Market Overview

An Open Letter from Sinobioway Consortium to All Shareholders of Sinovac Biotech Ltd.


On February 6, 2018, Sinovac Biotech Ltd. ("Sinovac" or the "Company")
held its 2017 Annual Meeting of Shareholders (the "Shareholders
Meeting") in Beijing, China. At the Shareholders Meeting, a new slate of
the board of directors, namely Messrs. Guowei Wang, Hoi Fung Qiu,
Jianzeng Cao, Pengfei Li and Yuk Lam Lo (the "Current Board"), were
appointed and elected by approximately 52.04% of all votes present and
voting. Accordingly, Messrs. Weidong Yin, Kenneth Lee, Meng Mei and
Simon Anderson (collectively, the "Former Directors") are no longer
authorized by the shareholders to act as directors of the Company.

Unfortunately, acting in violation of law and against the best interests
of the Company, the Mr. Yin Weidong (former CEO), Ms. Wang Nan (former
CFO) and Former Directors have not only refused to hand over control of
the Company, but also have continued to take self-interested actions to
line their own pockets and entrench their illegitimate position at the
expense of the Company and its shareholders.

Mr. Weidong Yin, the Chairman of Former Board, Committed Bribery from
2002 to 2014

From 2002 to 2014, Mr. Yin, acting on behalf of the Company, bribed Mr.
Hongzhang Yin, the then-vice director of the Center for Drug Evaluation
("CDE") of the China Food and Drug Administration, and his wife
on multiple occasions.Mr. Yin admitted the above illegal conduct to the
PRC law enforcement agencies, as disclosed in the two written judgments
issued by Beijing No.1 Intermediate People's Court --the Criminal
Judgment on Guo's Acceptance of Bribes
and the Criminal
Judgment on Hongzhang Yin's Acceptance of Bribes
, respectively.

Mr. Yin's illegal conduct no only violates the PRC Criminal Law, for
which he can be convicted and imprisoned for a term of up to ten years,
but is also a clear violation of the U.S. Foreign Corrupt Practices Act,
and a violation of both SEC and NASDAQ regulations and is a grave and
actionable offense for SEC registered companies like Sinovac.

Despite of the seriousness of Mr. Yin's illegal conduct, the Former
Board did not take any action to remove Mr. Yin from the board nor take
any other measures against Mr. Yin to protect the legitimate rights and
interests of the Company and its shareholders from this criminal
behavior. Surprisingly, the Former Board re-nominated Mr. Yin to
continue to serve on the board.

The Former Directors Issued and Sold Shares to the Members of the
Management Consortium (Mr. Yin Weidong, Advantech, C-Bridge Capital,
SAIF, VIVO Capital) at a Price Lower than Sinobioway's Offered Price

The Sinobioway Consortium has explicitly, publicly and repeatedly
offered $8.00 per share to acquire all common shares of the Company
since June 28, 2017. In fact, the reason that the illegal actions that
the Former Directors and Management have taken stems largely from their
fear that the Sinobioway Consortium's offer represents compelling value
to the Company's shareholders over the managed consortium's offer. In
light of this higher offer from the Sinobioway Consortium, the Former
Directors nevertheless tried to buyout the company at $7.0 per share
even after they were voted out by shareholders on Feb 6th,
2018. On July 2nd, Mr. Yin Weidong and the former boards
announced termination of his buyout agreement at $7.0 per share, yet in
the same press release and at the same time, issued and sold 11,800,000
common shares of Sinovac at a price of $7.35 per share, to two members
of the management consortium led by Mr. Weidong Yin. This transaction
immediately caused all unaffiliated shareholders substantial direct and
indirect losses at least in tens of millions. Such self-dealing
fraudulent transaction of company shares is in essence a new approach by
Mr. Yin Weidong's buyout consortium to acquire the company at a discount.

Mr. Yin Weidong, Wang Nan and The Former Directors Issued a Large
Number of Share Incentives to Themselves

According to the Company's 2017 annual report, the Former Directors
issued a large number of restricted shares to themselves on March 7,
2018. In particular, Mr. Weidong Yin, one of the Former Directors who
was previously implicated of bribing a Chinese government official,
received 160,000 restricted shares, and Ms. Nan Wang, the Company's CFO
who together with Mr. Yin is responsible for the late filing of the
Company's 2016 annual report, also received 160,000 restricted shares.
Given that the closing price of Sinovac's stock on March 7, 2018, was
$8.25, the Former Directors dishonestly and unlawfully awarded Mr.
Weidong Yin and Ms. Nan Wang a total of 320,000 restricted shares with a
cash value of US$2.64 million—despite Mr. Yin's illegal conduct and Ms.
Wang's poor performance as CFO. Both Mr. Yin and Ms Wang Nan have been
worked, not for the shareholders, but for the Management Consortium (Mr.
Yin, Advantech, C-Bridge Capital, SAIF, VIVO Capital) as Mr. Yin and Ms.
wang would receive 10% of the company as an incentive if they could help
the Consortium to buyout the company at a discount of $7.0 per share.

Sinobioway as the founding shareholders of Sinovac Beijing has Veto
Powers against Beijing Sinovac's Daily Operation and Key Corporate
Governance Matters and has the Right to Appoint the Chairman and Legal
Representative of Beijing Sinovac

Sinovac Biotech Co., Ltd. ("Beijing Sinovac") is the principal operating
subsidiary of Sinovac, of which Sinobioway Biomedicine Co., Ltd. (a.k.a
PKU V-Ming, "Sinobioway") is the key shareholder. Nevertheless,
Sinobioway has retained significant powers under the Articles of
Association of Beijing Sinovac. These powers remain vested in Sinobioway
and cannot be taken away under Chinese law, which include, among others,
the right to appoint the legal representative of Beijing Sinovac and
appoint chairman of the board and additional two directors to the
five-director board of Beijing Sinovac as the chairman of the board.
Accordingly, Sinobioway has the ability to take actions that block any
action that requires unanimous board approval. The Articles of
Association of Beijing Sinovac require the consent of each of its
shareholders and/or unanimous board approval on matters such as a major
change in the business line of the company, expansion or amendment of
the business scope of the company, transfer of the registered capital by
a shareholder, creation of a mortgage or pledge upon the company's
assets, a change in the organizational form of the company and
designation, or removal of the general manager. As such, Sinobioway's
veto powers play vital role in Beijing Sinovac's daily operation and its
corporate governance matters.

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