1. 1 RSCS Program Introduction Feb, 2006 UL Greater China RSCS Team

2. 2 Table of Contents - UL Methodology & Differentiations - Current Market Status & Problems - Our Practice - UL Mission & RSCS Program Overview

3. 3 In today’s world, “Green Trend” is spreading quickly throughout the whole world CA Prop. 65 Japan: Green Progra m EU: ROHS Directiv e China: RoHS Directiv e

4. 4 UL is proactively transforming itself into an organization with strong environmental commitment Creating safe living and working environments for people. Working for a safer world Mission Change

5. 5 UL’s RSCS Program aims to provide a complete set of solutions towards RoHS directives to help customers of all sizes E-Learning Core Program Testing Surveillance Database EMS ISO14001 ） Consulting Knowledge Solutions Seminars Regulations Monitoring

6. 6 Table of Contents - UL Methodology & Differentiations - Current Market Status & Problems - Our Practice - UL Mission & RSCS Program Overview

7. 7 OEM Supplier Trading Co. Supplier Trading Co. Supplier Snapshot of one OEM’s supply chain Illustrative Today, big OEMs own a complicated supplier network OEM are facing a complicated supplier network. Suppliers are holding different opinion and acting differently towards RoHS. OEM are facing a complicated supplier network. Suppliers are holding different opinion and acting differently towards RoHS. Supplier

8. 8 A component composed of several homogeneous materials may produced by suppliers in very different supplier level OEM S1S2 S3 S4 SS1SS2 SSS1SSS2 SS3SS4SS5 SSS3SSS4SSS5 Level 1 Level 2 Level 3 S1 SS1 SS2 SSS1

9. 9 To comply with RoHS directives, OEM usually assigned level 1 suppliers (S1,S2…) to provide testing report of themselves and lower level suppliers OEM S1S2 S3 S4 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 Under most circumstances, level 1 suppliers were forced to sign the contract to assist OEMs to comply with RoHS directives. S1S2 S3 S4

10. 10 Problems soon emerged under such settings OEM S1 SS1SS2 SSS1SSS2 Major Problems Different version of testing report, low credibility Testing Report ABC Lab Guangzhou Testing Report ABC Lab Guangzhou Testing Report XYZ Lab Shanghai Testing Report XYZ Lab Shanghai Testing Report HIF Lab Shenzhen Testing Report HIF Lab Shenzhen SSS3 Difficult to track problems Redundant test SS1 may only submit 1 report to S1. (only submit Testing report of SSS1 other than both SSS1 and SSS2) When someone change lower level supplier, no method to control and monitor

11. 11 More, since suppliers are usually facing multiple OEMs, they receive different requests from OEMs, and vice versa OEM Supplier OEM Supplier Eventually, OEMs will not be able to deal with the complicated and chaotic testing issues involving so many suppliers

12. 12 Table of Contents - UL’s Methodology & Differentiations - Current Market Status & Problems - Our Practice - UL Mission & RSCS Program Overview

13. 13 UL will first analyze supplier network structure, map out raw material flow, trace to the root of homogeneous material supply source OEM S1S2 S3 S4 SS1SS2 SSS1 SS3SS4SS5 SSS12SSS3 S1 S2 S3 S4 SS1 SS2 SS3 SS4 SS5 SSS1 SSS2 SSS3 SSS4 Homogeneous Material Supplier

14. 14 UL will then check the qualification & practice of supplier selection & management of each supplier OEM S1S2 S3 S4 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 Major Reference ISO 14000 IEC 954 …… √ √ √ √ √ √

15. 15 Then UL will collect the material samples from these qualified suppliers and send them to UL lab for testing Homogeneous Material Samples Testing Report UL Lab

16. 16 UL’s differentiation with common market practice S3 S4 OEM S1S2 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 Market Practice S3 S4 OEM S1S2 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 UL Approach Totally rely on first tier supplier Bottom-up & clear responsibility on each level

17. 17 Benefit 1: Cost is evenly distributed among every supplier level S3 S4 OEM S1S2 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 Market Practice S3 S4 OEM S1S2 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 UL Approach Under market practice, S1 level suppliers are very easy to get bargaining power against OEM when components complexity increases $$$$ ?? ? ? ? ? ? ? ? $ $$$ $ $ $ $ $ $ $ $ $

18. 18 Benefit 2: OEMs/Suppliers will be able to understand better of the qualification & management situations of lower level suppliers OEM S1S2 S3 S4 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 √ √ √ √ √ √ UL Approach OEMs/ Suppliers will understand following aspects of lower suppliers Supplier network structure # of supplier levels # of suppliers in each level Quality of supplier network management & supply chain management

19. 19 Benefit 3: OEMs/Suppliers will be able to join UL global database, explore more business opportunities OEM Company Program Compliance Status Component Number Supplier

20. 20 Benefit 3: OEMs/Suppliers will be able to join UL global database, explore more business opportunities (cont’d) Supplier Search Criteria Supplier Search Result

21. 21 Benefit 4: UL Green Mark will gain OEMs strategic advantage in promoting products to global market + + Environmental friendly products with UL Marks will easy win out in the global market competition. To gain accreditation from UL will allow OEMs to calmly react to possible regulation changes from European Union.

22. 22 Table of Contents - UL’s Methodology & Differentiations - Current Market Status & Problems - Our Implementation Plan - UL Mission & RSCS Program Overview

23. 23 Our implementation plan Plan 1 Plan 2 S3 S4 OEM S1S2 SS1SS2 SSS1SSS2 SS3SS4 SSS3SSS4SSS5 Top down push through training & seminar $ $ OEM $$ $$ $$ $$ $$$ Set a fixed fee for each supplier, collect through OEM

24. 24 Plan 3 Our implementation plan (Cont’d) Plan 4 Need your input