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Building a Harmonious Enterprise

Facing the increasingly diversified demand from the public for information, China Unicom is committed to providing the public with convenient, smooth and efficient communications and information services, broadening public access to information and interactive services through innovative integration in networks, services and terminals and promoting the sustained and healthy corporate development. Deeply aware of its duties and missions amid economic and social development, the company will follow noble business ethics, build a high-performance and standardized structure for corporate governance, actively promote a clean social climate and keep performing its social responsibilities as a well-mannered corporate citizen.

Highlighting Financial and Business Performances

According to the Express Report in December 2008 (unaudited), after the restructuring, China Unicom registered 165.08 billion yuan in revenue out of continued operations. As of the end of 2008, the company recorded a total of 272 million subscribers, of which there were 133 million mobile subscribers, 29.87 million broadband subscribers and 109 million fixed and PHS users. The sheer size of its revenue lifted the company into the list of Fortune 500. The user base and market capitalization of the listed company ranked 4th and 12th among all telcos across the globe.

Deepening Risk Management

Focusing on a responsibility mechanism to implement long-term internal control, the company kept promoting the effective implementation of internal control and risk management to ensure stability of its business objectives. In the wake of a series of internal and external tests, the company passed the Sarbanes internal audit in 2007 with success. While consolidating the outcomes of internal control and risk assessment of 2007 and recognizing its mandates in corporate governance, the company in 2008 placed emphases on improving its economic efficiency, putting operational risks under control and solving problems impeding further business growth and efficiency improvement, so as to make full use of the internal control instrument for planned and staged day-to-day internal reviews and thematic evaluations, bring to light risk-related issues in time, make in-depth analyses of the causes and the crux of risks and gather valuable opinions and inputs. In the mean time, the company kept urging its local branches to integrate the above efforts with the real-world business scenario to make internal control a regular part of their daily work. All this has served to greatly enhance the awareness of risk management and improve the operational efficiency as well as the caliber of corporate management.

Enhancing the Supportive Capacity of Information Technology Services

China Unicom has adhered to the principle of stressing project construction and service application by offering necessary support and providing standards. The company kept improving its major enablement systems, i.e., service management processes, IT management and control as well as specifications and standards. Every effort was made to promote the building of a new generation of BSS and MSS, and put them on track to enable fully integrated services. Sale of the CDMA network was wrapped up as expected, with a 3G roll-out plan already taking shape and the level of ICT application further improved. In the first national test evaluating the level of ICT application in SOEs, China Unicom ranked 2nd in total score among the 145 SOEs taking part in the test on the strength of its leadership and outstanding performance in ICT application, and was awarded the title of "Class-A SOE in ICT Application in 2007".

Persisting in Promoting Development by Means of Innovation

Innovation is not only a prerequisite for a corporation to sharpen its core competitiveness, but an objective need to meet the increasingly diversified customer demands. The capacity for innovation hinges on the sustainable corporate development. In 2008, China Unicom stuck to innovation for development, kept deepening managerial and technological innovations and scored a number of achievements in innovations. The company passed a comprehensive assessment by competent state ministries and commissions in regard to innovative pilot enterprises and was among the first few companies that were awarded the title of National "Innovation-oriented Enterprise".

China Unicom has been making unrelenting efforts to explore managerial innovations. At the 2008 national conference awarding telecom companies showing excellence in three performance categories, i.e., modernization in corporate managerial innovation, customer satisfaction and excellence of Quality Management Teams (QMT), China Unicom won 3 First Prizes, 8 Second Prizes and 14 Third Prizes and the Prize for Outstanding Organization in the first category; 18 companies under China Unicom won the award in the second category; 57 QMTs under China Unicom won the award in the third category. Three bodies under China Unicom were named Advanced Units in QMT-led activities. China Unicom's "Study Report on Management of and Services to Retired Corporate Staff under the New Situation" was awarded the Third Prize by the Organization Department of the CPC Central Committee, the only award of its kind in the national telecom industry. At the Third China Human Resource Management Award hosted by the Chinese Enterprises Association under the State Council Development Research Center and the China Human Resources Development Research Association under the State Development and Reform Commission (SDRC), the "Personnel Selection Approach Stressing both Managerial Innovation of CPC (Communist Party of China) and Market-oriented Designation" and the "Dual Control Concept and Practice in Extensive Implementation of HR Planning and HR Cost Budgeting in Large SOEs" submitted by China Unicom gained the Gold Award and the Silver Award respectively. Another thesis from the company won the Award for Outstanding Achievement.

In 2008, China Unicom applied for five major national scientific and technological projects, among which the team of the Olympic City Connect project and teams of projects for enabling fixed communications technologies and information services and for fixed communications command and scheduling during the Games and the R&D team of IPv6 Video Monitoring System project were named Advanced Units by the Leading Group of the "Olympic Technology (2008) Action Plan" and the Committee on Science and Technology of the 29th Olympic Games.

Strengthening the Building of an Honest and Disciplined Team

Great emphasis was placed on building a clean management team. In accordance with "Implementation Guidelines for Establishing and Improving a System to Punish and Control Corruption and Stress Education, System and Supervision" from the CPC central committee, efforts targeting at education, system and supervision were highlighted on all business links of the company. A sound institutional mechanism against corruption was taking shape and being refined. Also, as part of the efforts to combat corruption, an "Anti-corruption Firewall" was set up to promote the healthy development of the company.

In addition, the company continued its education on disciplines to raise the awareness of discipline among corporate executives and employees. The company called for an earnest study of "The Provisions on Building a Clean SOE Leading Staff" (Provisional Version), so as to strengthen the clean ethical awareness among its staff and standardize their business behaviors. The company also held seminars for its staff to study relevant laws and regulations, requiring the staff to know, understand and observe such laws and regulations while perform their duties.

The company valued the creation of a clean corporate culture to foster an honest and trustworthy ethical morality among its employees. To that and, the company launched diverse forms of clean education, e.g., the Clean Publicity Column in the MSS system, SMS sent to staff groups spreading the concept of Being Clean, the public playing of videos highlighting corruption-related cases, etc., so as to create a clean business environment. The company also endeavored to enhance the professional ethics of its staff by holding workshops to study "The Code of Professional Ethics", so as to foster the value proposition of credibility and integrity among its staff. As an outcome of such studies, all of China Unicom's staff signed statements of commitment to professional ethics.

Beyond that, the company gave full play to the role of the Department for Discipline Inspection and Supervision (DDIS), and stressed strengthening supervision of processes. DDIS took part in the entire processes of bidding for construction projects, material procurement, advertiser selection and staff recruitment. In the mean time, it worked hard to further improve the corporate rules and regulations and standardize relevant business processes by combining the problems found in the above processes with real-world scenarios, so as to enable all the business processes to proceed in an orderly manner.

The company provided handy channels for whistle blowers to report staff irregularities that tended to breach disciplines or violate rules. Special telephone lines and e-mails were set up and made known to the staff, with specific employees responsible for registering and handling such cases. Malpractices proved to be true following investigation would be severely dealt with in line with relevant corporate and state regulations. Cases proved to be not true after investigation would be clarified to the people involved to protect the legitimate rights and interests of employees. Meanwhile, cases in violation of laws or disciplines would be given a thorough analysis to identify vulnerabilities in business processes for timely redress and improvement.

Improving the Mechanism to Safeguard Employees' Rights and Interests

Currently, China Unicom is proactively and steadily pushing forward the building of a democratic management system for the Employee Congress. While carrying forward and introducing innovations to the existing mechanism of the Employee Congress, efforts are being made to improve the democratic corporate governance and safeguard employees' rights and interests. The company has brought into full play the positive role of the Employee Congress in building a harmonious enterprise and safeguarding the employees' right to know, participate in and monitor relevant corporate processes. The company also further improved the system for consultation on an equal footing and labor-related legal supervision systems in regard to collective contracts, labor contracts, labor dispute mediation and so forth. While implementing such systems, the company adopted flexibility in combining collective contracts with labor contracts by utilizing collective contracts to standardize labor contracts and establishing a sound performance accountability and supervision system for collective contracts, so as to ensure the successful implementation of collective contracts.