Ts u m u g uReport 2020
Fiscal 2019 (the year ended March 31, 2020)

Making your dreams come true

1

CHORI CO., LTD.

Cor por ate Slogan

Making your dreams
come true
Cor por ate P h ilosoph y
As members of the global community, we will work for the betterment of society.
We take pride in being fair and sincere, and in continuing to offer superb service in order todeliver superior customer satisfaction.

Regarding the Name of the Report
Since its establishment as a raw silk wholesaler in 1861, Chori has been weaving(“Tsumugu”) a variety of connections and bonds with stakeholders in the samemanner as it has been weaving silk. The report’s name “Tsumugu Report” reflects
Chori’s corporate stance that has remained intact since its founding. Moving
forward, we will continue to remain a company that weaves dreams into reality bycherishing our relationships with all stakeholders.

Tsumugu Report 2020

Contents
Overview of ChoriManagement Foundation
Tailored to Sustainable Growth3

Chori’s Business5

Chori at a Glance

7

Chori’s History9	Previous Medium-Term
Management Plan—Review ofChori Innovation Plan 201910	New Medium-Term Management
Plan—Chori Innovation Plan 2022
13

Message from the President

29

Environment

31

Business Partners

32
Occupational Safety
		Management
33

Human Resources

35

Local Communities and Society

36	Promotion of Health andProductivity Management
37

Feature: Chori’s Strengths
17

Chori’s Strengths

18	Lithium Compound Production
Project in Chile

Overview and Strategies by
Business Segment
21

Overview

Corporate Governance42
Directors, Audit & Supervisory		Committee Members, and		Executive Officers

Fact Data
43

11-Year Financial Summary

45

Chori’s Global Network

47

Corporate Information

23	Fibers, Textiles, and Garments
Business
25

Chemicals Business

27

Machinery Business

Editorial Policy
The “Tsumugu Report” was issued to provide all readers, including
shareholders, investors, and all other stakeholders, withinformation on Chori’s management vision, corporate philosophy,
strengths, and businesses, in order to broaden their understandingof the Company. The report also functions asa tool for engaging in new dialogues withstakeholders. The Tsumugu Report is issued
in both Japanese and English, and is alsoavailable for viewing on our company website.
https://www.chori.co.jp/english/
Scope of Reporting
CHORI CO., LTD. and its Group companies; however, certain
information applies only to CHORI CO., LTD.

Period of Reporting
The information contained in this report is primarily for fiscal 2019
(April 1, 2019 to March 31, 2020); however, certain sections of thereport contain information on fiscal 2020 and beyond.
Cautionary Notice Regarding Forward-Looking Statements
Performance forecasts and other forward-looking statements
contained in this report are based on Chori’s judgments andinformation available as of the issuance of this report and are
subject to change due to a variety of factors. Accordingly, suchforward-looking statements are not guarantees of any achievementof targets or forecasts, or future performance. In addition, theinformation contained in this report may change without priornotice. For this reason, we hope that readers make their own
judgment when utilizing the information and materials contained inthis report with the use of other information that may be available.
Chori does not take responsibility for any losses or damages
incurred through the use of this report. Moreover, the revised
business results and dividend forecasts for fiscal 2020, resulting
from the provision of allowance for doubtful accounts announced
in July 2020, are not reflected in this report.

2

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CHORI CO., LTD.

Overview of Chori

Chori is a specialized trading company
engaged in the textiles, chemicals,
and machinery industries.
2020 marks the 159th year
since our establishment.
As a specialized trading company, Chori supplies a wide range of products
globally across its textiles, chemicals, and machinery businesses.

Tsumugu Report 2020

Fibers, Textiles, andGarments BusinessIn the Fibers, Textiles, and Garments Business, we engage in every stage ofthe textile manufacturing process, from the handling of raw materials(upstream) to the management of textiles and other materials (midstream) andthe manufacture and distribution of apparel and other finished products(downstream). We also boast a diverse lineup of silk materials to meet a wide
assortment of needs from sportswear to traditional Middle Eastern garments,
in addition to our selection of sustainable, environment-friendly products.

Chemicals BusinessIn the Chemicals Business, along with basic chemical products, we handle a vastarray of raw materials and ingredients contained in products used in our day-today lives, such as pharmaceuticals and capacitors used in electronics and otherproducts, as well as cosmetics and food products. Our global presence also
distinguishes us from our competitors with not only the procurement and sales of
products in China and Asia, but also exports to and intermediary transactions
with countries in Africa and other regions.

Machinery BusinessIn the Machinery Business, we handle transportation equipment, such as
four-wheel vehicles, two-wheel vehicles, and trucks, along with agricultural
machinery, construction machinery, and other equipment. Since 2017, we havebeen conducting semi-knocked-down production and sales of automobiles in
Mexico for Chinese automakers. In these ways, we have capitalized on our
global network to promote the growth of the Machinery Business.

4

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CHORI CO., LTD.

Overview of Chori

Chori at a Glance
Since its establishment near the end of the Edo Period, Chori has continued to evolve in tune with thetimes while addressing the needs of society. This section highlights the figures defining the current stateof Chori, a company with a long and rich history.

Fiscal 2019 Business Results (Consolidated)
Net Sales

Ordinary Income

329.4

￥

8.7

￥

billion

356.5

DOWN

7.6 % YoY

billionUP

0.3 % YoY

329.4

8.7

8.7

2018

2019

7.5

311.7

2017

2018

2019

(FY)

2017

Total Assets

ROA (Ordinary Income Basis)

Ratio of Net Sales
through Trade￥114.4billion

7.5

71.4%

%

DOWN

UP

UP

3.5 % YoY

0.2 point YoY

1.8 point YoY

(FY)

72.3

119.1

7.5

118.5

114.4

2017

2018

71.4

7.3

2019

69.6

6.9

(FY)

2017

2018

2019

(FY)

2017

2018

2019

(FY)

Tsumugu Report 2020

Chori’s Growth Foundation
Subsidiaries and Offices

39




locations(of which, 4 in Japan)

Year of Establishment

1861
Chori was founded as a raw silk wholesaler in 1861. The
name “Chori” originates from the combination of theJapanese characters “蝶” (cho), derived from the imageof a moth creating raw silk, and “理” (ri), stemming fromthe first name of Chori’s first president, Riichiro Ohashi.

* As of July 1, 2020

Number of Employees (Consolidated)

1,014* As of March 31, 2020

Male

Female524

490

Certified as Sports Yell Company in Fiscal 2019
In December 2019, Chori was certified as a Sports Yell Company by theJapan Sports Agency. This certification recognizes companies that actively
engage in sports activities as a means to promote healthy lifestyles for theiremployees. Chori provides employees with opportunities to live a healthierlife through yoga classes during lunchtime as well as “CHOI-ARUKI,” awalking competition in which employees compete within their department.

2020 Health and Productivity Management Award(Large Enterprise Category)
In March 2020, Chori was recognized as an outstanding organization under
the large enterprise category of the Ministry of Economy, Trade andIndustry’s 2020 Health and Productivity Management Award. At Chori, we
regard the health of our employees as our foremost priority and haveestablished a medical office within our Tokyo and Osaka head offices.
In addition, we provide support for dental checkups and quitting smoking.

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CHORI CO., LTD.

Overview of Chori

Chori’s History
Chori has been creating value with all of its stakeholders since its establishment in 1861. While our past
has seen both growth and setbacks, we will strive to continue to evolve in the years ahead.

1861

Founded in the Nishijin district of Kyoto, JapanIn 1926, we began handling rayon yarn and in1937 we owned an approximate 30% share of thedomestic market, becoming a major producer inthe rayon yarn industry. This led to theestablishment of our business foundation as a
specialized trading company in textiles.

1948

CHORI CO., LTD. established

1956

1952

Moves head office to Osaka

1957	
Establishes Chori New YorkCo., Ltd. (currently CHORIAMERICA, INC.), Chori’s firstoverseas subsidiary1976	
Establishes FukuchoCommittee and Kanazawa
Chori Committee (currently
Hokuriku Chori Committee)
with twisted yarn manufacturers and other business partners
in the Hokuriku region

Launches Chemicals Business

1959	
Stock listed on Osaka
Securities Exchange
1961	
Stock listed on Tokyo Stock
Exchange
1953	
Commences exclusive sales ofwoolly nylon in cooperation with
Toyo Rayon Co., Ltd. (currently
TORAY INDUSTRIES, INC.)

1975	
Begins company restructuringwith drastic streamlining anddownsizing of management

	Designated as one of thefirst friendly trading companies
by China

1985	
Handling of angora sweaters
exceeds 300,000 units,
resulting in high market share
1993	
Establishes CHORI(SHANGHAI) CO., LTD. as
first subsidiary in China

1972	
Develops a large-scalecondominium
1950–1970s
Net sales
Ordinary income
Domestic economy
Global market

Jinmu economic boom of the mid-1950s
Iwato economic boom of 1958–1961
Economic boom created by the Tokyo Olympic Games (1962–1964)
Izanagi economic boom (1965–1970) of JapanA Period ofGrowth1973
First oil shock
1979
Second oil shock

A Period of
1948–1970s

Handling of Synthetic Resin, Chemical Products, and Various Machineries
In 1956, Chori engaged in the business of chemical products and machineries,
and developed the business alongside the Fibers, Textiles, and Garments
Business. Meanwhile, in the 1970s, we expanded our business to include lifestylerelated products, such as food, clothing, and housing and leisure, and successfully
improved our business results by diversifying our operations.

Setbacks

1970s–2000s

Selection and Concentration of Businesses
Due to Significant Losses
In fiscal 1991, Chori recorded its highest net sales everof ¥755.5 billion while incurring significant losses in thefinance and real estate businesses. This prompted a
restructuring of our business, which consisted ofrevising our portfolio of lifestyle-related products anddevoting our attention to Chori’s core businesses.

Tsumugu Report 20202004	
Becomes a consolidated
subsidiary of TORAY
INDUSTRIES, INC.

2017	
Participates in lithiumcompound production projectin Chile2005	
Establishes CHORI (CHINA)
CO., LTD., the first Japanesetrading company subsidiarywith the rights to sell and tradein China	Makes ASADA U CO., LTD., asales company of interior andpackaging materials, a consolidated subsidiary2006	
Expands Chemicals Businessthrough the supply of raw
materials for epoxy resin

1996	
Secures order for railway
project in Kazakhstan

2012	Engages in capital participation in
manufacture of electrode foil foraluminum electrolytic capacitors

82018	Makes KOZAKURA SHOKAI
CO., LTD., a trading company
specializing in chemicals, a
consolidated subsidiary	Establishes a joint venture with
MATSUOKA CORPORATION,
FAST RETAILING CO., LTD.,
and TORAY INDUSTRIES, INC.
in Indonesia
	Participates in first session ofChina–Japan Third-Party
Market Cooperation

1997	Establishes joint venture
Chongqing Dazu Red Butterfly
Strontium Industry Co., Ltd.
	Engages in capital participationin MEGACHEM LIMITED, a
trading company specializing inchemicals in Singapore

20022013	
Makes PTI Japan Limited(currently CHORI GLEX CO.,LTD.), a trading company
specializing in chemicals, a
consolidated subsidiary pins off the Synthetic Resin
S
Business Division into aseparate company

2003	
Commences Textiles Exhibition(currently CHORI Exhibition)

2019	
Establishes joint project with
Utsumi Recycle Systems Inc.
for the sale of recycled pellets

2015	
Makes Miyako Kagaku Co.,
Ltd., a trading company
specializing in chemicals, a
consolidated subsidiary2016	
Holds first annual Hokuriku
Yarn Fair	Participates in chemical fertilizer production projectin Nigeria.

2020
COVID-19

1991–2000s

2008
G lobalFinancial Crisis

2011
Great East Japan
Earthquake

Collapse of bubble economy
Heisei depression

A Period of

Breakthrough Results

2000s–2020s

Four Consecutive Years of Record-High Ordinary Income
In fiscal 2019, Chori’s ordinary income totaled ¥8.7 billion, a record high for the
fourth year in a row. By framing the drastic changes occurring in our businessenvironment as opportunities for further growth and addressing them in a timely
manner, we will continue to evolve as a corporate group in the years to come.

AFTER
COVID-19
Fortify
defensivemeasures

9

CHORI CO., LTD.

Overview of Chori

Previous Medium-Term Management Plan

Review of Chori Innovation Plan 2019
In fiscal 2018, Chori’s ordinary income and net income attributable to owners of the parent were its highest ever, achieving
the targets set out in the medium-term management plan one year ahead of schedule. In fiscal 2019, the final year of theplan, we felt the effects of COVID-19 as we were unable to reach our target for net sales. However, we continued to record
favorable results for both ordinary income and net income attributable to owners of the parent, for which we again reached
our targets and achieved record highs.
Chori made ASADA U CO., LTD., a sales company of automotive interior and other materials, a consolidated subsidiary andproceeded with the Fibers, Textiles, and Garments Business’s strategy of “expanding global development.” Meanwhile, in
the Chemicals Business, KOZAKURA SHOKAI CO., LTD., a trading company specializing in lubricating oil additives, fuel oil
additives, and other chemicals, became a consolidated subsidiary through an M&A.
Chori engaged in a joint venture for the sale of ECO BLUETM polyester pellets, which are generated through the recycling ofplastic bottles; participated in a chemical fertilizer production project in Nigeria; and actively carried out investments in otherinitiatives to further solidify its foundation for sustainable growth.
Chori complied with its basic policy of ensuring a dividend payout ratio of 25% or more of net income while increasing its
dividends for the seventh year in a row.

356.5

(Billions of yen)

311.7
280.0

330.0 329.4
300.0

8.7

8.7

7.5

8.5
7.8

7.2

Net sales (target)
Net sales (result)
Ordinary income (target)
Ordinary income (result)

FY2017FY2018FY2019FY2017 (Results) FY2018 (Results) FY2019 (Results)

FY2019 (Targets)

311.7

356.5

329.4

330.0

Ordinary Income (Billions of Yen)

7.5

8.7

8.7

8.5

Net Income Attributable to Owners of the Parent (Billions of Yen)

4.7

5.6

6.1

5.5

ROA (Ordinary Income Basis)

6.9%

7.3%

7.5%

7.5%

ROE (Net Income Basis)

9.7%

10.7%

11.0%

10% or more

Net Sales (Billions of Yen)

Tsumugu Report 2020

New Medium-Term Management Plan

Chori Innovation Plan 2022
(FY2020–FY2022)

Becoming a corporate group that continues to
evolve and change on a global scale, underpinnedby our exceptional capabilities and expertise.
Numerical Targets

FY2022Net Sales*￥280.0 billion(Reference: Trading Amounts￥350.0 billion)

Ordinary Income￥11.0 billion

Net Income Attributable to Owners of the
Parent￥7.3 billion

ROA (Ordinary Income Basis)

8% or more

ROE (Net Income Basis)

11% or more

Payout Ratio

30% or more

* In the first quarter of fiscal 2020, Chori implemented the early adoption of the
Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, issued
on March 30, 2018).

Accounting Standard for Revenue Recognition

Proxytransactions
Commission
incomeTransactions ofrelated party
Conventional

Trading Amounts
Net Sales

Net Sales

In May 2020, we announced our new medium-term management plan, Chori Innovation Plan 2022, covering the three-year
period from fiscal 2020 to fiscal 2022. The global spread of
COVID-19, which emerged near the conclusion of fiscal 2019,has had a tremendous impact on our business environment inboth Japan and overseas and we have yet to see any signs of
its containment. We must respond to this business environment and the rapidly shifting society and economic climate
with a sense of urgency. To that end, we will fortify our defensive measures, including risk management, while forging
ahead with our basic strategies of “reinforcement of consolidated management structure,” “creation of next-generation
business models,” “corporate governance,” “compliance,” and“strengthening of human resource development structure.” In
this way, the Chori Group will become a corporate group that
continues to evolve and change on a global scale, underpinned by its exceptional capabilities and expertise, and further
enhance its corporate value.

Commission
incomeTransactions ofrelated party

After adoption of revenue
recognition standard

Due to the lack of discretion for pricing, Chori records only thecommission received as a proxy for low inventory risk transactions
as net sales.

10

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CHORI CO., LTD.

Overview of Chori

The Basic Strategy of Chori Innovation Plan 2022
Chori will press forward with the following five basic strategies in its bid to become a corporate group that continues to evolve on a
global scale, underpinned by its exceptional capabilities and expertise, while addressing the drastically changing social environment.

Reinforcement of Consolidated Management Structure
As a part of its approach toward consolidated management centered on global
business, Chori reorganized its company structure to the most optimal
management system. Specifically, we introduced a new business division
structure by unifying the Fibers, Textiles, and Garments Business into a single
operation and separating management of the Chemicals and Machinery
businesses. Moreover, to expand our global business, we will form strategic
partnerships with global companies.
In terms of consolidated management, Chori will increase the consolidated-tononconsolidated ordinary income ratio from 1.35 times to 1.6 times, enhance thecapabilities of core subsidiaries, and promote Group management.
We will also raise the level of our portfolio management by ensuring thoroughcredit control and strengthening inventory management while optimizing thetransparency of costs and cost structures. As for digital management, we will
enhance the development of global infrastructure while improving operating
efficiency through robotic process automation (RPA).


Consolidated
management centeredon global business
Consolidated
management
Portfolio
management
Digital management

Strengthening of Consolidated-toNonconsolidated Ordinary Income Ratio
FY2019FY2022(Results)(Targets)

Consolidated
Ordinary Income

8.7

11.0

Nonconsolidated
Ordinary Income

6.4

6.8

(Billions of Yen)

Creation of Next-Generation Business Models
We will maintain the Business Investment Committee and proactively invest in growthfields and areas. In particular, we will proceed with the business investments outlined
below centered on the themes of the environment, health, sustainability, and cuttingedge technology.
In terms of M&A, we will expand our scope of business and improve ourconsolidated performance by implementing separate approaches for companies that
contribute to consolidated performance and companies that capture businesssynergies and by creating next-generation business models.


Investment
in and development of
new businesses

M&A

Focusing on Investment in Growing Fields and Areas
Fibers, Textiles, andGarments Business

Environmental and recycling, health, hygiene, andmaterials fields

Chemicals Business

Environmental, 5G-related, electronics andbattery materials, healthcare, and agricultural fields

Machinery Business

Global market development

Reference: Key M&A and Business Investments Undertaken During Chori Innovation Plan 2019

M&A

ASADA U CO., LTD.
K OZAKURA SHOKAI
CO., LTD.

Business InvestmentsF ibers, Textiles, andGarments Business
Chemicals Business

Invested in PT. MATSUOKA INDUSTRIES INDONESIA
Increased capital in SUZHOU FEILO ELECTRONIC COMPONENTS CO., LTD.
Increased capital in QINGDAO RED BUTTERFLY PRECISION MATERIALS CO., LTD.
Leased machinery for joint project with Utsumi Recycle Systems Inc. for the sale of recycled pellets
Partially financed capital for construction of chemical fertilizer blending plant in Nigeria

Tsumugu Report 2020

Corporate Governance
In March 2020, Chori established its Governance Committee, comprising a majorityof outside directors, as an advisory body to the Board of Directors. Through theenhancement and strengthening of corporate governance, we will pursue further
increases in corporate value and target a dividend payout ratio of 30% or more. At Chori,
our basic dividend policy is to provide performance-based dividends in accordance withthe standards for net income attributable to owners of the parent from the perspectives offlexibly returning profits to shareholders and ensuring stable operations and finances
while securing appropriate funds for investments in growth strategies.

Trends in Per-Share Dividend (Annual)(Yen)

Payout ratio

Includescommemorative
dividend of ¥10

100

30% or more

(Yen)

90

 stablishment of GovernanceE
Committee
Improvement of dividend policy
Continuation of stock-based
compensation and enhancement
thereofGroup governance
Enhancement of Chori’s brand value HORI Innovation Activities
C(Companywide activities)

500

Governance Committee(FY2020–FY2022)
80

400

59

63

60

60
40

300

36

34

33

40
200

24

20
0

SawanoCommittee
chairman(Independent
Director)

100

2012
(Result)

2013(Result)

2014(Result)

2015(Result)

Dividends per year (left scale)2016(Result)

2017(Result)

2018(Result)

2019(Result)

2022 0(Target) (FY)Net income per share (right scale)Through the reinforcement of corporate ethics, elimination oflegal violations, and strengthening of supervisory functions at
consolidated subsidiaries, we ensure thorough compliancethroughout our operations. As we continue to evolve ourbusiness globally, we will adhere to the laws, regulations, andcustoms of Japan and other countries and instill such awarenessin our employees through internal training sessions and legal
compliance manuals for the purpose of preventing legal violations.

(Independent
Director)

Sakihama
Committee
member(President,
CEO & COO)

Outside director
Appointment or
dismissal of
directors andexecutive
officers
Successor
planning andtraining

Compliance

Morikawa
Committee
memberCompensationof directors andexecutive
officers
Compensation
madeindividually

Director

Assessment oftransactions
and other
dealings withthe parent
company groupReinforcement of corporate ethics
Elimination of legal violations
Global risk management
Strengthening of supervisory
functions at consolidated
subsidiaries

Strengthening of Human Resource Development Structure
Guided by its vision for human resources, “Utilize people, and be useful to them.
Nurture people, and develop with them. Connect people, and join together withthem,” Chori regards each and every one of its Group employees as its most valuable
management resource and strives to ensure their health and well-being. Further, bypromoting the following measures in line with the key principles of “utilize,” “nurture,”and “connect,” we will cultivate our human resources for the next generation.

Nurture of Human Resources for Next Generation

U tilize

N urture

C onnectDramatically revamp thehuman resource system

Nurture future generations ofhuman resources

Realize diverse workstyles

Nurture employees of ouroverseas offices

Energize and unify the
Chori Group throughmobilization of employees
within the Group

Stimulate communication
through one-on-one interviews

Promote active roles for women
Nurtureof human resources for next
generation
Promotionof health andproductivity management(Please see page 36 for details)

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CHORI CO., LTD.

Overview of Chori

Message from the President

With our sights set on the“new normal,” we will strive
to remain a corporate groupthat continues to evolve andchange on a global scale.

President, CEO & COO,
President and Executive Officer

Kazuo Sakihama

Tsumugu Report 2020

Firstly, I would like to express my deepest sympathies to those who have been affected by COVID-19 and my prayers go out
to each of you for a speedy recovery. I would also like to offer my sincerest condolences to those who fell victim to theseries of natural disasters and the torrential rains in July 2020 in Kumamoto and other areas of the Kyushu region, as well as
the Chubu region. I wish for the safety of everyone involved and for the earliest recovery of the disaster-stricken areas.

Review of Chori Innovation Plan 2019
The three years covering our previous medium-term management plan, Chori Innovation Plan 2019, were the mostsuccessful three years in Chori’s history. Fiscal 2017, theinaugural year of the previous plan, was a year in which wewere able to improve our results amid the thriving global economy. Meanwhile, in fiscal 2018, despite suffering the effects ofthe stagnant global economy that transpired as a result oftrade disputes between the U.S. and China, Chori recorded
net sales of ¥356.5 billion and ordinary income of ¥8.7 billion,
achieving its key numerical targets one year ahead of schedule. As for fiscal 2019, the final year of the plan, the impact of
the increased trade disputes between the U.S. and China andthe spread of COVID-19 led to lower net sales of ¥329.4
billion. However, ordinary income was ¥8.7 billion, marking thehighest results ever for the fourth year in a row.
There is no doubt in my mind that this is the result of all of
the hard work and commitment of each and every one of
our Group employees to achieve our medium-term targets.
It appears that our business foundation has evolved throughthe strengthening of consolidated management and the
expansion of our overseas business toward the “reinforcement of consolidated management structure,” which we set
out as one of our basic strategies. As a result, we succeeded in forming an even more robust financial base overthis three-year period.

Establishment of Chori Innovation Plan 2022
In May 2020, Chori formulated its new medium-term
management plan, Chori Innovation Plan 2022, covering thethree-year period from fiscal 2020 to fiscal 2022. Essentially,
the new plan remains on course with our previous plan, but
we have established its numerical targets to reflect the impact
of COVID-19 and the “new normal,” which is said to arrive
upon the containment of the virus. While we had initially projected ordinary income of ¥10.0 billion for fiscal 2020 basedon our previous medium-term plan, the spread of COVID-19
during the formulation of Chori Innovation Plan 2022 called fora revision of our targets to net sales of ¥200.0 billion, a nearly
40% drop over fiscal 2019, and ordinary income of ¥7.0 billion, a roughly 20% decline over the previous fiscal year.
Although it is difficult to clearly indicate the numerical impact
of COVID-19 on our business as of yet, these figures were
determined in line with the anticipated deterioration in performance of our existing businesses based on what we haveseen thus far. For fiscal 2022, the final year of Chori Innovation
Plan 2022, Chori will target net sales of ¥280.0 billion andordinary income of ¥11.0 billion.
Recording of Provision of Allowance for Doubtful
Accounts and Revision of Business Results Forecasts(As of July 27, 2020)

Due to delays in the collection of ¥4.9 billion in accounts
receivable at consolidated subsidiary Tohcho Co., Limited
from a chemical manufacturing group in China, Chori
recorded ¥2.5 billion in provision of allowance for doubtful
accounts—equivalent to around 50% of the amount foraccounts receivable—as part of selling, general andadministrative expenses in the consolidated results for the
first quarter of fiscal 2020. As a result, we revised our fullyear consolidated business results forecasts for fiscal 2020
to operating income of ¥4.2 billion, ordinary income of ¥4.5
billion, net income attributable to owners of the parent of¥2.1 billion, and net income per share of ¥85.52.

While we have updated our numerical targets in line withthe projected impact of COVID-19, our mission to become“a corporate group that continues to evolve and change on
a global scale, underpinned by our exceptional capabilities
and expertise,” remains unchanged. We believe trading
companies that are able to flexibly adapt to changes in thebusiness environment are also those that can succeed on a
global scale even in the midst of COVID-19 or in the “newnormal.” This is because despite the trend toward placing
priority on one’s home country over the rest of the world,
resolving issues through the efforts of a single country isnearly impossible and for that reason, our procurement
capabilities are highly valuable. With that said, it is essentialthat we enhance the strengths of our business sites andmaintain and upgrade our supply chain. Chori will continue
to maintain a positive outlook during the three-year period of
the new medium-term management plan and look forward
to the arrival of the “new normal” by monitoring its operating

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CHORI CO., LTD.

Overview of Chorienvironment and implementing the measures necessary inorder to remain a corporate group that continues to evolve.

Bolster Collective Strengths in Textiles andSeparate Chemicals and Machinery Businesses
Under Chori Innovation Plan 2022, Chori will continue to move
forward with its basic strategies of “reinforcement of consolidated management structure,” “corporate governance,” and“strengthening of human resource development structure,”
which were set forth under the previous medium-term
management plan. In particular, under “reinforcement of consolidated management structure,” we unified the Fibers,
Textiles, and Garments Business into a single operation to
optimize our management system. This has allowed us toexpand the business seamlessly without the segmentation of
its operation between upstream, midstream, and downstream
like it was in the past, as well as to create new value throughthe ability to share ideas and know-how. Through suchmeans, Chori will draw on its collective strengths to continue
to flourish within the globally thriving textile industry.
Furthermore, we enhanced our collective strengths with thestart of cross-sectional projects for the Fibers, Textiles, andGarments Business. The number of products handled by thevarious departments of the Fibers, Textiles, and Garments
Business is significant. Therefore, by organizing and sharing
these products among the entire business, these projects facilitate the achievement of economies of scale and sales growth.
Specifically, the projects have been designed with a focus on“distinctive yarn” to strengthen the development of TEXBRIDTM
highly stretchable yarn and other brands, on the “environment” topromote the use of environment-friendly materials such as recycled yarn, on “sewing” to expand the number of sewing factories, on “textiles” to promote textile projects globally in addition to
the Hokuriku region, and on “geopolitics” to develop new sales
channels by taking geopolitical risks into account. In addition, weare currently involved in projects focused on “masks and nonwoven fabrics,” “antiviral and antibacterial treatment,” and “health,”
to address the emerging needs stemming from the spread of
COVID-19. In these ways, the Fibers, Textiles, and Garments
Business will continue to boost its collective strengths by conducting its business from a cross-sectional perspective andaddressing the needs for everything from yarn to sewn products.
Further, Chori will forge ahead with the separation ofmanagement of the Chemicals and Machinery businesses togenerate and expand profits in both businesses. This measureis also aimed at establishing the Machinery Business as anindependent operation from the Chemicals and Machinery
Business. In 2017, we spun off and established Chori
Machinery Co., Ltd. as the Machinery Business and haveachieved remarkable results over the three years since. This
success is owing to the fact that we are now able to clearly
assess the costs directly associated with this business and todevelop an organizational structure tailored to the generationof profits. The spin off has also had a positive impact on theChemicals Business with the ability to accurately assess its
globalization efforts. Going forward, we will continue to takesteps to separate the management of these businesses withthe aim of establishing an optimal management system.

Realizing Sustainable Growth with Society
Under “Creation of next-generation business models,” one of
the basic strategies laid out in the new medium-term management plan, Chori will carry out business investments centeredon specific themes and thereby expand its entire operations.
Specifically, in the Fibers, Textiles, and Garments Business,
we will ramp up our efforts in the environmental and recycling,
health, hygiene, and materials fields. Meanwhile, in theChemicals Business we will center our attention on the environmental and healthcare fields, while in the Machinery
Business we will focus on the development of global markets.

Examples of Cross-Sectional Projects
for the Fibers, Textiles, and Garments BusinessDistinctive Yarn
Environment
SewingTextilesGeopolitics
Masks and Nonwoven
Fabrics
Expandlineup of special and distinctive yarn
Strengthen
development of brands for distinctive yarn
Promoteuse of recycled yarn and other environment-friendly materials
Unifyand strengthen the Fibers, Textiles, and Garments Business
Expandnumber of sewing factories in Mauritius and other parts of Africa

Implement
the Global Textile Project in cooperation with textile
manufacturers in East Asia
Build new sales channels while responding to changes in the global climatePlan
to reassign certain overseas production to Hokuriku regionExpandlineup of products utilizing woven textiles

Address
needs for medical gowns

Antiviral and Antibacterial
Treatment
Address
needs for antiviral and antibacterial treatment

Health
Address
needs for at-home comfort and relaxation

Project meetings in session(meeting room divided to maintain social distancing)Tsumugu Report 2020

These themes were established for each business segment based on the United Nations Sustainable Development
Goals (SDGs). As a company that aims to continue toexpand worldwide, we understand the importance of fulfilling
our social responsibilities whenever possible. Our current
initiatives include the Fibers, Textiles, and Garments
Business’s efforts in ECO BLUETM, an environment-friendly
material generated from recycled plastic bottles, as well as
the Chemicals Business’s efforts in the procurement of lithium compounds, a component of energy-efficient lithium-ion
batteries, and the chemical fertilizer production project forthe development of agriculture in Africa. Over the years,
Chori has been involved in such CSR activities as the Natural
Dye plant coloring event in support of those affected by theGreat East Japan Earthquake and the sponsorship of theJapan Dance Convention, a dance contest for high school
students. In addition to these ongoing efforts, Chori willcontinue to remain an important part of society and together
realize sustainable growth.

The Sustainable Development Goals (SDGs) are a set of 17 goals and 169
targets that were adopted at the United Nations Sustainable Development
Summit in September 2015 toward the resolution of a number of global
issues by the year 2030. Governments across the globe are in full supportof these goals and companies of all industries are counted on to become
essential partners toward the achievement of the SDGs. Chori will put forth
every effort to help realize the SDGs through its business activities in pursuitof sustainable growth with society.

mitigate the risk of its employees contracting COVID-19 andimplemented a telecommuting system as a part of its efforts
to ensure business continuity. Specifically, we introduced atelecommunications system to facilitate telecommuting for allof our employees with the aim of having as many as 70% of
our head office employees work from home. At Chori, we
have been promoting workstyle reforms even prior to the
spread of COVID-19 through such efforts as encouraging
our employees to use paid holidays as well as childcare
leave, even to our male employees. We now have a telecommuting system in place as a result of COVID-19. Whilemonitoring the state of the pandemic throughout Japan, we
have continued to encourage our employees to work fromhome even after the state of emergency was lifted. Placing
the health of our employees above all else, we will work todevelop workstyles that are ideal for the current situationand for the “new normal.”In terms of social contributions, we have been providing
manufacturers with the materials necessary for the productionof masks through our lineup of nonwoven fabrics as well as
donating protective gear and goggles that were stockpiled
during the Great East Japan Earthquake to healthcare facilities.
Looking ahead, we will remain devoted to the development ofsociety by continuing to address its needs in a timely manner.

To All of Our Stakeholders
For Chori, the year 2020 marks the 159th year since its
founding. We have been able to carry on our tradition thanks
to the dedication and commitment of each and every
employee and all of our other stakeholders. While experiencing many ups and downs along the way, we have been able
to evolve to what we are today by constantly adapting to thechanging times.
Our world is currently undergoing remarkable changes
and experiencing a period of tremendous hardship. However,
Chori will overcome these trying times by continuing toevolve and change in the years ahead, underpinned by thelong track record it has built over its 159-year history. As weproceed forward and pursue this goal, we ask all of our
stakeholders for their continued understanding and support.

Chori’s Response to COVID-19
With the Japanese government’s declaration of the state of
emergency in April 2020, Chori introduced measures toKazuo Sakihama



President, CEO & COO, President and Executive Officer

16

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CHORI CO., LTD.

Feature: Chori’s Strengths

Human Resources
Expertise,technologies, and know-how
Communication skills
Organizational
capabilities and anawareness of different cultures

Procurement
Capabilities

Responsiveness(Promptness)

Ability to Developa Global Supply Chain

UniqueGlobal Network

History

Global bases and sales routes

An extensive business network

Product management teamCredibility (a proven track record)

Product procurement network

One of the first friendly trading
companies to be designated by China

Marketing capabilities
Know-how in overseas trade

Network

Chori’s Strengths
Cultivated since Its Establishment

Tsumugu Report 2020

Maricunga Salt Flat in Chile
The Maricunga salt flat is located 3,800 meters above sea level on the easternside of the Atacama region in northern Chile.
The region is known for its low impurity content and high-quality resources.
Lithium Raw Materials
Essentially, lithium can beproduced from either brinewater or mineral ore.
Brine extraction isconducted mainly in SouthAmerica, and Chile is the world’s
leading producer of lithium
extracted from brine water.
Errazuriz Group
Established: 1960s

Lithium Extraction
In general, lithium components are extracted frombrine water through an evaporation process.
The process of evaporating the brine water andextracting the lithium takes anywhere from one to
two years. The extraction process also depends on
weather conditions and has a significant impact on
the environment. For those reasons, Chori has
adopted a new extraction process for this project.
Partialinvestment

SIMCO SpA (Project Conductor)
Established: July 2016

Location:

Santiago, Chile

Location:

Santiago, Chile

Business
activities:

Mining, fishery,
food processing,insurance,
automotive, etc.

Details:

Able to commence commercial
production immediately due toits ownership of rights to
extract brine water from the
Maricunga salt flat.

Project Outline
Total cost:

Approx. ￥25.0 billion

Produced resource:

High-purity lithium compounds

Construction area:

Area surrounding Maricunga salt flat

Start of commercial production: 2022
Estimated production volume:

Approx. 20,000 MT per year
(converted to lithium-carbonate)

Lithium Compound
Production Projectin Chile
In this section, we will discuss the three strengths demonstrated by Chori throughout this project.

Overview and Background of the Project

Yasushi Ueda
Manager, Inorganic Fine Materials
Department
Chemical & Materials Business
Department

We will likely witness the growth of the lithium-ion battery market on the back of the global spreadof electric vehicles (EVs) and their rising demand. In 2017, Chori decided to take part in this projectbased on the belief that the lithium compounds produced by SIMCO SpA, a subsidiary of theErrazuriz Group, reflect the level of quality necessary for lithium-ion batteries as well as their risingdemand. For this project, we adopted a new production process to extract lithium components
from brine water in place of the conventional evaporation process.
Chori first engaged in the import of lithium compounds in the 1970s and has been involved in
the sale of lithium-ion battery materials to Asian markets in recent years. We will draw on thisexperience to contribute to the success of this project and fulfill our role of expanding sales oflithium-ion battery materials in Asia.

18

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CHORI CO., LTD.

Inspection at Maricunga salt flat

UniqueGlobal Network
×History

The History behind
Chori’s Lithium
Business and Its
Road to This Project
While lithium compounds have become
a topic of attention in recent years, owing
in part to the awarding of the Nobel Prize
for the development of lithium-ion batteries, Chori has been involved in this field
for many years. Our journey began

in the 1970s with the import of lithiumcompounds from the United States,
which was followed by imports fromSouth America into the 1990s. At thetime, lithium compounds were limited totheir use in lubricants and heat-resistantglass and the market was so small that I,
who had just joined the Company, wasput in charge of their business right away.
However, the development of lithium-ion
batteries revolutionized the industry andtheir potential spurred an upsurge in the
production of lithium compounds acrossthe globe. In addition to lithium compounds, in the 2000s Chori engaged in
the business of nickel, cobalt, andmanganese, all raw materials used inlithium-ion batteries.

Selection of Chori for the Projectand Utilization of Its Strengths

Human
Resources
×
UniqueGlobal Network

However, as demand for lithium-ion
batteries continued to grow, we
started to see shortages in the supplyof lithium compounds. This was when
we came across the opportunity toengage in this lithium compound production project with the Errazuriz
Group in Chile, with which we haveworked together with for over 20 years
in the vehicles business. Engaged in avariety of fields including construction
materials and food products, theErrazuriz Group boasts an extensive
business network consisting of arange of trading companies in Japan.
And for this project, they were insearch of a company that would team
up toward the discovery of a newlithium compound production process.
In general, the compounds are
extracted from brine water through aprocess of evaporation. This process
involves drawing brine water from wells
to the surface to create large pools andwaiting for it to evaporate. It takes roughly
two years to produce the compounds
and the costs involved are extreme. With
this in mind, as well the significant
environmental impact associated with theevaporation process, the Errazuriz Groupwas in pursuit of an alternative method
for the production of lithium.

Chori’s Lineup of Lithium-Ion
Battery Materials
Cathode Materials

Chori was selected to unite with theErrazuriz Group on this project for two
main reasons. One reason is the factthat Chori is a “supermarket of raw
materials,” or in other words, it
handles a range of raw materials forlithium-ion batteries.
Chori’s extensive track record in thesale of lithium and related materials,
such as nickel, cobalt, and manganese,
has afforded the Company a wealth ofknowledge in production technologies
and markets. In addition to raw
materials, we engage in the handling ofcathode materials, anode materials, andother related materials, which allows us
to provide the full lineup of ingredientsfor batteries. In reality, the number of
trading companies that mirror our business is limited, as most companies
focus on a particular type of material.
Accordingly, Chori’s track record in thebusiness of lithium and the network of

information that has been cultivatedthrough this business were looked upon
to guide this project forward.
The other reason for Chori’s selection was that it had a clear exit strategy
in place. The production of lithiumcompounds without the existence of aproper sales and exit strategy would
not appeal to any supplier. For thatreason, rather than focusing our attention on investments, we suggested thetype of needs that are apparent amongcustomers worldwide and establisheda framework to promptly address suchneeds. The ability to develop such anexit strategy, to sell commodities, represents one of Chori’s strengths. We
excel at leveraging our extensive information network to identify needs and at
producing and selling commodities thatreflect those needs. Chori’s ability tosell such commodities was a criticalfactor in being selected for the project.

Manganese compounds/manganese metal
Lithium compounds
Nickel compounds/briquette
Cathode materials(nickel-lithium oxide, lithium-manganese oxide)
Conductive auxiliary agent
Anode Materials
Silicon anode materials
Carbon anode materials
Conductive auxiliary agent
Separator Materials
Separator coatings
Electrolyte Materials
Lithium compounds
Fluorine materials

Lead cathode
Anode
Separator

CathodeLead anodeTsumugu Report 2020

Extraction of lithium components from the groundwater beneath the massive salt flat

Human
Resources

Environmentfriendly

Strengths andDistinctive Qualitiesof the New Lithium
Production Process

In our new production process, lithiumcompounds are produced by extracting
only the lithium components from thebrine water. The conventional evaporation process entailed the evaporation ofgroundwater, which reduced the water
volume of salt flats and involved the riskof people residing at the foot of mountains not being able to draw water fromwells, in addition to the loss of marine
habitats. On the other hand, the newprocess is extremely friendly to theenvironment as it involves returning thedrawn water to the salt flat, thereby
maintaining its water volume. In
addition, the new liquid compound
production process has enabled us to
drastically reduce production time incomparison with the evaporation process, and because it does not hinge on
weather conditions, the new process
allows us to adjust the production
volume according to market conditions.
Another distinctive quality of the newprocess is its low production costs,
which we were able to achieve throughour global pursuit of manufacturers with
cutting-edge technologies. We took
advantage of the product quality
assessment and analysis capabilities of
CHORI Analysis & Technology Service(Suzhou) CO., LTD. by visiting manufacturers together with a production
advisor from this Group company inorder to pursue the highest-quality
products at the lowest costs possible.
As a result, we were able to reduce ourcosts by a significantly greater amountthan what we had initially anticipated.

Human
Resources

Pursuit of Further
Business Growth
While we have succeeded in lowering
environmental impact, improving theefficiency of production management,
and reducing costs through the introduction of our new production process,the lithium compound market continues
to be dominated by three global manufacturers. Just as it would be difficult toconvince someone who has been consuming the same product to switch tosomething completely different, goinghead to head with the world’s threeleading manufacturers is certainly not aneasy task. With that said, rather thancompeting against the industry’s major
players for the production of lithiumcompounds, Chori will step up its
approach of appealing to customers
that embrace the distinctive qualities of
its raw materials and gear its sales

efforts to that target market. By harnessing our strengths in the form of low
environmental impact and more-efficient
production management, we will differentiate ourselves from the threeglobal manufacturers and overcome thismassive obstacle.
Despite the unfavorable market
environment stemming from the spreadof COVID-19, the project is moving
steadily toward its next stage. In
addition to the new lithium compound
production process, we are gearing up
to launch a project that places evengreater emphasis on the environment.
With that said, we hope you look forward to Chori’s continuous pursuit ofbecoming a company that fulfills its
responsibilities to both local communities and the environment.

20

21

CHORI CO., LTD.

Overview and Strategies by Business Segment

Fibers, Textiles,
and Garments
Business

Chemicals
Business

Due to the lack of recovery in domestic consumer
sentiment and the unfavorable state of the Japanesemarket, net sales in fiscal 2019 came to ¥114.5 billion, a4.8% decline over the previous fiscal year. However, on
the back of brisk results in the overseas base materials
sector and higher profitability in the domestic apparelsector, operating income climbed 16.1%, to ¥4.3 billion,
while ordinary income rose 8.6%, to ¥4.0 billion.

As a result of sluggish market conditions for bulk
products in the organic chemicals sector, net sales
dropped 14.7% year on year, to ¥150.6 billion,
operating income fell 12.9%, to ¥3.2 billion, andordinary income declined 9.6%, to ¥3.5 billion.

(Billions of yen)(Billions of yen)

120

176.5

200

150
120.2

113.3

114.5

160

150.6

142.3

12

9
6

3.5

3.5

3.7

3.7

4.3

8

4.0

4

3
0

2017

Net sales

2018

Operating income

2019

0

(FY)

Ordinary income

3.1

3.0

2017

Net sales

3.6

2018

Operating income

3.9

3.2

2019

3.5

(FY)

Ordinary income

Over viewGroup Structure

CHORI CO., LTD.

Major Subsidiaries

Main Business

Fibers, Textiles, and Garments
Business: 10 companies

ASADA U CO., LTD.
CHORI MODA CO., LTD.

Sales of automotive interior and packaging materials
Planning of fashion apparel

Chemicals Business andMachinery Business:
10 companies

Chori Machinery Co., Ltd.

Sales of transportation equipment and other products

Miyako Kagaku Co., Ltd.

Sales of chemical products, industrial materials, pharmaceuticals, and food-related ingredients

CHORI GLEX CO., LTD.

Import sales of chemical products, construction materials, and industrial products

Other: 2 companies
Overseas subsidiaries:
19 companies

Business Anchor Corporation Outsourcing of administrative work
CHORI (CHINA) CO., LTD.
CHORI AMERICA, INC.

Import and export sales, overseas transactions, and domestic sales of various products in China
Import and export sales, overseas transactions, and domestic sales of various products in the U.S.

Note: In general, overseas subsidiaries are classified into multiple business segments.

Tsumugu Report 202022

Fiscal 2019 Business Resultsby Segment

MachineryBusiness¥0.1 billion¥114.5 billion（0.0%）（34.8%）¥64.1 billion（19.5%）Net Sales¥329.4 billion¥150.6 billion

Due to the steady performance of the vehicles
business and its transactions with Central andSouth America as well as its entry into the Europeanand African markets, net sales grew 7.4% from theprevious fiscal year, to ¥64.1 billion, operating
income surged 44.4%, to ¥0.5 billion, and ordinary
income soared 28.9%, to ¥0.4 billion.

（45.7%）¥0.5 billion¥0.2 billion（6.1%）（2.6%）¥3.2 billion

Operating
Income¥8.2 billion（38.6%）(Billions of yen)

¥4.3 billion

100（52.7%）

80
60

64.1

59.7

56.0

¥0.7 billion¥0.4 billion（4.8%）

4
2

0.2

0

0.2

2017

Net sales

0.3

0.3

2018

Operating income

0.5

0.4

2019

(FY)

Ordinary income¥3.5 billion（8.3%）

Ordinary
Income¥8.7 billion¥4.0 billion（40.5%）（46.4%）█ Fibers, Textiles, and Garments █ Chemicals█ Machinery █ Other (incl. corporate adjustments)

Ratio of Net Sales in Fiscal 2019 by Region

Japan (Domestic Sales)

Japan (Imports)

Central andSouth America

Greater China*

14.6 %

9.9 % 4.7 %¥94.1 billion¥71.8 billion¥56.4 billion¥48.0 billion¥32.5 billion ¥15.7 billion

28.6 %

21.8 %

17.1 %

Asia

MiddleEast

North
America /Others

3.3 %¥11.0 billion

Overseas Transactions 71.4%
Domestic sales: Amount ofdomestic sales

Import sales:
Amount of net sales from overseas to Japan
Export sales:
Amount of net sales from Japan to overseas
Overseas sales: Amount of net sales from overseas transactions* Includes China, Taiwan, and Hong Kong

Domestic sales declined from the previous fiscal year in the face of sluggish market conditions in the organic
chemicals sector of the Chemicals Business and a slowdown in domestic consumption attributable to the spreadof COVID-19. By contrast, sales overseas were brisk owing to steady transactions of the vehicles business in the
Middle East with Central and South America as well as entry into the European and African markets.

23

CHORI CO., LTD.

Overview and Strategies by Business Segment

Fibers, Textiles, andGarments Business
Synthetic Fiber
Business Dept.

Synthetic Fiber andAutomotive Interiors Dept.

Performance Fiber
and Textile Dept.

Technical Textiles Dept.

Textile-Fabric Dept.
Textile Division

Technical Material& Garments
Business Dept.

Apparel &Sportswear
Business Dept.

Technical Fiber
Garments Dept.

Intimate Apparel Dept.

Menswear &Sportswear Dept.

Apparel Dept.

By merging the three divisions of the Fibers, Textiles, and Garments Business to form a single division, Chori established its new Textile
Division. Doing so has eliminated divisional boundaries and united the divisions to operate as a single entity.
Through the ability to seamlessly conduct operations as a result of the restructuring, the Fibers, Textiles, and Garments Business haslaunched cross-divisional projects, shared ideas and know-how, and engaged in joint efforts with manufacturers as well as with partners inindustry and academia. The restructuring has also facilitated the development of unique materials with water-repellent, odor-eliminating, andantibacterial features, in addition to proposals of optimal solutions at each stage of the material production process.

Strengths of the Fibers, Textiles, and Garments Business
A Global Supply Chain Combining Commercial and
Manufacturing Capabilities
The Fibers, Textiles, and Garments Business has been thecornerstone of Chori’s business throughout the nearly 160 years
since its establishment. We have been building trust alongside
our track record by leveraging our sound expertise and extensive
insight. Today, on the strength of its global network, the businessengages in every stage of the textile manufacturing process,from the handling of raw materials (upstream) to the
management of textiles and other materials (midstream) and the
manufacture and distribution of finished products (downstream).
Another strength of the business is its “commercial” capabilities,
which include the marketing of products and procurement of raw
materials, and its “manufacturing” capabilities, which cover the
production, manufacture, and quality control of textiles. By merging
these capabilities, Chori will continue to evolve the Fibers, Textiles,
and Garments Business into a high-value-added business.

Commercial

Manufacturing

company function

company function

Upstream

Midstream

Downstream

Handling of
raw materials

Handling ofmaterials

Handling ofproducts

fieldsfieldsTotal BusinessfieldsTsumugu Report 2020

Medium-Term Management Strategy:

Ordinary Income Target

GLOBAL ONE STOP Operation By CHORI
1(Billions of yen)

Bolster collective strength in the businessIn a bid to further solidify the integrated management of the Fibers, Textiles, and Garments Business,
Chori reorganized its three-division structure into a single-division structure, realizing an optimal
management system. In so doing, we will bolster the collective strengths of the business, which
integrate the entire textile manufacturing process, from upstream to downstream, on a global basis.

2

Enhance global supply chain management
By forming strategic partnerships with competitive manufacturers across the globe, Chori will improve
the sophistication of its manufacturing, procurement, processing, and sewing platforms and build aunique supply chain. We will also execute an exit strategy for global SPA apparel and sporting goods
manufacturers and enhance our six-region global framework.

3

Strengthen global proposals and marketing capabilities for Chori’s original products
Chori will step up its proposals of product lineups based on the themes of the environment andrecycling. We will also distinguish our products from those of our competitors through branding offunctional products.

5.2

1.3

times

4.0

FY2019(Result)

FY2022(Target)Initiative to Realize Medium-Term Management Plan
Joint Project with Utsumi Recycle Systems Inc.
Chori has continued to promote business investments in growth fields since its previous medium-term
management plan. Recognizing the potential of and growing demand for recycled materials, in
September 2019 Chori decided to engage in a joint project with Utsumi Recycle Systems Inc.
For this business project, we have provided a recycled pellet extruder to Utsumi Recycle Systems—
which collects, cleans, and pulverizes used plastic bottles and produces pellets out of them—and havejointly engaged in sales of recycled pellets. Approximately ¥900 million will be invested toward theestablishment of this machinery, which will generate roughly 15,000 tons of recycled pellets per year.
Moreover, we have implemented traceability for its manufacturing process, spanning the procurement of raw materials to the
manufacture of the finished product. In the future, we will look to acquire identification information to verify the use of Chori’spellets in apparel products in an effort to build a production system that caters to high levels of safety and quality.

Please refer to page 30 for more information on our environment-related products.

Regional Strategies
Evolution and Expansion of China Business Strengthen sales of original products Boost sales in China
Entry into
 xpand globally through China-based business
E
European Market Europe Expand businesswith Global Maison Bolster sales oftextile materials Grow business with the world’s leading manufacturers Increase direct trade with CHORI (DALIAN) TRADING CO., LTD.

MiddleEast /
Africa

China

Japan

Acceleration of Global Expansion
 Strengthen overseas subsidiaries Establish six-region global framework for
car seats and materials Bolster China and ASEAN businesses Develop production base in the ASEAN
regionStrengthening of Planningand Proposal Capabilities Collaborate with the Hokuriku region Further enhance original design
manufacturer (ODM) capabilities Upgrade Chori’s original products Pursue synergies with ASADA U CO., LTD.
 Strengthen environmental businessthrough textile recycling

Development of ASEAN Business

ASEAN
Traditional Middle Eastern
Garments Business Strengthen business foundation of textiles
and products manufactured at facilities inJapan and the ASEAN region

Northand Central
AmericaStrengthening of U.S.
Market Boost sales of lifestylerelated materials Bolster sales of textile
materials for automobiles in
the U.S. and Mexico Promote sales of sewn
textiles for use in sports
apparel Promote Indonesia Project
Reinforce system integrating processes from procurement of raw
materials to supply of finished products in Indonesia Expand business in China and other countries (including the ASEAN region and India) Establish business foundation through collaboration with successful partners
 Rapidly expand business within the thriving market of Vietnam
 Strengthen subsidiary in Vietnam

24

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CHORI CO., LTD.

Overview and Strategies by Business Segment

Chemicals
Business
Chemical &Materials Business
Dept.
Performance Chemicals Dept.

Inorganic Fine Materials Dept.

Fine Chemicals Dept.

Life Science Dept.

Industrial Chemicals Dept.

Chemicals Division

Life & Fine
Chemicals Business
Dept.

By separating management of the Machinery Business from the previous Chemicals & Life Science, Machinery, Electronics
Operations, Chori established its new Chemicals Division. Also, with the aim of realizing strategic and functional business management, the Chemicals Division consists of multiple departments in the same manner as the Fibers, Textiles, and Garments Business.
This restructuring will facilitate the exchange of personnel and information among divisions, departments, and subsidiaries, while
enabling Chori to promptly respond to the needs of communities worldwide with the potential for economic growth.

Strengths of the Chemicals Business
Global Pursuit of the Three “N”s
Chori is developing its business activities in accordance with its
three “N”s: Needs (analyzing client needs), Network (building a
network with domestic and overseas manufacturers), andNiche (creating niche markets). Recognizing the potential of
petrochemicals, Chori began handling chemical products in
1956 and has since built a track record spanning over 60 years
in the Chemicals Business. Over the course of this time, wehave built a robust global network and centered our efforts not
only on procurement and sales within China, but also on
exports to and intermediary transactions with countries in the
Middle East and Africa.
We have set ourselves apart from the competition andenhanced our market presence by addressing the needs of ourclients for niche products while taking advantage of our global
network. Looking ahead, we will step up our approach in new
fields where we foresee further needs, such as pharmaceuticalproducts and agrochemical intermediates, food ingredients, rawmaterials for cosmetics, electronics and battery materials, andbiodegradable plastics and other environment-related materials.

Analysis ofclient needs

Network-building
capabilities

Creation ofniche markets

Needs

Network

Niche

Tsumugu Report 2020

Medium-Term Management Strategy:

Ordinary Income Target

Accelerate the Transformation to a Business Model Based on Business Investments
1(Billions of yen)

Enhance business investments and promote development of new businesses
Chori will concentrate its management resources in fields with growth potential, such as environmental,
5G-related, electronics and battery materials, healthcare, and agriculture. We will also expedite thecreation of new products and bolster our development capabilities.

1.5

2

Accelerate global expansion
Chori will continue to strengthen and expand its China-based business and fast-track its
establishment of businesses within the ASEAN region. We will also move ahead with the developmentof large-scale projects in South America and Africa.

3

Transfer business headquarters to optimal location
Chori will promote the expansion of business operations at overseas subsidiaries and optimally deploy
human resources with a wealth of experience.

4

Strengthen subsidiaries centered on Miyako Kagaku Co., Ltd.
Chori will pursue business synergies through the exchange of personnel with Miyako Kagaku Co., Ltd.
and other subsidiaries. We will also look to expand our lineup of new products.

5

5.3

times

3.5

FY2019(Result)

FY2022(Target)Expand business domain through M&A
Chori will invest in fields with growth potential and expand its business domain.

Initiative to Realize Medium-Term Management Plan
Expansion of Business of Miyako Kagaku Co., Ltd.
While “fortifying defensive measures,” as laid out in the new medium-term management plan, Miyako
Kagaku Co., Ltd. will strive to expand its business in order to realize medium- to long-term growth.
Miyako Kagaku, which became a Group subsidiary in 2015 through an M&A, is a trading company
that handles chemical products, industrial materials, and pharmaceutical and food-related ingredients.
The company was founded in 1921 and has since developed solid relationships with business
partners mainly in Japan. Miyako Kagaku will work to contribute to higher profits as a member of theGroup through the continued growth of its business by drawing on Chori’s extensive global network.
Use of biodegradable resin for the
In an effort to realize the new medium-term management plan, the company will adopt a more cultivation of seedlings
environmentally responsive approach aimed at achieving a decarbonized society, such as by
reducing sludge at plants through the use of biodisinfectants in the chemical products field and rolling out biodegradable resin to
the agricultural industry and other primary sectors in the industrial materials field. Moreover, in the pharmaceutical and foodingredients fields, the company will address the needs of the flourishing healthcare market by building a platform for the supply of
amino acids, which it specializes in, and by incorporating functional lactic acid materials. In order to transform into such a nextgeneration business, Miyako Kagaku will leverage the Group’s global network in its product procurement.

Regional Strategies
Russia /EuropeNorth
AmericaChina Develop products locallyin Russia and Europe Strengthen capacity to procure locally (for chemical
products, electronics materials, pharmaceuticaland agrochemical intermediates, and food andfeedstuff additives) Boost exports to Japan and third-party countries Develop products in the fields of lifestyle, environmental, and electronics and battery materials Develop products locallyin North America

AfricaIndia /ASEAN
 xpand handling of raw
Ematerials for fertilizers

 Expand business within the ASEAN region andbetween Japan, China, and the ASEAN region
 Expand business in the fields of functional
chemical products, healthcare, and raw
materials for cosmetics

 Continue to move forwardwith the lithium compound project in Chile

Centraland South
America26

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CHORI CO., LTD.

Overview and Strategies by Business Segment

MachineryBusiness
Operating Company

Chori Machinery Co., Ltd.

Wholly owned consolidated domestic subsidiary

Four-wheel vehicles, two-wheel vehicles, and trucks;
agricultural machinery; industrial equipment; construction materials;
construction machinery; and marine equipment

With the aim of providing greater flexibility, in April 2017 Chori spun off Chori Machinery Co., Ltd., which supplies automobiles,
machinery, and related materials to Central and South America.
Leveraging the Group’s unique global network, which has expanded over the years, Chori Machinery commercializes products
acquired from China, India, South Africa, and Mexico in markets such as Europe, the ASEAN region, and North, Central, and SouthAmerica. Most notably, the company engages in a project in which the automobiles of Chinese automakers are assembled throughsemi-knocked-down production and sold in Mexico.
Recently, the company has been growing its business in the new markets of Africa and Southeast Asia. By drawing on its longcultivated know-how and unique trade routes, Chori Machinery will continue to expand its business in the years ahead.

Supplier
China

EuropeMarketSouth
Korea Japan

AfricaSupplier and market

Mexico

India
ASEAN

Centraland South
AmericaSouth
AfricaCore Project of Machinery BusinessSemi-Knocked-Down Production in Mexico
In semi-knocked-down production, automobile parts aretransported to another country, where the parts are assembled
and the automobile is completed. It differs from knocked-down
production in that the engine, suspension, and other main
components have already been assembled by the time they aretransported overseas. Accordingly, semi-knocked-down
production offers the benefit of lower import tariffs.
In 2014, Mexico’s annual automobile production volume
surpassed that of Brazil, becoming the seventh highest in theworld, and in 2018 it reached the 4.1 million-unit mark. Moving
forward, Chori Machinery will continue to seek greater business
opportunities within Mexico’s prominent automotive industry.

Plant in Mexico
JointventureBenefit from lower importtariffs due to semiknocked-down production

Chineseautomobile

Assembly

Automotive retailer
in Mexico
30 stores as of end-2019
35 stores as of end-2020

User

Tsumugu Report 20201

Medium-Term Management Strategy:

Ordinary Income Target

Develop the Global Market by Leveraging the Vehicles Business Platform(Billions of yen)

Develop markets of four regions + India
Chori Machinery will strengthen its presence in the four regions of Mexico and Central and SouthAmerica, the Middle East and Africa, Southeast Asia, and Europe, while expanding the Indian market.

2

Expand product lineups through vehicles business and convert to revenue model
Chori Machinery will expand its business and revenue by extending beyond the scope of its vehicles
business to the supply of such products as construction materials and food products of conglomeratecompanies, with which it has established business ties.

3

Promote strategic alliances with global corporations in each region
On the back of solid business relationships established through core products, Chori Machinery will
pursue the growth of its business and revenue by swiftly adapting to the changing market conditionsof each region and tapping into new businesses in areas with the potential for economic growth.

1.3

times

0.5

0.4

FY2019(Result)

FY2022(Target)Initiative to Realize Medium-Term Management Plan
Establishment of the Economic Community of West African States (ECOWAS) as a Priority Area
In 2017, Chori Machinery began working with a company equipped with an automobile production system that handles foodproducts, automobiles, chemical fertilizers, and other consumer goods. Through this joint venture, we will assemble
Japanese, Korean, Chinese, and Indian automobiles through semi-knocked-down and knocked-down production in Nigeria.
In addition, we will enhance our portfolio of construction materials and food products for the Nigerian market and pursue
multiple projects in ECOWAS.
In 2020, Chori Machinery embarked on the business of three-wheeled vehicles. We have partnered with a company that
handles such automobiles to export parts from India to Nigeria, where the automobiles are assembled in knocked-down
production and then sold. Going forward, Chori Machinery will look to expand its business in the ECOWAS region as apriority area.

ECOWAS

Nigeria

Joint venture(Nigeria)

Three-wheeled vehicle(India)ECOWASThe Economic Community of West African States (ECOWAS) was founded in 1975 as a subregional group that promotes the economic integration of the countries constituting West Africa. ECOWAS currently consists of 15 nations in West Africa, including Nigeria,
which accounts for a significant portion of the group’s overall GDP.

28

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CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives
Environment
We understand the importance of respecting the environment when conducting our businessactivities and that it is our responsibility to address environmental issues in a proactive manner.

Basic Principle
With a view to generating substantive value and helping to realize a moreenriched society, Chori strives to provide accurate information and exceptional
products tailored to the needs of its customers. As the environment continues togarner global attention, we believe the role we play in contributing to environmental conservation is essential to establishing a solid management foundation.

Basic Policies
1.Consideration for the global
environment
2.Compliance with environmental
laws and regulations
3.Establishment and continuous
improvement of environmental
management system

Environmental Management Structure (As of June 16, 2020)
We have established the following structure in pursuit of our environmental initiatives.
President
Propose EMS* revisions/improvements
Report EMS results

Environmental Management Secretariat

Appoint

Environmental Management Officer

Report internal audit resultsAppoint

Internal Environment Auditors
Corporate Management Division

Textile Division

Chemicals Division

Division Head

Division Head

Division Head

Division Environmental Manager

Division Environmental Manager

Division Environmental Manager

EMS Facilitator
Synthetic Fiber
Business Dept.

Technical Material &Garments Business Dept.

Apparel & Sportswear
Business Dept.

Logistics Dept.
(Textile)

EMS Facilitator

EMS Facilitator
Chemical & Materials Life & Fine Chemicals
Business Dept.
Business Dept.
Logistics Dept.
(Chemicals)* EMS: Environmental management system
Note: EMS Facilitators serve concurrently as Internal Environment Auditors and conduct internal audits inother divisions.

Corporate
Management Dept.

Human Resources &General Affairs Dept.

Information System
Dept.

Internal Auditing
Dept.

Pharmacovigilance &Quality Assurance Office

Health InsuranceSocietyBusiness Anchor
Corporation

Chori MachineryCo., Ltd.

Environment-Friendly Business Activities
Since its acquisition of the ISO 14001 international standard for environmental management
systems in 2000, Chori has continued to conduct and engage in environmental conservation activities. We adopted the 2015 standard in December 2017, acquired ISO 14001
certification for our Hokuriku Branch and Okayama Liaison Office in December 2019, andcontinue to engage in Groupwide efforts with Chori Machinery Co., Ltd., Business Anchor
Corporation, and other subsidiaries in our aim to help preserve the environment.

CHOI-Katsu Initiatives
We instill the importance of respecting the environment when conducting our businessactivities in our employees through the combination of ISO 14001 and Chori Innovation
Activities (“CHOI-Katsu”), Chori’s original Companywide initiative. Through the selectionof themes for CHOI-Katsu 2019 (as shown in the diagram on the right), we engage invarious initiatives such as the advancement of digitalization to reduce overtime work,
which will lead to lower energy use.
In fiscal 2020, we began utilizing digital tablets in place of documents at executive
meetings to reduce the use of paper. Such digitalization efforts have led to reductions inenvironmental burden and improved work efficiency.

CHOI-Katsu 2019 Themes

Think Smart! Work Smart!
1

Digital & Data

3

Global2

Cleanliness & Compliance4

HealthTsumugu Report 2020

Chori’s Environment-Friendly Products
At Chori, we handle a wide range of environment-friendly products. Twice a year, we hold the CHORI Exhibition to showcase ourdiverse line of products, including our originally developed materials and environment-friendly materials that are paired with various
other materials. While the number of products on display was significantly low compared with previous years due to the impact of
COVID-19, we held our 2021 spring/summer product expo in June 2020, where we featured such products as MILLENNIUM
ORGANICTM and ISRAEL GIZA COTTON.

ECO BLUETM
To help resolve the issue of plastic pollution, which has been gaining
greater attention in recent years, and realizing the importance of plastic
bottles, Chori has been expanding its lineup of recycled materials derived
from these resources. While ECO BLUETM recycled polyester has been apart of our product lineup for some time, in 2019 we established traceability for this brand, which will be essential to ensuring the stable supply andmanaging the quality of these ultra-white, high-quality pellets. ECO BLUETM
is also certified with the Global Recycled Standard as it generates lesscarbon dioxide during production compared with virgin polyester.

Domestic Recycling System of ECO BLUETM

Plastic bottles are recycled into
new, completely different products

Natural Dye
Conventional plant dyes are said to be sensitive to sweat and lighting, and to easily fade when washed.
Natural Dye, on the other hand, is a dyeing method that utilizes natural coloring derived from plants, vegetables, and coffee, and offers improved results. Currently, it can create roughly 3,000 types of coloring andcan be used on synthetic fiber. Also, due to its extremely low amount of residue dye remaining in wastewater,
Natural Dye helps prevent water and soil contamination. In addition to Japan, this environment-friendly naturaldyeing technology is sold in Europe and other environment-friendly countries.

New Products
MILLENNIUM ORGANICTM
MILLENNIUM ORGANICTM is a rare, long-fiber cotton cultivated in the Fergana Valley located 600 meters
above sea level in Uzbekistan. Developed in climates known for extreme temperature variations andsnowmelt in mountainous regions, MILLENNIUM ORGANICTM is a 100% organic, non-genetically modified cotton derived from ultra-white raw cotton.
While Europe and certain countries in Asia have strengthened regulations on harmful substances inrecent years, MILLENNIUM ORGANICTM has received the OEKO-TEX® STANDARD 100 Class 1 certification, the world’s highest safety standard for textile products, and is a highly trusted product for babies
and toddlers.

ISRAEL GIZA COTTON
While it is said that the longer the fiber, the more premium the cotton, Giza cotton is a high-quality ultralong cotton that is deficient in quantity. Chori handles and has acquired BCI* certification for ISRAEL GIZA
COTTON, which stems from seeds grown in Israel. As Israel is mostly a dry region, we have been utilizing
high-tech and environment-friendly agricultural technology for our cultivation of ISRAEL GIZA COTTON inorder to minimize our daily water consumption through AI. Moving forward, we will expand our lineup ofenvironment-friendly materials and help realize a sustainable society.
* Better Cotton Initiative: An international certification standard that promotes the sustainable growth of cotton production andcotton industries worldwide.

Consumers

Collect

Produceplastic pellets

Generate
product

Weave/knit

Create
yarn

30

31

CHORI CO., LTD.

Management Foundation Tailored to Sustainable GrowthBusiness Partners
Our suppliers are essential partners for our business activities and play a critical role in our contributions to society. With this in mind, we put forth every effort to ensure compliance in our CSR
procurement, export management, and other activities.

CSR Procurement
Results of Fiscal 2019 Questionnaire

In accordance with the Toray Group’s “Operating Rules
Regarding CSR Procurement” (revised in 2017), in principle
Chori conducts a CSR procurement questionnaire once every
two years. The primary goal of the questionnaire is to verify theexistence of a CSR promotion system as well as legal
compliance, environmental conservation, risk management,
and human rights measures.

Target: 188 companies (comprising approx. 70% of amountof purchases, excluding TORAY INDUSTRIES, INC.
and affiliated companies)
Respondents: 166 companies (approx. 88.3%)
Confirmed the use of conflict minerals with primary suppliers

Ensuring Strict Compliance
Recognizing the importance of complying with the laws and social norms when engaging in business activities with our suppliers, weundertake the following measures to ensure rigorous compliance throughout our operations.

Security Trade Control
With the objective of maintaining peace and security around the world, Chori has formulated its “Internal Regulations on Compliance withExport-Related Regulations” and “Regulations on Fair Reporting and Management of Imports and Exports.” We undertake strict export
controls to prevent countries in possession of weapons of mass destruction and conventional weapons from getting access to the highlysophisticated equipment and technology of developed countries.

Export Control Process and Training
Once applications for list control and catch-all control are filed by Chori’s Sales Department, the Corporate
Management Department will conduct final approval. In October 2020, we will implement a system that
integrates the management of information on export products and transactions, and by means of this
digital management, we will ensure rigorous security trade control and strengthen compliance.
In addition, Chori encourages its employees to obtain the STC Associate certificate and holds internal
workshops and training sessions to enhance their understanding of export control. In fiscal 2019, 35
employees acquired the STC Associate certificate.

Product Safety Initiatives
In accordance with product safety management regulations, Chori establishes a Product Safety Inspection Committee whenever a
product is launched, sold, or used externally for the first time.
President
Report results

ArrangeRequest for product safety inspection
and use of company name, etc.

Product Safety Inspection Committee

Chair: Deputy General Manager of Corporate Planning
Division (Human Resources & General Affairs Department
and Information System Department)
Inspection committee members
Held: As necessary
Inspect product safety

Product Safety Management Manager
Managers of business administration sections

Deliberate
on importantAggregate and analyzeissuesproduct safety matters
Comply with relevant laws
and compile information
ReportSecretariat (Human Resources &General Affairs Department)Secretariat of productsafetyStore and manage
relevant documents
Cooperate with TORAY
INDUSTRIES’ affiliateddivisions (reports, consultations, etc.)

Provisional point of contact
in the event of accidents
Product liability insurance
coverage
Reportto and consult with
relevant and supervising
ministries, National Instituteof Technology and
Evaluation (NITE), etc.

Command

Instruct and provide information

Departments
Prepare productmanagement procedureManage product safety
Respond to andresolve accidents

Store and manage relevant
documents
Provide advice to andcooperate with subsidiaries and affiliates

Legal Compliance Committee

Chair: President
Members: Officers and department managers ofcorporate planning divisions and managers ofbusiness administration sections ofsales divisions
Supervisor: Audit & Supervisory Committee

Propose productmanagement procedure
Report accidents andsubmit detailed report

Approve productmanagement
procedure

Tsumugu Report 2020

Occupational Safety Management
At Chori, we understand the significance of minimizing risks in the workplace environment andensuring the safety of our employees. In view of this, we have devised a business continuity plan
(BCP) and instituted a safety management system for our employees overseas.

Ensuring the Safety of Our Employees Overseas
In the event of a natural disaster or a terrorist attack, whether inJapan or overseas, we must be fully prepared to immediately identify the whereabouts of our directors and employees, confirm theirsafety, and respond appropriately in a timely manner. Chori has inplace a proprietary system dubbed Overseas Business Trip Inquiry(OBTI), which manages the overseas business trips of domestic
employees as well as the business trips of employees dispatchedabroad and of the employees of overseas offices, and identifies
the location of each employee at a particular point in time.
In the event of an accident or illness while abroad, our overseas
healthcare support program provides medical assistance byphone in Japanese to employees dispatched overseas and theirfamilies as well as to employees on business trips outside ofJapan. The program helps to minimize employee concerns
regarding overseas healthcare due to its differences from Japan.

Business Continuity Plan (BCP)
Chori’s business continuity plan (BCP) has been designed to place
the utmost priority on the safety of its directors and employees
and to enable swift recovery of business operations after serious
disasters. We have implemented a safety confirmation system,
which verifies the safety of all directors and employees and theirfamilies in a timely manner, and we examine the system regularly.
A BCP training is also held once a year.
Chori’s BCP manual calls for a swift recovery of business
operations by the sales divisions. For the corporate divisions, we haveestablished a core operations manual to maintain systems, finances,and other basic business functions. Moreover, we have established a
response headquarters and operational procedures in preparation for
major disasters and pandemics such as novel influenza.

BCP Response Headquarters
Incident
Primary Recipient ofInformation

Primary Members
for Response Measures

ConveneEmployees of
Human Resources &General Affairs Dept.

Department Manager
of Human Resources &General Affairs Dept.
Deputy General
Manager of Corporate
Planning Division

ReportInstruct andprovide information

Cooperate(Human Resources &General Affairs Dept.)

DivisionsManager of Corporate
Management Dept.

President

Relevant
Companies

Supervisor ofOverseas Stores

Response to COVID-19
To prevent the spread of COVID-19, Chori has been implementing
various measures that correspond to the requests made by theJapanese government, with the safety of its employees as its toppriority. These measures include the prohibition of business trips
overseas, the provision of alcohol-based hand sanitizers, and the
supply of masks to each employee. We also held our Chori Exhibition,a major trade convention for textile products held annually, at a later
date and in a much smaller scale compared with previous years.
In terms of workstyle reform, we encourage our employees tocome to work at staggered work hours under our flex-time systemand to work from home (including on a provisional basis), in addition to employing an online conferencing system at our overseas
bases and our Tokyo and Osaka head offices.
Japan is currently suffering from a shortage of antibacterial materials, which are an essential component of mask production. Leveraging
its long-cultivated business relationships with nonwoven fabric manufacturers in China, Chori has acquired antibacterial materials from
China as a new line of business and supplied them to mask manufacturers in Japan. Chori also donated the masks and protective garments(listed on the right) that were stockpiled in the aftermath of the Great
East Japan Earthquake to protect against radioactive contamination.

Donated Items
2,000 sets of masks from the Hokuriku Branch (Kanazawa City) tohealthcare facilities in Fukui Prefecture
500 sets of N95 masks to healthcare facilities in Osaka Prefecture
Donation of the following items to healthcare facilities in Chiba
Prefecture• 660 sets of Tyvek protective garments• 290 sets of raincoats• 720 sets of N95 masks• 380 sets of disposable hazmat
hoods• 100 sets of goggles

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CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Human Resources
The Chori Group regards people as its most valuable management resource, founded on its vision
for human resources, “Utilize people, and be useful to them. Nurture people, and develop with them.
Connect people, and join together with them.” We will utilize, nurture, and connect people tocontinue to grow as an organization and cultivate our next generation.

Human Resource Development
As globalization continues to spread on a rapid scale, employees will be expected to utilize their full capabilities. We cultivate our
employees to be able to respond quickly to changes, to think and act at their own will with a sense of curiosity and a broad
perspective, and to become an integral part of carrying the Group forward into the future.

Personnel We Seek
1. Always act responsibly as a member of Chori and keep the company charter close to their heart
2. Have a spirit of independence
3. Constantly work hard and come up with creative ideas as results-focused professionals
4. Expect the best and prepare for the worst
5. Respect the values and cultures of people from around the world

New Employee Training

Career Development Support

Development of Overseas Staff

At the Natural Dye plant coloring event,which is held in support of recovery from theGreat East Japan Earthquake, our new
employees take part as representatives ofChori with the aim of cultivating their awareness of being a Company employee.
Upon joining the Company, new employees receive orientation to acquire the basic
knowledge and proper etiquette to becomea responsible working adult as well as
attend 30 lecture sessions and take certification exams twice a year.

At Chori, we hold level-specific training for
directors and employees, invite instructors fromoutside of the Company, and conduct lectures
led by our employees. To speed up the pace of
globalization, we dispatch trainees overseas
and conduct our in-house training program,provide English-language training, and offer a
Chinese-language study abroad and dispatch
program. In fiscal 2020, we plan to dispatch
employees from various departments to conduct external training programs, in addition toholding selective training sessions.

For the purpose of developing theemployees of its overseas offices, Choriprovides training to acquire basic knowledgeof its Corporate Philosophy, information
security, credit management, overseas
business management, and financial reporting through lectures provided by employeesof corporate planning divisions. We arealso striving to enhance the interactions
between our employees at our head offices
and overseas.

Nurturing Our Human Resources by Embracing the Willingness to Grow
on One’s Own

Director, Executive Officer

SatokoNakayama

While the “Personnel We Seek” philosophy set forth under the Human Resources Policy represents the basis of
Chori’s human resource development, the Company exceptionally values those who “keep the company charter
close to their heart.” I truly hope that as members of Chori who will continue to carry on its tradition of nearly
160 years, our employees will keep the company charter close to their heart while continuing to fulfill their duties
to both society and the Company.
I am always the first to speak at our training sessions for young employees. The intention behind this is toenhance the motivation for and the outcomes of the training by having the management team directly express their
expectations of the employees early on. During the session, we monitor the demeanor of each employee while
requesting support from the human resource department when necessary. In our harassment training, we explain
the circumstances openly to employees in order for them to build a relationship of trust with the Company.
Both society and Chori are undergoing drastic changes at the moment and I hope every one of our employees
will adapt to these changes and continue to develop for their own benefit. Career development is about understanding the fundamentals and acting on one’s own accord. The reason why we discontinued our in-house
English-language training is because we embrace the willingness to grow on one’s own. Going forward, we willcontinue to recruit and develop employees who possess that willingness and help them elevate their potential.

Tsumugu Report 2020

Promoting Diversity
Creating a Comfortable Workplace Environment
We regard people as our most valuable management resource and for that reason, it is essential that we provide employees with workplace environments that allow them to work in a healthy and active manner. We conduct the following initiatives with this in mind, particularly with the aim of providing employees with a healthy work–life balance. Moreover, we have been working to improve our employees’
operational efficiency through our Companywide CHORI Innovation Activities (“CHOI-Katsu”), established in fiscal 2013 with the aim ofachieving department- and division-specific goals.

Eliminate Long Work Hours

Encourage Employees to Take
Annual Paid LeaveIn principle, designate one day of the week as
a no-overtime day
All staff must leave their workplace by 9 p.m.
every dayRestrict the number of overtime hours
Automate work processes with robotic
process automation (RPA)
Improve the efficiency of meetings

Mandatory use of annual paid leave (five days)
Encourage employees to take seasonal
holidaysMaintain records of paid leave taken indepartment-specific systems
Eliminate restrictions on the number of halfday leaves that can be taken due to childcare,nursing care, or hospital visits

Promote Flexible Workstyles
Improve flextime system (no core hours)
Introduce work-at-home system (temporarily)
and teleconferencing system
Encourage male employees to take childcare leaveConduct one-on-one meetings between
employees and their superiors
Provide option to relocate to otherlocations (transfer to other branches
domestically and regionally)

Supporting the Balance of Work Life and Childcare
Chori has various childcare systems in place to promote thebalance of work and family life. In fiscal 2019, the rate of employees who had taken childcare leave and returned to work was
100%. The number of male employees taking childcare leave has
also been on the rise with six of them taking time off in fiscal 2019.

Workforce Fluidity and Support for
Self-Development

FY2017FY2018

Number of Employees
Taking Childcare Leave

1

Number of Employees
Working Shorter Hours
Due to Childcare

9

FY20195

17(1 of whom is male)(6 of whom are male)11

11

Number of Recipients of Self-Development Subsidy

We promote workforce fluidity within the Group by assigning
employees to affiliates in Japan and overseas and facilitating
the exchange of personnel. We also support our employees’
self-development by subsidizing the tuition and fees necessary
to acquire Company-designated certification, which was utilized
102 times in fiscal 2019.

120

97

96

106

102
80

80

40

0

2015

2016

2017

2018

2019

(FY)

Recruiting Diverse Human Resources
As a part of its action plan based on the Act on Promotion of
Women’s Participation and Advancement in the Workplace,
Chori established the goal of raising the percentage of womenamong new graduates to 20% between fiscal 2016 and fiscal
2020. In fiscal 2019, women accounted for 32.8% of our entire

workforce. In addition, we have been making proactive efforts
to promote the hiring of people with disabilities.
Chori’s initiatives to increase the number of senior employees
are also making strides with various programs in place for retirees
looking to reenter the workforce and leverage their knowledge
and experience, network of contacts, and other strengths.

Number of New Graduates

Ratio of People with Disabilities(Number of employees)

(%)

30

3.0
17

20

10

0

Male

9
1

6

20

21

9

8
11
3

8

11

11

8

2015

2016

2017

2018

Female

2.6

2.7

2.0

2.0

2.0

2.0

2015

2016

2017

2018

2.4

2.0

2.9
2.2

1.0

13
2019

2.6

(FY)

0

Company employment rate

2019

Statutory employment rate

Note: Results as of March 31 of each fiscal year

(FY)

34

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CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Local Communities and Society
For a company to realize sustainability, it must be fully committed to coexisting withlocal communities. As a member of these local communities, Chori will continue to engage invarious initiatives in its mission to grow together with society.

Corporate Sponsor of WFP Walk the World 2019
Chori has been a corporate sponsor of WFP Walk the World, a charity walk organized by theUnited Nations World Food Programme (WFP), since 2016. In May 2019, WFP Walk the World
2019 saw participation from 204 Group employees and their family members and raised ¥163,840
for charity. These funds will be donated toward the provision of school lunches for approximately
5,400 children.

Special Sponsor of 7th Japan Dance Convention
In June 2019, the Japan Sports Agency held its 7th Japan Dance Convention. The Japan Dance
Convention is an educational dance contest in which high school club teams compete under thetheme of “watch and learn.” Chori is a strong advocate of the contest and its aims and has been a
special sponsor since its inaugural event in 2013. As we move ahead, we will continue to help develop
a healthy future for our next generation and a society that embraces communication, enjoyment,
and happiness.

Support for Disaster-Afflicted Areas of the Great East Japan Earthquake
Chori has held its Natural Dye plant coloring event every year since 2013 in support of areas
affected by the Great East Japan Earthquake. The event was held in September 2019 in Sendai
City, Miyagi Prefecture, where children and their families from local communities were able torejoice in coloring their hands with dye made from fruits and vegetables through the assistance ofChori’s newly recruited graduates.

Mangrove Planting Activity in Thailand
In May 2019, THAI CHORI CO., LTD. held a mangrove planting activity in Thailand. Mangrovesplay the vital role of functioning as a natural seawall against tsunamis and tidal waves as well as acradle for the cultivation of marine life. However, because mangroves grow along coastal waters,
they are vulnerable to pressure from exploitation and are therefore diminishing at exponential
speeds. Chori will continue to engage in this mangrove planting activity as a part of its efforts toimprove the global environment and increase environmental awareness.

Supplying Food to Africa throughProduction of Chemical Fertilizers
Since fiscal 2019, Chori has participated in a chemical fertilizer production project in Nigeria. Nigeria boasts the largest
population in all of Africa with roughly 190 million people andrelies on agriculture as one of its major industries. With the
expectation that increased demand for crops fueled bypopulation growth will continue in Africa, the need for chemical fertilizers to enhance agricultural efficiency is projected to
grow. The establishment of a chemical fertilizer blending
plant, which was partially financed by Chori, has enabled the
production of effective fertilizers in Nigeria that improve soil
quality and expand the range of crops. Through the sale ofchemical fertilizers, we will contribute to stable food supply
and higher agricultural efficiency in Africa.

Partially finance construction and supply raw materials
for chemical fertilizers

Chemical fertilizer blending plant(Construction site: Suburbs of Lagos, Nigeria)

Sell chemicalfertilizers in Nigeria

Enhance agricultural
efficiency through fertilizers

Provide stable
food supply

Tsumugu Report 2020

Promotion of Health and Productivity Management
Recognizing the importance of the health of our employees and their families to achieving soundcorporate management, we formulated our Health Declaration in 2018 to promote efforts toward
health and productivity management.

Health Declaration
1. Enhancement of Awareness of the Health of Employees
Chori believes that the health of its employees and their families is significant to the success of its business and that the vitality of
its employees translates into the vitality of the Company. Based on this belief, we strive on an ongoing basis to enhance awarenessof the health of our employees.
2. Approach to Health and Productivity Management
Chori actively supports and promotes initiatives that help maintain and improve the health of its employees and their families withthe goal of realizing health and productivity management.
3. Responsibility to Society and the Future
Chori will do what is necessary to ensure the health of its employees and achieve sound corporate management. In so doing, we
will make a difference to society and realize sustainable growth. February 14, 2018

Health and Productivity Management Promotion Structure
We established our Health Promotion Committee in April 2018 andhave since been promoting efforts to realize health andproductivity management. Chaired by Director Nakayama, thecommittee consists of industrial physicians and nurses from
Chori’s internal health clinics as well as the employees of the
Human Resources & General Affairs Department and members ofthe Health Insurance Society. Through the initiatives of the Health
Promotion Committee, Chori aims to maintain and improve thehealth of its employees and their families and fulfill its Health
Declaration. In addition, a debriefing session on White Paper for

Chori’s Health Management is held once a year to assess thecurrent state of health management and to discuss any issues.
Chair: Deputy General Manager of Corporate Planning Division(In Charge of Human Resources & General Affairs Department)

Human Resources &General Affairs Department

Chori Health InsuranceSociety
Health Promotion
Committee

Internal Health Clinics

Chori Labor Union

Ensuring the Health of Employees
We conduct oral and dental checkups and flu vaccinations on a
yearly basis. In addition, employees aged 30 and 35 years andover are eligible to receive a comprehensive medical checkup
once a year at the expense of the Company, while dependents
aged 35 years and over of the insured party are entitled toreceive up to ¥32,000 in subsidies for medical checkups.
We also conduct stress checks to prevent the possibility of
our employees suffering from mental illnesses. Employees who
work over 40 hours of overtime in a month are required toconsult with an industrial physician in the following month. In
these ways, we work to ensure the health of our employees
through the support of medical experts.

Rate of Employees and Family Members Who Undergo
Regular Health Checkups
FY2017FY2018FY2019

Employees

100.0%

100.0%

100.0%

Family Members

59.3%

70.3%

72.0%

Establishment of Internal Health Clinic
At its Tokyo and Osaka head offices, Chori has established internal health clinics where employees
can receive medical treatment twice a week and seek advice on their health checkup results.
Additionally, employees are able to receive personal guidance on specific insurance-related mattersfrom a nurse or public health nurse on duty.

Activities to Promote the Health of Employees
Chori conducts an array of activities to promote healthy lifestyles for its employees, such as support to quit
smoking and yoga classes during lunchtime. In January 2020, we held “CHOI-Aruki,” in which 16 teams
totaling 177 employees participated. In this walking event, a smartphone app tallies the number of steps
taken by each participant and calculates the average for each team or department. Members of the top
three teams are awarded a complimentary meal to enjoy together with the colleagues in their department.
We will continue to engage in a variety of initiatives to promote the health of our human resources, our most valuable management resource.

36

37

CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Corporate Governance
Basic Policy
Chori has established systems to ensure appropriate operations with the aim of achieving sound management and sustainable growth.
The Company strives to strengthen corporate governance by complying with laws and social norms, conducting operations efficiently
and effectively, and ensuring the credibility of its financial reports, while positioning the Board of Directors as a body for conducting
strategic decision-making and business oversight. Moreover, as a Company with an Audit and Supervisory Committee system, Chori hasestablished its Audit & Supervisory Committee in which the majority of the members are outside directors. Chori also aims to further
strengthen the management transparency and oversight function of the Board of Directors through the exercise of voting rights at theBoard of Directors' meetings by the directors who are Audit & Supervisory Committee members
General Meeting of Shareholders

Election/dismissal

Election/dismissal

Submitting Company[Decision-making]Board of Directors

Inquiry

GovernanceCommittee

Audit/supervision

Non-Audit & Supervisory Committee Directors
ReportAudit & Supervisory
Committee

Audit & Supervisory Committee Directors
Appointment/removal

Legal Compliance
Committee
Supervision[Business execution]

Representative Director
Supervision

Cooperation

Cooperation

Cooperation

Internal Auditing
Department

ReportExecutive Committee

Election/
dismissal

Internal
audit

Sales Divisions/Administrative Divisions

Accounting
Auditor

Audit
Internal
audit

Cooperation and support

Group Companies

Overview of Corporate Governance Structure and Reasons for Its Adoption
Chori has adopted the Company with an Audit and Supervisory Committee system with the aim of strengthening themanagement transparency and oversight function of the Board of Directors. The Company pursued further reinforcement of its
corporate governance structure by establishing its new Governance Committee in March 2020 to protect the interests ofminority shareholders, and by strengthening the independence and objectivity of the functions and accountability of the Boardof Directors pertaining to directors' nomination, remuneration, etc.
Company with an Audit andAt the Board of Directors' meetings, the directors (including
Organizational Structure
Supervisory Committee
those who are Audit & Supervisory Committee members) engage in Number of Directors
7lively and sufficient discussions and deliberations from a free and	Term of Office of Directors
According to the Articles of
1 yearindependent perspective in regard to the supervisory status of
Incorporation
decision-making and business execution. The Board also consists
Number of Directors Who Are Audit 3 (of whom, 2 are outside& Supervisory Committee Members directors)of two outside directors who are Audit & Supervisory Committee	Term of Office of Directors Who Are
members that audit the legitimacy and appropriateness of the
Audit & Supervisory Committee
Members According to the Articles 2 years
status of business execution from an external perspective in anof Incorporation
objective and rational manner. The Company therefore believes that
Number of Independent Officers
2
it is sufficiently fulfilling its management supervisory function.
Executive Officer System
Yes
Moreover, to ensure the prioritization of results, the Company has
Performance-Linked Remuneration Yes
Systemset the term of office of directors (excluding those who are Audit &Accounting Auditor
Deloitte Touche Tohmatsu LLC
Supervisory Committee members) and executive officers to one
https://www.chori.co.jp/csr/pdf/
year, and has established a management structure that can
Corporate Governance Report
governance-report.pdf(in Japanese only)
respond to changes in business conditions in a timely manner.

Tsumugu Report 2020

Composition and Overview of the Board of Directors, Executive
Committee, and Other Principal Committees
Name

Description

Number of
Meetings Heldin Fiscal 2019

Board of Directors

The Board of Directors consists of directors, including those who are Audit & Supervisory Committee
members, and is responsible for conducting strategic decision-making and business oversight.

15

Executive
Committee

The Executive Committee consists of executive officers and those who were approved by the Boardof Directors and was established as an organization for conducting discussions and exchanging
important information and opinions on matters related to business execution.

25

Audit &
Supervisory
Committee

The Audit & Supervisory Committee convenes regularly once a month to discuss matters related to
management conditions and audit results upon the exchange of information with outside directors.
In addition to attendance at important meetings of the Board of Directors, directors who are Audit &Supervisory Committee members conduct individual meetings with those in charge of the Sales
Department and corporate planning divisions to make decisions on important management-related
matters (including on their process) and sufficiently audit and monitor the appropriateness of the execution of duties by each director (excluding those who are Audit & Supervisory Committee members) and
executive officer. The attendance rate for the Audit & Supervisory Committee in fiscal 2019 was 100%.

14

GovernanceCommittee

The Governance Committee aims to enhance the Company’s corporate governance structure in order tostrengthen the independence and objectivity of the functions and accountability of the Board of Directors
regarding director nomination, remuneration, etc., and to protect the interests of minority shareholders.

Legal Compliance
Committee

The Legal Compliance Committee consists of directors (excluding those who are Audit & Supervisory
Committee members) and executive officers. The committee deliberates on important compliance-related
issues and reports the results to the Board of Directors and the Executive Committee as necessary.

6

Business
Investment
Committee

Under the supervision of the president and representative director, the Business Investment
Committee discusses and deliberates the appropriateness of risk—return assessments and plans
and the feasibility of important investments and financing.

4

M&A Promotion
Committee

The M&A Promotion Committee consists of the general manager of the Corporate Planning Division
who also serves as a director, general managers of business divisions, and other members. The
committee deliberates and decides on important matters pertaining to business direction and growthstrategies toward the promotion of consolidated management, such as M&A and the Group’s
medium- to long-term management plan.

5—(Established in
March 2020)

Committee Members*

Position

Name

President, CEO & COO /President and Executive
Officer

Kazuo
Sakihama

Director / Managing
Executive Officer

Shigemasa
Yabu

Director / Senior
Executive Officer

Hiroshi
YoshidaDirector / Executive
Officer

Yoshihiro
Teratani

Director / Executive
Officer

Kazuhiro
Tohge

Director / Executive
Officer

SatokoNakayama

Director (Part-Time)

MitsuoOhya

Director / Full-Time Audit& Supervisory
Committee Member

Jun
FuruyaOutside Director / Audit& Supervisory
Committee Member

Masaaki
SawanoOutside Director / Audit& Supervisory
Committee Member

NorikoMorikawa: Committee chair: Committee member

Board ofDirectors

Executive
Committee: Non-member attendee

Audit &
Supervisory
Committee

GovernanceCommittee

Legal
Compliance
Committee

Business
Investment
Committee

M&A
Promotion
Committee

38

39

CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Reason for Nomination of Outside Directors(Since the Annual General Meeting of Shareholders held on June 16, 2020)

The Company’s outside directors were nominated for the reasons outlined below and their dedication to strengthening the audit andsupervisory function through the proactive exchange of opinions and advice at the Board of Directors' and other important meetings.
Independent
Officer

Name

Director (Part-Time)

Reason for Nomination

MitsuoOhya

Since joining TORAY INDUSTRIES, INC., he has worked mainly in sales operations related
to its Fibers & Textiles Division. In addition to his wealth of experience and extensive expertise in the Fibers & Textiles Division, he was appointed as a director due to his abundant
track record and insight in all areas of management acquired through his positions aspresident and representative member of the Board of Toray International, Inc., and senior
vice president (member of the Board & member of the Executive Committee), executive
vice president, and representative member of the Board of TORAY INDUSTRIES, INC.

Masaaki
SawanoHe has been appointed as an outside director as he is expected to provide accurate
advice regarding the management of the Company and on the grounds that he isdeeply familiar with corporate legal work as a lawyer and has sufficient insight tosupervise corporate management. In addition, it has been deemed that he has nomaterial conflict of interest with the Company and that no conflict of interest will arise
with general shareholders.

NorikoMorikawa

She has been appointed as an outside director as she is expected to provide accurate
advice regarding the management of the Company and on the grounds that she is wellversed in finance and accounting and has broad insight based on her abundant achievements as a corporate manager and experience working overseas. In addition, it has been
deemed that she has no material conflict of interest with the Company and that no conflict of interest will arise with general shareholders.

Director(Audit & Supervisory
Committee Member)

History of Chori’s Governance
Chori recognizes that the enhancement of its corporate governance is a matter of priority for management and has taken and willcontinue to take the following measures. We have expanded our profit margin through the introduction of a performance-linked
remuneration system and the efforts of directors to instill the same level of awareness for profits in all shareholders in order tostrengthen the Company’s performance over the medium to long term.
Separation ofManagement andExecution

Revision of Remuneration
SystemDiscontinues the Directors’
Retirement Benefits System

Introduces the Executive
Officer System

Strengthening of Audit
FunctionTransitions to a Company with
an Audit and Supervisory
Committee

Management
Transparency and Fairness

Promotion of Compliance
Establishes the Legal
Compliance Committee, withthe president as the chairman

Institutes the GovernanceCommittee

Revision of Remuneration
SystemIntroduces the Restricted
Stock Transfer Remuneration
SystemEffectiveness of theBoard of Directors

Conducts questionnaires toevaluate the effectiveness of
the Board of Directors

Realization of Effective
Corporate Governance

Promotion of Diversity

Appoints a female director and afemale outside director (who isalso an Audit & Supervisory
Committee member)

Begins complying with the
Corporate Governance CodeOrdinary
income
2001

2002

2003

2004

2005

2012

2015

2016

2017

2018

2019

2020

Tsumugu Report 2020

Evaluation of the Effectiveness of the Board of Directors
With the objective of enhancing the effectiveness of the Board of Directors, Chori conducted an evaluation of the effectiveness of theBoard of Directors for fiscal 2019. The evaluation procedure entailed conducting a questionnaire with all directors and collecting theirindividual opinions regarding the agenda of the Board of Directors' meetings, composition and operation of the Board of Directors, andthe systems that support the Board of Directors.
Respondents

All 10 directors (including those who are Audit & Supervisory Committee members) in fiscal 2019
(registered questionnaire)

Method of
Evaluation andAnalysis

The secretariat of the Board of Directors (Corporate Management Department) gathers the questionnaire results,
which are evaluated and analyzed by the Governance Committee and the Board of Directors upon the ensuring ofconfidentiality.

Questionnaire
Content

The questions are based on the following four main items:• Agenda of the Board of Directors' meetings• Composition of the Board of Directors• Operation of the Board of Directors• Systems supporting the Board of Directors

Overview of
Evaluation
Results

The evaluation results of effectiveness confirmed that the composition of the Board of Directors, including outside
directors, is appropriate, and that the Board of Directors' meetings are held in a free and open environment thatfacilitates constructive discussions and the exchange of opinions. As a result, the Board of Directors is operating
appropriately on the whole and its effectiveness has been ensured. Meanwhile, the main points raised were conducting more in-depth discussions on the succession plans for representative directors, the appointment and dismissal ofmanagement executives, and executive remuneration. It was confirmed that the Governance Committee will conduct
further discussions and deliberations on these matters.

Based on these results and our continuous efforts toward their improvement, we will work to further enhance the effectiveness of theBoard of Directors.

Director Remuneration
Director remuneration consists of three types: monthly basic remuneration, yearly bonuses, and restricted stock compensation. The
remuneration for directors (excluding directors who are Audit & Supervisory Committee members) is decided by the Board of
Directors upon discussions held by the Governance Committee and consideration of opinions of the Audit & Supervisory Committee.
Meanwhile, the remuneration for directors who are Audit & Supervisory Committee members is determined through discussions heldby the Audit & Supervisory Committee.
Fixed /
Performance-Linked

Remuneration Type

Details

Monthly Remuneration

Monthly basic
remuneration

Fixed

Performance-Linked
BonusesYearlybonuses

Performancelinked

Stock-BasedRemuneration

Restricted
Performancestock
linkedcompensation

Maximum Amount of Remuneration

Resolution of the General
Meeting of Shareholders

The remuneration for directors (excluding those
who are Audit & Supervisory Committee members) is deemed to be no more than ¥300 million
annually. (However, this does not include theportion of employee salary for directors who
concurrently serve as employees.)

69th General Meeting of
Shareholders held on
June 15, 2016

Restricted stock compensation is deemed to be no
more than ¥100 million annually. (However, thisdoes not include the portion of employee salary fordirectors who concurrently serve as employees.)

70th General Meeting of
Shareholders held on
June 15, 2017

The total amount of remuneration, the total amount of remuneration by type, and the number of directors eligible, according to eachdirector position are as follows:

Classification

Total Amount of
Remuneration(Millions of Yen)

Total Amount of Remuneration by Type (Millions of Yen)
Basic
Remuneration

Restricted Stock
Compensation

Bonuses

Retirement
Benefits

Number of
Directors
Eligible

Directors*

217

133

19

65

—

6

Directors Who Are Audit &Supervisory Committee
Members

18

18

—

—

—

1

14

14

—

—

—

2

(excl. Outside Directors)

Outside Directors (Audit &Supervisory Committee Members)* Excludes one director who did not receive any remuneration.

40

41

CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Cross-Shareholdings
The Company and its subsidiaries may acquire and hold sharesof listed companies (hereinafter “cross-shareholdings”) in orderto maintain, expand, and sustainably develop their businesses.
In such cases, the Board of Directors and other bodies decideon acquisitions after determining the department in charge ofthe acquisition and considering the business conditions of theinvestees and the profitability of the investment. The Board of
Directors verifies the significance of the cross-shareholdings
each year and considers the sale or reduction of shares that are
deemed to be of no significance.
Those shares that are held are verified each year for their economic rationality from the perspectives of the significance of eachacquisition and holding, profitability of the investment, transaction
scale, and relevant profits, and are either held or replaced upon
resolution of the Board of Directors and other bodies.

The Company appropriately exercises the voting rights ofcross-shareholdings from the perspective of whether or not theCompany and the investee company can expect increases intheir corporate value over the medium to long term, while
respecting the management policies of investee companies.

Holding of Shares for Purposes Other Than Pure
Investment (Cross-Shareholding)
FY2017FY2018FY2019

Shares Held

35

32

30

Total Amount (Billions of Yen)

4.7

4.0

3.4

Note: The shareholdings of CHORI CO., LTD. for which the largest monetaryamount is recognized on the balance sheets in relation to investment in equity
securities (the monetary amount of equity securities recognized) have been stated.

Internal Audit
In regard to internal audits, the Company has established the Internal
Auditing Department (consisting of four members) directly under thepresident and representative director. The Internal Auditing Department
conducts audits on the appropriateness and efficiency of the Company’sbusiness activities from a fair and independent point of view. The Internal
Auditing Department also evaluates the status of implementationand operation of internal controls concerning financial reporting inaccordance with the Financial Instruments and Exchange Act.

Ensuring Thorough Compliance
Rules concerning compliance systems such as the Guidelines
for Corporate Behavior shall be established to set compliancewith laws and regulations and social ethics as a code of conduct of our business. In order to make all directors, executive
officers, and employees of the Group fully aware of the initiatives
for compliance, corporate divisions shall collaborate to holdcompliance training and other training programs. The Legal
Compliance Committee, with the president and representative
director as the chairman, shall be established to discuss

important matters regarding compliance of the Group and report
the results to the Board of Directors and the Executive
Committee as necessary. In the event of a significant legal
violation or compliance violation on the part of a management
executive, in accordance with the laws and regulations and the
Articles of Incorporation, the Governance Committee shall deliberate on the dismissal of the management executive in question
and the Board of Directors shall adequately discuss and consider his or her dismissal based on those results.

Policies Regarding Constructive Dialogues with Shareholders
The Company promotes constructive dialogues with shareholders based on the following five policies.
(1) The executive officer in charge of information handling oversees
matters related to IR and public relations, cooperates with the
Corporate Planning Division and relevant departments, andcommunicates information to shareholders and investors.
(2) The relevant internal departments proactively cooperate toward theachievement of constructive dialogues with shareholders through the
preparation of disclosure materials and the sharing of important
information, while conducting their business activities.
(3) Methods of dialogue other than individual meetings• General meeting of shareholders

The Company regards the general meeting of shareholders as
an opportunity to fulfill its responsibility of providing explanations to shareholders, and accordingly works to carefully
address their questions and understand the intent of theiropinions. In the event of important announcements regarding
management information, such as the medium-term management plan, the Company reports on its current status andcollects the opinions of shareholders through such measures
as the holding of briefings on the management plan upon the
conclusion of the general meeting of shareholders.

• Individual investors
The Company promotes dialogues with its individual shareholders byholding company briefings exclusively for such investors, which areattended by the president and representative director of the Company.
• Institutional investors
The Company holds financial briefings through the attendance ofthe president and representative director and management executives upon the conclusion of its six-month and full-year financial
results announcements. At these financial briefings, the Company
reports on the details of its financial performance, addresses thevarious questions, and collects the opinions of its shareholders. In
addition, the departments in charge of IR and public relations
conduct individual visits and briefings for institutional investors.
(4) Feedback
The Company promotes the sharing and use of information obtained
from dialogues through the reporting of opinions of shareholders to
the respective committees and their disclosure to the directors,
management executives, and relevant departments as necessary.
(5) The Company takes appropriate measures to ensure thoroughinformation management through compliance with theInsider Trading Prevention Regulations.

Tsumugu Report 2020

Directors, Audit & Supervisory Committee
Members, and Executive Officers(As of July 1, 2020)

President, CEO & COO,
President and Executive Officer

Director, Managing Executive
Officer

Kazuo Sakihama

Shigemasa Yabu

Number of shares held: 19,883
CEO & COO

Number of shares held: 13,226
General Manager of Corporate Planning
Division and Executive Chief
Representative for China of the Company

Director, Senior Executive Officer

Director, Executive Officer

Hiroshi Yoshida

Yoshihiro Teratani

Number of shares held: 5,891
General Manager of Textile Division,
Senior Manager of Synthetic Fiber
Business Department, General Manager
of Logistics Department (Textile) of theCompany and General Manager of
Hokuriku Branch

Number of shares held: 6,461
General Manager of Chemicals Division,
Senior Manager of Life & Fine Chemicals
Business Department, and General
Manager of Logistics Department(Chemicals) of the Company

Director, Executive Officer

Director, Executive Officer

Kazuhiro Tohge

Satoko Nakayama

Number of shares held: 3,434
Special Appointee of the President (inrelation to the Textile Division)

Number of shares held: 7,712
Deputy General Manager of Corporate
Planning Division (Human Resources &General Affairs Department, Information
System Department), General Manager of
Pharmacovigilance & Quality Assurance
Office, and General Manager of CHORI
Innovation Activities of the Company

Director (Part-Time)

Director (Full-Time Audit &Supervisory Committee Member)

Mitsuo Ohya
Number of shares held: 0
Significant concurrent positions• Executive Vice President andRepresentative Member of the Board of
TORAY INDUSTRIES, INC.

Outside Director(Audit & Supervisory
Committee Member)*• Outside Auditor of Japan Federation of
Certified Public Tax Accountants'
Associations• Member of Kanto Regional Government
Asset Council, Kanto Local Finance
Bureau, Ministry of Finance• Chairperson of Tokyo Metropolitan
Government Election Administration
Commission“ Number of shares held”
indicates the numberof CHORI CO., LTD.
shares held.

Independent
Director

Jun Furuya
Number of shares held: 4,730

Outside Director(Audit & Supervisory
Committee Member)*Independent
Director

Masaaki Sawano

Noriko Morikawa

Number of shares held: 0
Significant concurrent positions• Member of the Selection Committee forSummary Court Judges of the Supreme
Court• Member of Advisory Council on
Fundamental Issues in Corporate
Management and Chairman of Rent
Council of Urban Renaissance Agency• Member of Advisory Council on
Fundamental Issues in Corporate
Management of Urban RenaissanceAgency• Member of Business Evaluation
Monitoring Committee of Urban
Renaissance Agency

Number of shares held: 0
Significant concurrent positions• Outside Director of Showa Denko K.K.
• Outside Director of Mitsubishi Heavy
Industries, Ltd.

* Outside director as stipulated in Article 2, Item 15 of the Companies Act.

Executive Officer

Tatsuyuki Sakoda
Number of shares held: 2,796
President & CEO of Miyako Kagaku
Co., Ltd.

42

43

CHORI CO., LTD.

Fact Data

11-YearFinancial Summary

Medium-term management plan

Medium-term management plan

Yakushin 2010

Yakushin 2013

CHORI CO., LTD. and Group Companies
FY2009FY2010FY2011FY2012

Net sales

191,149

222,074

217,825

221,847

Gross profit

18,267

18,81820,02019,770

Selling, general and administrative expenses

13,576

13,641

14,103

14,665

Operating income

4,690

5,177

5,916

5,105

Ordinary income

4,728

5,343

6,118

5,466

Net income attributable to owners of the parent

2,918

5,372

3,497

2,944

57,10364,39067,46571,851

Net assets

21,59025,826

28,69831,385

Net interest-bearing debt*1(10,782)(8,635)(6,650)(7,491)

Cash flows from operating activities (A)3,612(1,098)

(263)

5,792

Cash flows from investing activities (B)

(530)

(295)

(1,153)(2,980)Free cash flows (A+B)

3,081(1,393)(1,417)

2,812

Cash flows from financing activities(1,113)

(623)

(318)

(1,641)

Net income per share

124.59224.11145.91117.57

Net assets per share

847.41

1,025.35

1,131.43

1,275.84

20.00

20.00

29.00

24.00

2.5

2.4

2.8

2.5

Operating Results:

Financial Position (As of March 31):
Total assets

Cash Flows:

Per Share Data*2 (Yen):

Dividends per share*

3

Key Indicators (%):
Ordinary income to net sales
4

Return on assets (ROA)*

8.5

8.8

9.3

7.8

Return on equity (ROE)*5

14.6

22.8

12.9

9.8

Equity ratio

37.5

39.8

42.4

43.5

Consolidated dividends payout ratio

16.1

8.9

19.9

20.4

Price earnings ratio

9.0

4.4

7.0

9.1

Price book-value ratio

1.3

1.0

0.9

0.8

Other Data:
Stock price at end of March (yen)*2

1,120

990

1,020

1,066

Number of employees (consolidated)

1,137

1,113

1,084

1,286

Number of consolidated subsidiaries

24

24

23

26

*1 Net interest-bearing debt = Interest-bearing debt – (Cash and deposit + Deposit paid in subsidiaries and affiliates)*2 The Company carried out a 1-for-10 reverse stock split of common shares on October 1, 2012. Net income per share and net assets per share were provisionally calculated at the beginning of fiscal 2009 based on this reverse stock split. Dividends per share and stock price at year-end for fiscal years prior to the reverse stock split havebeen retroactively adjusted to reflect its impact.

Tsumugu Report 2020

Medium-term management plan

Medium-term management plan

Yakushin 2016

Chori Innovation Plan 2019
(Millions of yen)

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019244,286

248,396

291,578

270,908

311,705

356,537

329,360

21,53022,157

24,79925,14926,40028,58528,31016,037

16,604

19,42918,701

19,174

20,53820,091

5,492

5,552

5,369

6,448

7,226

8,047

8,219

5,831

5,966

5,518

6,967

7,499

8,660

8,685

3,715

4,153

4,297

4,780

4,730

5,630

6,101

78,221

84,28998,736

97,983

119,055

118,499

114,400

36,417

41,47342,882

46,34351,15353,89757,279(8,820)(10,703)(8,029)(6,824)(11,134)(10,887)(11,962)

1,716

3,320

4,992

625

6,653

3,196

2,857

(208)

(813)

(4,442)58

821(1,421)

8

1,508

2,507

550

683

7,474

1,774

2,866

(506)

(840)

(1,510)(1,363)(2,352)(4,350)(1,899)151.54169.40175.31

195.00192.74229.28248.46

1,481.00

1,688.74

1,746.27

1,887.37

2,079.84

2,191.45

2,328.79

33.00

34.00

36.00

40.00

59.00

60.00

63.00

2.4

2.4

1.9

2.6

2.4

2.4

2.6

7.8

7.3

6.0

7.1

6.9

7.3

7.5

11.0

10.7

10.2

10.7

9.7

10.7

11.0

46.4

49.1

43.4

47.2

42.9

45.4

50.0

21.8

20.1

20.5

20.5

30.6

26.2

25.4

7.4

10.9

8.3

9.9

10.9

6.8

6.2

0.8

1.1

0.8

1.0

1.0

0.7

0.7

1,124

1,851

1,457

1,939

2,097

1,556

1,537

1,292

1,091

924

939

991

1,023

1,014

27

25

27

27

29

29

29

*3 Dividends per share in fiscal 2017 include a commemorative dividend of ¥10 for the Company’s 70th anniversary.
*4 Return on assets (ROA) = Ordinary income / Total assets (Avg. of beginning and end of fiscal year) x 100*5 Return on equity (ROE) = Net income attributable to owners of the parent / Total equity (Avg. of beginning and end of fiscal year) x 100

44

45

CHORI CO., LTD.

Fact Data

Chori’s Global Network(As of July 1, 2020)

After the end of World War II, Chori recommenced the full-scale development of its overseas business in 1949, when
private foreign trade resumed. Today, Chori boasts a global network consisting of subsidiaries and offices located invarious regions of the world. As we move forward, we will step up the pace of our globalization efforts while addressing
the needs of our customers.
Europe and Russia
Subsidiary	Chori Europe GmbH (Neu Isenburg)
Representative Office Moscow

Middle East
Subsidiary
Representative Office

Chori Middle East FZE (Dubai)
JeddahAsia
Subsidiaries	CHORI (CHINA) CO., LTD. (Shanghai)
THAI CHORI CO., LTD. (Bangkok)
CHORI (SHANGHAI) CO., LTD. (Shanghai)
Chori Trading (Thailand) Co., Ltd. (Bangkok)
CHORI (TIANJIN) CO., LTD. (Tianjin)
PT. CHORI INDONESIA (Jakarta)
CHORI (DALIAN) TRADING CO., LTD. (Dalian)
CHORI SINGAPORE PTE LTD (Singapore)
CHORI (DALIAN) COMMERCIAL IMPORT EXPORT CO.,CHORI TRADING (MALAYSIA) SDN. BHD. (Kuala Lumpur)
LTD. (Dalian)
CHORI VIETNAM CO., LTD. (Ho Chi Minh City)CHORI CO., (HONG KONG) LTD. (Hong Kong)
CHORI TRADING INDIA PRIVATE LIMITED (Mumbai)
TAIWAN CHORI MERCHANDISE COOPERATION LTD. (Taipei)
CHORI KOREA CO., LTD. (Seoul)
Representative Beijing, Qingdao, Nantong, Wuhan, Ruian, Guiyang, Shenzhen; Ho Chi Minh City; Manila; Dhaka; Cambodia
Offices

Domestic Offices Tokyo Head OfficeTower C, Shinagawa Intercity,
2-15-3, Konan, Minato-ku, Tokyo
108-6216, Japan
Tel: +81-3-5781-6200

Osaka Head Office
Nittochi Sakaisuji Bldg.,
1-7-3, Awajimachi, Chuo-ku, Osaka
540-8603, Japan
Tel: +81-6-6228-5000

Tsumugu Report 2020

Major Overseas Subsidiaries
and Affiliates
SUZHOU FEILO ELECTRONIC COMPONENTS CO., LTD. (China)

Production and sales of electronic materials

U.S.A.
Subsidiary
Representative Office

CHORI AMERICA, INC. (Jersey City)
Charlotte INGDAO RED BUTTERFLYQ
PRECISION MATERIALS CO., LTD. (China)

Production and sales of inorganic chemicals
Beijing Chostar Equipment Engineering Technology Co., Ltd. (China)

Import and export of equipment and materials for chemical plants
CHORI Analysis & Technology Service (Suzhou) CO., LTD. (China)

Analysis and research and development of chemicals
M
 EGACHEM LIMITED (Singapore)

Trading company specializing in chemicals
D
 ALIAN ANCHOR BUSINESS SERVICE CO., LTD. (China)

Outsourcing of administrative work
PT. MATSUOKA INDUSTRIES INDONESIA (Indonesia)

Sewing of textile products

Major Domestic Subsidiaries
and Affiliates
ASADA U CO., LTD.

Sales of interior and packaging materials
CHORI MODA CO., LTD.

Planning of fashion apparel

Central and South America
Subsidiary	CHORI COMERCIAL DE MEXICO,S.A. DE C.V. (Mexico City)

Tokyo Shirayurikai Co., Ltd.

Representative Offices Santiago, Lima

Miyako Kagaku Co., Ltd.

Manufacture and sales of ladies’ apparel

Trading company specializing in chemicals
CHORI GLEX CO., LTD. (formerly PTI Japan Limited)

Trading company specializing in chemicals
KOZAKURA SHOKAI CO., LTD.

Trading company specializing in chemicals
Chori Machinery Co., Ltd.

Subsidiary

Representative Office(Japan: 4 locations Overseas: 35 locations)

Trading company specializing in transportation equipment
Business Anchor Corporation

Outsourcing of administrative work

Hokuriku Branch
15F Visage Office Zone,
16-1, Showamachi,
Kanazawa
920-8676, Japan
Tel: +81-76-232-3521

Okayama Liaison Office
10F Okayama
Fukokuseimei-Ekimae Bldg.,
1-6, Ekimotomachi,
Kita-ku, Okayama
700-0024, Japan
Tel: +81-86-224-6188

46

47

CHORI CO., LTD.

Fact Data

Corporate Information(As of March 31, 2020)

Company Overview
CHORI CO., LTD.

Company NameTokyo Head Office
2-15-3, Konan, Minato-ku, Tokyo
108-6216, Japan
Tel: +81-3-5781-6200

Headquarters

Osaka Head Office (Main Headquarters)
1-7-3, Awajimachi, Chuo-ku, Osaka
540-8603, Japan
Tel: +81-6-6228-5000

Capital¥6.8 billion

Date of Incorporation

September 2, 1948 (Founded in 1861)

Closing Date

March 31

Logistics Dept. (Textile)
Business Administration Sec.
(Synthetic Fiber)
Business Administration Sec.
(Technical Material & Garments)

Consolidated: 1,014
Number of Employees Nonconsolidated: 412(Including 74 employees dispatched to other companies)
Corporate Website

Synthetic Fiber andAutomotive Interiors Dept.
Performance Fiber and Textile
Dept.

https://www.chori.co.jp/english/
Synthetic Fiber
Business Dept.

Organization (As of April 1, 2020)

Technical Textiles Dept.
Textile-Fabric Dept.

Textile Division

Technical
Material &Garments
Business Dept.
Apparel &Sportswear
Business Dept.

Technical Fiber Garments Dept.
Intimate Apparel Dept.
Menswear & Sportswear Dept.
Apparel Dept.
Logistics Dept. (Chemicals)
Business Administration Sec.
(Chemicals)
Performance Chemicals Dept.

General Meetingof Shareholders

GovernanceCommittee

Executive
Committee

Board ofDirectors

President

Audit &
Supervisory
Committee

ExpertCommittees

Chemicals
Division

Chemical &Materials
Business Dept.

Inorganic Fine Materials Dept.
Industrial Chemicals Dept.

Life & Fine
Chemicals
Business Dept.

Internal Auditing
Dept.
Legal
Compliance
Committee

Fine Chemicals Dept.
Life Science Dept.
Corporate Management Dept.

Corporate
Planning Division

Human Resources &General Affairs Dept.
Information System Dept.
Pharmacovigilance & Quality
Assurance Office
Executive Chief Representative
for China
Hokuriku Branch
Okayama Liaison Office
Overseas Representative Offices
Overseas Subsidiaries

Tsumugu Report 2020

Investor Information

 reakdown of Shareholders by
B
Investor Type

Securities Code8014
(First Section of the Tokyo Stock Exchange)

Total Number of Shares Authorized
to Be Issued

55,000,000

Total Number of Shares Outstanding

25,303,478

Number of Shareholders

4,620

Trading Unit

100

Shareholder Register Agent for
Common Stock

Mizuho Trust & Banking Co., Ltd.

Accounting Auditor

Deloitte Touche Tohmatsu LLC

Brokerages
1.55%

Treasury shares
2.96%

Foreignindividuals
22.27%

Japanese
corporations
55.26%

25,303,478 shares

Financial
institutions
10.42%
Individuals
and others
7.54%

Major Shareholders
Shareholder name

Number of shares held (Shares) Percentage of shares held (%)

TORAY INDUSTRIES, INC.

12,967,310

52.81

BBH FIDELITY PURITAN: FIDELITY SERIES INTRINSIC OPPORTUNITIES FUND

1,566,400

6.38

The Master Trust Bank of Japan, Ltd. (Trust Account)

625,900

2.55

Wacoal Corporation

548,890

2.24

Japan Trustee Services Bank, Ltd. (Trust Account)

451,100

1.84

BBH FOR FIDELITY LOW-PRICED STOCK FUND (PRINCIPAL ALL-SECTOR SUBPORTFOLIO)

423,100

1.72

INTERTRUST TRUSTEES (CAYMAN) LIMITED SOLELY IN ITS CAPACITY AS TRUSTEE OF JAPAN-UP

357,500

1.46

Tachibana Securities Co., Ltd.

318,400

1.30

MLI FOR CLIENT GENERAL OMNI-NON-COLLATERAL NON-TREATY-PB

296,000

1.21

State Street Bank and Trust Client Omnibus Account OM02 505002

275,000

1.12

Notes:
1. In addition to the above, the Company owns 747,620 shares (2.96%) of treasury stock.
2. The ratio of shareholding excludes the 747,620 shares of treasury stock.
3. All shares held by the Master Trust Bank of Japan, Ltd. (Trust Account) and Japan Trustee Services Bank, Ltd. (Trust Account) are related to trust services.

Stock Price

Total Shareholder Return (TSR)-Related Data
FY2014FY2015FY2016FY2017FY2018FY2019

1,851

1,457

1,939

2,097

1,556

1,537

Dividends per share (Yen)

34

36

40

59

60

63

Total dividends per share (Yen)(from fiscal 2015)—

Stock price at year-end (Yen)300

TSR (%)

36

76

135

195

258

Chori

80.7

108.9

120.6

94.6

97.0

TOPIX
(Incl. dividends)

89.2

102.3

118.5

112.5

101.8

* TSR is based on investments carried out at the closing price on March 31, 2015.
200

100

0

2016/4

Chori

2017/4

TOPIX 2018/4

2019/42020/3

Note: Based on closing price on March 31, 2015 as 100

48

CHORI CO., LTD.
Tokyo
Head Office

2-15-3, Konan, Minato-ku, Tokyo 108-6216, Japan
Tel: +81-3-5781-6200

Osaka
Head Office

1-7-3, Awajimachi, Chuo-ku, Osaka 540-8603, Japan
Tel: +81-6-6228-5000

URL

https://www.chori.co.jp/english/

Printed in Japan
Issued in November 2020