a national economic and technological development zone with approval of the State Council on April 25th, 2010. Its planning area is 115.6 sq km. with a total population of 0.12 million. Development zone and main urban area are connected together and share resources. It is separated from Rizhao Port by only one road, benefiting mutual development of the zone and the port.

 Planning Overall Layout of “One Axis and Four Belts” − Industrial Axis on Beijing Road: Focus on building a high-end business district and urban complex integrating such functions as operation headquarters, commercial finance, office and residence, modern logistics, living and recreation. − Industrial Belt on Dalian Road: Undertake public service functions of urban area, build quality living and commercial areas and emphasize on developing high and new technology industry. − Industrial Belt on Tianjin Road: Build a high-speed rail economic center and public service center accommodating administrative service, cultural education, medical treatment and health, high-end commerce, etc., − Industrial Belt on Shanghai Road: Develop such industries as oil and grain, wood pulp paper making, printed package and auto parts. − Industrial Belt on Shenzhen Road: Develop such industries as port-centered large bulk cargo logistics, bonded logistics, marine high-end equipment manufacturing and biotechnology.

Major Economic Indicators of Rizhao Economic-Technological Development Area in 2015 Total Output Value 30 billion yuan Total Industrial Output 78.3 billion yuan Value Industrial Added Value 22.7 billion yuan Fixed-asset Investment 17.05 billion yuan Local Fiscal Revenue 2.05 billion yuan Disbursement of Foreign 0.24 billion US Capital Dollars

Rizhao Economic-Technological Development Area: emphasize on building a “Port-centered Industrial Base” and “Regional International Shipping Logistics Center”. Industrial development will be centered on such fields as automobile, pulp paper, grain and oil, marine work, logistics and emerging industry

Emerging Industry Automobiles & Parts Energetically develop biotechnology Planned and constructed a automobiles & industry and new material. Several parts industrial park covering 9.8 sq km., in medium and large companies have settled which over 30 companies have settled, here including Jiejing Group and Yotabio. including Hyundai Wia Engine, Hyundai Industries to be attracted for investment: Powertech Automatic Gearbox and Wia biological fermentation, extraction and Automobile Molds. other biotechnology industry, new material, Industries to be attracted for investment: industry-university-research base and projects as auto parts, new energy automobile, scientific research institutions, etc. finished automobile, engineering equipment manufacturing, etc.

Wood Pulp Paper Making & Marine Equipment Manufacturing Printed Package It is mainly oriented in advanced The 3rd phase pulp paper project of Asia manufacturing industry primarily developing Symbol with a total investment of 30 oil-gas treatment equipment, marine oil-gas billion yuan is now under smooth exploration and development equipment and implementation. Upon its completion, drilling platform module, and related producer production capacity of pulp and paper will service industry. respectively increase up to 3 million tons. Industries to be attracted for investment: Industries to be attracted for investment: marine engineering equipment manufacturing such companies undertaking package and related producer services. designing, high-end packaging paper products and printed package.

Grain and Oil Industry Modern Logistics Focus on developing grain and oil Such logistics nodes as National Bonded processing, sugar production, aquatic Logistics Center, South Shandong (Rizhao) product and fruit & vegetable processing. International Trade and Shipping Service 4 soybean processing companies with Center, Rizhao Bonded Logistics Center (Type production capability of 1.2 million tons B) have been established while such including Bangesanwei and Sinograin exchange platforms as Rizhao Board of Trade have been established. Their processing and Xinhua Exchange Blue Ocean Commodity capability takes 1/7 of that nationwide; the Trading Center are constructed. sugar production capacity of Lingyunhai Industries to be attracted for investment: takes 1/4 of that throughout the country. manufacturing, logistics storage companies Industries to be attracted for investment: inside the comprehensive bonded zone; such such companies undertaking further organizations around third-party logistics, processing of downstream industry chain logistics real estate, urban complex, supply of grain and oil food grade, beverages chain finance, bank, insurance, guarantee, and food. intermediary, etc.

Rizhao Economic-Technological Development Area: owns improved supporting infrastructure while a series of policies are introduced to promote industrial development and talent introduction

Industrial Neighborhood Center It covers about 40 mu, with an overall floorage of 50,000 sq.m., in which the apartment takes 36,000 sq. m. and supporting service facilities take 8,500 sq.m. It provide employees inside the zone with one-stop services of catering, shopping, recreation, work and training.

Modern Entrepreneurship Center It is mainly responsible for constructing customized standard industrial factory for settled projects, as well as according industrial neighborhood centers. It covers about 550 mu, with an area of structure of over 0.4 million sq. m.. It focuses on building an Auto Parts Industrial Park, High-tech Industrial Zone, Photoelectricity Industrial Zone and Pharmaceutical Industry Zone.

Foreign Merchant Service Center The Foreign Merchant Service Center covers about 20 mu, with an area of structure of 15,000 sq. m.. It provides foreign merchants with living, relaxation, catering and recreation and other services, focuses on building a high-end service center with distinct international features and complete functions and services.

Policies for Industrial Development and Talent Introduction

 Policies for Science Technology and Talent Supporting of Rizhao Economic-Technological Development Area  Guidance Fund for Development of Marine Equipment Manufacturing Industry in Rizhao Economic-Technological Development Area  Guidance Fund for Development of Service Industry in Rizhao Economic-Technological Development Area  Guidance Fund for Development of Sino-Korean Industrial Park in Rizhao Economic- Technological Development Area  …

Rizhao Hi-tech Industrial Development Zone: provincial high-tech zone

 Rizhao Hi-tech Industrial Development Zone was founded in May 2000, and approved to become a provincial high-tech industrial zone in March 2006. Its finished area covers 18.6 sq. km., accommodating 196 settled companies, among which there are 33 industrial companies above certain scale, 84 R&D centers above city level, 1 Academician Workstation and 1 Post-Doctoral Research Center.

 The High-tech Zone has primarily formed a “Four Parks, One Base and One Center”development pattern of Electronic Information Industrial Park, Biological Medicine Industrial Park, Automobile Industrial Park, Modern Logistics Industrial Park and International Service Outsourcing Demonstration Base and Technology Incubation Center for Entrepreneurship.  It’s planned to form a layout structure of “Two Centers, Two Axises and Eight Areas” − Two centers mean Management Service Center in the high-tech zone and Incubation Center for Entrepreneurship, which are important platforms for the zone to enhance industrial structure and strengthen innovation and research functions. The Management Service Center is mainly offering administrative management and productive services in the high-tech zone while the Incubation Center for Entrepreneurship mainly consists of research and innovation institutions and company incubation institutions, and drives land development on both sides of Chuangzhi Road thus forming a function belt of incubation and entrepreneurship through these institutions. − Two axises mean primary roads of Linyi Road and Chuangzhi Road. Key function layout and landscape boundary of the high-tech zone are expanded along these two roads. − Eight areas include six industrial areas, which respectively are marine bioengineering and pharmaceutical industrial area, electronic information industrial area, modern machinery and equipment manufacturing area, new energy and environmental protection industrial area, new material technology and application industrial area, urban industry and building economy area; logistics area includes a logistics park and related supporting facilities; residential area makes supporting area of life services in the high- tech zone.

Major Economic Indicators of Rizhao Hi-tech Industrial Development Zone in 2015 Total Industrial Output Value of Industrial Enterprises 6.56 billion yuan above Designated Size

Main Business Income 6.2 billion yuan

High-tech Output Value 1.35 billion yuan

Taxation of Profit 0.29 billion yuan

E-commerce

Vigorously implement “Internet Plus” strategy, cultivate and construct large- scale e-commerce companies and e-commerce service platforms integrating product presentation, information publish, transaction and payment, promote development of a new-type e-commerce model and build an e-commerce industrial highland throughout the city.

Culture Creativity

Focus on developing cartoon game, image media, cultural tourism, news service, visual technology, folk culture and other related industries.

Service Outsourcing

Focus on developing information technology outsourcing, business process outsourcing and knowledge process outsourcing in terms of application software development, industrial design and information consultant, and other related industries.

Biological Medicine

Focus on developing marine biological medicine, research and application of medical diagnosis technology, medical research service outsourcing (CRO), medical equipment manufacturing and other related industries. In 2015, it realized an output value of 0.44 billion yuan, a main business income of 0.459 billion yuan and a taxation of profit of 15 million yuan.

Electronic Information

Focus on developing new-type display equipment, integrated circuit, sensing equipment, optoelectronic device, communication and network equipment, embedded software and other related industries, build a 10-billion-level cluster of electronic information industry. In 2015, it realized an output value of 1.097 billion yuan, a main business income of 1.107 billion yuan, a taxation of profit of 53 million yuan and earned profit of 48 million yuan.

High-end Equipment Manufacturing

Focus on developing manufacturing of finished electric car and key components, intelligent equipment, precise instrument and equipment, industrial robot and other related industries. In 2015, it realized an output value of 1.342 billion yuan, a main business income of 1.234 billion yuan, a taxation of profit of 99 million yuan and earned profit of 58 million yuan.

Five service platforms

Technological Service Platform

Rely on Rizhao Robot Research Institute and Harbin Institute of Technology Research Institute of New Materials, establish and perfect public technology research and development platforms, offer conditions for open experiment, test, research and trial-munufacturing, and assist companies in carrying out industry, university, research and cooperation.

Intermediary Service Platform

Rely on Rizhao Scientific and Technological Innovation Complex, offer such intermediary services as property management, assets appraisal, investment consultation, business diagnosis, financial audit, legal consulting and management consulting.

Talent Service Platform

Rely on Innovation Service Center, offer such services as talent service and recruitment, human agency and organize training in professional skill, business management and marketing.

Company Incubation Platform

Rely on National high-tech business incubator, College Student Entrepreneurship Park and offer incubation site and such services as company tutorship and company management training.

Sci-tech Finance Platform

Rely on the High-tech Zone, establish development companies, equity guidance fund, integrate such resources as bank, guarantee, insurance and venture capital investment and provide settled small and medium-sized technology-based companies with one-stop and personalized financing services through gathering such companies and integrating innovative financial products.

Rizhao Hi-tech Industrial Development Zone provides settled companies with preference for investment costs

Water Supply

Water Price • Industrial Water: 3.11 yuan/m³ • Domestic Water: 2.81 yuan/m³ • (The prices are to-the-household comprehensive water prices, covering basic water price, sewage treatment fee, charge for water resources and urban additional charge)

Power Supply

Power Price • Large Industrial Power (per kilowatt-hour): 1-10KV : 0.6718 yuan; 35-110KV : 0.6568 yuan; 110-220KV: 0.6418 yuan; 220-500 KV: 0.6268 yuan;

• General Industrial & Commercial Power (per kilowatt-hour): ＜1KV: 0.8060 yuan; 1-10KV: 0.7910 yuan; 35-110KV: 0.7760 yuan;

Natural Gas

• Industrial Gas: 3.253 yuan/m³; Domestic Gas: 2.913 yuan/m³

Steam

Industrial Steam: 215 yuan/ton Residential Steam: 150 yuan/ton

Rizhao Hi-tech Industrial Development Zone provides settled companies with preference for investment costs (continued)

Heat Supply

Residential Heat: 24.0 yuan/m³ Non-residential Heat: 33.0 yuan/m³

Communication:

• Broad Band: − Activation fee: free for office work, 100 yuan/household for family. − Household: 560 yuan/year (2M); office work: a special network cable is set, to be determined by number of connected computers, Internet speed and traffic. • TV: − Activation fee: 400 yuan; fee of digital television: 300 yuan/year. • Telephone: installation fee: 120 yuan/unit.

Rizhao Shibei Economic Development Zone: provincial development zone

 Rizhao Shibei Economic Development Zone was founded in 2004, and approved to become a provincial development zone by the provincial government in March, 2006. Its planning area covers 120 sq. km., and total population is 96,000, which makes one of modernized industrial parks and new urban districts built by Rizhao City with emphasis and also the high-end equipment manufacturing industrial park, provincial industrial demonstration base of new industrialization, provincial demonstration zone of low carton economy in Shandong Province, as well as a key base of car manufacturing and parts of Shandong Peninsula.

 “Multiple Parks for One Zone” is implemented to develop “large Shibei” and “New Shibei” − Wuzheng Motor City: strive to build a base of car manufacturing and parts in Shandong Peninsula, attract car-supporting industrial projects, gradually construct a industrially improved, concentratedly developed and dynamic automobile industry city with tremendous scale and modern industrial features. − Port-centered Logistics Processing Zone: serve needs of the port and companies, prepare to build a bonded area and bonded warehouse, build an international transit and trading distribution center integrated multiple patterns including warehousing processing and logistics distribution. − High-tech Industrial Zone: aim at new materials of energy efficiency and environmental protection, put an emphasis on attracting industrial projects of “Two High and One Strong”, referring to high scientific and technological content, high added value and strong driving ability. − Low Carbon Industrial Zone: a reserved site to put the priority in accepting and developing low-energy large-scale industries, for example, solar energy, wind energy, bioenergy and LED electronics.

Major Economic Indicators of Rizhao Shibei Economic Development Zone in 2015

Total Business Revenue 42.2 billion yuan

Fixed-asset Investment 1.72 billion yuan above Designated Size

Local Fiscal Revenue 62 million yuan

Actual Fund of 0.2 billion yuan Investment Attraction Disbursement of Foreign 3.5 million US Capital Dollars

Automobile Agricultural High-end Equipment & Manufacturing Machinery Intelligent Manufacturing Industry Equipment Industry Industry

• Carrier: Wuzheng Motor City, of • Carrier: Wuzheng Motor City, • Carrier: the high-end equipment which the planning area covers 5 of which the planning area manufacturing industrial park, of which sq. km.. covers 5 sq. km.. the planning area covers 2.59 sq. km.. • Major Projects: finished car • Major Projects: automatic • Major Projects: rail transit equipment manufacturing, engine and key production of auto-body manufacturing industry, ocean components, generator, piston ring panels, structural parts of engineering equipment manufacturing and four kinds of parts, auto pump, agricultural equipment, industry, intelligent manufacturing car body, car compartment, interior agricultural automation equipment industry, etc., and their trim parts, etc., equipment, designing and supporting search bases. manufacturing of tobacco machinery, manufacturing of special-purpose equipment including pollutant disposal.

Electronics Industry Marine New-energy Automobile Equipment Industry Industry • Carrier: electronics industrial park, of which the planning area covers • Carrier: the high-end • Carrier: new-energy automobile industry 500 mu. equipment manufacturing park, of which the planning area covers • Major Projects: high-end household industrial park, of which the 1,000 mu. appliance manufacturing, planning area covers 2.59 sq. • Major Projects: manufacturing of finished component production, chip km.. new-energy automobile and such key manufacturing, etc., a • Major Projects: development parts as engine, chassis and power transboundary combination of equipment of marine oil and supply control system; technical research electrics industry including smart gas resources, including and development, supporting industries television and new information various drilling platforms, of commercial services. technology, such as Internet, big FPSO, diving boat, etc., data and cloud calculation.

Marine Business Ecological Eco-cultural Tourism Service Industry Medicine & Health & Industry Aged Care Industry • Carrier: marine business and • Carrier: cultural tourism industrial park navigation trade center. • Carrier: cultural tourism and tourism service industrial park, of • Major Projects: five modern industrial park and tourism which the planning area covers 2.76 sq. business services consisting of service industrial park, of km.. business of headquarters, which the planning area • Major Projects: replying on the wet land technology, trade, software & covers 2.76 sq. km.. and river system of Chaobai River, build service outsourcing and culture • Major Projects: service, a small town featured in mountain and creativity with regional industrial nursing, physical examination, sea; relying on Egret Bay Countryside advantages and marine features. recovery for the aged, a filial Complex, develop “Internet + Tourism” piety culture museum in the and promote eco-culture tourism patterns ecological community in three terms of intelligent service, intelligent management and intelligent marketing.

Excellent Business Environment

Administrative Service Center

It was officially put into use in March, 2013. It owns a hall for office covering 1,200 sq. m.. There are now 21 window units and 32 window employees settled. The principle of “integration of power and responsibility, simplification and high-efficiency, concentration and well preparation” to promote the operation mode of “one-stop work, one-package service, parallel-type approval, open-door operation and standardized management”, such systems as “green channel” for major project approval and listing service for key company. The whole-course agent system is carried out for any matter that cannot be fully completed inside the zone, which will act the agent role during the whole course.

Improved Supporting Facilities

A school inside the zone invested with 16 million yuan with a market- based operation mode is put into use, the 1st phase construction of a hospital inside the zone invested with 20 million yuan is delivered for use, a waterworks supplying water output of 9,000 cubic metres invested with 28 million yuan is put into use, so is Jiayuan Community invested with 0.1 billion yuan. The area of dwelling structure reaches up to 15,000 sq. m. There are each of technical school and technician training school in there, training 1,000 technicians from companies per year. It also owns each of night school for amateur farmers and technical school for amateur farmers, which are capable of timely offering technical talents to both companies and villages.

Favorable Investment Attraction Policies

Rizhao Shibei Economic Development Zone introduced a series of preferential policies to promote investment attraction, including:  Workbook for Investment Attraction of Rizhao Shibei Economic Development Zone Create a New  Preferential Policy of Investment Promotion of Wulian County Rizhao City  An Opinion of Wulian County People’s Government on and a New Strengthening and Improving Investment Attraction Work Shibei District  Supportive Policy of Company Reorganization for Listing of Wulian County  Supportive Method for Introduction of Innovative and Career- creating Talents of Wulian County  …

Ju County Economic Development Zone： Provincial-level Economic Development Zone

• Ju County Economic Development Zone was established in 2000. It was set as provincial-level economic development zone upon approval by the people’s government of Shandong Province in 2006, the planning area of which covers 25 square kilometers. • There are 106 running and under construction enterprises, among which there are 42 industrial enterprises above designated size, 1 exclusively foreign-owned enterprise of fortune global 500, 5 high-tech enterprises above provincial-level. There are 18 famous brands above provincial- level and 18 R&D centers above municipal-level with more than 30,000 employees. An industry system with the leading fine chemicals, equipment manufacture, energy and logistics, food processing, textiles and garments has been formed preliminarily. • Aiming at building an ecological park, Ju County Economic Development Zone forms a comprehensive and multifunctional modern ecological park integrated with technology, industry and trade. On the base of developing and expanding the industrials of textiles and garments, food processing, equipment manufacture, chemicals and construction materials, logistics, new energy and new materials, it will concentrate on extending and creating closely related industrial chain projects and building a professionalized development zone with combined effect. • The development zone plans to build 5 functional zones of chemical industrial zone, equipment manufacture zone, construction materials manufacture zone, food processing zone and textiles processing zone to be the important carriers of industry development of the development zone in the future.

Main Economic Statistics of Ju County Economic Development Zone, Rizhao in 2015

Gross Industrial Output Value 13.5 billion yuan

Sales revenue 16.6 billion yuan

Investment in Fixed Assets 1.55 billion yuan

Local Government Revenue 340 million yuan

Foreign Investment Actually Used US 60 million dollars

Five leading industries: energy and chemical industry, equipment manufacture industry, food processing industry, textiles and garments industry, modern logistics industry

 Energy and chemicals: Major companies include Haoyu Energy, RZBC Biochemical, Shengyun Chemical, Haiyue Chemical, Tengsheng Fine Chemical and etc. The leading industries are coal chemical industry and citric acid fine chemical industry. Daily coal gas output is 1.3 million m3. Annual output of dry whole coke, tar, carbon black, expanded polystyrene, refined benzene, citric acid and citrate and silica gels is respectively 900,000 tons, 200,000 tons, 60,000 tons, 200,000 tons, 100,000 tons, 360,000 tons and 150,000 tons. The annual output value amounts to15.5 billion yuan.

 Equipment manufacture: Major companies include Dingchang Tower, Changyun Industrial Conveyor Equipment, Jingang Piston, Jinfeng Machinery Manufacturing and Muniuliuma Robot. Their production capacity of towers and idlers ranks among the best of the industry. These companies are mainly engaged in manufacture of general conveyor equipment, general components, environmental protection equipment and forging and processing of metal. The annual output of towers, engineering accessories and environmental protection equipment is respectively 300,000 tons, 150,000 tons and 15,000 pieces. The annual output value amounts to 13.6 billion yuan.

 Food processing: Major companies include Taisen Foodstuff, Hengbao Foodstuff, Baihui Dairy, Chenxi Vegetable Oil, which are mainly engaged in processing of meat, dairy products, fruit and vegetable, food and oil. The annually processed meat and wheat reaches respectively 80,000 tons and 200,000 tons. The annual export of vegetable, frozen food, dairy products, bee products, edible alcohol and alcohol beverages made from food respectively reaches 70 million tons, 12 million tons, 100,000 tons, 20,000 tons, 140,000 tons and 20,000 tons. The annual output value is more than 10 billion yuan.

 Textiles and garments: Major companies include Jinlida Spinning, Haoyu Textiles, Haitong Silk and Wenzheng Garment. They process 6,000 tons of cotton yarns each year. With annual output of 20 million meters of mid- and high-end cotton fabrics for garments, crafts and home furnishing, 4.5 million pieces of garments and 500,000 pieces of knitwear, their products are sold to Europe, America, Japan, Republic of Korea and Southeast Asian Countries.

 Modern Logistics: Major companies include Kaida Logistics, Haoyu Logistics, Yuanchang Logistics and etc. With annual transport capacity of more than 500 million tons, it is a large third-party logistic base for storage and transshipment. These companies are mainly engaged in storage services, e-commerce related delivery, transport of ordinary goods, hazardous goods and container transport, etc.

Preferential Policies to Attract Investment

• For investment in new projects or expansion of existing projects (excluding real estate projects) by new investment in the Ju County Economic Development Zone, if the investment in fixed assets is no less than RMB 60 million yuan and the investment intensity is no less than RMB2.8 million yuan/mu, it is entitled to the following preferential policies:

Type of Policy and Measure Preference

For the administrative charges involved in various processes relating to investment in new projects from project proposal, examination and approval till construction, except for the part turned over to the central government, provincial and municipal government, all the charges Payment Policy retained by the local county government will be reduced or remitted. For investment in the zone, the urban infrastructure fee of productive factory buildings will be remitted, non-productive constructions will be charged 50% of the urban infrastructure fee. The intermediaries in the county will charge the minimal fee for any services provided.

For industrial projects with investment of no less than 60 million yuan in fixed assets and investment intensity of no less than 2.8 million yuan/mu, lands shall be provided for use at cost price. Subsidies will be provided based on the actual size of used land when the construction of fixed assets reaches the required amount. To be specific, for projects Land Using involving investment in fixed assets of 50 million yuan(included) to 100 Policy million yuan, when the investment in fixed assets exceeds 50 million yuan, there is a subsidy of 30,000 yuan/mu. For projects involving investment in fixed assets of more than 100 million yuan (included), when the investment in fixed assets exceeds 100 million yuan, there is a subsidy of 40,000 yuan/mu.

For new projects, besides the preferential policies provided by the state, if the annual taxes per mu after formal operation reaches 50,000 yuan (included)-100,000 yuan, 100,000 yuan(included)-150,000 yuan , Financial 150,000 yuan (included)-200,000 yuan or 200, 000 yuan and more, and Support the taxes retained by the local county government are no less than 2 million yuan, it will receive subsidy for five successive years since the day of operation, which will be 10%, 15%, 20% and 25% of the taxes retained by local county government.

We encourage projects in the form of “headquarters economy”, hi-tech enterprise projects of provincial and above level, projects with investment Policy concerning of over 500 million yuan, projects using provincial or state land quota as Headquarters well as any investment project that may significantly promote the Economy economic and social development of the development zone. For the last mentioned type of projects, more favorable policies may be possible based on a “case-by-case” principle.

Lanshan Economic Development Zone: a provincial-level development zone

• Lanshan Economic Development Zone was established in 1994 upon approval by the people’s government of Shandong province. It is a provincial-level development zone, the starter area of which covers 5 square kilometers. Adjacent to the Yellow Sea, the development zone is located at the regional boarder of southern Rizhao with Jiangsu and the east end of the Eurasian Land Bridge. The Port of Lanshan and Fishing Port of Lanshan in the zone are both first-class open ports. The Pingshang-Lanshan Railway,Tongsan Expressway and State Road 204 run across the zone. The corresponding infrastructures in the development zone are well developed. Social programs including culture, education and health services are also developing at a high speed. Port inspection and examination authorities are available for service in the zone. • Adjustment of the plan: On November 28, 2016, the provincial government approved the adjustment of the planned location of Lanshan Economic Development Zone. After the adjustment, the development zone extends eastwards to the Jubei Road, westwards to the Planned Park Road, southwards to the Shugang Avenue and northwards to the South Shengli Road, covering an area of 1 square kilometer. • The government of Lanshan district aims to build Lanshan as a livable place with modern port economy and an eco-friendly international city of steel through development of port economy, industry and private enterprises and opening up. With focus on port industry, marine industry, modern agriculture and trade and logistics, we will make great effort to develop the blue economy, while encouraging cluster areas of characteristic port industries including steel and iron, petrochemical, wood and logistics industries. A port industry base covering 100 square kilometers is under plan and six industrial parks of steel and iron, petrochemical, wood and logistics and etc. have been constructed. We have set up a state-level demonstration zone of wood trade and processing, a quarantine treatment zone of imported wood, a Taiwan Industrial Park in the zone and the development zone is a provincial-level economic development zone. All these contribute to a favorable platform for attraction of projects. At present, Lanshan has become famous in China as a manufacture base of steel and iron, the largest liquid chemical hub in the areas north of the Yangtze River, an important hub for processing of imported wood and a regional port trade and logistics center. • Directory of Port Industries and Relevant Parks in Lanshan

Main Economic Statistics of Lanshan District, Rizhao in 2015 GDP 47.451 billion yuan Gross Industrial Output Value 63.27 billion yuan Industrial Added Value 12.62 billion yuan Investment in Fixed Assets 51.196 billion yuan Local Government Revenue 3.426 billion yuan Foreign Investment Actually Used US$103 million

Five developing port clusters: steel and iron, petrochemical, modern logistics, woodworking, food and drugs

Petrochemical Industry Modern Logistics Wood Industry  The foundation of  Taking advantage of the  Lanshan Wood Processing Zone is petrochemical industry is ports and port industries and a state-level demonstration zone for strengthened continuously focusing on regional logistics, wood trade and processing and with the cluster effect with “one building and four state-level quarantine treatment beginning to show. With 12 markets” as the channel, we zone for imported wood. It is the bulk liquids berths from 5000t will make focused effort to only state-level demonstration zone to 100,000t , two 300,000 DWT develop storage and in Shandong province. There are crude oil terminals and transshipment, processing, 411 wood processing companies in corresponding storage tank delivery and third-party the zone. The storage capacity of its area for liquid chemicals, the logistics and actively promote wood freight yard is 1 million cubic storage capacity amounts to the headquarters economy meters. Its annual processing more than 7 million cubic and construction of e- capacity is 6 million cubic meters. meters. So far, Vopak from commerce platforms, aiming An industrial chain of trade, Holland, CNPC, SINOPEC, to build Lanshan as a processing, waste treatment and CEFC, Landbridge, Guangxin regional logistics center and comprehensive use of wood has Chemical and Kinshi Bitumen shipping center. formed. The platforms for wood- have set up companies in related customs clearance, e- Lanshan, constituting 10 commerce and financing services million tons of processing have been continuously improved. capacity and 30million tons of 3 The zone has become the largest storage and transport capacity. unloading point in the coastal areas in China and the largest base for 2 4 processing, transshipment and delivery of wood joist and square Port timber in China. Industries Steel and Iron Industry Food and Drug Industries  Lanshan district is a priority 1 5  We have set up a deep-processing base for deep processing of light industry cluster with food and steel and iron in the Southern drug industry as the main Shandong Economic Belt. An component. Great effort is taken to industrial cluster has formed, develop the Rizhao Demonstration consisting of Rizhao Steel Zone of Marine, Biology, Drug and Holding Group and Rizhao Food Industries. So far, there are 24 Top-Quality Steel & Iron Base food and drug companies with which play the leading role and annual revenue of 20 million yuan Baohua New Material, Rizhao and more, including COFCO Steel ESP and Wanfang Steel. Yellowsea Oils and Grains Industries The annual revenue of 40 steel (Shandong) Co., ltd., Shandong and iron enterprises amounts Topscience Biotech Co., Ltd., Rizhao to 20 million yuan or more. The Changhua Aquatic Foodstuff Co., Ltd. annual manufacture capacity and Ayeshan Group. 9 food and drug and deep processing capacity companies have reached gross respectively reaches 12 million output value of more than 100 million tons and 10 million tons. yuan.

Favorable Investment Environment for Resident Companies in Lanshan Economic Development Zone

Service Center for Administrative Examination and Approval The Lanshan District Service Center for Administrative Examination and Approval was established in October 2002 to offer one-stop services. Its objective is ‘lowest charge, best service, best environment and highest efficiency’. General company name reservation is finished in 1 workday and company registration is finished in 3 workdays. Tax registration is finished in 1 workday. Approval of project proposal is finished in 2 workdays. It undertakes commissions for project approval. Foreign-related service organizations, customs, entry-exit inspection and quarantine, immigration inspection authorities and shipping agencies are available for service in the center.

Lanshan has rich labour resources. The young and Rich Reserve of Talents middle-aged people account for 61% of the population. Many universities and colleges are located in the Rizhao University City, including Shandong Sport University, Shandong Water Conservancy Vocational College, Jining Medical University, Rizhao Polytechnic, Shandong Foreign Language University, Qufu Normal University and Rizhao Open University. The registered students amount to more than 20,000, providing Rizhao with over 5,000 graduates each year.

Preferential Investment Cost  Land: Lanshan will provide investors with industrial land at minimal price for up to 50 years.  Power supply: 220kv backbone, 110kv and 35kv ring network or double circuits power supply. Big-industry electricity price: 1-10kv: 0.6224 yuan/Kwh; 35-110kv: 0.6124 yuan/Kwh;110-220kv: 0.6024 yuan/Kwh.  Water supply: 3 water sources, i.e., Zhucao Water Source, Jufeng Reservoir and Rizhao Reservoir. 2 water plants. Maximum daily water supply: 190,000 tons. Average daily water supply: 85,000 tons. Comprehensive price of industrial water: 2.49 yuan/ton.  …

Shanhaitian Resort: a Provincial-level Resort  Rizhao Shanhaitian Resort is a provincial-level resort which was approved by the people’s government of Shandong Province in September 1995, combining traveling and vacation, hi-tech industries and administrative departments. It covers 168 sqaure kilometers of land area and 2,000 square kilometers of sea area, with 36 kilometers of coastline. The resort commands two sub-district offices of 100 villages, with 100,000 permanent residents.

 The GDP in 2015 is 1.873 billion yuan. Investment in fixed assets is 1.27 billion yuan. Public financial revenue reaches 335 million yuan.

 Favorable conditions of Shanghaitian Resort for development

- Advantageous location: It is the front garden of Rizhao and back garden of Qingdao. Several major roads including the Tongsan Expressway, State Road 204, Qingdao Road, Beihai Road and Chaoshi Road run through the resort. 8.5 km from the Rizhao Port and 18 km from the Dongjiakou Port, it is an important link between the two ports. Rizhao Shanhezi Airport has been in operation since the end of 2015.

- Rich coastal resources: The coastline in the Resort extends for 36 km. The Taigong Island and Taohua Island are like two pearls decorating the coastline. The golden coastline of the Resort is acclaimed as superior to that of Hawaii. It has a state-level fishery germplasm resources reserve of Mactra antiquata Spenbler and a provincial-level Lophymastrix japonica fishery germplasm resources reserve.

- Pleasant eco-environment: The air quality is excellent through the year. The quality of the sea water and fresh water is of A class. In the west lies the Wolongshan Eco-protected Zone covering an area of 32 square kilometers and in the east is the 12,000-mu Rizhao Coastal State Forest Park. The Liangcheng-hekou Westland is an important winter habitat for red-crowned crane(Grus Japonensis) which is under first- class national protection.

- Profound culture and long history: The Liangcheng Site is one of the 100 major sites in China. The Fenghuangcheng Site is where Jiang Ziya was born and spent his childhood

Status quo Development plan

 There are 4 AA and above scenic spots, Aiming at building a state-level resort, 13 villages for customs tour and 2,700 we invite investment from outside the households engaging in customs tour. resort for upgrading of the traveling There are 126 hotels and over 80,000 services. beds. Among the hotels, one is built in  Through star-management in custom accordance with the five-star standard, tours, pilot association of customs one in accordance with the four-star tours and demonstration stores of standard and three hotels are 3-star. 43 clear price, we encourage the hotels are built in accordance with the 3- operators of customs tours to be star standard. In the north of the Resort, honest in business dealings. there is the AAAA Rizhao Coastal State  Forest Park. Rural tourism and fishery tourism are integrated for common development.  The reception capacity of the Resort has Another 20 rural cooperatives have been on the rise. In 2015, the total visit been established, including 1 from China and abroad reached 17.27 applying for state-level million person times, bringing tourism demonstration and 3 applying for income of 7.111 billion yuan, provincial-level demonstration. representing an increase of respectively  8.09% and11%. The comprehensive Rizhao Coastal State Forest Park is improvement efforts have achieved making comprehensive effort to built significant results, with 2500 illegal it as a AAAAA scenic spot. The constructions torn down in 12 customs environment in the park has been tour villages, a total of 195,000 square under improvement. Infrastructures meters, 85% of the demolition work in including shower cabins and toilets the Wolongshan area. have been built, and the tourist center is under plan.

China-Australia (Rizhao) Industrial Park covers a planning area of 50 square kilometers, with 8 major carriers, for bilateral industrial cooperation

Shanhaitian Resort

Konggang Industrial ParkComprehen sive Tax- Base of Base for Modern ProtectedAdvanced Service Industry Zone Manufacture Port of Rizha o Modern Agricultural Lanshan International Base for Base Chemical Park Logistics and Transshipment

Lanqiao Port

8 major carriers for industrial development

 Lanshan Chemical Park  Base of Advanced Manufacture

 Shanhaitian Resort  Modern Agricultural Base

 Comprehensive Tax-Protected  International Base for Logistics Zone and Transshipment

 Konggang Industrial Park  Base for Modern Service Industry

Starter Area of China-Australia (Rizhao) Industrial Park

The starter area of China-Australia (Rizhao) Industrial Park is located in the Lanshan Economic Development Zone, with a planning area of 18 square kilometers. It is divided into function zones respectively for food processing, wood processing, energy processing, storage and logistics, and health and recreation, constituting an arrangement of “five zones in one park”

Planning of Lanshan Starter Area of China- Australia (Rizhao) Industrial Park

 Food processing zone - With a planning area of about 4 square kilometers, it is mainly for the development of emerging industries, including slaughter of imported beef cattle, cold-chain integrative deep-processing of wines, importation and tax-protected distribution of aquatic products, animal products and agricultural products, agriculture and food processing industry and marine economy.  Wood processing zone - With a planning area of 1 square kilometer, it is mainly for the development of deep- processing of timber, manufacture of high-end wood products, trade, logistics and e- commerce.  Energy processing zone - With a planning area of about 4 square kilometers, it is mainly for the processing of new energies and in particular liquid natural gas (LNG), fine chemical and clean energy projects.  Storage and logistics zone - With a planning area of about 5 square kilometers, it is mainly for the development of high-end logistics and headquarters economy. We will speed up development of large specialized logistics companies and construction of modern logistics park, in order to build a regional port logistics center.  Health and recreation zone - It covers a planning area of about 4 square kilometers. We will make great effort to push forward the construction of the health and recreation zone highlighting Australian features. Priority will be modern service industries such as health care, senior care, business and tourism and etc.

The Park will strive to create a convenient business environment and an investment atmosphere that is favorable to Australian companies

- Expanding effort to introduce high-end talents. Attract high-end talents through diversified forms including stock ownership, technology investment and venture fund. Ease restrictions and provide more convenience in employment, residency, exit and entry Improving procedures for high-end talents in the field of port talents flow economy in China and from abroad.

- Improving life and convenience facilities for foreign talents. Adopt management measures in schooling for their children, medical insurance, recreation and etc. for foreign talents.

China-Australia Enhancing (Rizhao) Industrial convenience Park in trade

Strengthening construction of - Establishing a single open market system platforms featuring orderly competition and and carriers supervision rules, creating a favorable environment for cooperative investment with - Strengthening construction of public Australian companies platforms and specialized platforms, - Establishing systems and mechanisms that improving the construction of platforms for are friendly to new ways of trade such as public services including information service cross-boarder e-commerce platform, technology innovation platform and - Offer preferences in classified management publicity platform. Speeding up application and at the customs, reduce customs inspection construction of functional platforms including and simplify customs procedures for priority the slaughter houses for imported beef cattle companies in the port industries and the designated port of imported meat and food. - Striving for trial of mature trade facilitating measures in the free trade zone or other - Speeding up the establishment of Rizhao opened-up areas, trying to replicate and Comprehensive Tax-Protected Zone, expand them in the China-Australia (Rizhao) improving the tax-protection function of the Industrial Park. China-Australia (Rizhao) Industrial Park.

The Park will fully implementing relevant policies of China-Australia Free Trade Agreement to offer policy support for the investment of Australian companies in Rizhao

The contents of China-Australia Free Trade Agreement cover more than ten fields including cargo, service and investment, which achieve the goal of “Complete, High quality and Benefit balance” and lay the foundation for the investment of Australian companies in Rizhao.

 Achieve zero interest rate for 97% of the cargos - Zero interest rate for products accounting for 85.4% of the export trade volume of both China and Australia parties upon the validity of China-Australia Free Trade Agreement - After the transitional period of tax reduction, the ratios for the tax items and trade Cargo Field volume of China party will reach 96.8% and 97% respectively.

 More open service fields - China party will open service departments for Australia party in the way of positive list and greatly improve financial service, law firms, professional service suppliers, education service export as well as market accesses of fields including health care, old-age care, hotel, construction and production. Service Field  More convenient and secured investment - Offer most-favored-nation treatment to each other upon the validity of the Free Trade Agreement - The investment obligation of China-Australia Free Trade Agreement can be compulsorily executed directly by Australia and China investors through ISDS Investment Field mechanism to increase the confidence of investors. The changes of import and export duties for part of the products after the signing of China- Australia Free Trade Agreement Product Current duty Free Trade Zone duty Effective time Dairy products 20% Zero duty In 4-10 years Infant formula 15% Zero duty In 4 years Beef 12%-25% Zero duty In 9 years Mutton 12%-23% Zero duty In 8 years Barley 3% Zero duty Immediately Sorghum 2% Zero duty Immediately Live cattle 5% Zero duty In 4 years Fur, Leather 5%-15% Zero duty In 2-7 years Horticulture industry - Zero duty In 4 years Marine products 14%-15% Zero duty for most In 4 years Drinks 14%-20% Zero duty In 4 years Minerals 1%-8% Zero duty In 4 years Energy 3%-6% Zero duty In 4 years

Data source：China-Australia Free Trade Agreement

Rizhao Comprehensive Tax-Protected Zone: A New Passage for Customs Clearance in Bohai Sea Region Development Foundation  Protected warehouse, Export supervised warehouse and Customs inspection warehouse of Rizhao Tax-Protected Logistics Center have been established with a total area of 16,000 ㎡ and open storage area of 65,000 ㎡, which is the center of international procurement, international delivery, international transit and international trade for southern Shandong province. Development Orientation  Make use of the specific policy advantage of Comprehensive Tax-Protected Zone to actively connect the domestic and international markets with focusing on carrying out the development of industries of commerce & trade logistics, tax-protected service, shipping finance, cross-border e-commence, R&D outsourcing to concentrate on building the new channel of “Simplify Customs Clearance Procedures" in Bohai Rim. Development Plan  The Comprehensive Tax-Protected Zone will be constructed with the Rizhao National Tax- Protected Logistics Center as core with a planning area of 3 square kilometers. Five function zones including comprehensive office zone, tax-protected processing zone, tax-protected logistics zone, tax-protected service and comprehensive tax-protected supporting zone will be established. At present, Shandong provincial government has brought Rizhao into the pilot demonstration zones of China-Japan-Korea Free Trade Agreement and supported to establish Rizhao Comprehensive Tax-Protected Zone. Industrial Inviting Investment Orientation  Tax-protected processing, tax-protected logistics, service trade, cross-border e-commerce, shipping finance, import and export product exhibition, information processing and consultation service, high-tech and innovative R&D, etc.

Implement more preferential policy and convenient customs clearance procedures in Comprehensive Tax-Protected Zone - Implement tax-protected for foreign cargos entered the zone and tax refund for domestic cargos entered the zone by regarding it as export. - The companies can carry out the tax-protected storage, processing and manufacturing as well as foreign trade of the cargos in the zone. - For the cargos exit the zone and to be sold at home, clear customs according to the related regulations of cargos import and collect tax according to the actual state of the cargos. - Factory can be established in the zone for the export processing. Cargos can be flowed between the companies in the zone without added-value tax and consumption tax for the trade.

Appendix II: Overview of Investment Policies

Industrial Park Development Policies

 Industrial park is the “main battle area” of economy construction and inviting investment is the “strong engine” of promoting development. The CPC Rizhao municipal committee and Rizhao municipal government issued Suggestions on the Implementation of “Break Through Industrial Parks, Focus on Inviting Investment” of Rizhao City in 2015 of optimizing the planning layout of industrial parks, defining industry orientation, promoting “three inviting” (inviting investment, inviting talents, inviting technology) with the power of the whole city to provide strong power for the economic transformation and upgrading and innovation driven development.

 Rizhao city insists on “turn on the water pisciculture” and increase the policies support on industrial parks according to Suggestions on the Implementation of “Break through industrial parks, Focus on inviting investment” of Rizhao City.

Suggestions on the Implementation of “Break through industrial parks, Focus on inviting investment” of Rizhao City policies excerpts

Type of Preferential Measures Preference – Within three years since 2016, 60% of shared revenue of municipal new taxes will Financial be taken out every year to be the special fund for industrial park development, 50% incentives for of which will be taken for rewarding the districts specially for the development of industrial parks industrial parks according to tax revenue growth. development – The rest 50% will be used specially for the comprehensive assessment rewards and allowances. – All industrial parks above provincial level will establish state-owned holding industry financing platforms as the main body of investment and financing for the parks to enhance and enlarge the asset scale as well as strengthen investment and financing functions. Financing support – The municipal government will provide 100 million yuan of financial fund to set up municipal equity investment guidance fund. The districts also shall set up equity investment guidance fund contributed by finance to support the development of park industries. – For the newly invited “Enclave” project, form local financial revenue within 5 years from the production starting date, inviter and investor share the benefits with ratio 3:7. Improving – For the relocation projects of “Retreat from the urban area and shift to Industry distribution of parks” and “Emptying the cage, removing the bird” , form local financial revenue industries within 5 years, the removal party and investor share the benefits with ratio 5:5. – Divide shares according to the same portion of inviting investment assessment and provide certain compensation for the removed companies.

The municipal government sets up special talent introduction supporting fund for the financing aid, allowance and rewards for talent introduction. Offer various amounts of Motivation for entrepreneurship start-up capital, research funds, house purchase subsidies and living talent introduction allowances for the innovative entrepreneur team, leading talents and badly-needed talents.

Industrial promotion policies: leaping development of service industry

 Rizhao municipal government issued Policies on accelerating the leaping development of service industry in 2011 to fully make use of the role of service industry in transfer mode and adjusting structure so as to promote the leaping development of service industry in the whole city.

Policies on accelerating the leaping development of service industry excerpts Preference Type of Preference Preferential Measures Objective The municipal financial department takes 1/10000 of the GDP of the last year Special funds to continuously set up and gradually increase service industry development guiding funds. For the big external companies of service industry whose headquarters moved in, implement “2-Year Free And 3-Year Half" for income tax from the Headquarters date of paying tax. For the new moving in companies that play important roles economy in the long-term development of our city, at the same time of implementing above policies, implement in the way of “one discussion for one case”. Facility finance and For the service industry companies registered and established according to tax preference Rural service law in district and county and below, the local governments offer 30% of local industry shares of the actual business tax paid in the year as financial incentives in the next three years from the date of operating. For newly established industrial design companies, real estate service company, intermediary service companies, household service companies, New service exhibition companies, service outsourcing companies and creative industry industry companies, the same level financial departments offer 30% of local shares of the actual business tax paid in the year as financial incentives in the next three years from the date of operating. Small and Further increase the amount of guaranteed small loans. Increase the amount Increase financial medium-sized of newly issued personal guaranteed small loans to 100,000 yuan. Increase support service the amount of issued guaranteed small loans for small labor-intensive enterprises enterprises to 3 million yuan. Headquarters economy Land for service industry development shall be brought into the general land Service industry utilization and city planning strategy. For the key service industry park and park and project service industry project listed in the “12th Five-Year Plan" of service industry Guarantee land development of the state, province and city, arrange the yearly land utilizing supply plan preferentially.

Headquarters For lands used for company headquarters and R&D centers, implement plans economy and construction land procedures preferentially.

The one-time subsidies for high-level oversea talents Encourage talent High-level are exempted from individual income tax. The housing allowance, relocation introduction oversea talents fee, visiting relative fee, children's education fee for foreign talent are exempted from individual income tax according to the national tax provisions. – Relax control over the minimum amount of capital contribution of service industry companies, otherwise stated in law and regulations. The capital Relax control over Service industry contribution of service industry companies shall be paid by the company market access companies investors. – Allow to pay the company registration capital in installments with 20% down payment and the rest to be paid in 2 years.

Industrial promotion policies: modern service industry “one industry, one policy”

 Rizhao city seriously implements the instruction of service industry “one industry, one policy” of provincial government. Propose transformation and upgrading solutions of service industry orderly with classifications. At present, Rizhao city has issued Suggestions on accelerating the development of commercial circulation, Suggestions on accelerating the development of modern logistics industry, Suggestions on accelerating the development of old-age service industry, Suggestions on accelerating the development of modern insurance service industry.

Preference Type of Preferential Measures Policy Document Objective Preference We have set up modern logistics industry development special funds separately since 2012. Special Offer key support for the key logistics projects funds of leading logistics companies with certain scale, public information platform construction Suggestions on Modern logistics of logistics park and loan with discounted accelerating the industry interest for key logistics projects. development of modern logistics industry Guarantee the lands preferentially for planned Land and approved logistics parks, logistics center utilization and key logistics projects including sorting, support storage, transportation loading and unloading.

The income of support service offered by nursing home shall be exempted from business tax, city maintenance and construction tax and added educational expenses and cultivated land occupancy tax if Tax cultivated land used. For the income of Preference nonprofit nursing institution for the aged approved with nonprofit organization tax-free qualification shall be exempted from corporate income tax, and the house and land used shall be exempted from house tax, urban and rural land use tax. – Nursing institutions for the aged shall get Suggestions on Old-age service construction and operation subsidizations accelerating the industry from municipal financial funds. development of old-age – Daycare centers: one-time starting service industry Financial subsidizations of 30,000- 50,000 yuan support according to scale. – Medical and support combine care service institutions for aged: starting subsidizations of 100,000- 1 million yuan. One-time allowances of 2000 and 1500 yuan for personnel acquired with national aged support and care technician and senior Talent professional qualification certificates worked in development qualified care positions of nursing institution for the aged for two years from the municipal finance.

Enterprise Cultivation Policy : strengthen financial resource construction

 In 2015, Rizhao municipal government issued Notice on implementing Shandong provincial government issued [2015]14# document about making use of financial policies to promote the transfer mode and adjusting structure of the whole city economy and strengthen financial resource construction to promote the transfer mode and adjusting structure of the economy and further strengthen financial resource construction with financial policies.

Notice on implementing Shandong provincial government issued [2015]14# document about making use of financial policies to promote the transfer mode and adjusting structure of the whole city economy and strengthen financial resource construction policy excerpts

Type of Preferential Measures Preference

Encourage Award top ten companies of annual local tax paid and top ten companies of local tax paid companies to be increasing with “Meritorious Companies" as well as 500,000 yuan, only one to be awarded if bigger and stronger achieved both.

Take “Rizhao equity investment guidance fund" as basic fund to attract social funds and set up Support the sub-funds so as to sever as the main channel of supporting the development of middle and development of small-sized enterprises. In 2015, the city integrated 100 million yuan of basic fund of guidance middle and small- fund and set up 3 sub-funds. Try to increase the scale of basic fund to 500 million yuan and sub- sized enterprises fund to 1.5-2.0 billion yuan by 2017.

Offer one-time subsidies of 3 million yuan, 2 million yuan and 2 million yuan respectively for Guide enterprises domestic initial public offering, abroad initial public offering and back door listing enterprises. Offer into capital market one-time subsidies of 1.5 million yuan and 200,000 yuan for “New third market" enterprises and enterprises listed in regional equity trust trading center.

Offer one-time subsidy of 1 million yuan for new branches of foreign banks and national banks Support the who purchase business occupancy and 600,000 yuan for renting business occupancy. Offer one- development of time subsidy of 500,000 yuan for regional financial institutions who purchase business occupancy financial service and 300,000 yuan for renting business occupancy. enterprises

– Bridge finance: every district and county shall collect bridge finance according to actual needs to support enterprises with temporary financing difficulty but with good market prospect and economic benefit. The total amount of the city shall not be lower than 2 billion yuan. – Every district and county shall develop a state owned or state controlled financing assurance Strengthen financing company with more than 300 million yuan of registered capital by new establishment or capital support injection transformation according to the performance of the city to increase the opportunities of medium small and micro-sized enterprises getting loans with assurance within normal specifications.

In 2015-2017, offer 10 million yuan of operating subsidy to Rizhao-Pingze regular ship line every Support the year, 100 yuan for every standard weight container of sea-railway combined transportation, 50 development of port yuan for every common standard weight container and subsidies for high way tolls of the trucks economy carrying regular ship containers.

In 2016-2018, arrange special technology funds every year and implement the regulations about Support technology technology innovations to greatly support introducing advanced technology, encourage innovations enterprises to increase R&D investment and strive to create high-tech enterprises. Offer subsidies to national and provincial incubation platform construction.

Promote the Offer 50% of the booth fee of enterprises participating commercial activities the municipal development of government encourages and bear the round-trip flight ticket of one company employee. foreign trade

Enterprise Cultivation Policy: Lighten the Burden on Enterprises

 In order to lighten the burden on enterprises and lower financial expense cost, Rizhao municipal government issued Suggestions on lightening the burden on enterprises in 2016 to fully lower the costs in the operating management of enterprises in multiple dimensions and promote the development of entity economy.

Suggestions on lightening the burden on enterprises policy excerpts Preference Type of Preference Preferential Measures Objective By Dec 31, 2017, the added-value tax will be exempted for small and micro size enterprises with monthly sales and turnover lower than 30,000 yuan (including). Small and micro Deduct 50% of the taxable income and collect corporate income tax with 20% tax size enterprises rate for small and micro size enterprises with taxable income lower than 300,000 yuan (including).

By Dec 31, 2017, offer financial discount for the loan provided to the trust account Export Rebates for export tax refund of enterprises.

Deductions and The extra charges of education funds, extra charges of local education funds, exemptions of foundation for water works, cultural construction funds and disabled employment Lower tax burden administrative security funds shall be exempted for small and micro size enterprises meet the undertaking requirement. The exemption range for 18 administrative fees including internal plant charging quarantine fees will enlarged to involve all enterprises. Since Feb 1st, 2016, the woods-raising fund collecting standard has been lowed to Stop collecting zero, price regulation fund collection has be stopped, the special fund for bulk and integrate cement has been incorporated into special fund for new-type wall material. Since governmental May 1st, 2016, the special fund for new-type wall material has been collected funds according to 80% of the standard, collecting 50% and delaying 50%. Implement “One window” handling for international trade. The lifting, transportation Lower customs and storage fees shall be exempted for foreign trade enterprises without customs clearance cost inspection problems in import and export. Lower the basic If the basic medical insurance balance could pay for 12 months and with balance in medical every district and county, the basic medical insurance rate shall be lowed by 1 insurance rate percent from June 1st 2016 to May 31th 2017.

In 2016-2018, lower the allocation ratio of guaranteed pension of construction enterprises from 2.6% to 1.3%. For large scale projects or projects last two or more Lighten the labor years, the guaranteed pension of construction enterprises can be paid by fee of installments if it is really difficult to be paid in once. The construction labor wage Lower social security construction margin can be exempted for construction enterprises without default payment in expense industry construction arrears, construction units without wage arrears for migrant rural workers and enterprises with excellent construction market credit assessment result.

Accident Establish accident Insurance allowance system for homemaking people. Insurance Homemaking institutions buy accident Insurance for homemaking people with the allowance for standard of 120 yuan every year and the registered location financial department homemaking offer allowance of 60 yuan for every person every year. people Offer 5% of the confirm R&D cost after calculation and deduction to industrial enterprises above designated size as award. The award for one enterprise cannot R&D and design be exceeded 500,000 yuan. Offer 200,000 yuan of allowance to newly verified high- Lower tech enterprises. entrepreneurship and Offer import interest subsidy by seriously implement provincial interest subsidy and innovation cost Technology and allowance standard for advanced technology and equipment listed in China and equipment Shandong “Encouraged imported technology and product catalog" and imported in introduction the way of general trade by enterprises.

Enterprise Cultivation Policy: Lighten the Burden on Enterprises (II)

Type of Objects Preferential Policies Preferential

For industries and enterprises above designated size, 5% of the certified weighted deduction of the R&D expense in the same year (maximum R&D Design 500,000 RMB per enterprise). 200,000 RMB allowance will be offered to newly certified hi-tech enterprises

For advanced technology and equipments imported through general Introduction trade by enterprises that are in the list of national and provincial of Technical Technology and Product Catalogs Encouraged to Import will receive Equipment discount support according to provincial standard

The First For the quality assurance Insurance, product Liability Insurance, all-risk Unit(Set) of insurance of key technological equipments and core components Science and enterprises purchase, provincial finance sector will offer allowance no Technology more than 3% of the maximum level of premium rate and 80% of actual Insurance annual insurance premiums while municipal finance sector 3% and 20%

Full subsidy(application fee & agent fee) will be offered to enterprises that gained patent license for the first time; Awards will be given to: enterprises that gain more than ten patents; patents maintain good Intellectual market value for more than 5 or gained foreign certifications; IPRs co- Property developed by universities, research institutions, and enterprises; 200,000 Protection RMB will be offered as award to newly certified enterprises that are Reduce Cost of national IPR frontrunner (demonstration enterprise) and 100,000 RMB Innovation for those of provincial level

Start-up of 300,000 RMB subsidy of funds for operating will be offered to current Small and provincial and beyond technology business incubator; 1 million RMB to Micro-sized newly certified ones of national level and 300,000 to newly certified ones Enterprise of provincial level(provincial agricultural science and technology park)

Set up award funds for financial innovative development and the Innovation of municipal finance sectors will take 500,000 RMB out of it to reward Financial prominent innovative financial teams and individuals in financial Institutions products, technology, services, management, etc.

Encourage the park to set up venture capital to guide the fund amd the municipal finance sector should input no less than 10% of the total amount. Guide funds or special sub-funds to render priority support to high-quality start-up enterprises at seed period, start-up period and Development growth period in accordance with the market-oriented model. Standard of Sci-tech for support amount will take the actual need of the enterprise when at its Enterprise initial stage or no less than 3 million per enterprise For those receive special governmental support that master core technology and have core competitiveness with substantial market potential, the FOF can be either be direct-investment or co-investment to accelerate business growth

Enterprise Cultivation Policy: Lighten the Burden on Enterprises (III)

Type of Objects Preferential Policies Preferential

Enterprises listed on the major domestic and foreign stock Support exchanges will respectively be given subsidies worth3 million and 2 Domestic and million RMB. Among them, once the listing application officially Foreign accepted by domestic or foreign securities regulatory authorities or Enterprise to the stock exchange, 1 million RMB will be pre-allocated as initial- Go Public stage subsidy. 2 and 1 million RMB will be given respectively for enterprise that financing by listing on the stock market through IPO

300,000 RMB of subsidy will be granted to enterprises whose amount of financing is less than 1 billion after refinancing through Support Listed SPO; After the listing of enterprises through the implementation of enterprise to refinancing, financing less than 1 billion RMB, to grant subsidies Refinance 300,000 RMB; and 500,000 RMB to those whose amount of financing include and above 1 billion RMB

For enterprises listed in the national SME share transfer system, after officially announced listing will be granted subsidy of 1.2 million Encourage RMB; for those whose amount of financing is less than 100 million Small and RMB through SPO, 200,000 RMB; those include and above 100 Medium-sized million RMB, 300,000 RMB. 200,000 RMB will be granted as subsidy enterprises to to enterprises listed at provincial level(excluding display, managed List on Stock listing, etc.). If companies that start business officially in new three Market board listed successfully on other boards, or provincial enterprises in Reduce Cost of equity exchange markets transferred to new three board or IPO will enterprise be made up the difference Financing Loan Risk 10 million risk compensation Fund for small and micro-sized Compensation enterprise guarantee will be funded by municipal finance sector and for Small and the specifics is remained to be studied to formulate. enterprises Micro-sized match the condition will get compensation by 20% Enterprises The newly introduced banking financial institutions headquarters will be granted subsidy no more than 1 million RMB for the purchase of office and business premises to give subsidies. These premises cannot be let or sold within 5 years; no more than 1 million RMB in Introduction of total within 3 years if the headquarters choose to let premises. Newly Financial founded county branches of banking financial institutions, if loan Institution balance exceed 100 million RMB in the second year will be granted Allowance housing allowance for the first year(maximum 300,000 RMB) and newly purchased office and business premises no more than 400,000 RMB. The total amount of allowances for office and business premises can not be over 500,000 RMB per financial institution.

Receipt of Proceeds Based on the provincial finance sector’s 50% proportion of insurance Financing of premiums for enterprises’ export credit, Rizhao municipal finance Foreign Trade sector will add extra 20% Enterprise

Enterprise Cultivation Policy: Lighten the Burden on Enterprises (IV)

Types of Objects Preferential Policies Preferential

Offer award for employee settlement in resolving excess capacity Support Key according to the provincial implementation plan of resolving excess in iron Industries to and steel, coal and other industries, taking the completion of the task to Resolve the resolve the excess capacity and number of employees to settle and Excess Capacity municipal financial situation into consideration, combined with the central and provincial financial compensation funds

Implement the “Industrial Green Power” plan and the one-off award of Shandong Province for newly built and adopted efficient pulverized coal Reduce the Expense Transformation boiler demonstration project(maximum 100,000 RMB T/H). Offer one-off of enterprise in Costs for allowance for solar heating system applied and dissemination in the industry Optimizing Energy Use field (6,000 RMB / ton per day). enterprises make full use of the resources Production Capacity and produce products that meet national industrial policy, only 90% of the total taxable income will be charged business income tax

Since January 1, 2016, the general commercial electricity prices per kilowatt-hour has been reduced by 3.49 cents, large industrial electricity prices 1.72 cents. Implement environmental protection policy of power Electricity Costs generation enterprises. Increase 1.5 cents for desulfurizing thermoelectricity and 1 cent, 0.2 cent respectively for denitrifying and dedusting electricity prices

Private Sector to Enterprise; Small Enterprise to Render one-off 100,000 RMB award to newly founded industrial enterprises Enterprises Above above designated size; 100,000 RMB to small and medium-sized Designated Size; enterprises above designated size whose invoiced sales revenues and tax Enterprise above paid the following year increase by over 20%/ yr, and pay more than Designated Size to 200,000 RMB tax per year Joint Stock Enterprises Establish special municipal foreign economic and trade fund of 10 million RMB per year for enterprises to explore international markets from 2016 to 2018. Municipal business department progressively organize overseas exhibitions and special product promotion sessions. The business Optimize Economic department of the city actively organizes overseas exhibitions, renting Development International exhibition sites together, making public propaganda facilities, providing Environment Marketing Costs translation services, as well as covering the round-trip cost of one enterprise staff member. Pay attention to time, booth fees and other information of the world-renowned professional trade fair and expos so as to inform relevant enterprises timely. Enterprises participated in commercial activities recommended by municipal government will get 50% subsidy of the booth fees and also the round-trip costs of one enterprise staff member

Offer subsidies of financial, legal, consulting and other aspects of the Service Subsidy intermediary service fee for small and micro-sized, plus continuous Vouchers for Small subsidies for administrative chargers of newly registered ones during the and Micro-sized registration process to basically realize "zero cost“ for the registration of Enterprises small micro-sized enterprises

Enterprise Cultivation Policy: Development of Private Economy and Small and Medium-sized Enterprises  During the Second Five-year Period, Rizhao municipal government has promulgated the Opinions on Further Promoting Employment and Entrepreneurship, Opinions on Promoting the Development of Private Economy in the Whole City and Opinions on Vigorously Promoting mass entrepreneurship and happy workplaces of Rizhao. These supportive policies promote the development of private economy and small and medium-sized enterprises and create entrepreneurial environment

Types of Preferential Policies Preferential -Private Sector to Enterprise: After the transformation, the investment subject, place of business, business scope remain unchanged when doing land and housing ownership transfer and the deed tax and transaction fees are exempted. Transferred enterprises enjoy the same preferential treatment of new enterprises. If tax burden Promote the increased due to the transfer, the municipal and district as well as county finance Transformation sectors give appropriate subsidies and Upgrading of -Private Enterprise：Offer one-off award to private sectors whose annual revenues Private Economy exceed 1 billion, 5 billion, and 10 billion RMB for the first time -Brand Building：Offer award according to relevant regulations to brands certified as famous-brand product, top service brand, well-known trademark, famous trademark, or laureates of China Quality Award, quality award of municipal or provincial level -Credit Guarantee: increase municipal credit margin “Preferential Loans to Promote Trust” to 400 to 500 million RMB and increase the proportion of risk compensation appropriately. Credit upper limit of general micro-enterprises is 5 million RMB with the interest rate controlled within 30% above the benchmark interest rate and technology- Improve Financial based manufacturing small and micro-sized enterprises 3 million RMB and within 10% Services -Financing Support: Small loan enterprises reach the standard level of loan scale, loan interest rate and institutional rating for small and micro-sized enterprises will be granted subsidy of 0.25% of their annual loan balance. In the case of small and micro- sized enterprises listed on the OTC market, one-off 200,000 to 300,000 RMB will be granted Plan and construct a number of small enterprises industrial park and entrepreneurship counseling base. Industrial projects whose investment are less than 20 million RMB Field Support are mostly in principle, in various types of small and medium-sized enterprises industrial park Support private enterprises to introduce academicians from CAS and CASS, scholars of "1000 Talent Plan" and "1000 Talent Plan for High-level Foreign Experts, high-level Talent Support talents in key technical fields and industry academic and technical leaders etc., and implement talents and intellectual introduction policies concerning research funding, talent subsidies and entrepreneurship support -Services Subsidy: Increase the services subsidy voucher amount to 3 million RMB plus. Compensate for the administrative cost through purchasing services to achieve “zero burden” when it comes to administrative fee gradually. Offer subsidy in proportion Fiscal and for small and micro-sized enterprises to purchase financial agents, labor and personnel Taxation Support agents, financing, law, training, etc. from intermediaries -Implementation of Tax Preferential: Fully implement all preferential tax policies concerning private economy and make full use of the supportive role of them under the premises of upholding tax administration in accordance with the law

Enterprise Cultivation Policy: Development of Private Economy and Small and Medium-sized Enterprises (II)  Among them, entrepreneurship support is an important means to support the development of small and medium-sized enterprises in Rizhao through the support policy of "five allowances, one subsidy, one prize" of the financial subsidies as well as optimizing of financing environment and government services. Favorable entrepreneurial environment has thus been created and new development engine forged

Types of Means Preferential Policies Preferential

From 2014 to 2018, the municipal government arrange 40 million RMB as Special Funds support for entrepreneurship to promote employment each year from the unemployment insurance rollover balance fund

Entrepreneurship 1,800 RMB per person in accordance to allocation standard and gradually Training Subsidies increase according to the actual situation

From 2014 onwards, one-off 10,000 RMB start-up allowance has been granted to small micro-sized enterprises that obtain a business license and One-off Start-up operate normally for more than a year. For enterprises that recruit Allowance employees and sign labor contract for more than 1 year will be granted one- off 2,000 RMB subsidy per job position according to the amount of job creation when the application for subsidy is submitted

Offer subsidy to business incubator bases and entrepreneurial parks certified by district and county-level for the first time according to the number of enterprises assigned(maximum 500,000 RMB); the municipal business incubator demonstration bases and entrepreneurial demonstration Incubator Building parks certified will each be offered one-off 2 million RMB subsidy. Enterprises recommended as provincial business incubators demonstration base (park), will be given one-off subsidy in accordance with provincial Entrepreneurship regulations Support

Offer full discount to guaranteed loan of entrepreneurship , no more than Subsidized Interest 3% beyond benchmark lending rate; labor-intensive, small and micro-sized sci-tech enterprises 50% according to national regulations

Subsidies for water and electricity are implemented together directly to entrepreneurs. Any qualified entrepreneur can apply for these subsidies. Subsidies for Fees The subsidy standards per enterprise per year cannot exceed 9,000 RMB for no more than 2 years. The first year is 6,000 RMB and the second year 50% of the first year

Further deepen the reform of the commercial system and for the newly founded enterprises farmers’ professional cooperatives (including branches), “Three Cards Combined as One, One Business License with One Code" registration model is implemented. The administrative Facilitation of authorities for industry and commerce issue new business license with a industry and uniform social credit code. Before December 31, 2017, the original commerce business licenses will all be replaced by new ones. Promote interconnection between industrial & commercial registration and employment (entrepreneurship) registration. Issue “Certificate of Employment and Entrepreneurship” for project management to achieve full tracking and policy support

Enterprise Cultivation Policies：Supports on Scientific & Technical Innovation

 As Rizhao Municipal Committee and Municipal Government introduce Suggestions of Carrying out “Talent Introduction from outside the Park”, Rizhao formulates Supportive Policies on Scientific & Technical Innovation accordingly to fuel the transformation and upgrading of parks and industries through Scientific & Technical Innovation

Preferential Preferential Policies

Advanced technology Project imported from other cities with record-filing quota more than 500,000 RMB(quota of registration of technology contracts, assignment of the patent right or Technology Import patent licensing record) , after project registration or record-filing, will be offered 10% out of the payment according to the practical implementation results of the project, with the maximum amount up to 300,000 yuan for each

For industries and enterprises above designated size, 5% of the certified weighted deduction of Input of Scientific the R&D expense in the same year (maximum 500,000 RMB per enterprise). Enterprises are Research encouraged to perform key technology research and development and transform and upgrade traditional industrial technology. 200,000 RMB allowance will be offered to newly certified hi-tech enterprises

300,000 RMB subsidy of funds for operating will be offered to current provincial and beyond Construction of technology business incubator; 1 million RMB to newly certified ones of national level(national Incubator agricultural science and technology park) and 300,000 to newly certified ones of provincial level

Choose no more than 10 technical service institutions provided extraordinary service to Technology Services technology innovation through public appraisal with an support of 100,000 RMB for each one

Full subsidy(application fee & agent fee) will be offered to enterprises that gained patent license for the first time; 200,000 RMB will be offered as award to newly certified enterprises that are Innovations national IPR frontrunner (demonstration enterprise) and 100,000 RMB for those of provincial level

Innovation on Scientific For Small micro-sized enterprises to use large-scale scientific equipment and equipment to share Instruments and the scientific network equipment for testing, testing, analysis and other activities, 20% more Equipment Sharing subsidy will be offered on the basis of the 40% subsidy of the provincial finance sector to of Hi-tech Small and encourage these enterprises to engage in technology innovation. The maximum amount of Micro-sized subsidy one enterprise receives is 500,000 RMB Enterprises

Units preside over the formulation of international standard will be granted 300,000 RMB; national Technical Standard standard, 200,000 RMB; Units participate in formulating international standard, 150,000 RMB and 100,000 RMB in formulating national standard

Scientific and 300,000 RMB subsidy will be granted to units preside over science and technology research and Technological development of new varieties of animal and plant, which pass the national validation in the very Innovation of Seed same year; provincial validation, 100,000 RMB Industry

2 million RMB and 1 million RMB will be granted respectively to units win the first and second prizes of National Medal of Science and Technology in the very same year; 600,000 RMB and Technology Award, 300,000 RMB for winners of provincial level. Individuals who win China Invention Patents Award Patent Award Gold Medal and Award of Excellence of it will receive 600,000 and 300,000 RMB respectively; 200,000 and 100,000 RMB for winners of provincial level

Personnel Policy

Introduction Policies

Innovative High Talent Living Allowances  Accredited academicians of Academy of Sciences (Academy of Engineering) both within and outside Chinese mainland will receive one-off scientific research funds of 1 million RMB and each and every academician will receive 8,000 RMB per month from finance sector at the same level  Scholars from “1000 Talent Plan” & “10,000 Talent Plan”; young and middle aged scientists, technical and management experts who have made contribution to the nation; “Changjiang Scholar”candidates； candidates of CAS “100 Talents Program”; ”New Century Talents Project” national level candidates; laureate of The National Science Fund for Distinguished Young Scholars; winner of State Natural Science Award; winners of State Technological Invention Award; the first 3 accomplisher of the first and second prizes of National Science and Technology Progress Award; world-class economist, culture and arts masters and celebrities. All these individuals from above will receive one-off scientific research funds of 300,000 to 500,000 RMB and will receive 5,000 RMB per month from finance sector on the same level in the first 3 years  Winners of Special Government Allowances of the State Council; "Taishan scholar" or those of corresponding level, young and middle-aged experts of provincial and ministerial level who have made outstanding contributions to the nation; provincial and ministerial level key academic leaders, academic leaders of key laboratory; class A cast members as well as world renowned culture and arts celebrities who enjoy good reputation; nation- level coaches who have cultivated golden medalist in Olympic Games or World Championship; winner of State Natural Science Award; winners of State Technological Invention Award; the first 2 accomplisher of the first prize of National Science and Technology Progress Award. All these individuals above will receive 4,000 RMB per month from finance sector on the same level in the first 3 years  Those who stay overseas after staying abroad and have worked in international enterprises, top universities and scientific research institutions, with the equivalent professional title of associate professors (included) or beyond  Those who have worked as management leaders in Fortune Global 500 or Fortune China 500 for more than 3 years; provincial-level top technician, Messenger of Harmon, Star of Countryside, Cultural Talent of Shandong; those can meet the development need of major projects, traditional competitive industries and emerging industries; professional and skilled talents who can make breakthrough in key technology of scientific research or can manage the manufacture process of core parts; other talents in urgent who works full time in Rizhao will receive 50,000 to 100,000 RMB as scientific research funds and will also receive 3000 RMB living allowance per month from finance sector at the same level  One-off 50,000 R&D funds will be given to postdoctors who work in Post-doctoral Research Centers and will receive 5,000 RMB per month at that period of time by finance sector at the same level Housing Subsidies  Employers offer innovative high talents houses. Talents mentioned above will receive 1million, 600,000, 300,000 and 150,000 respectively purchasing owner-occupied houses for the first time in Rizhao. Postdoctors from post-doctoral research centers who have worked in enterprises and public institutions will be given 150,000 RMB housing subsidies if it’s the first time to purchase houses for self use. Employers and finance sector at the same level will each pay half of the housing subsidies and if the postdoctor works in public institution that get financial allocation will receive housing subsidies from finance sector at the same level

Personnel Policy( II）

Introduction Policies

Entrepreneurial High Talent (Group) Capital Support  Offer 1 million to 10 million to accredited entrepreneurial high talents or team leaders as initial capital for start-ups. Accredited academicians of Academy of Sciences (Academy of Engineering) both within and outside Chinese mainland will receive 10 million and experts from national “1000 Talent Plan” & “10,000 Talent Plan” and their counterparts 5 million; other accredited entrepreneurial high talents or team leaders of various levels will receive 1 million to 5 million according to circumstances (appropriate by stages according to schedule). enterprises founded with annual sales revenue over 50 million within 3 years will receive another 1 million capital support  Office Building/Factory Building: The local government or park of the registered enterprise will provide not less than 200 square meters of business premises and the first 3 years will be free of rent. Those in need of productive standard factory buildings and construction sites will receive policy support according to circumstances Housing Subsidies  In the first 3 years, the accredited entrepreneurial high talents or team leaders will be provided with no less than 100 square meters of talent apartments in local area free of charge, or be offered corresponding rent assistance by finance sector of the same level. Those who purchase homes for self use for the first time in Rizhao will receive one-off purchase subsidies according to policies and those in need of financial support will be given by financial department of the same level

Innovative High Talent Capital Support  500,000 to 5 million RMB will be offered to accredited innovative teams. Each and every innovative team leaded by accredited academicians of Academy of Sciences (Academy of Engineering) both within and outside Chinese mainland will receive capital support worth 5 million; Expert teams of national “1000 Talent Plan” & “10,000 Talent Plan” and their counterparts 3 million; other accredited innovative teams 500,000 to 3 million according to circumstances in which no less than 30% of the capital support will be specifically for R&D. One-off 50,000 R&D funds will be given to postdoctors who work in Post-doctoral Research Centers and will receive 5,000 RMB per month at that period of time by finance sector at the same level Housing Subsidies  In the first 3 years, the accredited team leaders will be provided with no less than 100 square meters of talent apartments in local area free of charge, or be offered corresponding rent assistance by finance sector of the same level. Those choose not to use talent apartments who purchase homes for self use for the first time in Rizhao will receive one-off purchase subsidies according to policies and those in need of financial support will be given by financial department of the same level

Personnel Policy( III）

Supporting Policies

 As Rizhao Municipal Committee and Municipal Government introduce Suggestions of Carrying out “Talent Introduction from outside the Park”, Rizhao formulates Talent Introduction Policy accordingly to offer full support in living allowances, scientific research funds, housing subsidies, special funds, financing support, tax reduction etc. to talents of different levels.  Financing Support: Rizhao Municipal Finance Bureau initiates Funds for Entrepreneurial Talents worth 100 million RMB. Those who certified by authorities will receive 10% to 30% supporting investment(Maximum10 million RMB) ； for those enter pilotscale experiment or early stage of industrialization applying for financing due to lack of current funds, related guarantors can offer a maximum of 5 million RMB as financial guarantee and finance sector of the same level will also offer a certain amount of risk compensation.

 Tax Reduction: For the first 3 years of start-ups in its incubation period initiated by entrepreneurial talents & groups, supports will be given according to the contribution it make to local finance; those accredited programs which are highly scientific and technological will get full financial subsidies from finance sector of the same level in the first 3 years; the government will offer all kinds of supporting funds as well as living allowances for introduced talents & groups and for those meet related policies can be exempt from individual income tax.

 Supporter Cultivation: Award 1 million RMB to newly built national level innovation base by overseas talents and 300,000 for that of provincial level; 500,000 to newly built national level innovation park by overseas students and 200,000 for that of provincial level; 200,000 to newly accredited R&D institutes of firms at national-level and 100,000 for that of provincial level; 20,000 for newly accredited post-doctoral research workstation and academician workstation and 100,000 for post-doctoral innovation practice base at provincial level; 150,000, 100,000, and 50,000 respectively for technician workstation at national, provincial, and municipal level; 150,000, 100,000 and 50,000 respectively for those gained the title of “Demonstration and Popularization Base for the Introduction of Foreign Intellectual Achievements (Demonstration Units)” unites at national, provincial, and municipal level

 Green Channel: To create convenient and effective green channel for the talent recruit of public institutions to introduce scarce high talents and fill job vacancy for employees on regular payroll on time; units without vacancy of authorized strength should redistribute opportunities for introduced talents

 Household Register Support: Spouses, children and parents who have reached retirement age as well as parents of spouses of high-level innovative and entrepreneurial talent and team leader can receive household register of Rizhao; spouses work as civil servants or in public institutions at the moment will be granted a counterpart job by the organization, human resources and social security and authorized strength department

 Innovation on Talent Introduction System: Construct and implement motivation system to attract talents. Individual or Organization introduce high talents successfully will be awarded 10% of talent introduction subsidy within 500,000 RMB. Those who introduce leading high talents of national “1000 Talent Plan” will receive handsome rewards for each case

 Green Card for Talents： Organizational Department of the CPC Rizhao Municipal Committee and Rizhao Municipal Human Resources and Social Security Bureau will offer Green Card of Rizhao for accredited innovative and entrepreneurial talents and team leaders. Green card provide services like free physical examination, schooling for children, airport check in, fitness consumption etc.

(I) Main Contact Units and Contact Info. of Rizhao

Rizhao Municipal Bureau of Rizhao Municipal People’s Government Commerce(Investment Promotion Dept.) 198 Beijing Rd., Rizhao 5th Floor of Civil Air Defense Building, 369 Contact Us：0633—8781001 Jining Rd., Rizao Contact Us：0633-8816912 Rizhao Municipal Commission of Rizhao Municipal Commission of Economy Development and Reform and Information Technology 158 Beijing Rd., Rizhao 33 Tai’an Rd., Rizhao Contact Us：0633-8776600 Contact Us：0633-8781164 0633-8776601

Rizhao Municipal Office, SAT(State Rizhao Local Taxation Bureau Administration of Taxation) 156 Beijing Rd., Rizhao 67 Yantai Rd., Rizhao Contact Us：12366 Contact Us：12366

Rizhao Municipal Land & Resources Rizhao Municipal Finance Bureau Bureau 13 No. 2 Huanghai Rd., Rizhao 59 Tai’an Rd., Rizhao Contact Us：0633-8668000 Contact Us：0633-8717058

(II) Main Websites

Rizhao Municipal Economic-Technological Development Area Web Portal of Shandong Gov. http://www.reda.gov.cn/ http://www.shandong.gov.cn/ Rizhao Municipal Hi-tech Industrial Web Portal of Rizhao Municipal Gov. Development Zone http://www.rizhao.gov.cn/Index.php http://www.rzgxq.gov.cn/ Rizhao Municipal Bureau of Commerce Lanshan District Economic and http://www.rztrade.gov.cn/ Technological Development Zone http://www.rzlanshan.gov.cn/