CHINO Report2023

Corporate Philosophy

The CHINO Group pushes the limits of measurement,
control, and monitoring technologies and contributes
to the advance of industry and the realization of
tomorrow’s society

CHINO Re
Editorial Policy
This report has been prepared for the purpose of aiding customers, shareholders,investors, business partners, local communities, employees, and other stakeholders

Reporting period: T his report primarily covers our activities during
FY2022 (April 1, 2022 to March 31, 2023).

of the CHINO Group in better understanding our business activities and initiatives.
We launched the CHINO Report in 2022, enhancing the content we had releasedin our Environmental Report since 2006 and in our CSR Report since 2017. This newreport covers our sustainability-related activities overall while adding business outline
and financial data highlights to offer more integrated information.
We plan to continue enhancing the content of this report as we expand our business activities, with the aim of making this an even more effective tool for communication with our many stakeholders.

Issued: October 2023
Frequency of publication: Annually
Scope of reporting: C HINO CORPORATION and the CHINO
Group. Some content addresses CHINOCORPORATION alone.
Inquiry: S ustainability Planning Office, Business Management
Headquarters, CHINO CORPORATION

1

CHINO Report 2023

A Management Vision for Our 90th Anniversary (2026)
While capturing changes in the environment,

Co-Creation

we will create new value together with our
stakeholders.

Strengths

We will inspire our customers through loop
solutions based on our superior technology.
We will strengthen our bonds of trust andReliability

continue growing toward the future throughpassion and teamwork.

eport 2023
CONTENTS
Top Message 
3Value Creation Story
Our Value Creation Process 
7Progress Toward Medium-Term
Management Plan 2026 
9
Key Issues (Materiality) in Sustainability  13
The History of CHINOCORPORATION 
15
A Foundation for Building a Future
Employee Roundtable 17
FY2022 Performance Highlights
23
Introduction to Our Businesses
and Products 25

Sustainability and ESG
Corporate Governance Compliance 
Risk Management 
Sustainability Management Environmental Initiatives 
CHINO Biotope Forest 
Customer Service —Stable product supply andappropriate information provision— Initiatives Toward Active Roles
by Human Capital Social Contribution Activities 

31
38
39
43
45
49

Corporate Data
Financial Information 
Corporate Information 

57
63

51
53
56

CHINO Report 2023

2

T o p Me s sag e

Mikio Toyoda
President and CEO

Solidly managing risks and seizing
opportunities

expanded greatly due to companies in numerous industries increasing DX- and GX*-related activities aimed at lessening risks in the business environment. While the impact of semiconductor shortages has

In the second half of FY2022, the disruption of global logistics andlessened and has leveled off to an extent, in the area of DX, we expect

high resource prices stemming from the COVID-19 pandemic andthat if AI technology development further accelerates, capital expen-

the situation in Ukraine began to settle somewhat. I believe we should

ditures will further ramp up in industries including semiconductors andrecognize that costs and exchange rates will remain at high levels.

electronic components. Our company must also consider how we

While the severity of swings in the business environment has less-will incorporate digital technologies into our work and must urgently

ened, the outlook remains opaque. Among such changes in the ex-tackle how we will incorporate the technologies into the systems andternal environment, those with particularly large impacts on our busi-

equipment that we provide to customers. Amid such changes in theness included pressure to make adjustments in production, delivery

business environment, we believe that solidly understanding when,dates, and inventory under high resource costs and logistics disrup-

where, and what kind of changes are occurring, and thoroughly ad-

tions, the further advance of digital technology in the DX area as seen

dressing those changes, will be essential for our growth.

in the emergence of interactive AI, and the acceleration of movements
toward the realization of a decarbonized society.

logistics disruptions, even a year or two ahead of delivery. This has

Our performance in FY2022 andprogress toward our Medium-Term
Management Plan

led to an increase in order volume but has also been a factor inflating

Measures formulated in our Medium-Term Management Plan and ourorder backlog, thereby presenting both positive and negative sides.

accompanying work improvement activities bore fruit in FY2022, re-Regarding the other noted issues, we believe that the market has

sulting in record high order volume, net sales, and operating profit on

In the area of logistics issues, an increasing number of customers
want to place orders as early as possible as a risk hedge against* GX (Green Transformation)
Initiatives to transform social systems overall through a switch from fossil fuels that release greenhouse gases to an economy centered on renewable and clean sources of energy
such as solar and wind power

3

CHINO Report 2023

We will create value with “Strengths” byadvancing “Co-Creation” and, while building“Reliability” with our stakeholders, will contributeto the realization of tomorrow’s society.

a consolidated basis. Operating profit, ordinary profit, and net profit all

To advance co-creation within the company, such as collaboration

increased between 30% to 40% year on year, greatly exceeding our

between the Development Department and Sales Department orassumptions under the Medium-Term Management Plan.

among production factories, we have launched a number of project

In our analysis, the main factors behind this strong performanceteams and placed “flag bearer” key persons within them to create a

are a strong propensity toward capital expenditures in industries withsystem capable of solidly advancing the PDCA cycle. With the cre-which our company deals, and heightened demand for hydrogenation of this system and subsequent activities, co-creation within theenergy- and renewable energy-related technologies and products

company is steadily bearing fruit. We intend to expand the scope of

aimed at realizing a decarbonized society. In addition to our heat treat-co-creation from inside the company to outside as well, and to pro-ing-related core business, sales of hydrogen energy-related products

vide wholly new value to customers through collaboration in which we

including fuel cell evaluation and testing equipment and water elec-

and our partner companies complement each other in technologies

trolysis evaluation equipment were robust in FY2022, leading to in-

and know-how not held by the other party. Our policy is to actively

creased net sales. Looking at the renewable energy-related business,undertake industrial collaboration between companies as well as in-in February 2023 Japan’s Cabinet resolved to enact the Basic Policy

dustry-academia collaboration with universities and other academic

for the Realization of GX, and in May 2023 the Act on Promotion of

institutions as partners. To lead co-creation outside the company toa Smooth Transition to a Decarbonized Growth-Oriented Economic

success, we believe that it is important to dig deeply into our own

Structure (GX Promotion Act) was passed. With the winds of suchstrengths, solidly hedge against our weaknesses and risks, and haveshared goals blowing across Japan’s business community overall, we

our partners recognize our value.

believe that the market will continue to expand.
FY2022 marked the Phase 1 “Solidify foundations of growth” periing initiatives based on “Co-Creation”, “Strengths” and “Reliability” asBalancing long-term growth strategy
with enhancement of current profitability

set out in the Vision of the Plan, and the results of solidifying our foun-

Our company is undertaking a six-year Medium-Term Management

dations are gradually appearing. Among these the three aspects ofPlan with its final year in FY2026, the 90th anniversary of our found-the Vision, I attach particular importance to the theme “Co-Creation.”ing. The plan combines long-term growth and enhancement of cur-od of our six-year Medium-Term Management Plan. We are undertak-

CHINO Report 2023

4

T op M e s s ag erent profitability by setting a vision for our 90th anniversary year anda magnetism that resonates with others. Flexibility and diversity thatbackcasting from a medium- to long-term perspective, with the aim

are not bound by old values are also indispensable in times of rapidof achieving our goals for every fiscal year while placing milestones

change. If a leader is not someone able to listen to the opinions of dif-for short spans. However, given the current era of rapid changes inferent people and build relationships of trust with others, the company

the business environment, we must bear in mind that assumptions

itself risks heading in an unexpected direction.

will keep on changing. We intend to steadily operate the PDCA cycle

At the same time, I believe that people are also the key to boost-

every year and move forward to achieve our targets for the final fis-ing our current profitability. The “Co-Creation,” “Strengths,” andcal year while discussing what parts should be changed to adapt to“Reliability” named in our Medium-Term Management Plan can be

circumstances.

achieved without the power of people. Based on the three aspects

I am convinced that what is most important for companies in seek-of our Vision, we will actively promote investment in human resources

ing long-term growth is people. In Japan in particular, labor shortages

to achieve the targets of Phase 1, “Solidify foundations for growth.”caused by a declining birthrate and aging population have come un-

Nurturing individuals has no meaning, though, if the organization is

der focus as a potential near-future social issue. The use of DX andnot one in which those people can play active roles. I believe that

AI is under discussion as a means of addressing this. With the times

sound company strategy is also essential for an organization to grow.

as they are, however, human resources capable of supporting the

Sharing our company strategy while piloting CHINO CORPORATION

company during difficult periods are necessary, and we need to foster

toward a presence as an organization in which all employees con-people to serve as next-generation leaders. I believe that empower-

sider their own roles in the organization and take action of their own

ing human resources who will lead CHINO CORPORATION from theaccord—that is the responsibility placed upon me.

present to the future, imbuing those people with the ability to conmost sustainable form of management. Stated otherwise, my most

Evolving sustainability management
befitting CHINO CORPORATION

important role as the head of management is to hand over CHINO

Our Corporate Philosophy states that we will “contribute to the ad-

CORPORATION to the next generation while growing the company.

vance of industry and the realization of tomorrow’s society.” In thatAs a specific action, we have given all departments the task ofway, I believe that our business will support the sustainability of soci-drafting succession plans. While considering how we can nurtureety overall. Our Management Vision, meanwhile, expresses in words

people who can shoulder roles, we are carrying out diverse forms of

the ideal that we hold for ourselves in order to put our Corporate

education and training that include exchanges with other industries.

Philosophy into practice. In the belief that practicing the three as-

Leaders must be convincing in their communications and must havepects of our Vision—Co-Creation, Strengths, and Reliability—will leadsider things naturally and seamlessly and to take action, will be theto “realization of tomorrow’s society,” we are incorporating these into
concrete initiatives. “Gather under our Philosophy, take action under
our Vision.” That is the essence of CHINO’s sustainable management.
Under such thinking, we established the Sustainability Promotion
Council in December 2021 as a body to formulate company-wide
policy and deliberate directions for evolving sustainable management
befitting CHINO CORPORATION. In October 2022, we launched the
Human Resources and Organizational Development Committee as a“flag bearer” to lead specific initiatives based on policies determinedby the Promotion Council. In April 2023, we launched the Sustainability Planning Office. To further make the outcomes of specific initiatives
visible, in April 2023 we set KPIs for all materialities. Setting these
KPIs facilitates the “Check” step of the PDCA cycle in our sustainability activities, allowing the cycle to run more efficiently.

5

CHINO Report 2023

Contributing to the realization of adecarbonized society through ourbusinessAmong our many sustainability activities, reducing our environmentalload, particularly greenhouse gas emissions, and ultimately aiming forcarbon neutrality are important initiatives for our company as a manufacturer. In achieving carbon neutrality, effecting an early transition
from fossil fuels to renewable energy sources is essential. Renewableenergy sources include hydrogen and biomass, which are capable ofgenerating stable power. In the field of hydrogen energy, we are focused on providing evaluation and testing equipment for fuel cells thatgenerate electricity using hydrogen, and water electrolysis evaluationequipment necessary for producing hydrogen. Many issues remain,such as the provision of measurement and management equipment

implemented a regular wage increase averaging 3.52%. In contrast

for improving combustion efficiency in biomass power generation,

to lump-sum payments distributed for past hard work, we implement

and sensing technology for managing signs of heat generation at bio-wage increases from a desire to provide young employees with fairmass yards. Through our business, we are contributing to the realiza-

treatment that incorporates our expectations for future hard work,

tion of a decarbonized society.

taking overall balance into account for the past few years in particular.

As I’ve noted, our business supports the sustainability of soci-We make investments in human resources not only in terms of

ety overall. In fact, increased sales of products and services related

wage increases but also in wide-ranging areas that include educa-

to hydrogen energy was a key factor boosting our performance intion, training, respect for diversity, and health and productivity man-FY2022. In relation to renewable energy-related businesses, policies

agement. These active investments included a 146% year-on-year

to encourage groundbreaking innovation by industry are gradually

increase in training by the HR & General Affairs Department, a de-being developed, as seen in the creation of the GX Promotion Act inpartment that tracks specific figures. We expect investment related to

May and the revision of the Basic Hydrogen Strategy by the Agencygroup-wide education and training to further increase to about three

for Natural Resources and Energy in June. Opportunities for our com-times the amount of the previous year. In addition, since the devel-pany to play an active role are expanding.

opment in FY2022 of a legal framework related to childcare leave

In May 2022, we declared our endorsement of the TCFD recom-by male employees, our efforts to develop programs to accommo-

mendations and set a goal for the group of achieving zero Scope1

date this and foster corporate culture has led to the rate of male em-and 2 GHG emissions by 2040. By July 2022, we had completed

ployees taking childcare leave increasing to 70.6%. While promoting

the switch to renewable energy sources for all electricity used at ourmulti-skill development in employees to facilitate the use of childcare

head office and at our Yamagata, Kuki, and Fujioka Factories. We

leave by research and manufacturing site employees, we are also

will continue these activities with the aim of switching to renewableinvesting in digitalization and systematization to provide backup forenergy sources for all electrical power procured by the group in Japan

work during leave periods.

by 2030.

Promoting the management of
human capital and accelerating
investment in human resources

To our stakeholders
I recognize that our company’s business environment is undergoingdrastic changes. To overcome these circumstances and to realize thevision for ourselves that we have set for our 90th year in 2026, as
well as to achieve the final fiscal year targets of our Medium-Term

We undertake human capital management as an indispensable ele-

Management Plan, we want to continue advancing cooperation andment for sustainability as well as for solidification of our foundations

co-creation with stakeholders, build relationships of trust with cus-

for growth, one of our Medium-Term Management Plan goals. We are

tomers while creating value with original strengths, and become aalso accelerating our investments in human resources. In 2023, wage

company that will realize tomorrow’s society. I ask our stakeholders

increases came under attention as a social issue across Japan. We

for their continued support.

CHINO Report 2023

6

Our Value Creation Process
Making maximum use of our capital and creating new value to contribute to the realization of a sustainable
society through the provision of original solutions, the CHINO Group will achieve sustained growth.

Social issues

Politics and theeconomy● lobal political andG
economic opaqueness● xpansion of demandE
due to development inemerging economies●●

International
unification of safety
standards andspecifications
 conomic shift fromE
goods to services

Environment●●

Business activities

Investment capital (FY2022)

Creation of original technologies

Number of group employees

1,101



Total consolidated assets●

Heightening of
expectations anddemands toward
companies

Technology●

Innovation in digitaltechnologies●

Advanced use ofdiverse energy
sources

ControllingIntellectual capital

126

Research and development expenses

CHINO Report 2023

Creation of originaltechnologies¥1.15 billion

Manufactured capital

8

Production sites(5 domestic sites, 3 overseas sites)

Capital expenditures¥0.81 billion



Development and provision of

optimal loop solutions
created through original technologies

Social andrelationship capital

5,423 companies
Distributor network 28 companies
Number of Cooperative
Association member companies 21
Number of clients

Materiality

p. 13

Medium-Term Management Plan

p. 9Management Visionp. 2

Corporate Philosophy

p. 1(CHINO CORPORATION non-consolidated)

Natural capital
Energy consumption

53,040 GJ(CHINO CORPORATION non-consolidated)

7

Monitoring ide-ranging technologies related to temperatureW
measurement, control, and monitoringWorld population
growthMeasuring¥36.28 billion
Equity ratio
51.8%
Acceleration of the
movement towards a
decarbonized society●“Creation of customer value
through loop solutions”
Process control
technology that achieves
high-accuracy control

Financial capital

Number of patents heldDeclining birthrate andaging population inJapan

Strengths of our business

Human capitalWorsening of global
warming/climatechange problems

Society●

InputsValue Creation Story

Outputs

Outcomes

Results of business activities

New value to be created

Human capital

Products and services withtemperature measurement
at their core

Temperature sensing
technology capableof measurementfrom extremely
low to ultra-hightemperatures

 evelopment of employees who haveDadvanced expertise● 
Utilization of diverse human resources andenhancement of job satisfaction●

Measurement andcontrol instruments

Financial capital

Instrumentation systems●

Sensors●

 obust financial baseRContinuation of active growth investments

Intellectual capital
Development ofsoftware technology
for integrated
management of
measurement,
control, andmonitoring●

FY2022 achievements(consolidated)●●●¥27.82 billion
Net sales ¥23.79 billion
Operating profit  ¥2.01 billion
Order volume (Operating margin 8.5%)●

Dividend per share 

●

ROE

●

ROA (return on assets) 

¥52
8.5%
6.0%

Load on the environment●

CO2 emissions 

Manufactured capital rovision of products that contribute to theP
reduction of environmental load
● 
Provision of products and services that
contribute to technological innovation andenhancement of added value for customers●

Social and relationship capital onstruction of a sound and competitiveC
supply chain● Partnerships with distributors and business
partners● Strengthening of relationships of trustwith customers based on a long record ofachievement●461.38 t-CO

Natural capital2(Scope 1, 2)Improvement of measurement, control, andmonitoring technologies that contributeto the realization of a safe, secure,decarbonized society●

Reduction of environmental load●

CO2 reduction

100%(Scope 1, 2 FY2040 targets)

CHINO Report 2023

8

Progress Toward Medium-Term
Management Plan 2026
The CHINO Group has formulated a Medium-Term Management Plan (2021-2026) aimed at achieving our vision
for ourselves in our 90th year (2026). Our group is working as one to establish a sustainable growth trajectory andenhance our medium- to long-term corporate value.

Overall view of our strategy

Four basic strategies■ Establishment of a sustainable growth trajectory + enhancement of medium- to long-term corporate value

Solution

Integration

Further development and expansion of growth areas
Our group will generate group synergies and accelerate the development
and provision of solutions with strengths in new growth areas

Enhancement of core businesses and value creation
Our group will enhance its core businesses through the integration of originaltechnologies and services to create new value together with customers

Strengthening of foundations and expansion of business overseas

RelationshipOur group will increase its earning potential by strengthening the relationshipbetween domestic and overseas business and by deploying regional strategies

Innovation&
Speed

Establishment of a resilient management base
Our group will enhance the resilience of its human resources, organizations, ICT, governance,
and finances to support innovation, agile management, and the creation of corporate value

Promotion of Sustainability Management
Response to ESG issues

Contribution to the SDGs

Progress toward the Medium-Term
Management Plan during the fiscal year
FY2021 results

FY2022 results

FY2026 KGINet sales (consolidated)¥21.9 billion¥23.79 billion¥30.0 billion

Operating profit¥1.49 billion¥2.01 billion¥2.7 billion

6.8%

8.5%

9.0%

¥4.07 billion¥4.85 billion¥7.0 billion

ROE

6.1%

8.5%

10.0%

ROA

4.8%

6.0%

8.0%

Operating margin
Overseas net sales(numerator of ROA is operating profit)2026

90th anniversaryof the company’s
foundation

Phase 2

2023

Enhancement ofcorporate value
Sustained growth

Accelerationof growth

Phase 1
Solidify foundations
for growth

FY2020

Against the backdrop of expanding demand in hydrogen-related fields that are working toward decarbonization anddemand by major customers in fields including automobiles and electronic components, our activities to secure orders and our cost reduction initiatives have met with success. We are steadily delivering results in the KGIs under our
Medium-Term Management Plan.

9

CHINO Report 2023

Value Creation Story

Four basic strategies and their status in FY2022

1

Further development
and expansion of
growth areas

Solution

Realizing a sustainable society
Toward a carbon-free society
Hydrogen Semiconductors
Nextutilization and electronic generation
technologies components
batteries

Newmaterials



Taking “measurement, control, and monitoring” to thenext stage through Co-Creation, Strengths, and Reliability

Medical drugs
and food
Logistics
management

Originaltechnologies(Strengths)

Toward a safe and secure society
In growth areas, we expanded sales of temperature sensors and radiation
thermometers for semiconductor manufacturing equipment. In the areaof electronic components, we developed heat-resistant thermal imaging
equipment for performance/quality evaluation and testing, and proposed
new data measurement/analysis techniques. In hydrogen utilization technology for realizing a decarbonized society, we are working to improve ourdesign/manufacturing efficiency and strengthen our production system
to meet rapidly growing demand for fuel cell/water electrolysis evaluationequipment. We are also taking on product and market development and thecreation of latent demand for sensors that are indispensable in decarbonization, including those related to CCUS and next-generation energy areas.

3

RelationshipStrengthening of foundations
and expansion of businessoverseas

Promotion of global niche development
through collaboration among domestic andoverseas sites and among production, sales,and development
With our domestic and overseas sales and service departments working as one to provide services globally,
we have established a structure able to satisfy customers who are expanding overseas. We also reorganized
our Overseas Marketing Strategy Office under a structure that centralizes and takes in domestic and overseas
sales data to engage in product planning that aligns withdemand in global niches. In FY2023, we will evolve ouroverseas group companies from “independence” to “autonomy.” We will work to further boost earnings by expanding “local production for local consumption” throughtransactions among overseas group companies.

2

Integration

Enhancement of corebusinesses and value
creation

Service(Reliability)

Creation ofemotional value(Co-Creation)

To strengthen our capabilities for the JCSS calibration at thecore of our calibration business, the Yamagata Factory received
accreditation as a JCSS calibration body. Together with the Kuki
Factory, it will meet calibration demand associated with regulatory strengthening. To meet changing customer needs, we areworking to develop a maintenance/site visit service structure,share information using DX, and make improvements to work.
We are also undertaking the development of cryogenic high-accuracy temperature measuring equipment and tackling value
creation and the enhancement of technologies that will allow us
to contribute to society as “CHINO, the temperature experts.”

4

Innovation
&
Speed



Establishment of a resilient
management base

Agile and flexible adaptation to changes inthe super-VUCA era, and bold execution ofmanagement strategy based on creation ofshared value (CSV)
To enhance our human capital, we have deployed new measures including organizational improvement surveys and an
e-learning system, based on human resources development
and workplace environment development policies established through discussions by the Human Resources andOrganization Development Committee. In our ICT platform,
we are advancing the digital transformation of business processes in all areas and have constructed a systematic DX
human resource development program. While continuing
work to strengthen our governance and finances, we undertook actions including TCFD information disclosure, renewalof our annual reports, and enhancement of IR activities toenhance recognition of our company.

CHINO Report 2023

10

Progress Toward Medium-Term Management Plan 2026

Priority measures and performance trends, by segment
Measurement and control instruments
Priority measures● romotion of product development that speedilyPadapts to changes in the business environment●

 xpansion of service work through activities for theEproposal of periodic calibration and inspection●

 ptimization of our production structure throughO
global expansion

Status by product● emand is robust, particularly for semiconductorDand electronic component manufacturing equipment and heat treating equipment●

 emand in overseas markets (particularly China,
DSouth Korea, and India) is growing●

 rofit increased from the previous year, mainly duePto increased revenue

Instrumentation systems
Priority measures● evelopment of growth markets through the adDvancement of control construction technology,
IoT technology, and software● reation of new added value and provision ofCenhanced services through the consolidation ofsystem construction technology●

 romotion of overseas production and servicePsystem construction for instrumentation systems●

 trengthening of our organizational capabilities
S
for instrumentation through changes to work
structures

Status by product●In decarbonization-related areas, demand is growing for fuel cell evaluation and testing equipment
for automobiles and water electrolysis evaluationequipment for research and development into theuse of hydrogen energy● ales of compressor performance test equipment
S
have recovered due to the demand for natural refrigerant-compatible equipment●

 rofit increased significantly from the previous yearP
due to increased revenue, improvement of cost margin, etc.

Sensors
Priority measures
●

●

●

●

11

 xpansion of our market share in contactless sensingEthrough the creation of new measurement technologies, and evolution into a global brand reation of new demand through efforts to create highCvalue-added temperature sensors and pursuit of maximized synergies with the group and partner companies
 dvancement of calibration services (standard techA
nologies) and calibration equipment —Creation of
new services and expansion of revenue— evelopment of products matched to market needs,
D
aimed at growth markets and the realization of a decarbonized society

CHINO Report 2023

Status by product● emand is robust for both radiation thermometersDand temperature sensors, particularly for use in
semiconductor-related manufacturing equipment●

 emand is strong for AMS standards-conformantDtemperature sensors* AMS standards: Standards for special processes in the aerospaceindustry●Impacts of rising cost of materials were absorbed byincreased revenue, cost reductions, review of sales
prices, etc., with profit remaining at nearly the samelevel as in the previous fiscal yearValue Creation Story

Profit and loss
(million yen)(million yen)

10,0002,000

Net sales

8,617 million yen

8,617
7,965

year on year

8.2%

1,600

↑

8,000
6,923

6,000

1,168

1,200

1,226

Segment profit

1,226 million yen

888

4,000

800

400

0

0

↑

2,000

year on year

5.0%

Net sales
FY2020

FY2021

FY2022

Segment profit
FY2020

FY2021

FY2022

Profit and loss
(million yen)(million yen)

10,000

2,000

8,000

1,600

Net sales

7,131 million yen
year on year

7,131

13.2%

↑

6,752

6,302

6,000

1,200

4,000

800

1,015

1,015 million yen
year on year592

110.9%

↑

481

2,000

Segment profit

400

Net sales
0

FY2020

FY2021

FY20220

Segment profit
FY2020

FY2021

FY2022

Profit and loss
(million yen)(million yen)

10,000

2,000

8,000

1,600

Net sales

7,124 million yen
year on year

6,804

7,124

1,304

6,000

1,200

4,000

800

1,304

1,138

4.7%

↑

6,560

Segment profit

1,304 million yen
400

0

0

↑

2,000

year on year

-0.1%

Net sales
FY2020

FY2021

FY2022

Segment profit
FY2020

FY2021

FY2022CHINO Report 2023

12

Key Issues (Materiality) in Sustainability
To promote sustainability management, our group has identified issues to which our group should give priority(i.e., materialities), leveraging our group strengths. We will update these as appropriately in response to changes
in social conditions and the business environment.

Process of identifying priority issues in sustainability (materialities)
Identification of issues

Evaluation of issues

With reference to evaluation indicators and guidelines related to
the SDGs and ESG (Environment, Society, Governance), we identified key social issues based on changes in the business environment and business conditions

Based on our Corporate Philosophy and Management Vision, we
evaluated our identified social issues from the two perspectives ofimportance to our group and importance to stakeholders

Priority issues in sustainability (materialities) and related SDGs
Priority issues in sustainability (materialities)
Environment

ES

1 Contribution to the realization of adecarbonized society● rovision of products and solutions
P
that solve environmental problems●

 eduction of greenhouse gases/
R
CO2 emissions

2 Systematic initiatives aimed at
respect for human rights

Society●

Diversity and inclusion/
Human resources development

3 Development of appealing
workplace environments

Work style reform/Health andproductivity management● 

4 Strengthening of supply chain
management

GovernanceG

BusinessB● trengthening of corporate
Sgovernance structure●

 nforcement of risk managementEand compliance

5 Advancement of governance
6 Enhancement of stakeholder
engagement●

7 Creation of products and solutions
that enhance UX (user experience)

●

●

13

CHINO Report 2023

 eep cultivation of originalD
technology with strengths
 ecuring of quality/safety; stableSsupply ppropriate provision of informationA
on products and services

KPIs, outcomes●Increase in the sales ratio of decarbonization-related
products and systems●

Reduction of GHG emissions (Scope 1, 2)●

Reduction of wastes●

Ongoing implementation of human rights/compliance training●

 atio of female executives (chief officers/group leader class,Rmanagement positions)●

Ratio of mid-career hires in management positions●

Rate of employment of persons with disabilities●

Rate of utilization of childcare leave by men●Enhancement of employee training Average training attendance hours●

Rate of utilization of annual paid leave●

Periodic health checkups, re-examination rate●

Number of cases of work improvement utilizing IT●

Continuation of engagement surveys●

Rate of management response to chemical substances
contained in products●

Rate of requests for green procurement
guidelines from major business partners●

Maintenance and enhancement of effectivenessevaluations of the Board of Directors●

Accommodation of the Corporate Governance Code●

Number of serious compliance violations●

Number of individual IR meetings●

Number of applications for patents and know-how patents●

Number of new products and systems brought to market●

Customer satisfaction●

Rate of audit implementation at targeted partner companies●

Ongoing expansion of website content

Value Creation Story

Our group is advancing initiatives aimed at achieving
the Sustainable Development Goals (SDGs) throughour business.

High

Determination of priority issues

From the perspective of the opportunities
and risks presented to our group, we prioritized issues to be addressed and considered themes for activity

We presented issues and activity themes in
the Sustainability Promotion Council, discussed their validity, and made determinedpriority issues

Importance to stakeholders

Prioritization of issues

Socialissues to beaddressed aspriorities

Scope ofconsideration ofpriority issues

Importance to our group

Targets

Results

Other specific targets

FY2021

FY2022

FY2023

FY2026

32.7%

34.3%

36%

Maintain at
36% or higher

Result 2,129 t-CO2

Result 461 t-CO2

75% reduction(compared to FY2020)

90% reduction(compared to FY2020)100% reduction in FY2040(compared to FY2020)

1.3%

1.5%

Company-wide final
disposal rate
Less than 1.3%

Company-wide final
disposal rate
Less than 1.2%

Less than 1% in FY2030(Zero emissions)

Once a year

Once a year

Once a year or moreOnce a year or more

Ratio of women in
management positions 3.5%
Ratio of female executives 26.8%

Ratio of women in
management positions 4.4%
Ratio of female executives 26.4%

Ratio of women in
management positions 5%
Ratio of female executives 28%

Ratio of women in
management positions 7%
Ratio of female executives 30%

24.3%

22.8%

1.95%

2.13%

2.30%

2.70%

31.8%

70.6%

60%

70%

6.96 hours per year

8.5 hours per year

9.5 hours per year

10 hours per year

58.3%

62.6%

65%

75%

36%

37%

50%

100%

Cases of improvement 57(cumulative total, FY2020-2021)

Cases of improvement 28

ーIntroduction of surveys

Continuation

Enhancement of employee engagementーー

Rate of registration in
product chemical substancesmanagement database, newproducts 100%Rate of registration in
product chemical substancesmanagement database,new products 100%

ー

ー

100%

100%

Start of operation

Continuation

Continuation

Explanation 2 items

Compliance with all principles

Maintenance and advancement of initiatives

0

0

20

18

20

20

20 or more

20 or more

Company-wide 8

Company-wide 14

Company-wide 16 ormore per year

Company-wide 16 ormore per year

1H 64.7
2H 68.6

1H 64.8
2H 72.875

80

100% (implementing
companies: 6)

100% (implementing
companies: 23)

100%

100%

Consideration of newservices websites

Expansion of newservices websites

Provision of information on
new services websites

Establishment of approachstructure for all website visitors

High

Related SDGs

Active promotion of mid-career hiring

Enhancement ofprograms

Continuation00Enhancement of quantity and quality of interviews

Establishment of 100% follow-up structure(FY2024)
CHINO Report 2023

14

The History of CHINO CORPORATION
Since our founding in 1936, CHINO CORPORATION has expanded its business in the field of measurement,
control, and monitoring, contributing to the development of numerous areas of industry.
Heading toward our 90th anniversary in 2026, we will aim to further enhance our corporate value to contribute to
the realization of tomorrow’s society.

1992

1963

Establishment of Yamagata Chino Co.,
Ltd. (present Yamagata Factory)

Completion of the Fujioka Factory1986

Launch of Advanced Recorder AR

1986

50th anniversary; change of company
name to CHINO CORPORATION

1913

1990

Founding of Chino Seisakusho
Co., Ltd. in Shimotani, Tokyo(present Okachimachi, Taito-ku)

Completion of the new head officeand laboratory buildings

1978Completion of Kuki Sensor Factory

1962

Launch of Oscillating AutomaticControl Thermometer E500

1955

●
●●

Launch of Optical Pyrometer 770

1936

●

●

●

1923

1945

1962
1957

CHINO Report 2023

1989

Establishment of Korea CHINO
Corporation in South Korea

1985

Start of FC instrumentation
business

Establishment of CHINO Works America Inc.
in the United States

1980

Relisting of shares on the First Section of the Tokyo Stock Exchange

Establishment of Senko Denki Co., Ltd. (present CHINO Softex Corporation)

Listing of shares on the Second Section of the Tokyo Stock Exchange

Completion of No. 1 Factory on the site of the former head office

Head office and factory burned in air raid

Construction of new factory in Nakamaru, Itabashi-ku (present Kumano-cho)

15

●

1979
1977

●

●●

●●

●●

Start of calorie instrumentation business

●

●

1983

●●

Establishment of Chino
Seisakusho Co., Ltd.
(present CHINO CORPORATION)

●

●

●●

●

Value Creation Story

2014

Completion of Fujioka Equipment Products
Development Center, Fujioka Factory
Conversion of ADVANCE RIKO, Inc. to subsidiary

2020

Conversion of MEIYO ELECTRIC Co., Ltd. to a subsidiary

2011

Expansion of instrumentation plant,
Fujioka Factory
Completion of Biotope

2026

2022

Launch of Real-Time
Wireless Logger MZ Series

Toward the90th anniversaryof our founding2015

Launch of Infrared Radiation
Thermometer IR-CZQ

●
●
●
●

2007

2023

Launch of Digital Instruction
Controller DB1000/2000

Yamagata Factory Customer Satisfaction Department
JCSS registration and accreditation
for hygrometer calibration

●
●
●
●
●
●

●

●

●

●

2012

●

●
●

2013

Installation of photovoltaic
power generation system at the
Yamagata Factory Completion

Merger of Yamagata Chino Co., Ltd.
Establishment of CHINO Corporation (Thailand)
Limited in Thailand

2010

Conversion of AR’S CO., Ltd. to subsidiary

2006

Conversion of Tokyo Seiko Co., Ltd. and Asakawa Lens Works Co., Ltd. to subsidiaries

2005

2020
●
●

Transition to Tokyo Stock Exchange Prime Market
Completion of conversion of purchased electric
power at the head office and domestic production
sites to 100% renewable energy

2021

Start of Medium-Term Management
Plan 2026
Staged conversion of purchased electric powerat the head office and domestic production sites
to renewable energy

JCSS registration and accreditation for hygrometer calibration, Calibration Engineering Department, Kuki Factory

2003

Establishment of CHINO Instrumentation (Kunshan) Co., Ltd. in China

2002

ISO14001 environmental management system certification

1999

ISO9001 quality management system certification

1998

Conversion of SANKI KEISO CO., LTD. to subsidiary

1996
●
●

Establishment of CHINO LAXSONS (India) Private Limited in India
Launch of loop instrumentation business

1994

JCSS national accreditation as a hygrometer calibration business operator in accordance with the establishment of the
Measurement Law traceability system, Calibration Engineering Department, Kuki Factory

1993

Establishment of Shanghai Dahua-CHINO Instrument Co., Ltd. in China
CHINO Report 2023

16

C H I N O D IA LO G U E—Employee Roundtable—

Product Development and Marketing Aimedat the Realization of a Decarbonized Society
The CHINO Group announced its endorsement of the TCFD recommendations in May
2022. In our Medium-Term Management Plan, we established a basic strategy of aiming for carbon neutrality in our group and contributing to the decarbonization of society
overall through hydrogen energy-related businesses. This issue of CHINO Report gathered seven employees who deal with decarbonization in their everyday work, centeredon members of the Decarbonization Project*1. The participants discussed the role that
CHINO CORPORATION should play in realizing a decarbonized society, addressing the
topic from the two approaches of product development and marketing.
*1 Decarbonization Project: A project to study how CHINO CORPORATION’s technologies and products can contribute to the realization of adecarbonized society

①

②

⑤

⑥

③ ④
⑦

Participants① Takuya Suzuki
Group Leader,
Demand Development
Section, New Business
Development Department,
Yamagata Factory② Hideo Narita
Group Leader, Sales Technology
Section, Loop Instrumentation
Section 1, Second Instrument System
Department, Instrument System
Management Division, Fujioka Factory⑤ Sakiko Iwagaki ⑥ Daiki Ojima
Group 2, Section 1,
Development Department,
Kuki Factory

Chief Officer, Strategic Planning
Section, Business Strategy Office,Head Office③ Atsuhiro Hoshino
Group Leader, Sales Technology
Section, First Instrument System
Department, Instrument System
Management Division, Fujioka
Factory

Facilitator④ Yusuke Kakiichi
Group Leader, Nagoya Sales
Office, Nagoya Branch⑦ Toshiyuki Oki
Manager, Technology Management Office,Innovation Center

Conducted at the CHINO CORPORATION head office, July 21, 2023 * Participants’ affiliations and titles are as of the time of the Roundtable

17

CHINO Report 2023

A Foundation for Building a Future

Contributing to a decarbonized society
through both hydrogen energy utilizationand electric power monitoringas power generation after combination with nitrogen to create am-

Oki: With global warming no longer avoidable, “decarbonization” hastion will differ by approach, so there’s a question of how we as CHINO

become a goal shared worldwide. Today, under the theme of “prod-

CORPORATION can judge the approaches.

monia, or transport after catalysis with toluene to reduce volume to
1/500. Effectively combining all of these will likely be necessary torealize a decarbonized society. I think the speed of social implementa-

uct development and marketing for the realization of a decarbonizedsociety,” I hope to exchange information on your thoughts and experiences through your work, and to talk about the future of CHINOCORPORATION.
Regarding the use of the renewable energy that is indispensable fordecarbonization, and hydrogen energy in particular, the company has
a 30-year track record of manufacturing fuel cell evaluation equipment. In that sense, the company can be seen as having contributed
to decarbonization for decades. Tell us your thoughts on what further
roles CHINO CORPORATION should play in the realization of a decarbonized society.
Hoshino: I’ve been involved in fuel cell evaluation equipment sincejoining the company over 20 years ago. At the time, even the existence of fuel cells wasn’t well known, and a hydrogen society still

Hoshino: Recently, it’s water electrolysis. Interest is shifting from thesounded like talk of a distant future.

stage of using hydrogen to that of creating the hydrogen needed in

Kakiichi: If you think about it, the situation has completely changed

various approaches. The other day, I took part in an exhibition related

now. Last month (June 2023), the Ministry of Economy, Trade and In-

to green factories to explain fuel cell evaluation equipment. Visitors

dustry set its Basic Hydrogen Strategy, broadly calling for the steering

seemed as interested in the water electrolysis equipment that createsof policy toward acceleration of the realization of a hydrogen society.

hydrogen as in the fuel cells that use hydrogen.

A flow for decarbonization and hydrogen utilization has been createdIwagaki: The radiation thermometers I work with are often involved

for society overall, and business discussions are suddenly coming up

in products used by the steel industry, which emits a lot of CO2 inwith companies that we haven’t had relationships with but that now

the production process. The development of hydrogen-reduction

want to deploy fuel cells. There are definite movements toward newsteelmaking technology that makes use of hydrogen in manufactur-

entry by companies that hadn’t earlier had an interest in hydrogen.

ing processes is accelerating, which I think shows a lot of interest in
decarbonization and hydrogen utilization. I think it’s important to pay
attention to what things interest specific industries.
Kakiichi: Right. The area around Nagoya, which I’m in charge of, ishome to a lot of automobile manufacturers and ceramics businesses.
There’s considerable need for fuel cells and water electrolysis. Inquiries about water electrolysis to create hydrogen have been increasing
recently, so we’re engaging in sales activities while exploring further
needs.
Hoshino: In terms of producing hydrogen to contribute to decarbonization, stable generation of “green hydrogen” that emits no CO2 in
the manufacturing process is needed, with hydrogen concentration
an example of a key point. It’s the same for temperature, too. I’ve
heard that temperature control is vital in the process of hydrogen production. I think that CHINO CORPORATION’s wide range of sensors

Oshima: There are a number of approaches to hydrogen utilization

and advanced sensing technologies can be of use in concentration

aimed at decarbonization, going beyond fuel cells and into uses suchmeasurement and temperature management.

CHINO Report 2023

18

Oshima: Without question, the more that decarbonization and hy-

Kakiichi: Even with customers wanting to tackle decarbonization,

drogen utilization advance, the more that parameters that need to berather than jumping right into talk of fuel cells and water electrolysis,

managed increase. How to quickly catch up with, that is the question.

there’s often talk about a first step of energy conservation, that is,I feel that CHINO’s role in realizing a decarbonized society lies there.

“low carbon.” Energy conservation offers the quickest start, so I feel

Hoshino: I agree. I think that as we’re a sensor manufacturer, we’llthat it’s often the starting point toward moving on to fuel cells andface demands for devices capable of compound measurement ofwater electrolysis as the next step.

temperature as well as of humidity, concentration, the component

Iwagaki: Even inside CHINO, I sometimes feel that energy conser-

ratio of CO2 and other greenhouse gases, and more.

vation is insufficient for reasons such as the operation of blackbody

Kakiichi: Hydrogen is hydrogen, but there’s methanation technolo-

furnaces that consume a lot of electricity. I feel it’s extremely important

gy that synthesizes methane from CO2 and hydrogen, transportation

to first review power usage in commonly used equipment.

technology specific to hydrogen, and other modes of involvement

Narita: Talking to staff at customer companies, it seems they’re of-way that differ completely by industry. What CHINO can offer to ad-

ten asked by management and by end users whether they monitor

dress those differences is vital. I think that’s where constituent meters

electric power usage. During Sales Technology Group activities, I my-and moisture meters, rather than evaluation equipment, can contrib-

self receive a lot of questions about whether electric power usage

ute a lot.

can be monitored. In response, we launched a new Electric Power
Monitoring Project Team. We’re first starting a demonstration experiment inside CHINO involving the company’s monitoring technologies
and its IoT-based energy conservation support. Ultimately, we plan
to commercialize it as an electric power monitoring package that we
can offer customers. When we started actual monitoring, we foundthat a small amount of “standby power” was being used even whenthe equipment was not running. We’ve started tackling this under the
thinking that we need to find and carefully reduce this unnecessary
power usage.
Iwagaki: I think that there is going to be a movement in various manufacturing industries to adopt new technologies and equipment for
decarbonization, but a lot of the equipment in use at manufacturing
sites is still analog. When migrating to new equipment in the future, I
think that technology for the ready implementation of functions that

Suzuki: The Yamagata Factory where I’m based manufactures thecontribute to energy conservation will be indispensable, such as high-sensing components of sensors such as hygrometers, gas meters,

speed response and building the IoT into equipment.

and thermopiles, and has already begun such initiatives. Recently,
we’ve been investigating the degree of need for CO2 meters, oxygen
meters, hygrometers, and other equipment for companies tacklingdecarbonization.
Oki: CHINO has various measurement technologies, which I think will
no doubt be of use in connection to decarbonization. Ultimately, I feelthat the point is how quickly we can catch up with latent needs thataren’t yet visible. At the same time, as seen in the many companies
that point to 2050 as the deadline for achieving carbon neutrality, it’s
not yet possible to replace all energy needed at present with hydrogen, solar, or other energy that doesn’t emit CO2. This means that,for the time being, there’s a need to reduce CO2 emissions as muchas possible. In other words, we have to tackle “low carbon” as astep on the way to “decarbonization.” What do you think CHINO cancontribute there?

19

CHINO Report 2023

A Foundation for Building a Future

Narita: Right. The demonstration experiments I’m carrying out is for
power meters and other equipment integrated into an in-house IoT
system and provided as an electric power monitoring package. We

Enhancing the quality of communication
to grasp true needs

want to satisfy customers by making it easy to install and easy to use.

Oki: Our other theme today is marketing. Society as a whole is ex-

Suzuki: Using products like MD8000*2, which is manufactured in Ya-

pected to dynamically change under the keyword of “decarboniza-

magata, makes it possible to map too-cold areas and too-hot areastion.” I want to discuss how we can read the movements of the times

in factories. Making temperature distribution in the factory visual also

and respond to changes in customers’ needs.

enables the reduction of wasted energy. However, customers won’t

Kakiichi: I think what’s important is enhancing the quality of our com-know that using CHINO products enables these things if we don’tmunication with customers. As an example, this means discerning

communicate that fact. So, looking ahead, I think we should strength-through conversations about how customers want to make use ofen our capabilities for communicating information.

fuel cells and water electrolysis equipment within the process of de-*2 MD8000: “Wireless Watcher” wireless logger with monitoring function. This logger
enables wireless collection and monitoring of data and centralized management ofdata on a PC with a single system software.

carbonization and what their true needs are, to determine what CHINO can specifically propose.
Hoshino: I agree. I think that through communication, we have to

Narita: How we can make use of existing products and technologies

draw out the development schedules for decarbonization-related

to create the packages and systems needed by customers is import-

products of customer companies that have an interest in decarbon-

ant. Also, as there are a great many opportunities to not only deliver

ization, along with their aims in entering markets, the roadmap to-

products but also to hear inquiries from customers about subsequent

ward a decarbonized society, and other matters, in order to discernengineering, I’ve also been feeling the importance of communicatingwhere we should make future investments. I think hearing customers’

information about what CHINO can do.

dreams in terms of how they want to contribute to society even be-

Oki: Right. I think that solving issues by combining CHINO’s technol-yond decarbonization, and proposing what sort of cooperation CHI-

ogies and products is a great idea, and I agree that communicating

NO can offer, is the real appeal of our work.

information is important.

Oshima: I think that boosting the quality level of our information is achallenge for the future. Marketing is meaningless if not carried out
continuously, so we have to update it to match the times and changes
in customers’ needs.

CHINO Report 2023

20

areas, like secondary battery and semiconductor factories. Lately
there has been increased need for sensors capable of measuring lower dew points. As our sensors lack that sensitivity, there have been
opinions that we need to develop a new sensor for low dew points if
we’re to be chosen by customers.
Kakiichi: As water electrolysis technology advances, we’re also going to need high dew point sensors. Moisture measurement is of particular importance in water electrolysis, so we have to be able to meetneeds for both low and high dew points.
Hoshino: In the area of hydrogen energy usage, high pressure will
be a particular issue. At the stages of storing and carrying hydrogengenerated through electrolysis, “high-pressure hydrogen” is a keyword. The stages up to producing hydrogen may be carbon neutral,
Narita: CHINO engages in an extremely wide range of businesses.

but that becomes meaningless when CO2 is emitted in storage andIf we can aggregate the knowledge held by individual departments,

transport. So, reducing volume even a bit through high pressure is

the number of things that we can achieve will also increase. Given

seen as important.

the wide-ranging knowledge held by the group overall, I feel that if weOki: I think discussions pinpointing places where technologies andcan bring together and leverage our knowledge we can deliver further

products can be used are easy to arrive at when the producer side andsynergistic effects.

user side successfully share information. So, I thought it would be good

Kakiichi: In that sense, I think the launch of the Decarbonization Proj-

if there’s a shared understanding across the company, not only amongect is extremely significant, and I strongly feel that diverse information

today’s Roundtable participants, on the huge importance in marketingis actually being collected from departments. I think that this project isof information sharing both inside and outside the company.

already yielding some synergistic effects, as in teams within the project announcing details of their activities based on that information.
Oshima: Recently, there was a change in an aspect of our Management Vision from “Solidarity” to “Co-Creation.” I feel that taking action
based on this vision of “Co-Creation” will bring in a lot of information.
The Decarbonization Project is a good example of co-creation. However, as we advance co-creation with parties outside the company inthe future, I think we’re not going to be selected as co-creation partners if we don’t have knowledge of customers’ issues and a broader
product lineup.
Suzuki: That’s a concern that I have, too. I’m on the sensor utilization team within the Decarbonization Project Team, where dew point
thermometers have been a big topic recently. This is a measurement
instrument used for environmental management in moisture-averse

21

CHINO Report 2023

A Foundation for Building a Future

The value creation that CHINO shouldseek in the future

most chemical fertilizers used in agriculture have ammonia as a raw

Oki: Moving toward the end, I’d like to change the perspective a bit

monia and the hydrogen at its source has completely changed sinceand talk about the future. Feeling free to go beyond decarbonization,

the Ukrainian situation. I’d only viewed hydrogen from a perspective

are there things you want to tackle in your work from here on out?

of energy usage in Japan, but from here on out I want to consider

Narita: In line with our self-description as “CHINO, the temperature

CHINO’s contribution through hydrogen utilization from more global

experts,” we provide society with a variety of products centered on

and diverse perspectives.

material. Since the emergence of the situation in Ukraine, food issues
has worsened at the global level. I feel that how the world views am-measuring temperature. But I’m aware of the fact that this act ofmeasuring temperature itself consumes energy. I think that if we candevelop products able to perform measurement without using any
energy, we’ll exert greater strength as “the temperature experts.”
What’s more, decarbonization encompasses the perspective of absorbing CO2 as well as not emitting CO2. So, I’ve long been thinking
about whether CHINO can contribute in terms of CO2 absorption.
Reduction of CO2 is being carried out everywhere. Is there some way
to instead absorb it and turn it into energy? Taking on such a newchallenge would be good, I think.
Oki: It would be ideal if we could come up with products that havethat sort of impact and run on zero energy. I think that would require
a considerably high level of innovation, though...
Kakiichi: What’s currently close to that is methanation technologythat synthesizes methane from CO2 and hydrogen. However, this has

Iwagaki: Taking part in this discussion today, I was able to learn

the problems of manufacturing capacity that’s low for the size of theabout the importance of developing products with value that we canequipment and too high a cost.

propose to customers with confidence, and of always staying on the

I also have a high interest in performing measurement using as little

lookout for new things. I still lack knowledge of decarbonization andenergy as possible. For example, in the water electrolysis that pro-an experienced recognition of how the products I’ve developed areduces hydrogen, there’s not a great need for diverse operation modes

used, but I want to tackle product development that makes use ofin evaluation equipment. I think this can be simplified from what it iswhat I’ve learned here, such as the importance of sharing information.

now, with attendant reduction in amount of electric power required

Oki: CHINO has truly diverse technologies cultivated over the years.

for operation. In our company’s case, development will inevitably

I think today let me realize anew that new solutions born when these

originate in customers’ needs. But if we become able to propose

technologies are brought together, not scattered, hold incrediblerefinements by CHINO that contribute to decarbonization, we should

power. For decarbonization in particular, having been involved in fuelbe able to take better approaches to a hydrogen society.

cells as a pioneer in hydrogen energy utilization is extremely valuable.

Hoshino: Things are certainly moving too quickly in decarbonization,

I realized that CHINO can definitely make great contributions to theand in many cases customers’ marketing has yet to catch up. So, if

decarbonized society of the future. Thank you all for your valuable

we can instead propose the directions they should aim for, I think wecomments.

can expect further advances in the decarbonization market.
Suzuki: In terms of strengthening our proposal capabilities, mythoughts are the same. I want to tackle sensing technology thatmoves a step ahead of our customers and develop measurement
products not yet found in our lineup.
Oshima: There was some talk about methanation earlier. What interests me is ammonia. Ammonia is produced by synthesizing hydrogen and nitrogen. While it’s attracting attention for contributing
to decarbonization as a next-generation, CO2-free source of energy,

CHINO Report 2023

22

FY2022 Performance Highlights
Financial
Orders received and net sales(100 million yen)
300.0

Total assets / Net assets / D/E ratio
Orders received
278.29255.57200.0

206.28205.82210.80205.53362.89300

303.98274.02

100 million yen

Year on year

100 million yen

100.0

↑

8.6%

FY2018FY2019FY2020

FY2021

Ordersreceived
Net sales

FY2022

Operating profit and operating margin(100 million yen)25

195.02
159.48163.18

0.18

0.18

0.16

100

201.50215.74

Operating profit

0.18
0.13

Total assets
Net assets
0

D/Eratio
FY2018FY2019FY2020

FY2021

FY2022(million yen)
1,200

Amount of capital
expenditures

815 million yen

100 million yen

20

↑

10.26

8.5％
8.5
6.8

FY2018FY2019FY2020Year on year

FY2021

OperatingprofitOperatingmarginFY2022

Net profit (attributable to owners of parent) /ROE (return on equity)(100 million yen)
20.00

15.36

15.00

10.50
8.0

815
785

8.5

8.1
6.1

100 million yen

Amount ofcapitalexpenditures

200
0.0

Depreciation
FY2018FY2019FY2020

FY2021

FY2022(yen)
60

Annualdividends

52

50
45

46.2%

40

ROE

30

Year on year

20

8.5%
2.4 points

45

45

Profit10

46

Dividend
payout ratio(consolidated)
34.2

28.7%

37.1
31.3

29.6

28.7

Annualdividends

ROE

0(attributable to ownersof parent)
FY2018FY2019FY2020

FY2021

FY202252 yen* Dividends increasedby 6 yen from theprevious year

↑

5.00

0.00

785 million yen

400

↑

7.6

15.36

Year on year

12.89

11.13

10.00

Depreciation
795
784

Dividends per share / Dividend payout ratio(consolidated)

Profit(attributable toowners of parent)

12.18

872

600

1.7points

5.4

5

0

843

↑

5.0

825
815

991

Operating margin

11.36

7.8

977

1,000
800

14.99

15

10

Year on year

34.6%

17.18

D/E ratio

0.18 times

Amount of capital expenditures / Depreciation

20.18
20.18

100 million yen

215.74267.08200

362.89Net assets

315.45Net sales

237.930.0

Total assets

Year on year

8.9%

219.08(100 million yen)
400

100 million yen↑

221.91
219.99237.93278.29FY2018FY2019FY2020

FY2021

FY2022

Dividend
payout ratio(consolidated)* Net profit (attributable to owners of parent) for FY2019 and FY2020 includes ¥574 million and ¥557 million, respectively, of negative goodwill associated with the conversion
of MEIYO ELECTRIC Co., Ltd. to a subsidiary.

23

CHINO Report 2023

A Foundation for Building a Future

Non-financial
GHG (greenhouse gas) emissions (Scope 1, 2)(t-CO2)
3,500

Waste volume and intensity

GHG emissions

461 t-CO(t)
140

Waste volume

2

2,768

Year on year

78.3%

2,500

0.66

120
0.58

↑

2,748

2,887

100
100.29

2,129

2,000

80

1,500

60

1,000

40

Year on year

0.63
0.56

113.83
97.92

97.79

92.37

5.6%

↑

3,000

92.37 t0.73

Waste volume per
100 million yenof domestic net sales

0.56 tYear on year

0

FY2018FY2019FY2020

FY2021

FY2022

Number of group consolidated and nonconsolidated employees(people)
1,200
1,000
800

1,010

347

1,110

1,106

1,101

421

418

414

1,013

342

663

671

689

688

687

200
0

FY2018FY2019FY2020

FY2021

FY2022FY2018FY2019FY2020

FY2021

FY2022

Number of
employees(consolidated)(people)
140

5

120

113

112

115

110

100

Number of
employees(non-consolidated)

80687 people

60

114

4.4%

414 people

20
0

114
Ratio of female
managers
Year on year

0.9%

2.7%

40

Number of malemanagers

4.4%

3.5%

Number of
employees
in group

NonconsolidatedGroup

Number of
female managers

↑

400

0

Waste volume per
100 million yen ofdomestic net sales

Ratio of female managers

1,101 people

600

Waste volume

20
GHG
emissions

↑

461

500

11.1%

1.8%

1.8%

2

2

3

4

5

FY2018FY2019FY2020

FY2021

FY2022

Number of female
managers
Number of malemanagers
Ratio of female
managers

CHINO Report 2023

24

Introduction to Our Businesses and Products
Strengths of our business“Creation of customer value throughloop solutions”

Process control
technology that achieves
high-accuracy control

Temperature sensing technology
capable of measurement fromextremely low to ultra-hightemperatures

MeasuringControlling

Monitoring

Creation oforiginal technologies

Development ofsoftware technology
for integrated
management of
measurement, control,and monitoring

Loop solutions

Loop solutions
Throughout manufacturing, correctly measuring, controlling, and monitoring temperature is a vital factor in
improving quality, performance, and safety.
At our company, we call this series of measurement, control, and monitoring steps the “temperature loop.”
We systemize this loop by incorporating it into products in accordance with varied aims, and provide it as“loop solutions” that lead customers to solving problems.
Temperature loop solution flow

25

CHINO Report 2023

A Foundation for Building a Future

Technologies in which we have strengths
Temperature sensing technology capable of measurement from extremely low
to ultra-high temperatures

Measuring

Our temperature sensing technology is capable of measurement from extremely low -269°C to ultra-high
3500°C temperatures.
We further pursue greater accuracy in temperature measurement and uphold the measurement accuracy ofnational standards as an accredited and registered business operator for temperature and humidity under theJapan Calibration Service System of the Measurement Act.

Process control technology that achieves high-accuracy control

Controlling

Our control technology enables quick, accurate control of temperature, humidity, pressure, flow rate, dew
point, and other parameters under varied conditions. Our original control algorithms also contribute to greater
efficiency and energy conservation at manufacturing sites, including in temperature control of furnaces that
consume large amounts of energy.

Development of software technology for integrated management of
measurement, control, and monitoring technologies

Monitoring

We are developing dedicated software technology for integrated management of measurement, control, andmonitoring of temperature and other subjects. Our monitoring technology enables the building of systems
matched to customers’ purposes. We combine these technologies to support manufacturing, transport, andevaluation and testing of all kinds.

The strengthsof CHINO
CORPORATION

Through the provision of loop solutions centered on temperature,
we support a variety of industries and contribute to
the advancement of society.
New materials

Glass

Agribusiness (agriculture)

EnergyHigh-level technicalcapabilities inmeasurement, control,and monitoring
×

Medicine

Steel

Customer-focusedengineering
Foods

Semiconductors

Automobiles

CHINO Report 2023

26

Overview of Our Business and Products

Main products
Measurement and control instruments

Accurate recording and control of measured data enables enhancementof quality in manufacturing and the assurance of safety and security.

Controlling

RecorderMonitoring

Controlling

Controller

This equipment records measured data on chart paper and as digital data.
Analog, graphic, or hybrid recording can be selected according to purpose.

This equipment controls process amounts, such as temperature, pressure, and flow rate based on measured
data, and matches measured values to target values.

High-Performance Graphic Recorder
KR3-H Series

Digital Instruction Controller
DB Series

In addition to conventional numerical data recording, thispaperless recorder is able to save trends (waveforms) in
PDF format.

This digital instruction controller featuresa multi-programming function and universal input function as standard equipment,with an accuracy rating of ±0.1% and acontrol period of approximately 0.1 seconds.

Hybrid Memory Recorder AL4000 SeriesThis recorder simultaneously records data on chart paper
and SD card.
Saved data can be played and analyzed on a PC using theincluded package software.

Instrumentation systems

Based on measurement, control, and monitoring technology, we design instrumentation systems, including application
software, matched to customers’ purposes. We offer varied evaluation and testing equipment and package software.

Evaluation, testing, and performance/endurance testing equipment

MeasuringControlling

Monitoring

This testing equipment evaluates the performance and durability of measurement subjects. It is indispensable technology for the realizationof a hydrogen-based society using fuel cells and water electrolysis.

Fuel cell evaluation and testing
equipment

Water electrolysis equipment

This is necessary testing equipment in the fieldof fuel cell performance evaluation and testing,from elemental research, materials research,
single cell/module research, and other basic
research into fuel cell development to practicalapplication testing. We perform end-to-end
design and manufacture of component element
gas supply, humidification control, temperature
control, data measurement, fully automatedoperation, and other systems, as well as on-site
construction, adjustment, and handover.

Sensors

Measuring

These are thermometers that make direct contact with the measurement
subject to measure temperature through heat conduction from the subject.

Intrinsically Safe Explosion-proof
Platinum Cobalt Sheath Resistance
Thermometer NR800-6, NR800-7
These are capable of measurement from 4K to
375K, with a precision of ±0.5K. In combination
with an insulation barrier, the equipment passes theessential safety explosion-proof equipment certification of the Technology Institution of Industrial Safety.

Hand-held Temperature/Humidity Meter HN-EHThis temperature/humidity meter features quick response timeand easy operation. The sensor part and the display part areavailable in two configurations: an integrated type and separated type.

CHINO Report 2023

Evaluation and testing equipment for compressor
performance and durability
This equipment performs evaluation of the durability of compressors for
air conditioners, refrigerators, and other home appliances. It featureshigh operating functionality following deployment, with operational
management handled by a general-purpose package system and theability for batch setting of operating conditions and data collection.

Accurate measurement is vital in manufacturing. In addition to sensors that accurately measure temperature,
we provide sensors that measure humidity, gas concentration, moisture, film thickness, and more.

Temperature sensors

27This equipment supplies electrolytes to electrolytic cells
and applies direct current to performs water electrolysis,
then measures the properties of the generated hydrogenand oxygen.

Radiation thermometers

Measuring

These thermometers measure temperature by capturing thermal (infrared) radiation, without making contact with the measurement subject.

Radiation Thermometer IR-CZ SeriesThis all-in-one stationary radiation thermometerfeatures a measuring range of 0°C to 3500°C,
a digital temperature display on the unit body,and measurement value external output.

Waterproof Handy Infrared Radiation
Thermometer IR-TE2
This waterproof radiation thermometer can be washedin water.
It enables the issuance of HACCP, ISO, and othertraceability certificates (sold separately) in a measuring
range of -40°C to 300°C.

A Foundation for Building a Future

Wireless logger

Measuring

Monitoring

Through a receiver, this equipment collects and monitors measured data wirelessly sent by a transmitter.

Wireless Logger with Monitoring
Function MD8000 Series
Through a single receiver, this equipment is able to collectmeasured data sent wirelessly by up to 60 distributed
transmitters, compiling the data and performing alarm
monitoring on a PC.

Thyristor regulator (electric power regulator)

Calibration
Temperature sensors used in research, production, inspection,
distribution, and other scenarios in industry require traceability for
quality control, ISO, HACCP, safety, and maintenance of accuracy.
To support customers in establishing traceability systems, we provide calibration devices including temperature sensors, radiation
thermometers, and glass thermometers, along with measuring instruments and standard sensors, to industry, testing and researchorganizations, universities, and so on.

ControllingStandard temperature sensors

This is an electrical switch that turns an AC power supply on and off. Receiving
signals from a controller or other equipment, it controls electric power to control
the temperature in an electric furnace.

We offer five types of standard
platinum resistance thermometers
spanning extremely low to hightemperatures.

Single-phase Thyristor Regulator JM Series

Standard Radiation Thermometer IR-RSTThis single-phase thyristor controller receives
signals from regulators, PLCs, and manually set
equipment to adjust the power supplied to heaters
in electric furnaces.

Collection and monitoring system package softwareMeasuring

Monitoring

This package system uses our measurement and control instruments as system components to compile data and monitor devices and facilities via PC.

Data Acquisition andMonitoring Package System
CISAS/V4
This system enables flexible, clean,and highly visible management of datawith up to 5,000 tags through easily
operated screen configuration. It isequipped with full functionality for datacompilation, alarm monitoring, andsecurity.
Monitoring via network client (optional
software) can be performed on multiple PCs.

Thermal image measurement equipment

MeasuringThis measurement equipment visually displays temperature distribution as an image. It captures movement of the measurement
subject and measures temperature for a set period (process).

Compact Thermal Image Measurement
Equipment CPA-L4 SeriesThis fixed-mount thermal image measurement equipment meets diverse
needs including mass detection determination and abnormality monitoring through temperature distribution measurement, for subjects ranging
from room temperature to high temperatures.

Infrared moisture and thickness gauge

This high-precision standard thermometer isused for comparative calibration of radiation
thermometers.
Comparative calibration: Calibration performed by comparing a standard thermometer
against the thermometer to be calibrated. Unlike fixed-pointcalibration, arbitrary temperatures can be set.

Adopted by the national standards
organizations of 22 countries
We engage in the business of calibration and correction of temperaturemisalignment and errors in customers’ sensors and our own sensors. In
addition, as a nationally-recognized registered business operator under
the Japan Calibration Service System of the Measurement Act, we areable to issue certificates having validity equivalent to those issued by thenational government.

The Calibration Engineering Department of CHINO CORPORATION is
accredited under the Japan Calibration Service System (JCSS), which
operates in accordance with the ISO/IEC17011 accreditation scheme
using ISO/IEC17025 as its accreditation standard. IAJapan, the accreditation body of JCSS, has signed mutual recognition agreements with
the Asia Pacific Accreditation Cooperation (APAC) and the International
Laboratory Accreditation Conference (ILAC). Our Calibration Engineering
Department has the registration number 0024.

Field engineering
Our service engineers or outsourced service staff visit users’ sites
to perform inspection and calibration services, primarily for temperature and humidity measuring instruments, controllers, andrecorders.
On-site calibration service flow
On-site surveys

MeasuringThis equipment uses the infrared absorption of the measurement
subject for non-contact measurement of multi-components.

Infrared Moisture and Thickness Gauge IM SeriesThis moisture and thickness gauge is able to measuremoisture, organic content, film thickness, coating
thickness, and more.

Repair, parts replacement
Operational checks
Maintenance

CHINO Report 2023

28

Overview of Our Business and Products

Toward the realization of a sustainable societyWith a safe and secure future society as our aim, we engage in thorough information gathering and market analysis related to decarbonization and other technologies required by industry, and develop products and systems
that meet market needs.

Hydrogen utilization technologies
To ensure the stable, long-term, and large-volume supply of the hydrogen that is the key to a decarbonized society, it isimportant to simultaneously advance the utilization of low-cost hydrogen produced overseas and the establishment of a
production base for hydrogen using domestic resources.
Our equipment can be installed
in challenging locations in directcontact with liquid hydrogenat -253°C, providing accurate
temperature measurement andcontrol even through long hours
on rolling seas.

Resistancethermometer for
liquid hydrogen

Semiconductors and electronic components
The semiconductors inside PCs, smartphones, and tablets, now indispensable to our lives, require precision that involves
long production cycles of a year or more. Temperature control in manufacturing processes is important to the advancementof next-generation technology development and the development of the digital industry through the stable shipment ofsemiconductors.
 o prevent clogging of pipesTin manufacturing equipment
for the vital pre-process ofdeposition (CVD, ALD, etc.),
the pipes must be controlled
to the proper temperature.
The etching process that removes unnecessary oxide film after deposition requires accurate measurement of solution concentration tocontrol etching depth.

Next-generation batteries
Measuring water soluble residue and film thickness in thefilm manufacturing process on separator film productionlines is important in improving the performance of secondary batteries.

Infrared Moisture andThickness Gauge IM Series

29

CHINO Report 2023

Temperature Controller for Piping LH

Infrared Moisture andThickness Gauge IM Series

A Foundation for Building a Future

DX-related
We offer systems for centralized monitoring of equipment in factories to support digitalization at manufacturing sites.
●●● e build and provide systems using CISAS/
W
V4.

Example of system configuration:
centralized monitoring system, CHINO CORPORATION Fujioka Factory eatstroke index monitoring can be built intoH
systems at manufacturing sites to enhancefactory utilization rate as well as the safety
and security of employees.
 or the medical and pharmaceutical fields,F
we provide systems that conform to Part 11
rules concerning electronic records and electronic signatures.

Medical drugs and food management
In the medical and pharmaceutical fields that relate directly to our lives, highly accurate temperature control is always required in manufacturing processes as well as in storage and transport.
(1) In drug warehouses

Wireless Logger with
Monitoring Function
MD8000 Series(2) In medical
refrigerators

Graphic Recorderwith Measured Data
Protection KR2000
Series, etc.

(3) In transport trucks

We also perform services including temperature mapping,validation, and calibration conforming to Good Distribution
Practice (GDP) guidelines for pharmaceuticals, and support
temperature control overall in pharmaceutical distribution.

Real-Time Wireless
Logger MZ Series

Logistics
In the aerospace and automotive industries that employ strict standards for control of quality and strength, we support conformance with international standards through our temperature sensors, recorders, and calibration technologies.
Nadcap/AMS2750G

High-Performance Graphic Recorder KR2-H Series

An international accreditation system that sets operating standards for
special processes (welding, heat treating, etc.) in the aerospace industry● Conformance with mandatory requirement for use of digital equipmentfrom June 2022

This graphic recorder features a 10-minute-interval digital printing
function.
It meets required
functions for tamperproofing, electronic
signatures, andaccess restriction.

●

IATF16949/CQI-9
International standard for quality management systems, specialized
for the automotive industry● Conformance with mandatory requirement for use of digital equipmentfrom June 2023●

The following rules are set in both standards● (1) Calibration accuracy, (2) Digital recording, (3) Read-only

CHINO Report 2023

30

Corporate Governance
List of Senior Executives (as of June 29, 2023)
Mikio Toyoda
President and CEO

Takao Shimizu
Director and Senior
Executive Officer
In charge of Group
Technical Management,
Director, Innovation
CenterAkihiko Nishiguchi
Director and Senior
Executive Officer
Executive Manager, Sales
Headquarters and BranchManager, Eastern Japan
BranchManabu Matsuoka
Director and Managing
Executive Officer

Executive Manager,
Quality Headquarters

Apr. 1981 Joined the Company
Jun. 2012 Director, General Manager, Fujioka Factory
Oct. 2014 Director, General Manager, Fujioka Factory, Equipment Products Development Center
Jun. 2015	Director and Managing Executive Officer, General Manager, Fujioka Factory, Equipment
Products Development Center
Jun. 2016	Director and Managing Executive Officer, Executive Manager, Corporate Strategy
Headquarters, Equipment Products Development Center
Jun. 2017 President and CEO, Equipment Products Development Center
Jul. 2019 President and CEO (To the present)
Apr. 1976 Joined the Company
Jun. 2009 Director, Measurement Technology Development Center
Jun. 2013 Director and Managing Executive Officer, R&D Center, General Manager, SST DivisionSep. 2014 President of AR’S Corporation Limited (To the present)
Jun. 2015 Director and Managing Executive Officer, R&D Center
Jun. 2017 Director and Managing Executive Officer, R&D Center, General Manager, Kuki Factory
Feb. 2018 Director and Managing Executive Officer, General Manager, Kuki FactoryMay 2018 President of Asakawa Lens Works Co., Ltd. (To the present)
Jun. 2021	Director and Managing Executive Officer, General Manager, Kuki Factory, In charge ofGroup Technical Management
Oct. 2021 Director and Managing Executive Officer, In charge of Group Technical Management,
Director, Innovation Center
Jun. 2023 Director and Senior Executive Officer (To the present)
Apr. 1982 Joined the Company
Jun. 2011 Director, Branch Manager, Osaka Branch
Jun. 2013 Director, Branch Manager, Osaka Branch, Chinese Business Unit
Feb. 2014 Director, Managing Director, Shanghai Dahua-CHINO Instrument Co., Ltd. (seconded)
Jun. 2015	Executive Officer, Managing Director, Shanghai Dahua-CHINO Instrument Co., Ltd. (seconded)
Jun. 2019	Director and Managing Executive Officer, Chinese Business Division, Managing Director,
Shanghai Dahua-CHINO Instrument Co., Ltd. (seconded)
Jun. 2021	Director and Managing Executive Officer, Executive Manager, Overseas Business
Headquarters, Deputy Executive Manager, Sales Headquarters
Apr. 2022	Director and Managing Executive Officer, Executive Manager, Sales Headquarters, BranchManager, Eastern Japan Branch
Jun. 2023 Director and Senior Executive Officer (To the present)
Apr. 1981 Joined the Company
Jun. 2014 Director, General Manager, Instrument System Management Division at Fujioka FactoryJun. 2015 Executive Officer, General Manager, Instrument System Management Division at Fujioka FactoryJun. 2016 Managing Executive Officer, General Manager, Fujioka Factory, General Manager, Instrument System Management DivisionFeb. 2018 Managing Executive Officer, Executive Manager, Innovation Center
Jul. 2019	Managing Executive Officer, Executive Manager, Innovation Center, Executive Manager,
Production Innovation Headquarters
Feb. 2021	Managing Executive Officer, Executive Manager, Production Innovation Headquarters,
Executive Manager, Quality Assurance Headquarters
Apr. 2022 Managing Executive Officer, Executive Manager, Quality Headquarters (To the present)
Dec. 2022 President of SANKI KEISO CO., LTD. (To the present)
Jun. 2023 Director and Senior Executive Officer, Quality Headquarters (To the present)

Tatsuyoshi Yoshiike
Director (Outside)

Mar. 1975 Joined HIOKI E.E. CORPORATION
Mar. 2005 President, HIOKI E.E. CORPORATION
Jan. 2013 Chairman, HIOKI E.E. CORPORATION
Feb. 2015 Resigned, HIOKI E.E. CORPORATION
Jun. 2015 Outside Director, the Company (To the present)
Jun. 2016 Outside Director, Shinko Shoji Co., Ltd. (To the present)

Kazuo Ikuta
Director (Outside)

Jul. 1991 Secretary General, Japan Measuring Instruments Federation
May 1998 Executive Director and Secretary General, Japan Measuring Instruments Federation
May 2008 Senior Executive Director, Japan Measuring Instruments Federation
May 2014 Special Adviser, Japan Measuring Instruments Federation
Jun. 2016 Outside Director, the Company (To the present)

Yukinobu Miki
Director (Outside)

31

CHINO Report 2023

Apr. 2010	Director, Research Institute of Metrology, National Institute of Advanced Industrial Scienceand Technology
Apr. 2012 Director, National Institute of Advanced Industrial Science and Technology
Apr. 2017 Vice President, National Institute of Advanced Industrial Science and Technology
Jun. 2022 Outside Director, the Company To the present

Sustainability and ESG

Noriyuki Saito
Full-time Auditor

Apr. 1969 Joined the Company
Jun. 2001 Director
Jun. 2007 Managing Director
Jun. 2010 Senior Managing Director
Jun. 2014 Executive Adviser
Jun. 2017 Full-time Auditor (To the present)

Kazuhiko Yamashita

Apr. 1979 Joined The Saitama Bank, Ltd.
Jun. 2005 Executive Officer, Resona Bank, Ltd.
Jun. 2007 Senior Managing Director, Resona Kessai Service Co., Ltd.
Apr. 2008 Executive Vice President, Resona Card Co., Ltd.
Jun. 2011 Executive Vice President, NTT DATA SOFIA CORPORATION
Jun. 2016 Outside Auditor, RHYTHM WATCH CO., LTD. (now RHYTHM CO., LTD.)
Jun. 2017 Outside Auditor, the Company (To the present)
Feb. 2018	Director, Audit & Supervisory Committee Member, OPTOELECTRONICS CO., LTD. (To the present)
Jun. 2018	Director, Audit & Supervisory Committee Member, RHYTHM WATCH CO., LTD.
(now RHYTHM CO., LTD.) (To the present)

Auditor (Outside)

Yoshihiko Kasuya
Auditor (Outside)

Apr. 1979 Joined The Mitsubishi Bank, Ltd. (now MUFG Bank, Ltd.)May 2006	Executive Officer, Kyoto Branch President, The Bank of Tokyo-Mitsubishi UFJ Ltd.
(now MUFG Bank, Ltd.)
Jun. 2008 President, Chitose Kosan Co., Ltd.
Jun. 2010 Director and Managing Executive Officer, Prince Hotels, Inc.
Apr. 2015 Executive Vice President, SEIBU CONSTRUCTION CO., LTD. (To the present)
Jun. 2023 Auditor, the Company (To the present)

Managing Executive Officers

Kazumasa Omori

Executive Manager,
Business Management
Headquarters

Executive Officer

Teiji Suzuki

Hisashi Henmi

Kazuhisa
Murakami

Osaka Branch Manager

General Manager of
Fujioka Factory

Nagoya BranchManager

Yusuke Murai

Hajime Chino

Kazumi Masuda

General Manager
of Kuki Factory

General Managerof Overseas
Sales Promotion
Department

General Manager of
Yamagata Factory

CHINO Report 2023

32

Corporate Governance
Message from Outside Directors

Tatsuyoshi Yoshiike

Kazuo Ikuta

Outside Director

Outside Director

Enhancing corporate value through“Co-Creation” with stakeholders
Since its founding, CHINO CORPORATION has contributed to theadvance of industry and the resolution of social issues through thebusinesses of measurement, control, and monitoring. Under its corporate philosophy, the company will continue to challenge the boundaries of these businesses, offer optimal solutions for varied fields ofindustry, and contribute to the realization of a better society. In recent years, the company has also faced demands to solidly address
corporate social responsibility (CSR) and environmental, social, andgovernance (ESG) issues. In March 2021, it announced a new Medium-Term Management Plan and clarified its vision for itself in its
90th anniversary year of 2026. It also set “Co-Creation,” “Strengths,”and “Reliability ” as its three Core Values and Management Vision.
“Co-Creation”, a newly added message, symbolizes the company’s
stance of aligning closely with society. Through co-creation with individual stakeholders, the company will aim to create more evolved value. The company is supported by customers, shareholders, business
partners, employees, related industries, local communities, and othervaried stakeholders, and cannot exist solely on its own. Moreover,individual stakeholders and the company’s value creation do not exist
independently in relation to each other, but rather in deeply interconnected relationships. Enhancement of employees’ capabilities enhances business value and leads to high-satisfaction customer value.
The resulting enhancement of performance also improves shareholder value and value for business partners, and further enables positive
contribution to local communities. If the company is able to make thechain of co-creation a reality at a high level, I think results will naturally
come out.
The most important role shouldered by outside directors is that ofsupervising management. We lead evaluation of whether management is appropriate from the standpoints of embodying the corporate
philosophy and engaging in sustainability management, and, in themedium to long term, support management aimed at sustainablegrowth from broad and diverse perspectives. As a provider of supervisory functions in the Board of Directors, I hope to fulfill my duties
from an objective standpoint that speaks for the shared interests ofall shareholders.

33

CHINO Report 2023

About the company’s corporate governanceThe corporate governance of the company makes its fundamental
concept the construction and maintenance of a management system that is highly sound, transparent, objective, and efficient in order to realize medium- to long-term enhancement of corporate value
and sustainable growth. The foundation for its structure consists ofa Management Conference and a Board of Directors and Audit &Supervisory Board originating in general meetings of shareholders,plus the introduction of an executive officer system and a Nomination and Compensation Advisory Committee that has independent
outside directors as the majority of its members. The executive officer system serves to clarify the division between top management
decision-making/supervisory functions and business execution functions, and to carry out quick and agile management. The Nomination
and Compensation Advisory Committee is set as an advisory bodyto the Board of Directors to ensure objectivity and transparency inprocedures for the selection and dismissal of directors and executive
officers and in procedures for examination and determination of matters including compensation. I also participated as a member in discussions by the Nomination and Compensation Advisory Committee.
We revised the executive compensation system to abolish retirement
benefits to boost the weight of performance-linked compensation,and create a structure that adds stock compensation as a mediumto long-term incentive.
To build relationships of trust with all stakeholders, we strive forprompt, accurate, and impartial disclosure of important information
concerning the company.
As such, the corporate governance of the company fully complies
with the current corporate governance code and functions soundly.
Accelerating the promotion of women in companies is considereda pressing issue for the future growth of Japan’s economy as well.
Companies listed on the Prime Market must address a requirement
to appoint at least one female senior executive by 2025 and 30% ormore by 2030.
Monitoring to ensure that corporate governance is functioning
soundly is another duty of outside directors. I will continue making
efforts to fulfill the roles of an outside director.

Sustainability and ESG

Message from an Outside Auditor

Yukinobu Miki

Kazuhiko Yamashita

Outside Director

Outside Auditor

CHINO CORPORATION’s initiatives towardsustainable development

Taking the present as an opportunity andmaking adaptability to change a cornerstone

I was appointed an outside director following approval at the general
meeting of shareholders held in June of last year. Since then, I havestriven to objectively monitor CHINO CORPORATION’s business withthe standpoint of shareholders in mind. I would like to take up some
topics concerning several of the company’s initiatives for the futurethat I considered important through a year of activities.
The first is initiatives related to corporate governance. CHINOCORPORATION conducts regular self-assessments of the effectiveness of its Board of Directors, and works toward transparent, rational
management of the company through a variety of improvements tothemes for discussion, ways to move forward, and so on. These continuous initiatives are expected to enable more apt judgment.
Next is initiatives for technology development. Based on fundamental technologies for temperature measurement, monitoring, andcontrol that are the company’s current strengths, CHINO CORPORATION is making efforts toward development in new fields, particularly
measurement and monitoring technologies related to hydrogen energy. As technologies that will support the foundations of the cominghydrogen-based society, I think that progress in these activities ishighly significant in terms of meeting demands of society.
Third, I want to comment on digital transformation (DX). Based onlatest technologies, CHINO CORPORATION and the group are advancing plans to provide customers with network-enabled measurement and monitoring systems, and internally are advancing centralized aggregation, sharing, and utilization of information, along with its
active use in the production of products. Such continuous efforts canbe expected to yield streamlining and enhancement of work, as wellas the provision of new services.
As I’ve noted, CHINO CORPORATION engages in forward-looking
initiatives for sustainable development. As a director expected to haveskills in research, development, and manufacturing, I also want to beappropriately involved in new technology development.

Our present era has been called an era of VUCA for some time now.
The business environment around us is constantly changing, and we
do not know where it will rest. Darwin’s statement that those whobest adapt to change are those who survive goes without saying.
Ongoing self-transformation can be seen as the minimum-fare ticket
to sustainability.
The current Medium-Term Management Plan adopts a challenging construction focused on new themes and areas, while reorganizing the Management Visions and basic strategies in line with thedemands of the era. Along with ESG management and strengtheningof CSR, social issues that should be addressed can also be seen as
opportunities.
As an auditor since June 2017 and as a member of the Audit &Supervisory Board that operates independently of the Board of Directors, I collaborate with internal audits, relevant departments, andaccounting auditors to monitor the status of execution by top management. I have also visited subsidiaries and business sites at times.
I believe that the company has given rise to virtuous cycles in a
number of aspects, including management of work execution, cultivation of employees’ organizational understanding and sense of unity,and even a broad-minded atmosphere in which people can speak
freely.
With regard to the effectiveness of the Board of Directors, too, I believe that exchange of opinions from varied angles has been suitably
secured, but PDCA must be employed to achieve further heights. The
Board of Directors tends to place a focus on “supervision of management,” which carries a strong image of protectiveness. In the future,“aggressive governance” will also increase in importance. The reason
for this is that amid drastically changing conditions at ever greater
speed, scenarios for taking risks and steering the company’s management will increase.
In today’s age of the genome, the earlier mentioned theory of evolution is apparently interpreted to state that creatures that were bornwith mutations and eventually adapted to their environments were thecreatures that survived. However, it was still the environment that provided the direction. I believe that building a resilient corporate culturethat overcomes the rough seas of change is an urgent matter facing
the company.

CHINO Report 2023

34

Corporate GovernanceFundamental approach■ Audit & Supervisory Board Number of members: 3

As temperature experts, CHINO CORPORATION’s mission is toprovide products and services that aid industry and society throughtechnologies with strengths in measurement, control, and monitoring,
while becoming a “corporate group that contributes to the future ofpeople and society.”
For this reason, the company is working to enhance the soundness, transparency, efficiency, and speed of its management, andto strengthen and enrich its corporate governance, with the goal ofenhancing its medium- to long-term corporate value and sustainablegrowth while building positive relationships with all stakeholders.

Corporate governance structure(as of the end of June 2023)
The company has selected the form of a company with a corporate
auditor and has built a corporate governance structure based on a
Management Conference and a Board of Directors and Audit & Supervisory Board elected at general meetings of shareholders. It has
also adopted an executive officer system to clarify the division between top management decision-making/supervisory functions andbusiness execution functions and to strengthen and speed up thesefunctions.
To ensure objectivity and transparency in procedures related to theselection and dismissal of directors and executive officers and in procedures for the examination and determination of matters including
compensation, the Nomination and Compensation Advisory Committee is set as a voluntary advisory body to the Board of Directors, withindependent outside directors as the majority of its members.

■ Board of Directors Number of members: 7
The Board of Directors is chaired by the President and meets at least
once a month in principle. In addition to matters stipulated in laws,
regulations, and the Articles of Incorporation, it makes decisions on
management-related important matters based on the Rules of theBoard of Directors, and supervises the execution of duties by all directors. In FY2022, the Board of Directors met 14 times to examine
matters including medium- to long-term business strategy, humanresource development policy, and fundraising.

The Audit & Supervisory Board consists of one Full-time Auditor fromwithin the company and two Outside Auditors. Its members formulate
audit plans, attend Board of Directors meetings and other key meetings, investigate the business and financial status of the head office,major factories, and important subsidiaries, and monitor the regular
activities of top management, including directors. The Audit & Supervisory Board also holds regular liaison meetings with accounting auditors and the auditors of group companies to engage in cooperation,
and works to strengthen information collection and the monitoring
structure.

■	Nomination and Compensation Advisory Committee
Number of members: 3
The Nomination and Compensation Advisory Committee bears thefunctions of both a nomination committee and a compensation committee. Its three members are the President, who serves as the committee chair, and two Independent Outside Directors. The Committee
met four times in FY2022 to deliberate on matters including the executive officer system, performance-linked compensation, and successor planning, and reported to the Board of Directors.

■	Management Conference Number of members: 9
The Management Conference consists of directors and executive officers appointed by the President. It meets every week in principle.
As a decision-making body addressing the allocation of management
resources and other fundamental and important matters related tobusiness execution, it strives for meaningful deliberations from theperspective of management overall and works to promote fast andefficient business operations.

■	Executive Officer’s Meeting Number of members: 12
With executive officers and full-time auditors as its members, theExecutive Officer’s Meeting is convened once a month in principle.
In meetings, the President and executive officers in charge of departments communicate policy and report on the status of businessexecution, share information on issues requiring coordination, andhold discussions aimed at achieving priority measures proposed ona semi-annual basis.

Corporate Governance Structural Diagram
General Meeting of Shareholders
Board of Directors

Audit

Appointment
Dismissal

Auditors (Audit & Supervisory Board)

Advisory
ReportSelection
Nomination and Compensation Advisory Committee
Audit

Instruction/Report

President
Management Conference
Executive Officers (Executive Officer’s Meeting)

Audit

Instruction/ReportCompliance Committee
Investigation

Instruction/Report

Head office and divisions/Group companies

35

CHINO Report 2023

Collaboration

Collaboration

Appointment
Dismissal

Accounting Auditor
Accounting
audit

Collaboration

Internal Audit OfficeAppointment
Dismissal

AuditSustainability and ESG■	Internal Audit Office■ Executive compensation

The Internal Audit Office is set as an independent auditing department
under the direct control of the President. Based on the annual internal
audit plan, it conducts audits of the reasonableness and efficiency ofdepartments’ business operations. It also works to enhance the effectiveness of internal audits through exchanges of opinions with departments under audit and through counsel and suggestions aimed
at the correction and mitigation of issues. It further reports its findings
to the President, the Audit & Supervisory Board, and the Board of
Directors, and confirms necessary measures and the status of improvements.

The basic policy of the company regarding executive compensation is
to create a structure that will grow its business in the medium to longterm and continuously enhance its corporate value.
Limits on total amounts of compensation for all directors and for
all auditors are determined through resolutions at general meetingsof shareholders.
Levels and composition of senior executive compensation are
reviewed as appropriate in light of basic policy, taking into accountchanges in the business environment and social trends. To enhancethe objectivity and transparency of the process for determination of
executive compensation, the company decides on matters related
to directors’ and executives’ compensation in Board of Directors
meetings, following deliberation and reporting by the Nomination andCompensation Advisory Committee.
Compensation for directors (excluding outside directors) and executive officers consists of three components: basic compensation,
performance-linked compensation as a short-term incentive, andstock-based compensation as a medium- to long-term incentive.
The composition ratios of these are set with basic policy taken into
account. Outside directors receive basic compensation only, with no
performance-linked compensation or stock-based compensation.
◦	Basic compensation is fixed monthly compensation, set in accordance with the roles and positions of individual directors and executive officers.
◦	
Performance-linked compensation varies with respect to basic
amounts set by role and position, in accordance with company
performance and evaluations of individual executives’ performance(degree of achievement of individual goals, development of successors, enhancement of corporate value, etc.) in the previous
fiscal year. Its purpose is the improvement of morale in order toachieve single-year performance targets.
The group uses consolidated operating profit, which shows earnings in main businesses, as an important numerical target indicatorin the Medium-Term Management Plan. Accordingly, consolidated
operating profit is set as an indicator for company performance inperformance-linked compensation.
◦ Stock-based compensation was introduced in July 2022 with theaims of enhancing the motivation of senior executives to contributeto enhancement of medium- to long-term corporate value and offurther advancing value sharing with shareholders. A number ofcommon shares of the company, set according to role and position, is issued at a certain time every year in the form of pre-issued,transfer-restricted shares. The restriction on transfer is lifted upon
the retirement of the executive.

■ Evaluation of the effectiveness of the Board of Directors
The company conducts questionnaire surveys of directors and auditors regarding the effectiveness of the Board of Directors, outsources
analysis and evaluation of the responses to outside parties, and reports the findings to the Board of Directors. While operation of theBoard of Directors has been evaluated to be generally appropriate
overall, the company recognizes the need to deepen discussions
concerning medium- to long-term management strategies and thediversity of the Board of Directors. It will focus on initiatives toward improvements and will continue to study measures aimed at enhancing
the effectiveness of the Board of Directors.
Skills expected of directors
Corporate management

Global businessResearch, development,
and manufacturing

IT and digital

Legal affairs andrisk management

Mikio
ToyodaRepresentative
Director
President and
CEO

●

●

●

●

●

Takao
Shimizu

Director
SeniorExecutive
Officer

●

●

●

●

AkihikoNishiguchi

Director
SeniorExecutive
Officer●●

ManabuMatsuoka

Director
Managing
Executive
Officers●●

Tatsuyoshi
Yoshiike

OutsideDirector●●

Kazuo Ikuta

OutsideDirector●●

Yukinobu
Miki

OutsideDirector●●●

Finance and accounting

Job title

Sales and marketing

Name

●

●

●

●

●

●

●

●

Auditors receive basic compensation only in light of their duties,
with no performance-linked compensation or stock-based compensation. The amount of basic compensation for an individual auditor
is determined through deliberation with the auditor, comprehensively
taking into account the content, volume, difficulty, etc. of the auditor’s
duties.

●* The top four skills expected of each director (excluding the representative director)

CHINO Report 2023

36

Corporate Governance

Basic policy on information disclosure■	Silent period
To prevent leaks of financial results information and ensure impartial-■	Fundamental approach

ity, the company observes a silent period from the day following theclosing date of financial results until the release date of said results.

To build long-term relationships of trust with shareholders, investors,

During this period, the company refrains from responding to or com-and other stakeholders, we strive for prompt, accurate, and impartial

menting on questions concerning financial results. However, if it be-disclosure of important information about the company.

comes clear that the performance forecast could change significantly
during the silent period, we will appropriately disclose information in■	Standards for information disclosure
We conduct prompt disclosure of information on the basis of transparency, impartiality, and continuity, in accordance with laws and reg-accordance with rules for disclosure.

Dividend policy

ulations such as the Financial Instruments and Exchange Act and with
the Rules on Timely Disclosure of Corporate Information by Issuers

The company views the return of profits to shareholders as a keyof Listed Securities within the securities listing regulations set forth

management policy. With the aim of enhancing its corporate value,by the Tokyo Stock Exchange (hereinafter “timely disclosure rules”).

the company stably and continuously pays dividends with a consoli-

In cases in which information does not fall under laws, regulations,

dated dividend payout ratio of 30% as a guideline, under a basic poli-or the timely disclosure rules, to the extent possible we actively andcy of balanced distribution of earned profits toward strategic business

impartially disclose information deemed to be important or beneficial

investments and shareholder returns and based on the maintenanceto shareholders and investors.

of medium- to long-term financial soundness.
We also flexibly consider and implement the acquisition and can-■	Methods of information disclosure

cellation of treasury stock from the standpoint of enhancing capitalefficiency.

Disclosure of information falling under the timely disclosure rules isperformed in accordance with said rules through the Timely Disclosure network (TDnet) system provided by the Tokyo Stock Exchange.
The released information is also promptly posted on our company

Communication with shareholders
and investors

website. Information that does not fall under the timely disclosurerules or other rules but is considered to have an impact on investment

In addition to financial results briefings for institutional investors anddecisions is widely disclosed through posting on our website or otheranalysts held twice a year (with 63 participants in FY2022), the com-means, in line with the purposes of timely disclosure.

pany holds individual IR meetings as required throughout the year (19meetings in FY2022). At the financial results briefing held on June 20,■	Disclosure of information to third parties andperformance forecasts by third parties

2023, the company offered a financial results summary for FY2022
and discussed the state of its progress during the second year of theMedium-Term Management Plan (FY2021 to FY2026) and its future

We perform disclosure in accordance with fair disclosure rules based

management strategies. We will work to enhance our corporate valueon the revised Financial Instruments and Exchange Act of 2017. We

through constructive dialogue with investors to aid investors’ under-

make no endorsement of comments, evaluations, performance fore-

standing of our initiatives and technological capabilities.

casts, etc. by third parties regarding the company.

■	Outlook for the future
Other than information concerning past or current facts, disclosed information represents forward-looking prospects grounded in information held by the company at the time of disclosure and in judgments
based on certain assumptions deemed reasonable. Accordingly,
actual performance, etc. may vary due to elements of uncertainty
including economic conditions and market trends, and results may
differ from disclosed forecasts of performance, etc.

Financial results briefing for institutional investors held in June 2023

37

CHINO Report 2023

Sustainability and ESG

ComplianceFundamental approach
Our company recognizes that the establishment of compliance forms
the basis of CSR management and is crucial to enhancing the trustof all of our stakeholders. We will continue initiatives aimed at awareness-raising and at everyday practice of compliance by all executives
and employees.

Responding to anti-social forces
In light of government guidelines and local government ordinances,
the CHINO Business Code of Conduct clearly states that we takea resolute stance in blocking any relationship with antisocial forces.
We regularly make efforts to collect information from police-related
agencies and other parties, and have constructed a structure for appropriately dealing with any incidents in close cooperation with policeand general counsel.

Compliance promotion structure
Our company has established a Compliance Committee, chaired by
the executive in charge of corporate ethics appointed by the President. Composed of members representing departments acrossthe company, the Compliance Committee engages in deliberation,
monitoring, and instruction concerning compliance activity policy andexecution plans for the group overall, in regular and extraordinary
meetings.
The Sustainability Planning Office is charged with development of
a compliance stance and promotion of initiatives, including communication of information to executives and employees and making consultation and whistleblowing desks widely known.
Compliance promotion structureInternal reporting system
To prevent, detect, and resolve violations at an early stage, we believein the importance of preparing and appropriately operating mechanisms that allow executives and employees to candidly and unhesitatingly raise questions and concerns involving corporate ethics andlegal compliance. Accordingly, we have established an internal reporting system that lets executives and employees safely provide information and seek relief through routes outside the job position structure.
Specifically, along with internal desks for reporting and consultation, we have set up external desks for contacting attorneys and aremaking efforts toward prompt resolution of issues while ensuring theprotection of persons who report and request consultation, basedon our Internal Reporting Regulations. The contents of reports are

Board of Directors
Audit

ReportingPresident
Instruction

reported to the Compliance Committee, which investigates cases inaccordance with the regulations. We strictly ensure the anonymity of
persons who make reports and seek consultation, and ensure thatthey face no disadvantage for doing so. When a compliance violation

ReportingCompliance Committee
Chair: Executive in charge of corporate ethics
Members: Representatives of departments
Secretariat: Department in charge of compliance
Raising of compliance awarenessMonitoring of compliance measures, etc.
Company departments

Compliance promotion activities
We have created the CHINO CORPORATION Business Code of Conduct as a guideline for basic conduct by executives and employees. Its
content is summarized in the compact Compliance Handbook booklet,

has been recognized, we take necessary corrective measures suchas improvement of the work environment and disciplinary actions
based our employment rules. We incorporate the measures in theselection of themes for compliance education and connect this toinitiatives to prevent problems.
Follow-up on internal reports
Compliance Committee
Investigation of events related to reporting;deliberation on response
Direction

Reporting

Reporting desk
In-house desk
(Department in chargeof compliance)

External desk
(Attorneys)

Response

Reporting/Consultation

which is distributed to all executives and employees and is used in everyday work and in-house training.
To ensure compliance with the Code of Conduct, we regularly con-

Whistleblower/Consulting party

duct compliance training for all executives and employees. We also engage in repeated efforts to raise awareness of corporate ethics throughopportunities such as new employee training and hierarchy-specifictraining.

CHINO Report 2023

38

Risk Management
Fundamental approach

Addressing disaster risk (BCP)

We view the proper recognition of risks surrounding the group andTo respond to emergency situations, we have formulated a businessappropriate risk response as among the most important items incontinuity plan (BCP) and have built a structure for fulfilling our respon-

management. To comprehensively understand risks that impede

sibilities to our customers and society through the quick restoration of

normal business operations, prevent the emergence of risks, andour business, with human lives as our highest priority. During normal

minimize losses should risks manifest, we strive to practice compa-

conditions, we engage in actions including clarification of standards

ny-wide effective risk management based on our Risk Managementof conduct and division of roles in the event of disaster, construction

Basic Policy.

of safety confirmation systems, backup of data, seismic reinforcement and inspection of buildings and equipment, regular drills, replenishment of food, drinking water, and other disaster supplies, andRisk management structure andinitiatives

confirmation of flood hazard maps and volcanic ash maps at all sites.

To centrally manage overall risk and engage in organized response,

Initiatives for information security

we have established a Risk Management Committee overseen by the
President and based on our Risk Management Regulations. We for-To prevent incidents such as leaks of personal information, informa-

mulate operating policy, plans, and measures for company-wide risktion on customers and business partners, and all information handledmanagement and identify and evaluate various risks in our businessin our business processes, we have established the Information Se-

activities. We designate those risks with a high degree of impact on

curity Basic Policy and engage in company-wide information security

management and high probability of occurrence as priority manage-

measures and risk management. While making efforts toward educa-

ment risks. The Risk Management Committee, which meets regularly,

tion to ensure information security for all employees, we are perform-

receives reports from staff in charge of departments, assesses theing necessary environmental enhancements to further strengthen our

status of risk control, and carries out PDCA for risk management byfunctions for detection and defense against cyber attacks.

studying and giving instructions on necessary measures and by monitoring progress and effectiveness. The Internal Audit Office verifies theproper performance of risk management by checking departments’risk management status through regular audits.

Risk management structure diagram

Board of Directors

Reporting

ReportingPresident
Management Conference
Deliberation on risk response policy/planning

Risk Management Committee

ReportingMonitoring

Divisional risk managers
Factories, branches, sales headquarters, headquarters,
centers (departments/offices), group companies

39

CHINO Report 2023

Audit

Internal Audit OfficeSustainability and ESG

Business and other risks
We identify risks that could affect the group’s financial condition, business results, and cash flow status as follows, and work to reducerisks through countermeasures.

Risk item(1) Deteriorationof businessconditions(2) Exchange rate
fluctuations(3) Geopolitical risks

Overview of risk

Countermeasures

The risk that significant decline in capital
investment occurs in the domestic manufacturingindustry due to deterioration of businessconditions.
The risk that decline in competitiveness occurs
due to significant exchange rate fluctuations(appreciation of the yen), or that the group’sbusiness results are impacted by yen conversion
when preparing consolidated financial statements.
The risk that business activities become
constrained and costs becoome incurred in
response to terrorism, conflicts, deteriorationof the political and economic situation, etc. in
countries and regions where we conduct business.

In addition to working to develop and expand growthareas, we will make efforts including strengthening
overseas businesses to lessen dependence on domestic
revenue.

(4) Competition withother companies

The risk that competition on quality, performance,
price, etc. with other companies will squeeze
profit.

(5) Procurement ofmaterials, parts,
etc.

The risk that tightness and delays in the supplyof semiconductors and other materials andcomponents occurs, and that purchase prices
rise.

(6) Product liability

The risk that costs, compensation to customers,
etc. are incurred in the event of a serious event
related to product quality.

(7) Securing, hiring,and training
human resources(8) Information
security(9) Deterioration ofbusiness partners’
financial situation(10) Pandemic(11) Natural disasters

The risk that our business activities are impeded
if necessary human resources are not sufficiently
secured and developed due to changes in thebusiness environment, etc.
The risk that social trust in our company declines
due to unexpected failures in information systems
supporting our business activities, unusual
unauthorized access, infection by computerviruses, etc.
The risk that significant deterioration in thefinancial situation of business partners, delay in thecollection of accounts receivable, and impact on
the group’s business results and cash flow occur.
The risk that stagnation in domestic and overseas
production and sales activities occurs due to therepeat spread of COVID-19 or the spread of otherinfectious diseases.
The risk that damage to production equipment,
and impediment of factory operations and supply
to customers, occur due to natural disasters suchas major earthquakes and typhoons.

In foreign currency-denominated transactions, we will
reduce the risk of rate fluctuations through exchange
forward contracts while keeping a close watch on
economic trends.

We will continually share information with overseas groupcompanies and engage in appropriate monitoring.
We will undertake active budgetary measures for researchand development, mainly in growth areas, and will strive
to maintain and enhance our competitiveness by means
including securing intellectual property rights centered on
our core technologies.
We will strive for stable raw material procurement throughmeans including the securing of multiple suppliers,
consideration of alternative components and materials,
and global procurement.
In the manufacture of products, we will conduct productevaluation testing, design reviews (DRs), pre-shipment
inspections, acceptance inspections, and other actions forthe maintenance and enhancement of product quality.
We will actively engage in recruiting visits to universities
in Japan, employment seminars, internship programs,
and other measures, and will work to expand specialized
human resources through mid-career hiring.
We will protect confidential and personal information,
develop systems for the proper management of said
information in business activities, implement security
measures, and conduct regular training for employees toprotect against incidents.
We will thoroughly monitor the business status and credit
status of business partners and will engage in flexible
credit management based on the situation.
While enforcing measures to prevent infection during
normal conditions, we will develop work systems such as
work from home and staggered working hours, as well as
response manuals in the event of pandemic.
We will strive to minimize impacts and effect recovery
as quickly as possible through means including theformulation of BCP, enhancement of seismic resistance inbuildings and equipment, regular training, and stockpilingof food and drinking water.

CHINO Report 2023

40

Risk Management

Information disclosure based on
TCFD recommendations■	Basic approach to addressing the climate change
problem
The CHINO Group recognizes climate change as a highest-priority issue in sustainability management. Through collaboration with a wide
range of stakeholders, we are working to appropriately respond to therisks posed by climate change and to capture growth opportunities
so that we can contribute to the decarbonized society envisioned in
the long-term goals of the SDGs and the Paris Agreement.
In recognition of the importance of climate change-related information disclosure, in May 2022 our group endorsed the TCFD recommendations. We will take this as an opportunity to further strengthen
our analyses of the risks and opportunities that climate change poses
to our business, and will enrich our information disclosure in line with
the TCFD recommendations.

■	Information disclosure in line with the TCFD
recommendations
1. GovernanceWe established the Sustainability Promotion Council in January 2022.
Chaired by the President, this organization examines and deliberates
on basic policy and key measures concerning sustainability management. The council communicates to all members of top management
the message that addressing climate change is a highest-priority issue (materiality) in sustainability management, and formulates related action plans and reviews their progress. As an organization thatengages in “middle-up” study and recommendations concerning theissue, we also established the Decarbonization Project charged withmarketing and solution proposals for the decarbonization market, as

well as the CSR Promotion Project charged with deepening businessactivities involving materiality, with a focus on addressing climatechange.
The Board of Directors receives reports on matters discussed in
the Sustainability Promotion Council and supervises its basic policies
and key measures.
(See p. 43 for details of our sustainability promotion system)

2. Strategy
Our group recognizes the risks and opportunities associated withclimate change as among the most important elements in our business strategy. We are identifying risks and opportunities under the“2°C or lower” scenario, and are studying and formulating appropriate
countermeasures.
As a result of our studies, as risks that will have particularly major
impacts on our business activities, we assume increased manufacturing costs due to the introduction of carbon pricing (carbon tax) andrising prices as transition risks, and assume shutdown or slowdown
of supply chains, including our own sites, due to intensification ofabnormal weather as physical risks.
At the same time, we view movements toward a decarbonized society, particularly advances in hydrogen utilization, the shift to electric
mobility, the expansion of demand for renewable energy, and otheroccurrences as opportunities to leverage our group’s technologies tosolve problems and expand sales.
As quantitative evaluation of financial impacts on our business isdifficult at present, we qualitatively assess impacts at three levels:
large, medium, and small. Looking ahead, by strengthening our ability
to respond to risks and opportunities associated with climate change
and by enhancing precision in financial impact assessment throughongoing scenario analyses, we will work to enhance the level of ourgroup’s sustainability management.

Major risks and opportunities, and our company’s response policy
Major risks and opportunities

Increased manufacturing costs due to price increases andintroduction of carbon taxes, etc.

Degree ofimpact on
business
and finance

Large

Opportunities

Risks

Reinforcement of policies for GHG emissions reduction
Shutdown of operations due to intensification of abnormal
weather and interruption of raw material supply networks

Time axis

Monitoring of carbon pricing policy trends

Long term

Introduction and expansion of renewable energy

Medium term

Upgrading to energy-saving, efficient manufacturing equipment

Long term

Enhancement of BCP measures in preparation for disasters

Medium term

Strengthening of procurement and logistics measures

Short term
Medium term

Increased procurement costs due to switch to environmentallyconsiderate raw materials

MediumShift to energy conservation and lower costs throughenvironmentally considerate design and improvement of production
processes

Loss of trust from stakeholders due to delayed initiatives toreduce emissions

Small

Promotion of carbon neutrality in line with Roadmap

Long term

Advances in customer companies’ technologies and productdevelopment aimed at realizing a hydrogen-based society

Large

Development of technologies and solutions that contribute toadvancement of hydrogen utilization technologies (manufacturing,storage, transportation, utilization), and development of newmarkets

Long term

Progress toward electrification in mobility-related industries

Large

Development of specialized products and systems that capture
customer needs

Medium term

MediumDevelopment of related technologies and solutions, and newmarket development

Progress toward making renewable energy a main strength
Increase in energy conservation needs

41

Large

Our company’s response policy

CHINO Report 2023

Long term
Medium termSustainability and ESG

3. Risk management

4. Indicators and targets

Our group has established a Risk Management Committee as a bodyoverseeing risk management. Chaired by the President, the Risk
Management Committee continuously identifies and evaluates environmental issues and company-wide business risks and formulates
risk response policies. It determines measures to address prioritized
key risks and monitors the measures’ progress.
Key risks that involve climate change are discussed in greater detailin the Sustainability Promotion Council based on particulars of thetime axis and scale, and are incorporated into action plans. Related
progress is shared with the Risk Management Committee and is reported to the Board of Directors.

For Scope 1 and 2 emissions, we have set medium- to long-term targets including “effectively zero GHG emissions in FY2026” and “fully
zero GHG emissions in FY2040,” and are advancing initiatives towardachieving those targets.
In specific initiatives, by July 2022 we had converted electric powerpurchased by the head office and major domestic production sites
to 100% renewable energy sources. We expect this action to reducegreenhouse gas emissions by 70% and about 2,300 tons per year
compared to FY2020.
Looking ahead, we will actively work toward the formulation of indicators and targets and toward data collection and reduction measures for Scope 3 emissions (GHG emissions encompassing the entire supply chain related to our business activities) for our entire group,
including consolidated subsidiaries.

Roadmap for carbon neutrality in our business activities (actual values and target values for GHG emissions)(t-CO2)
3,000

2,500

Scope 1, 2

Scope 1, 2

Scope 1, 2

70% reduction

90% reduction

100% reduction

Scope 2
Jul. 2022
Completion of
introduction ofrenewable energy
at the head officeand domestic
production sites

Scope 2
100% renewableenergy at all sites,
including offices(compared to FY2020)

GHG emissions

2,000

1,500

(compared to FY2020)(compared to FY2020)

Scope 2
Domestic groupcompanies:
100% renewableenergy

1,000

500

0
0

2020

2021

2022
Scope 1

Scope 2

……

2026

2030

2040

(FY)

Scope 1, 2

CHINO Report 2023

42

Sustainability Management
Basic Sustainability Policy
Based on our corporate philosophy of pushing the limits of measurement, control, and monitoring technologies and contributing to the

Sustainability promotion structure
Sustainability Promotion Structural Diagram

advance of industry and the realization of tomorrow’s society, theCHINO Group strives to engage with our varied stakeholders, while

Board of Directors

Chair● President

contributing to the realization of a sustainable society through ourbusiness activities and realizing sustainable growth and enhancement

Members
Executive officers (Executive Managers of
Headquarters, General Managers of Factories)● Decarbonization Project Leader● CSR Promotion Project Leader● Managers in charge of related departments●

Presidentof corporate value for ourselves.

Priority issue areas
Contribution to solving global environmental
and energy problems
In all processes of our business activities, we will contribute to the realization of a decarbonized society by reducing CO2 emissions, promoting the reduction and reuse ofwastes, and protecting biodiversity, as well as by providing
products and solutions that solve environmental problems.

Coexistence and shared prosperity with all
stakeholders
While striving for accurate and clear disclosure of information, we will strengthen bonds of mutual trust under respectfor dialogue with customers, business partners, employees, shareholders, investors, local communities, and all
stakeholders, and will cooperate in solving social issues.

Practice of sincere and fair corporate activities
By engaging in sincere and fair corporate activities throughthe enhancement of corporate governance, strict compliance with all laws, ordinances, and regulations, and thestrengthening of risk management, we will realize management that earns strong trust from society.

Providing peace of mind and excitement throughdistinctive technology
We will accurately capture change and supply safe,
high-quality products and services that offer strengths andmeet the needs of the market. Together with this, we will
strive to appropriately provide information about our products to ensure greater satisfaction and excitement for customers.

Management
Conference
Executive
Officer’s Meeting

Sustainability Promotion Council
Human Resources andOrganizational Development
Committee

Decarbonization
Project

CSR Promotion
Project

Head office and divisions/Group companies■ Sustainability Promotion Council
In December 2021, we established a Sustainability Promotion Council
chaired by the President.
This council formulates policies concerning the sustainability activities of the group as a whole, deliberates on directions, and monitors
the status of initiatives.

■ Sustainability Planning Office
We established the Sustainability Planning Office within the Business
Management Headquarters on April 1, 2023 to advance sustainability
management and promote further company-wide initiatives.

■	Human Resources and Organizational Development
Committee (p. 53)■ Decarbonization Project TeamTo engage in marketing aimed at the decarbonization market andprovide new products and services aimed at solving related issues,
we established the Decarbonization Project Team in February 2021.
By contributing to the realization of a sustainable society throughour group’s technologies, we will carry out our social responsibilities
and achieve sustainable growth.

■ CSR Promotion Project TeamTo raise awareness of sustainability among all employees and accelerate activities, we established the CSR Promotion Project Teamin May 2021. This company-wide organization consists of about 20
members gathered from different departments to engage in CSR
activities and awareness-raising activities at individual sites and departments. It also deliberates on draft proposals for the updating ofpriority sustainability issues (materialities) and the setting of specificindicators.

43

CHINO Report 2023

Sustainability and ESG

Involvement with stakeholders

Internally instilling sustainability

To achieve sustainable growth, a company must fulfill its corporate

In the promotion of sustainability management, it is important that allsocial responsibilities toward varied stakeholders, along with protec-

employees engage in business activities with an understanding andtion of nature and the environment. Through our business activities,

constant awareness of policies and the thinking behind them.

our group will strive for coexistence with society by actively meetingthe expectations and demands of stakeholders.

Inside the group, we engage in activities including briefings, regular
informational publications, and real-time information communicationon our internal portal site.

CSR training and briefings

Stakeholder Relational Diagram
Stakeholders

CSR activity policy

Customers

Recognizing thechallenges that ourcustomers face, we
provide safe, valuable
products andservices.

Shareholders
and investors

We practice fairand equitable
management, stably
and continuously
return profits, andactively disclose
accurate informationon the company.

Employees

We ensure safe
work environments
and actively provide
opportunities forall employees toenhance theircapabilities.

Local
communities

As a member ofsociety, we actively
respond to the
expectations of
the communities inwhich we engage inbusiness.

Business
partners

We maintain positive
relationships withbusiness partners
and engage in fairand impartial dealings
aimed at sustainableprocurement.

Local
government
and industry
associations

We engage in CSR
activities throughcollaboration withlocal government
and partnerships withindustry associations.

Opportunities forcommunication

We conduct internal training to deepen understanding of sustainability at all levels and to accelerate related initiatives.

Opportunities
for routine
transactions● Exhibitions● Customer ProductConsultation Office● nnual generalA
meeting of shareholders● Share holder
networking events● Business reports●

 ierarchy- andHfunction-specifictraining● Occupational
Health and Safety
Committee●

Scene from new employee training in FY2023

Publication of “CSR Communication” (once a month) pening ofO
Biotope● Hands-onclassrooms● Workplace
experiencelearning●

Opportunities
for routine
transactions
enabling sharedprosperity● Meetings withmaterials business
partners●

Operation of internal portal siteParticipationin campaigns
for exclusion ofantisocial forces● Participationin outsideorganizations●

CHINO Report 2023

44

Environmental Initiatives
Fundamental approach
Our company complies with ISO14001:2015 requirements incorporated into our Integrated Management System (IMS). Moreover, in response to the six Environmental Policies set by top management andto the current fiscal year’s management measure of “promoting CSR
management on the basis of specific targets for management issues
such as fulfillment of social responsibilities and social contribution inorder to further enhance corporate value,” we will engage in activities
under an awareness by all employees of how our corporate activities
can directly and indirectly contribute to the international community’s
shared goals for the global environment (the SDGs).

Environmental policy
1 Prevention of global warming	We will work to reduce greenhouse gases through energy conservation and through promotion of the use ofrenewable energy

2 Promotion of environmental innovation
	We will work to promote environmentally sound industries through the provision of temperature solutions

3 Effective utilization of resources	We will work to enhance resource productivity throughgreen procurement and through 3R (Reduce, Reuse,
Recycle) initiatives

4 Coexistence with nature	We will strive for conservation of biodiversity throughprotection of water, soil, and atmosphere and throughrestoration of ecosystems

5 Harmony with communities
	We will strive for contribution to the sustainable development of society through community and social contribution activities

6 Compliance and improvement
	We will strive to lessen our global environmental impacts
through compliance with environmental laws and regulations and through continuous improvement of our environmental management system

Environmental activity policy
To make all employees aware of the environmental policy set out by
top management, our management measure for the current fiscal
year, and the environmental indicators set on the basis of those, wepost said information on our internal document management system
and in workplaces as “policy rollout,” and engage in monitoring ofroutine business activities and of the PDCA cycle.

45

CHINO Report 2023

Priority issues and countermeasures■	Reduction of GHG emissions (Scope 1 and 2) andelectric power conservation
To reduce GHG emissions generated by our business activities, weare advancing initiatives aimed at our target of fully zero Scope 1 and2 emissions in 2040.
As an initiative completed by 2022, we switched to the use of renewable energy sources for all purchased electricity at major domestic sites (see p. 42).
We are also promoting energy conservation at factories and production facilities and will begin reducing non-electric power as well toaccelerate our initiatives toward carbon neutrality.

■	Reduction of waste (zero emissions)
Under a definition of zero emissions as “final disposal rate (final disposal volume / total amount of generated waste, etc.) of 1% or lower,”
our company engages in recycling and activities to reduce the final
disposal volume of waste.
To achieve our target, we are working toward efficient use of resources, conservation of resources in manufacturing and shipping
packaging processes, and control of waste generation at sites
through means such as the reuse of transport packaging boxes withbusiness partners and the collection and recycling of uniforms.
As a result of these activities, our final disposal rate in FY2022 was
1.45%.

■	Rate of management response to chemical
substances contained in products
Our company strives to collect information about chemical substances to meet domestic and foreign environmental laws and regulations.
To ensure safe and confident use of products by customers, we
determine substances to be managed, register and manage product-related chemical substance information in specialized databases
in design review meetings at the design and development stage, andprovide information matched to customer needs.

■	Rate of requests for Green Procurement Guidelines
from major business partners
We work to make our Green Procurement Guidelines understood bymajor business partners, and will conduct material procurement activities under a strengthened structure for cooperation with business
partners.

Sustainability and ESG

Environmental initiatives andachievements■	Co-existence with nature: Conservation of biodiversity■	Installation of solar power generation system◦ Collaborative biotope monitoring survey with the Laboratory of En-

We installed solar power generation systems at the Yamagata Factoryin 2013 (capacity: 732 kWh) and the Fujioka Factory in 2014 (capacity: 40 kWh). These contribute to the reduction of about 260 tons ofgreenhouse gas emissions per year.

Promotion of regeneration of community forest-side landscapes and conservation of biodiversity through the CHINO
Biotope Forest (p. 49-50)
vironmental Chemistry, Gunma University◦ Planting of native species and protection of the slender bitterling, anatural monument of Fujioka■	Harmony with communities: Community andsocial contribution
Promotion of regional contribution and cooperation with local
government bodies, etc.
Fujioka Factory◦ Provision of opportunities for environmental education using the

CHINO Biotope Forest as a “venue for experiential opportunities
in environmental education, etc. (Prefectural Certification No. 1)” in
Gunma Prefecture◦ Support for local youth baseball team and junior tennis club by
opening our baseball field and tennis courts
System installed at Yamagata Factory in 2013 (capacity: 732 kWh)Yamagata Factory◦ Participation in the Yamagata Sun and Forest Association using thenational J-Credit Scheme, and purchase of 250 t-CO2 environmental value in FY2022◦ Permanent exhibit at the Yamagata Museum of Science and Industry■	Compliance and improvement(1) Compliance with environmental laws and regulations
Proper compliance with no violations(2) RoHS compliance for products
RoHS2 compliance for all target products(3) Green procurement
System installed at Fujioka Factory in 2014 (capacity: 40 kWh)

Confirmation of non-use of prohibited chemicals in the CHINO
Green Procurement Standards

Output of our solar power generation systems (cumulative)(MWh)
10,000447.999,000
402.688,000

348.937,000

295.076,000

241.195,000

186.054,000

133.078642.117783.30
6936.67

6111.18
5186.964278.39
2,000
26.80
3410.172515.89
1,000
1556.00
690.59

3,000

0

79.63

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (FY)Yamagata Factory

Fujioka Factory

CHINO Report 2023

46

Environmental Initiatives

Prevention of global warming■ Reduction of greenhouse gas (GHG) emissions

GHG emissions (Scope 1+2)

To contribute to the sustainability of the global environment, we monitor and work to reduce emissions of greenhouse gases (GHGs) thatcause global warming.
As a result of initiatives through FY2022, we have converted electric
power at our major domestic production sites (Fujioka Factory, Kuki
Factory, and Yamagata Factory) and the head office to renewable energy sources, reducing emissions by 83.0% (about 2,250 tons peryear) compared to 2020.

(t-CO2)
3,500
3,000
2,500
2,000

2,710
261

1,500
1,000

1,887
266

2,449

265 461

1,621

500
0

83.0% reduction
compared with FY2020(approx. 2,250 t
annually)

196

2020

2021

2022

Scope 1

Scope 2(FY)

Scope 1 (direct emissions of GHGs associated with the use of fuel)Results in FY2022
Fuel usage

Head office

Branches and offices

Fujioka

Kuki

Yamagata

Gasoline (kl)

94.31

0.13

79.44

12.39

1.10

1.25

LPG (t)

12.93

0.00

0.00

0.39

0.04

12.50

Kerosene (kl)

2.35

0.00

0.00

0.00

0.43

1.92

Diesel oil (kl)

0.10

0.00

0.00

0.00

0.00

0.10

265.080.31

184.38

31.29

3.69

45.41

GHG emissions (t-CO2)

Scope 2 (indirect emissions of GHGs associated with the use of electricity)
Head office

Branches and offices

Fujioka

Kuki

Yamagata

Electric power usage (MWh)Results in FY2022
5,320.18

620.22

143.12

1,554.59

1,344.45

1,657.90

includedrenewableenergy4,882.57

620.2224.16

1,235.94

1,344.45

1,657.90

included nonrenewableenergy437.610.00

118.96318.650.00

0.00

Renewable energy rate

91.8%

100.0%

16.9%

79.5%

100.0%

100.0%

GHG emissions (t-CO2)

196.30

0.00

55.77

140.530.00

0.00

Head office

Branches and offices

Fujioka

Kuki

Yamagata

0.31

240.15171.82

3.69

45.41

Scope 1+2
Results in FY2022
GHG emissions (t-CO2)

461.38

Scope 3 (indirect emissions other than Scope 2)
We are working to build a data collection system for Scope 3 emissions.
For combined Scope 1 and 2 emissions, we will make active efforts for the reduction of GHG emissions throughout the supply chain.

■ Prevention of fluorocarbon leaks
We continue the proper use and monitoring of equipment using fluorocarbons.

Results in FY2022
Calculated leak amount (t-CO2)

47

CHINO Report 2023

0.0

Head office

Branchesand offices

Fujioka

Kuki

Yamagata

0.0

0.0

0.0

0.0

0.0

Sustainability and ESG

Material balance dataINPUT

OUTPUT

Total energy input (GJ)

53,040461

Electricity (MWh)5,320.2

Gasoline (kl)94.3

Fujioka site

Emissions (t)LPG (t)12.9

Kuki site

Recycling amount (t)91Kerosene (kl)

2.4

Yamagata site

Final disposal amount (t)1.3Diesel oil (kl)

0.1

Amount of valuables (t)46.4Energy-derived CO2 emissions (t-CO2)

Business activities

Waste volume

Head office, office sites

92.4

Waste reduction
Control and monitoring of waste emissions, and final disposal volume; monitoring of recycling rate
Results in FY2022

Head office

Branches and offices

Fujioka

Kuki

Yamagata

92,368

9,606

3,976

23,15921,531

34,097

Final disposal amount (kg)

1,344

259

242

0

30

813

Recycling amount (kg)91,025

9,347

3,734

23,15921,50133,284Emissions (kg)Amount of valuables (kg)46,390945

045,300145

0Industrial waste recycling rate

99.8%

100.0%

100.0%

100.0%

99.2%

100.0%

General waste recycling rate

93.3%

91.1%

93.9%

100.0%

ー*

88.3%

Final disposition rate

1.45%

* General waste at the Kuki Factory is included in aggregated industrial waste.

Monitoring of water resource usage
Results in FY2022
Water usage (m3)3Clean water (m )3Ground water (m )Head office

Branches and offices

Fujioka

Kuki

Yamagata

39,9191,728

ー*

32,288

2,460

3,443

8,641

1,728

ー

2,795

2,460

2,136

30,8000ー29,4930

1,307* Branches and offices are excluded from measurement due to trace amounts.

CHINO Report 2023

48

CHINO Biotope Forest
A symbol of nature, coexistence with living things, and communication withlocal communities
Overview of CHINO Biotope Forest

We also take part in Community School, an initiative that support
children’s learning in the local community. Employees from our company conduct classes at elementary schools, offering opportunities

As a symbol of our initiatives toward biodiversity and protection

for students to take an interest in environmental learning at the bio-of the natural environment, we developed a biotope within the Fu-

tope and furthering cooperation with schools.

jioka Factory to serve as a base for communication with the local
community.
We prepared forest containing sawtooth oak, jolcham oak, bam-■	A place for communication among employees

boo-leaf oak, and other mixed woods on a site of about 11,000 m2,

In principle, we do not bring living things from outside into the bio-

creating water areas including ponds and streams and forming hills

tope, and leave changes in living things to the transitions of nature.

and valleys. Now, 12 years after opening, the site is inhabited by

However, removal of prolific non-native species must be carried out

diverse living things.

at the right time, a task that we perform on the basis of continuous

We regularly open the site to the public during the seasons formonitoring surveys.

cherry blossoms, peak hydrangea viewing, and fall foliage. The

Recently, we removed non-native freshwater shrimp that posed aforest is enjoyed by nearby residents throughout the four seasons.

risk of proliferating and preying on killifish eggs. About 30 employeesWith the cooperation of Gunma University and conservationand their families took part in the work, which provided an opportunity

organizations, we are also working to protect living things in theto think about environmental issues.

biotope including the slender bitterling, fringed water lily, and sa-

The Fujioka Factory conducts biotope training for new employees,

sabamo (Potamogeton malaianus), which have nearly disappeared

walking as a group through the forest for a day to equip employees

from the area. Through this action, the biotope plays a vital role aswith the ability to speak about the biotope.

a place for the conservation of living things in the region.

New employees then leverage the knowledge gained in training

Through the biotope, we will continue such efforts that value

to serve as environmental learning guides for elementary school stu-

connection with the local community and will contribute to thedents. This deepens understanding of the biotope and offers an op-

sustainability of society as a whole.

portunity for thinking about environmental problems and social contribution as personally relevant matters.

Biotope training for new employees

Utilization of the Biotope Forest■	A place for connecting with the community andfor children to learn about the environment

From the biotope creation stage onward, we have conducted flora
monitoring surveys in collaboration with Gunma University.

About 100 children from a local elementary school visit the biotope

In the FY2022 survey, we confirmed 152 species growing in thefour times a year to learn about seasonal changes in the natural en-

biotope forest, including 110 native and 42 non-native species. The

vironment. We teach them through activities such as authentic com-naturalization rate, which indicates the percentage of exotic species

mentary on insects by outside experts and guided tours, exploration

within the total number, is about 27.6%.

quizzes, and other nature games that make learning fun.

From 2021 to 2022, we also conducted a survey of 597 trees withSince 2019, these activities have been incorporated into the annuala height of 3 meters or more, measuring height and trunk circumfer-

event schedule of the school and areence. The survey found a maximum height of 21.4 m and maximum

annual events for 4th grade students.

trunk circumference of 44.0 cm, numbers 1.7 times and 1.5 times

Last year, 1st and 2nd grade stu-

We will continue to regularly conduct the surveys and will further

ing acorns and making a biotope map.

utilize them as indicators for developing and managing the biotope.

ing tailored to students’ ages.
A scene from nature games

CHINO Report 2023

larger, respectively, than in the survey conducted five years ago.

dents also visited the biotope, gatherThe forest serves as a stage for learn-49■	Continuation of environmental indicator surveys andenvironmental measurement using our products

Sustainability and ESG

Native and non-native species(species)
200

(%)
50

169

150

39

160
34

165
161
155 159 156
152
152
35 148
144
143
30
30
28
28
28
28
28
27
27

40
30

100
20
50

0

10

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Native species
Non-native species

0

(FY)

Naturalization ratio (percentage of non-native species)

In November 2022, the CHINO Biotope Forest was awarded the
Biodiversity Conservation Activity Award in the Sustainable Society
Creation Activity Awards sponsored by the Ministry of the Environment-backed Ecological Life and Culture Organization. This award
recognized our outstanding activities to conserve biodiversity and our

We use our own products and software to measure temperature

natural environment learning activities using the biotope, including

and humidity on the factory grounds, as well as temperature, groundjoint research with local universities and environmental learning withtemperature, water temperature, humidity, solar radiation, and otherlocal elementary schools. We will continue to undertake activities forvalues inside the biotope. The measured information is used as basic

the protection and conservation of a rich natural environment and will

data for growth analyses of the biotope in collaborative research with

contribute to the creation of a sustainable society in which the envi-

Gunma University.

ronment, economy, and society are integrated.

■	Future initiatives (the aims of the biotope)
The biotope is situated adjacent to a JR line, a national road, anda residential area, making expansion difficult. However, we view thelocation positively and are examining activities that involve the surrounding area.
Specifically, we are working on cultivating fragrant eupatorium, aplant favored by the chestnut tiger butterfly that migrates long distances in winter.
Fragrant eupatorium has long been known as one of the “sevenautumn herbs,” but is currently designated a near-threatened species. Working with Gunma University, we identified a growing area■	History of awards
November Ecological Life and Culture Organization
2022
Receipt of Commendation for Sustainable Societal Development
Activities (Biodiversity Conservation Activity Award)
October
2019

Minister of Economy, Trade and Industry
Receipt of METI Minister’s Award, Factory Greening Award
Programand received seeds, from which we are working to grow seedlings.
By distributing the cultivated seedlings to neighboring residents toform a corridor centered on the biotope, we hope to create a wide-area activity that will attract many chestnut tigers to the area as a migration point.

September Gunma Prefecture
2018
Certified as “venue for experiential opportunities in environmental education, etc.”
October
2016

Director, Kanto Bureau of Economy, Trade and Industry
Receipt of Kanto Bureau of Economy, Trade and Industry
Award for Outstanding Greening Factory, etc.

August2014

Kanto Regional Management Service Association/
Ecosystem Conservation Society-Japan
Selection among Kanto Water and Green Network 100
Selected Sites

November Chairman, Japan Greenery Research and Development Center2013
Receipt of Japan Greenery Research and Development Center Chairman’s Award for Outstanding Greening Factory, etc.

CHINO Report 2023

50

Customer Service—Stable product supply and appropriate information provision—
Strengthening of supply chain
management

cycle, we continually make revisions involving product requirements,
product improvements, catalogs, manuals, documentation, and soon, thereby ensuring safety and stable supply.

We engage in trusted transactions with the aim of mutual develop-■	Audits of cooperating companies

ment, based on fair transactions with materials suppliers in compli-

In our production activities, we always prioritize the stable provisionance with laws and regulations. As a component of this, we exchangeof products that satisfy customers. To do so, the components andinformation and create opportunities for two-way communication,materials that make up our products must be stable in terms of theirsuch as meetings with materials business partners. As an initiative

quality and delivery time from suppliers. Amid our numerous trans-

to minimize impacts on the environment, we request active coop-action activities, we conduct audits of materials business partners

eration with green procurement, which has come under increasing

to maintain and improve quality. We draft audit plans every year andattention in recent years, and request participation in environmentallywill continue quality activities aimed at 100% fulfillment of the plans.

considerate corporate activities. Looking ahead, we will view green
procurement, CSR procurement, and other aspects of supply chain
management as important activities for building environmental aware-

Communication with customers

ness, and will work to further strengthen management through the
stepwise construction of systems.

As an initiative to strengthen customer communication, we actively
stream webinars and take part in exhibitions. Through attentive in-

Supply chain: Diagram of the CHINO Integrated Management
Systemterview sessions with customers and wide-ranging product knowledge, we offer proposals that closely align to the needs of individual
customers. We will continue working to build trust through two-way
communication and will create products and services that add highCustomers

value for our customers.

Customer information

Quality Conference and Development Conference■	Participation in exhibitions
Thermotec 2022

Development
Environmentallyconsiderate design• Design Review
Committee• Design anddevelopment
regulations•

ProcurementGreenprocurement
standards• Purchasing
regulations formaterials, etc.
•

Manufacturing•

Manufacturingbusinessregulations

After-sales
service

Sales
Website,exhibitions• Call Center• Export control•

Calibration,
inspection• Call Center• Customer
satisfaction
surveys•

CHINO CORPORATION Integrated Management System (ISO9001/14001)

We exhibited equipment including radiation thermometers, thermal imaging
cameras,instrumentation

modules,and graphic recorders, and introduced
products and technologies that support conservation of energy and laborat industrial furnaces.

INTERPHEX Japan

Assurance of product quality andsafety, and stable supply

We introduced products and technologies related to temperature control
in pharmaceuticals distribution and totemperature mapping during storage.

To stably provide customers with products that offer assured highquality and safety, we are focusing on the following activities.

■	Customer satisfaction surveys

51

INTERMEASURE 2022
We exhibited sensors and equipment including recorders, con-

We take part in interview sessions with customers to discuss func-

trollers, wireless sensors, andtions, performance, quality, information, and support, and conduct

radiation thermometers in ourcompany-wide, production site-specific, and product-specific cus-booth, and exhibited water elec-

tomer satisfaction surveys. We express customer satisfaction survey

trolysis evaluation equipment,

findings in terms of degrees that we tackle as numerical targets forhydrogen sensors, and otherthe company as a whole, and hold internal quality conferences to

products aimed at realizing a hy-

provide feedback on the evaluated survey content and comments

drogen-based society in the BLUEDGE exhibit section that featured

received at call centers. Based on this and operating under the PDCA

four companies.

CHINO Report 2023

Sustainability and ESG

2nd GREEN FACTORY Expo

quality, etc.) and work to respond

We exhibited water electrolysis evalua-in accordance with customers’ re-tion equipment, FC evaluation holders,quests. In addition to solving cus-hydrogen gas sensors, paperless re-tomer issues, we will engage in DX

corders, and wireless power monitors,

such as strengthening system in-and introduced products and technol-

tegration with SFA and inter-ogies aimed at reducing environmental

nal data. By speeding up re-

impacts and conserving energy.

sponse and further expanding
customer points of contact,

FC EXPO 2023

we are working to enhance

We exhibited water electrolysis evalua-customer satisfaction.

tion equipment, reversible PEM evaluation equipment, FC evaluation holders,■	Continuous expansion of website content

hydrogen gas sensors, and wirelessTo promote relationship-building with our customers and stakehold-power monitors, and introduced prod-ers online, we conduct real-time communication of information on

ucts and technologies aimed at the

our website and in webinars. Enhancements to our website include:

production, transport, and storage of• Expansion of information on products and services

hydrogen and the development and• Regular disclosure of IR and sustainability activities

manufacture of fuel cells.

• Enhancement of visibility through the introduction of e-books andWebinar streaming from the head
office and Kumano-cho Studioother digital tools
To enhance convenience and strengthen our provision of useful information, we will make ongoing updates to the website and continuously enhance its content.

In the spring of 2023,
we streamed a we-■	Calibration service

binar on the topic of

Measurement is critical in manufacturing. In recent years, measure-“PID worth knowing”

ment related to safety and peace of mind has been further growing

to product custom-

in importance. To ensure the reliability of measurements, it is neces-

ers, registered e-mailsary to calibrate measuring instruments and demonstrate traceability

magazine recipients,

to national standards. Taking advantage of measurement know-how

and website users.

built up over years as a measuring instrument manufacturer, we offer

We will continue

inspection and calibration services that ensure that customers’ sen-streaming in response to customers’ needs.

sors and measuring instruments are always managed for accuracy
and can be operated in proper condition.

Full-fledged follow-up service
structure

Looking ahead, we will provide peace of mind and safety to customers through even more enhanced calibration services, and willcontribute to the sustainability of society overall by enabling longer
use of our products.

We have developed a variety of services and a full-fledged follow-up
structure for quickly addressing on-site problems, including inquiries
about product malfunction and repairs, to enhance customers’ peaceof mind following product delivery.

■	Customer Product Consultation Office (Call Center)
Our Call Center always strives to assist customers by responding tophone- and website-based inquiries under a motto of “quick, compact, and simple.”
The inquiries we receive from customers are diverse, spanning
product selection, confirmation of specifications, price inquiries, andrequests for consultation concerning trouble. We forward the information received to the relevant departments (sales, manufacturing,

CHINO Report 2023

52

Initiatives Toward Active Roles by Human
Capital
Fundamental approach
Industrial structures and the socioeconomy are undergoing remarkable change under the rapid advance of globalization, digitalization,and decarbonization. Our group regards such changes in social issues as opportunities for growth and expansion. Positioning markets
including hydrogen utilization technologies, semiconductors and electronic components, next-generation batteries, new materials, medical
drugs and food management, and logistics as key markets, we seek
to enhance our corporate value by addressing the realization of asafe, secure, and sustainable society. To achieve our business plans
and to hone the organizational resilience and the human resource
development that are the source of power for further growth, our Medium-Term Management Plan for 2026 sets out the following three
items as our human resources strategy connected to the group’s
Management Vision of “Co-Creation, Strengths, and Reliability.”• Securing and training of professional human resources able to put
our Management Vision into practice• Creation of motivating workplace environments that enhance organizational vitality• Restructuring of human resource-related systems for enhancement of impartiality and productivity

Promotion of diversity
Our group has put forth the CHINO Group Diversity & Inclusion
Declaration by which we mutually respect the diversity of others ingender, age, nationality, values, disabilities, and other attributes, andwork to connect these to innovation and the creation of new value as
strengths of the organization.

CHINO Group Diversity & Inclusion Declaration
The social environment around us is undergoing massivechange at a speed that continues to accelerate. In order for
a company to adapt aptly and flexibly to diversifying customer
needs and social issues under such circumstances, it must
establish an organizational culture that is able to maximize thepotential of employees exhibiting diverse individualities.
Based on the three core values of our Management Vision– “Co-Creation, Strength, and Reliability” – the CHINO Group
engages in varied initiatives involving diversity and inclusion, to
promote respect for diversity in gender, age, nationality, values, disabilities, and other attributes, and to connect these toinnovation and the creation of new value as strengths of theorganization.

■	Human Resources and Organizational Development
Committee
To engage in human capital management closely linked to our management, human resources, and organizational strategies, we established the Human Resources and Organization Development Committee in October 2022 with the President as chair and executive
officers as members. Taking a top-down view of our human resourcesmanagement system, the committee reviews and determines visions
for future personnel programs, measures to enhance human resource
development and engagement, and other policies concerning key
personnel measures, while checking progress on measures and advancing personnel strategy that enhances corporate value.

■	Human resource development policy
Our group believes that people are the greatest asset of a company,
and that the enhancement of human resources’ motivation and capabilities for playing roles are the wellspring of sustainable growth in
a company. We undertake human resource development under basic
policies of “respecting every person’s individuality and making use of
personal strengths,” “supporting employees who demonstrate hard
work and efforts toward personal growth,” and “properly rewarding
achievements.”

Human resources with a strong
will to tackle change and take
Leaders on the realization of theirpersonal mission with passion
and a sense of responsibility

Human
Desire to growHigh ethical standards
Autonomy
Agility
resource
Expert knowledge/Skills
requirements Ability for breakthroughs Cooperativeness

53

CHINO Report 2023

Promotion of active roles by women
Recognizing that active roles by women are essential to the further
enhancement of our corporate value, we have created an action plan
and are undertaking measures to ensure that female employees areable to continue playing such roles under the Act on Promotion of
Women’s Participation and Advancement in the Workplace. As of theend of March 2023, our ratio of female employees is 22.6% of all
employees, and our ratio of female executives (chief officers and managerial positions) is 20.0%. We will actively recruit, train, and appoint
women with the aim of increasing the ratio of female executives to
30% or higher by the end of FY2026.

Ratio of female executives(No. of employees)
600
400

17.4

(%)
25.0
18.0

18.6

20.1

20.0

20.0
15.0
10.0

200

Vision for human resources
Human resources capableof creating value by thinking
Creators on their own, acting quickly,
and persevering

Mikio Toyoda, President and CEO

5.0
0

2018

2019

2020

Female employees
Ratio of female executives

2021

2022

Male employees

0

(FY)

Sustainability and ESG

Ratio of mid-career hires inmanagement positions

workplace, we respect diverse values and lifestyles and promote environmental aspects that achieve productivity enhancement throughflexible work styles matched to the circumstances and characteristics
of work.

We aim to build an organization in which career human resources
who possess outstanding expertise and skills along with abundant
experience play active roles in varied departments. Toward this end,
we engage in active hiring of career human resources and promotions
to Professional Manager positions. We will continue hiring recruit career human resources to aid in revitalizing our organization and willcontinue initiatives to raise the proportion of mid-career hires in management positions.
Ratio of mid-career hires in management positions as of the end of
March 2023: 22.8%

Employment of persons withdisabilities
Our company views disabilities as aspects of individuality. We actively
undertake the hiring of persons with disabilities with the aim of enhancing organizational and team capabilities for complementing othermembers’ individuality and capabilities, regardless of the presence orabsence of disabilities. We conduct in-house awareness-raising activities, in-house training, workplace environment improvements, andother activities to allow all individuals to maximize their capabilities,
while fostering a mindset of mutual respect for diversity.
Employment rate of persons with disabilities in FY2022: 2.13%

Enhancement of the rate of utilizationof childcare leave by men
Our company promotes utilization of childcare leave by men throughtraining sessions and awareness-raising activities. We seek to achieve“Ikuboss” managers, or superiors who think about the work-life balance of subordinates and staff in the workplace and offer support for
their careers and private lives, and who are able to raise the performance of the organization while enjoying their own work and personal
lives. We seek to create workplace environments that facilitate taking
childcare leave, and are working to achieve work-life balance andwork style reform in the true sense.
Rate of utilization of childcare leave by men in FY2022: 70.6%

Work style reform and health andproductivity management
Environment development policy
The CHINO Group believes that the ability for diverse individuals todemonstrate their capabilities to the fullest with energy and confidence is the driving force for new value creation. While protecting thesafety and the mental and physical health of every individual in the

Health and productivity management
We issued our Health and Productivity Management Declaration asa message from top management that expresses our aim to be acompany in which all employees enjoy mental and physical health,demonstrate their capabilities with vitality, and realize personal happiness, development of the company, and contribution to society.
Through the promotion of three priority measures, we work to maintain and improve the health of employees. Our targets include 100%
rates for health checkups and re-examinations.

Health management priority measures
1. Advancement of “health literacy” for all employees
2. Enhancement of health management and health promotion activities, including for employees’ families
3. Development of an environment for the practice of work-life management and work style reform

Rate of re-examinations in periodic
health checkups

FY2023 target

FY2022 result

50%

37%

Development of motivating work
environments
As a result of health management and health promotion awareness-building activities based on our Health and Productivity Management Declaration, we received Gold
Certification from the Healthy Company
Declaration Tokyo Promotion Council. We
are also enhancing work-life management
through means such as training and interview opportunities to support employees’
career autonomy, engagement surveys
for the visualization of motivation, and the

CHINO Report 2023

54

Initiatives Toward Active Roles by Human Capital

introduction of work intervals and telework, as we create a foundationfor employees to engage in work with energy.

gram for management positions, designed to cultivate a management
mindset, business strategy skills, and relationship-building skills. We
are also undertaking DX human resource training to provide services
that leverage the IoT and AI and to develop human resources whowill lead internal work reform. We have also established opportunities
for age-specific career design training and individual interviews, while
also developing company-wide e-learning as a mechanism for employees to learn whenever they wish, providing every employee withsupport for career autonomy and motivation to grow.

Introduction of work intervals
We have incorporated work intervals as a part of creating an environment conducive to the enhancement of work-life balance and of realizing diverse, flexible, and efficient work styles and health promotion
for all employees.
We view this as an initiative for the conscious practice of daily rest
periods by all employees, and took the step of making it a guideline
instead of mandating it in regulations.
In FY2022, we began the initiative with nine hours as the time interval. Even during the year-end busy period, we achieved interval timein excess of 99% of 9 hours on average.

Enhancement of employee training and average training
attendance hours
FY2023 target

FY2022 result

9.5 H

8.5 H

Training (capability development)
hours per person

Introduction of hourly paid leave

Engagement surveys

To enable flexible leave matched to employees’ diverse circumstances, we introduced an hourly annual paid leave system. This allows
employees to take paid leave efficiently without waste, achieving balance between work and private life.

To ensure that every employee works with energy and enhances
organizational vitality, and to enhance our corporate value throughboth employees and the company growing and developing together,
we have introduced engagement surveys to make work motivation
visual. Based on survey findings, we conduct dialogue within organizations, determine actions for improvement, and work through the
PDCA cycle to develop work environments for well-being.

Human resources development
Development of next-generation
human resources
To enhance business continuity and our corporate value, we are conducting a selective next-generation executive candidate training pro-Training systems
Young employees

Managers/Highly skilled professionals

Leaders

Management

Selective: Dynamic Leader Training
Qualification-Specific Training I

Qualification-Specific Training II

Manager FU Training

Expert knowledge

D&I Training

Assessor Training

Skill-Specific Training (attended): Engineering/Sales/Production/Management, etc.

Next-Generation Executive
Development Training II

Mental Health Training

Skill-Specific Training (lecturer)

Language Study Program (English) / Pre-Assignment Training
Self-Development Correspondence Education (company-supported)

Follow-Up Training

OJT Development Chart

New Graduate
Introductory Training

Shared skills

Next-Generation Executive
Development Training I

Group Leader PU Training
Young Employee Leadership Training

55

Qualification-Specific Training IV

Qualification-Specific Training III

CHINO Report 2023

Promotion Training I

Promotion Training II

Promotion Training III

Career Training / Diversity & Inclusion Training
3rd-Year Training

Ongoing enhancement of basic shared skills

Promotion Training IV

Sustainability and ESG

Social Contribution Activities
Contribution to local communities
We actively engage in social contribution activities, embodying ourcorporate philosophy of “The CHINO Group pushes the limits of measurement, control, and monitoring technologies and contributes tothe advance of industry and the realization of tomorrow’s society.”
Through the activities, we will deepen our relationships of trust withstakeholders and will contribute to solving social issues, achieving theSDGs, and building a sustainable society.

■	Youth Science Festival
The Youth Science Festival in Yamagata aims to create opportunities for children to experience andlearn about the appeal of science.
We take part in this event throughcrafting classes mainly for elementary school students.

■	Other initiatives
The Fujioka Factory utilizes its facilities to make a baseball field andtennis courts available to a youth baseball team and tennis club. The
site has also been registered as a medical helicopter landing site
since FY2017, contributing to the improvement of emergency medical care for nearby residents.

Senko-kai activities
Since 1973, our company has worked to contribute to local communities through the activities of Senko-kai an employees’ social
gathering that makes employee solidarity and service to society its
basic philosophy. In addition to undertaking cleaning and beautification activities around the head office through employee volunteers,
every year Senko-kai arranges for artworks from the group Mouth &Foot Painting Artists as an activity to assist with living support suchfor painters with disabilities, including subsidizing of living expenses,
scholarships, and introduction of welfare equipment such as assistiveequipment.
Senko-kai has also arranged for the dispatch of blood donation
vehicles to the Fujioka, Kuki, and Yamagata Factories and the head
office in cooperation with the Japanese Red Cross Society, securing
participation in blood drives from employees as well as neighboring
residents.

■	Itabashi-ku Takashimadaira Library Science
Experiment Class and Company Introduction Exhibit
To communicate information about our business activities and oursustainability initiatives to people in Itabashi-ku, Tokyo, we hold acompany introduction exhibit and science experiment class for elementary school students during summer events at the library.

Support for sports
As an official sponsor of the J2 soccer league club Montedio Yamagata, we engage in club support activities and initiatives to energize theregion.

■	Hosting of junior high school student workplace
experience learning
Every year, we cooperate in workplace experience learning aimed atjunior high school students. The students gain experience with ourbusiness and work through activities such as creating employee ID
cards and business cards and performing tasks on a production line,
while also learning about social etiquette as a working person anddiscovering the joys and difficulty of work.
©MONTEDIO YAMAGATA

CHINO Report 2023

56

Financial Information
Consolidated financial summary
FY2013

FY2014FY2015FY2016

Net sales

16,784

19,677

19,496

18,569Gross profit

5,258

5,701

5,708

5,739

Selling, general and administrative
expenses

4,865

5,108

5,083

5,173

Operating profit

392

592

624

566

Operating margin (ROS) (%)

2.3

3.0

3.2

3.0

Ordinary profit

568

896

665

637

Net profit(attributable to owners of parent)

334

395

303

373

Total assets

22,34625,53023,94624,229Interest-bearing debt

1,763

3,340

2,666

3,001

Net assets

13,945

14,767

14,424

14,456

431

1,363

1,956

840

Net cash provided by (used in) operating
activities-1,452-2,650-693-244Free cash flow

-1,020-1,287

1,262

596

558

979

-1,043-141* 39.30

46.20

35.39

43.62

* 1,538.20

1,609.14

1,577.72

1,596.00

* 35

35

40

35

1,177

2,117

557

479

Depreciation

743

850

927

868

Overseas sales ratio (%)

18.2

19.4

19.5

19.7

Return on equity (ROE) (%)

2.5

2.9

2.2

2.8

Return on assets (ROA) (%)

1.8

2.5

2.5

2.4

D/E ratio (multiple)

0.13

0.25

0.20

0.22

Equity ratio (%)

58.7

54.1

56.5

56.0

Dividend payout ratio (consolidated) (%)

89.1

75.8

113.0

80.2

Profit/loss (fiscal accounting year)

Financial position (end of fiscal year)

Cash flow status (fiscal year)
Cash flows from operating activities

Cash flows from financing activities
Per-share information
Profit (EPS) (yen)Net assets (BPS) (yen)Dividends (yen)Other financial data
Capital expenditures* Share merger at a ratio of one share per five shares of common stock, effective August 1, 2014. Calculated on the assumption that the share consolidation
was conducted at the beginning of FY2013.

57

CHINO Report 2023

Corporate Data

Unit (million yen)

FY2017FY2018FY2019FY2020

FY2021

FY2022

20,74521,99920,582

21,08021,90823,793

6,578

7,179

6,354

6,363

7,076

7,869

5,275

5,460

5,328

5,227

5,576

5,851

1,303

1,718

1,026

1,136

1,499

2,018

6.3

7.8

5.0

5.4

6.8

8.5

1,368

1,750

1,683

1,283

1,744

2,294

832

1,113

1,218

1,289

1,050

1,536

26,396

27,402

26,70830,39831,54536,289

2,295

2,615

2,834

2,590

2,260

3,385

15,36015,94816,31819,502

20,15021,574

2,814

1,659

1,149

2,341

1,880

1,619

-729

-955

-1,523

-748

-578

-564

2,085

704

-373

1,592

1,301

1,054

-1,080

-81

-245

-968

-978

655

98.25

131.48143.78152.24124.07181.22

1,703.64

1,768.61

1,815.33

1,964.43

2,073.94

2,214.16

40

45

45

45

46

52

452

825

977

991

784

815

810

815

843

872

795

785

19.9

22.5

22.2

16.7

18.6

20.4

5.9

7.6

8.0

8.1

6.1

8.5

5.1

6.4

3.8

4.0

4.8

6.0

0.17

0.18

0.18

0.16

0.13

0.18

54.7

54.7

57.6

54.7

55.7

51.8

40.7

34.2

31.3

29.6

37.1

28.7

CHINO Report 2023

58

Financial Information
Consolidated balance sheet(millions of yen)

AssetsPrevious consolidated fiscal year
(March 31, 2022)

Consolidated fiscal year under review(March 31, 2023)

Current assets
Cash and deposits
Notes receivable - trade

7,331

9,176

441

479

Electronically recorded monetary claims operating

1,943

2,599

Accounts receivable - trade

5,210

5,202

631

706

Work in process

2,860

3,658

Raw materials and supplies

3,086

4,212

274

374

Merchandise and finished goods

Other
Allowance for doubtful accounts

-99

-87

21,681

26,322

8,601

8,704

Accumulated depreciation-5,576-5,677

Buildings and structures, net

3,025

3,027

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment

4,182

4,289

-3,345-3,525

837

763

1,406

1,415

2

33

3,806

3,819

-3,511-3,480

294

338

5,566

5,578

Intangible assets
Software

392

420

Other

16

15

Total intangible assets

408

436

Investments and other assets
Investment securities

1,761

1,817

Deferred tax assets

740

881

Retirement benefit asset

663

543

Other

780

766

Allowance for doubtful accounts

-56

-56

Total investments and other assets
Total non-current assets
Total assets

59

CHINO Report 2023

3,889

3,952

9,864

9,967

31,54536,289

Corporate Data

(millions of yen)Previous consolidated fiscal year
(March 31, 2022)

Consolidated fiscal year under review(March 31, 2023)

Notes and accounts payable - trade

2,397

2,697

Electronically recorded obligations - operating

2,113

2,619

Short-term borrowings

1,265

1,265

Current portion of long-term borrowings

375

459

Income taxes payable

317

470

Advances received

176

980

Provision for bonuses

625

821

Provision for bonuses for directors (and other officers)

34

46

Provision for shareholder benefit program

43

47

Electronically recorded obligations - facilities

35

137

Other

832

943

8,216

10,489620

1,660

Long-term accounts payable - other－188

Deferred tax liabilities

83

91

Provision for retirement benefits for directors(and other officers)

343

135

1,867

1,887

Liabilities
Current liabilities

Total current liabilities
Non-current liabilities
Long-term borrowings

Retirement benefit liability
Other

263

263

3,177

4,225

11,394

14,715

Share capital

4,292

4,292

Capital surplus

4,264

4,267

Retained earnings

9,911

11,050Treasury shares-1,159-1,138

Total shareholders’ equity

17,30818,471

Valuation difference on available-for-sale securities

289

341

Foreign currency translation adjustment

67

158

Remeasurements of defined benefit plans

-101

-187

Total non-current liabilities
Total liabilities

Net assets
Shareholders’ equity

Accumulated other comprehensive income

255

312

Non-controlling interests

Total accumulated other comprehensive income

2,586

2,790

Total net assets

20,15021,574

Total liabilities and net assets

31,54536,289CHINO Report 2023

60

Financial Information
Consolidated statement of income andconsolidated statement of comprehensive income(millions of yen)

Consolidated statements of income
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Provision for bonuses
Provision for bonuses for directors (and other officers)
Retirement benefit expenses
Provision for retirement benefits for directors (and other officers)
Depreciation
Research and development expenses
Provision for shareholder benefit program
Provision of allowance for doubtful accounts
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Electricity sale income
Foreign exchange gains
Subsidy income
Surrender value of insurance policies
Other
Total non-operating income
Non-operating expenses
Interest expenses
Finance related expenses
Electricity sale expenses
Contract business related costs
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of investment securities
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Loss on valuation of investment securities
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Previous consolidated fiscal year
(from April 1, 2021 to March 31, 2022)
21,908
14,832
7,076

Consolidated fiscal year under review(from April 1, 2022 to March 31, 2023)
23,793
15,924
7,869

2,242
213
34
117
64
149
798
43
91
1,822
5,576
1,499

2,294
311
44
126
22
179
886
47
-16
1,954
5,851
2,018

7
50
35
94
20
66
26
301

13
58
35
81
5
92
36
323

8
4
15
11
16
55
1,744

7
4
14
－
19
46
2,294

1
0
1

13
3
16

3
23
27
1,719
504
-19
484
1,234
183
1,050

6
－
6
2,305
670
-116
553
1,752
215
1,536
(millions of yen)

Consolidated statement ofcomprehensive income
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefits plans, net of tax
Total other comprehensive income
Comprehensive income(breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

61

CHINO Report 2023

Previous consolidated fiscal year
(from April 1, 2021 to March 31, 2022)

Consolidated fiscal year under review(from April 1, 2022 to March 31, 2023)

1,234

1,752

-17
145
-60
67
1,302

53
160
-85
128
1,880

1,065
236

1,593
287

Corporate Data

Consolidated statement of cash flows(millions of yen)

Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Increase (decrease) in provision for shareholder benefit program
Interest and dividend income
Interest expenses
Subsidy income
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in advances received
Other
SubtotalInterest and dividends received
Interest paid
Subsidies received
Income taxes refund (paid)
Cash flows from operating activities
Net cash provided by (used in) operating activities
Proceeds from withdrawal of time deposits
Payments into time deposits
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of investment securities
Loan advances
Proceeds from collection of loans receivable
Purchase of insurance funds
Proceeds from maturity of insurance funds
Other
Net cash provided by (used in) operating activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings
Proceeds from long-term borrowings
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Purchase of shares of subsidiaries not resulting in change inscope of consolidation
Cash flows from financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Previous consolidated fiscal year
(from April 1, 2021 to March 31, 2022)

Consolidated fiscal year under review(from April 1, 2022 to March 31, 2023)

1,719
795
88
49
-38
-39
43
-58
8
-20
-1
23
50
-987
821
106
-259
2,301
58
-8
20
-491
1,880

2,305
785
-12
195
35
-19
4
-71
7
-5
-13
－
-626
-1,937
744
796
-115
2,073
71
-7
5
-524
1,619

1,449
-1,390
-774
0
-136
94
-8
4
-73
302
-47
-578

1,543
-1,573
-416
3
-155
34
-5
4
-71
122
-50
-564

-58
-272
－
-1
-381
-42

－
-375
1,500
-0
-389
-78

-222

－

-978
67
390
5,430
5,821

655
71
1,781
5,821
7,603

CHINO Report 2023

62

Corporate Information
Head office / Factories

❶
❸❷
❻

❺❹

Head office / Innovation Center

Head office / Factories

32-8 Kumano-cho,Sales sites

Itabashi-ku, Tokyo 173-8632
TEL 03-3956-2111

List of sales sites
Tokyo Sales Office, Eastern Japan Branch

Chiba Sales Office

Hiroshima Sales Office173-8632
32-8 Kumano-cho, Itabashi-ku, Tokyo
TEL 03-3956-2205

260-0016
Nihon Kigyo Kaikan, 42-11 Sakae-cho, Chuo-ku,
Chiba-shi, Chiba Prefecture
TEL 043-224-8371

732-0827
Hiroshima Inari-machi NK Bldg., 4-1 Inari-machi,
Minami-ku, Hiroshima-shi, Hiroshima Prefecture
TEL 082-261-4231

Tachikawa Sales Office

Fukuoka Sales Office190-0023
Chiyoda Bldg., 3-11-4 Shibasaki-cho, Tachikawa-shi,Tokyo
TEL 042-521-3081

812-0011
NMF Hakata Ekimae Bldg., 1-15-20 Hakataekimae, Hakata-ku, Fukuoka-shi, Fukuoka
Prefecture
TEL 092-481-1951

Sendai Sales Office980-0014
Kashima Kogyo Bldg., 2-2-3 Honcho,
Aoba-ku, Sendai-shi, Miyagi Prefecture
TEL 022-227-0581

Takasaki Sales Office375-8505
1 Mori, Fujioka-shi, Gunma Prefecture
TEL 0274-42-6611

Mito Sales Office
310-0011
Mito Keisei Bldg., 1-4-73 Sannomaru,
Mito-shi, Ibaraki Prefecture
TEL 029-224-9151

Omiya Sales Office (Utsunomiya)
321-0953
KD Bldg., 4-2-20 Higashi-Shukugo,
Utsunomiya-shi, Tochigi Prefecture
TEL 028-612-8963

Omiya Sales Office330-0802
Ichigo Omiya Bldg., 2-81 Miya-cho, Omiya-ku,
Saitama-shi, Saitama Prefecture
TEL 048-643-4641

Kanagawa Sales Office243-0018
Flos Atsugi, 3-11-18 Naka-cho, Atsugi-shi, Kanagawa
Prefecture
TEL 046-295-9100

Osaka Sales Office, Osaka Branch564-0063
Daido Seimei Esaka Bldg., 1-23-101 Esaka-cho,Suita-shi, Osaka Prefecture
TEL 06-6385-7031

Otsu Sales Office520-0043
Otsu Daiichi Seimei Bldg., 3-1-8 Chuo, Otsu-shi,
Shiga Prefecture
TEL 077-526-2781

Okayama Sales Office711-0921
Naikai Daiichi Bldg. 6F, 1-100 Kojima-ekimae,
Kurashiki-shi, Okayama Prefecture
TEL 086-473-7400

Kitakyushu Sub office802-0081
Mainichi Seibu Kaikan Bldg., 13-1 Konya-machi,
Kokurakita-ku, Kitakyushu-shi, Fukuoka Prefecture
TEL 093-531-2081

Nagoya Sales Office, Nagoya Branch
450-0001
Nagoya Kokusai Center Bldg., 1-47-1 Nagono,
Nakamura-ku, Nagoya-shi, Aichi Prefecture
TEL 052-581-7595

Shizuoka Sales Office420-0853
Shizuoka Ando Hazama Bldg., 2-12 Ote-machi,Aoi-ku, Shizuoka-shi, Shizuoka Prefecture
TEL 054-255-6136

Toyama Sales Office930-0004
Toyama Daiichi Seimei Bldg., 2-25 Sakurabashidori, Toyama-shi, Toyama Prefecture
TEL 076-441-2096
Company Information (as of April 1, 2023)

63

CHINO Report 2023

Corporate Data

Yamagata Factory
1515 Midaregawa, Tendo-shi, Yamagata
Prefecture 994-0002
TEL 023-607-2100

Fujioka Factory
1 Mori, Fujioka-shi, Gunma Prefecture
375-8505
TEL 0274-42-2111

Kuki Factory
18 Kawarai-cho, Kuki-shi, Saitama Prefecture
346-0028 (4-2 Kuki Ayame Kogyo Danchi)
TEL 0480-23-2511

Group companies (domestic)❶ CHINO Softex Corporation❷ SANKI KEISO CO., LTD.

❸ Asakawa Lens Works Co., Ltd.

CHINO Softex Corporation designs measurement
equipment and software related to process
automation (PA).

SANKI KEISO CO., LTD. designs, constructs, and sells control
equipment for facility landscaping and clean air systems.

Asakawa Lens Works Co., Ltd. designs andmanufactures optical instruments.

❹ AR’S CO., Ltd.

❺ ADVANCE RIKO, Inc.

❻ MEIYO ELECTRIC Co., Ltd.

Possessing circuit design and package
technology for high-density wireless modules,
AR’S CO., Ltd. has considerable field knowhow in compact wireless modules and wirelesstechnologies.

ADVANCE RIKO, Inc. manufactures and distributes
products related to its thermal technologies,
including analysis/thermophysical measurement
systems and infrared heating systems.

MEIYO ELECTRIC Co., Ltd. designs,
manufactures, and distributes marine
instrumentation and sensors for marine engines.

375-8505
1 Mori, Fujioka-shi, Gunma Prefecture
TEL 0274-42-6601

221-0052
Yokohama Creation Square, 5-1 Sakae-cho,
Kanagawa-ku, Yokohama-shi, Kanagawa Prefecture
TEL 045-440-1123

345-0043
248-2 Shimotakano, Sugito-machi,
Kitakatsushika-gun, Saitama Prefecture
TEL 0480-53-7606

224-0053
4388 Ikonobe-cho, Tsuzuki-ku, Yokohama-shi,
Kanagawa Prefecture
TEL 045-931-2221

346-0028
18 Kawarai-cho, Kuki-shi, Saitama Prefecture(4-2 Kuki Ayame Kogyo Danchi)
TEL 0480-26-1800

424-0066
485 Nanatsu-shinya, Shimizu-ku, Shizuoka-shi,
Shizuoka Prefecture
TEL 054-345-2211

CHINO Report 2023

64

Corporate Information

❺

❷
❶

❸

❹

❻

Group companies (overseas)❶Shanghai Dahua-CHINO
Instrument Co., Ltd.

❷CHINO Instrumentation(Kunshan) Co., Ltd.

T12B-1 6F, Building 1 A SIDE No.615
Ningqiao Road, Free Trade ExperimentZone, Shanghai, 201206 China
TEL +86-21-50325111

449-10 Xiangshi Road, Shipai,
Bacheng Town, Kunshan City,
Jiangsu, 215312 China
TEL +86-512-57881000

Shanghai Dahua-CHINO Instrument
Co., Ltd. distributes recorders,
controllers, radiation thermometers,
and instrumentation systems in China.

CHINO Instrumentation (Kunshan)Co., Ltd. manufactures and distributes
measurement and control instruments
and instrumentation systems in China.

❸ Korea CHINO Corporation❹C HINO Works America Inc.

9, Donghan-daero, 17-gil,Hwaseong-si, Gyeonggi-do,
18481 Korea
TEL +82-31-379-3700

Korea CHINO manufactures anddistributes recorders, controllers,
radiation thermometers, andinstrumentation systems in
Korea.

CHINO Report 2023

From its base in the UnitedStates, CHINO Works America
Inc. distributes all CHINO
products in North America andLatin America.

❺ CHINO Corporation India
Private Limited❻ CHINO Corporation (Thailand)
LimitedPlot No. PAP-A-235-240, South
Central Road,
TTC Industrial Area,
MIDC Mahape, Navi Mumbai
400 710 India
TEL +91-22-4129-3000

No. 65, 42 Tower, 10th Floor,
Soi Sukhumvit 42 (Kluaynamthai),
Sukhumvit Road, Prakanong, Klongtoey,
Bangkok 10110 Thailand
TEL +66-2712-2630

CHINO India manufactures anddistributes measurement andcontrol instruments such asrecorders and controllers.

6522301 S. Western Ave. Suite
105 Torrance, CA 90501 U.S.A.
TEL +1-310-787-8899

From its base in Thailand, CHINO
Corporation (Thailand) Limited distributes
all CHINO products and engages inengineering, maintenance, inspection,and repair services in ASEAN countries.

Corporate Data

Company profile (as of March 31, 2023)
Corporate name

CHINO CORPORATIONHead office32-8 Kumano-cho, Itabashi-ku, Tokyo 173-8632
TEL 03-3956-2111

Representative

Mikio Toyoda, President and CEO

Business description

Manufacture and sales of measurement and control instruments,
instrumentation engineering work

Established

August 1, 1936

Share capital

4,292 million yen

Number of employees(consolidated)

1,101

Status of stock (as of March 31, 2023)
Total authorized shares

23,820,000

Total number of shares outstanding

9,260,116

Number of shareholders

5,732

Number of shares
held (thousands)

Ratio of the number ofshares owned to total
number of issued shares(excluding treasury shares) (%)

CHINO Business Partner Shareholders’ Association

807

9.52

The Master Trust Bank of Japan, Ltd. (trust account)

664

7.83

CHINO Employee Shareholders’ Association

355

4.19

Nikkato Corporation

209

2.47

Kyowa Electronic Instruments Co., Ltd.

207

2.44

Kitahama Seisakusho, K.K.

182

2.14

Nippon Life Insurance Company

152

1.79

NORTHERN TRUST CO. (AVFC) RE NORTHERN TRUST(GUERNSEY) LIMITED RE GGDP RE: AIF CLIENTS 15.315
PERCENT NON TREATY ACCOUNT

150

1.76

NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTSNON LENDING 15 PCT TREATY ACCOUNT

145

1.71

Custody Bank of Japan, Ltd. (trust account)

127

1.50

Major shareholders (top 10)

CHINO Report 2023

66

Cat.No.XGE-08-18 Issued December 28,2023 Printed in Japan S