Ts u m u g u Report 2021
Fiscal 2020 (the year ended March 31, 2021)

Making your dreams come true

1

CHORI CO., LTD.

Corporate Slogan

Making your dreams
come true
Corporate Philosophy
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—Commemorating Our 160th Anniversary—
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 same manner
as it has been weaving silk over the years. The report’s name “Tsumugu Report” reflects
our corporate stance that has remained intact since our founding. Commemorating its
160th anniversary in 2021, Chori will continue to remain a company that weaves dreams
into reality by cherishing its relationships with all stakeholders.

Tsumugu Report 2021

Contents
Management Foundation
Tailored to Sustainable Growth

Overview of Chori3
		A History Dating Back 160 Years
to Our Founding

37

5

Our Expanding Footprint Overseas

		 37

Environment

7

Chori’s Strengths

		 39

Business Partners

9

President’s Message

		 40	Occupational Safety
Management

13	Medium-Term Management Plan—
Chori Innovation Plan 2022
17

Financial Strategy

Natural Dye

Overview and Strategies by
Business Segment
Overview

25		Fibers, Textiles,
and Garments Business

29

Chemicals Business

33

Machinery Business

Scope of Reporting
CHORI CO., LTD. and its Group companies; however, certain
information applies only to CHORI CO., LTD.

Human Resources

		 44	Promotion of Health andProductivity Management
45

Corporate Governance

52

Messages from Outside Directors

53	Directors, Audit & Supervisory	Committee Members, andExecutive Officers

Fact Data

23

Editorial Policy
The “Tsumugu Report” was issued to provide all readers, including
shareholders, investors, and all other stakeholders, with information on Chori’s management vision, corporate philosophy,
strengths, and businesses, in order to broaden their understanding of the Company. The report also functions
as a tool for engaging in new dialogues withstakeholders. The Tsumugu Report is issued
in both Japanese and English, and it is alsoavailable for viewing on our corporate website.
https://www.chori.co.jp/english/

		 41

		 43	Local Communities
and Society

Special Feature:
Chori’s Sustainability-Focused
Business
19

Chori’s Sustainability Initiatives

55

11-Year Financial Summary

57

Chori’s Global Network

59

Corporate Information

Period of Reporting
The information contained in this report is primarily for fiscal 2020
(April 1, 2020 to March 31, 2021); however, certain sections of thereport contain information on fiscal 2021 and thereafter.
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 achievement of targets or forecasts or future performance. In addition,
the information 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.

2

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CHORI CO., LTD.

Overview of Chori

A History Dating Back 160 Years
to Our Founding
1861

Founded in the Nishijin District of Kyoto, JapanIn 1926, Chori began handling rayon yarn upon its founding as a raw silk wholesaler. Due to the lack of market knowledge at the time,
we visited weavers on a number of occasions to enhance awareness of rayon yarn and continued to improve its level of quality while
orchestrating efforts to expand the market. In 1937, we became a major producer in the rayon yarn industry with an approximate 30%
share of the domestic market, which led to the establishment of our business foundation as a specialized trading company in textiles.
Moreover, the name “Chori” originates from the combination of the Japanese characters “蝶” (cho), derived from the image of a mothcreating raw silk, and “理” (ri), stemming from the first name of Chori’s first president, Riichiro Ohashi.

1970
2000s

1948
1970s
A Period of

Setbacks

A Period of

Selection and Concentration of Businesses
Due to Significant Losses

GrowthIn fiscal 1991, Chori recorded its highest net sales ever of ¥755.5

Handling of Synthetic Resin, Chemical
Products, and Various Types of Machinery
In 1956, Chori engaged in the business of chemical products andbillion while incurring significant losses in the finance and realestate businesses. This prompted a restructuring of our business,
which consisted of revising our portfolio of lifestyle-related
products and devoting our attention to Chori’s core businesses.

machinery and developed the business alongside the Fibers,
Textiles, and Garments Business. Meanwhile, in the 1970s, we
expanded our business to include lifestyle-related products, such

1975

Begins company restructuringwith drastic streamlining anddownsizing of management

1997Establishes joint venture
Chongqing Dazu Red Butterfly
Strontium Industry Co., Ltd.

1976

Establishes Fukui Chori
Committee and Kanazawa Chori
Committee (currently Hokuriku
Chori Committee) with twisted
yarn manufacturers and otherbusiness partners in the
Hokuriku region

2002Spins off the Synthetic Resin
Business Division into aseparate company

as food, clothing, and housing and leisure, and successfully
improved our business results by diversifying our operations.

1948	CHORI CO., LTD. established1952	Moves head office to Osaka
1953	Commences exclusive sales ofwoolly nylon through theestablishment of a joint venture
for the manufacture of woolly
nylon with Toyo Rayon Co., Ltd.
(currently TORAY INDUSTRIES,
INC.)

1956	Launches Chemicals Business

1957	Establishes Chori New York Co.,

Ltd. (currently CHORI AMERICA,
INC.), Chori’s first overseas
subsidiary1959	Stock listed on

1985Handling of angora sweaters
exceeds 300,000 units, resulting
in high market share

1993

Establishes CHORI (SHANGHAI)
CO., LTD. as first subsidiaryin China

1996

Secures order for railway projectin Kazakhstan

Osaka Securities Exchange

1961	Stock listed on

Tokyo Stock Exchange	Designated as one of the firstfriendly trading companies
by China

1972	Develops a large-scalecondominium	Pla-Net Holdings, Inc. (currently
Sojitz Pla-Net Corporation)acquires all shares of Chori
Pla-Techno Co., Ltd.

2003

 aunches “Reborn Management
LPlan” medium-term management plan and undergoes
sweeping structural reforms

	Holds Textiles Exhibition(currently CHORI Exhibition)

Tsumugu Report 2021

2020s
2000
2020s

A Period of

BreakthroughResults

Four Consecutive Years of Record-High
Ordinary Income
In fiscal 2019, Chori’s ordinary income totaled ¥8.7 billion, a record

Transitioning to

Our New StageIn 2021, Chori celebrated the 160th
anniversary of its founding. Established as araw silk wholesaler in 1861, prior to Japan’shigh for the fourth year in a row. Meanwhile, we also began partic­transition to the Meiji Era, Chori has continued

ipating in a lithium compound production project in Chile and ato evolve with the times and accommodate thechemical fertilizer production project in Nigeria, and we continue
to actively engage in such social contribution activities to this day.

needs of society while actively pursuing the
expansion of its business.

2004

2005

Becomes a consolidated
subsidiary of TORAY
INDUSTRIES, INC.
Establishes CHORI (CHINA) CO.,LTD., the first Japanese trading
company subsidiary with therights to sell and trade in China

2006

Expands Chemicals Businessthrough the supply of raw
materials for epoxy resin

2012Engages in capital participationin manufacture of electrode foil
for aluminum electrolytic
capacitors

	Engages in capital participationin MEGACHEM LIMITED, a
trading company specializing inchemicals in Singapore

2013Makes PTI Japan Limited(currently CHORI GLEX CO.,LTD.), a trading company
specializing in chemicals, a
consolidated subsidiary

2014Relocates Tokyo head office toShinagawa2015

Makes Miyako Kagaku Co., Ltd.,a trading company specializing inchemicals, a consolidated
subsidiary

2016Holds first annual Hokuriku
Yarn Fair

2017

Participates in lithium compound
production project in Chile	Splits off Machinery Businessand establishes Chori MachineryCo., Ltd.
	Makes ASADA U CO., LTD., asales company of automotive
interior and packaging materials,
a consolidated subsidiary2018

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., andTORAY INDUSTRIES, INC. in
Indonesia	Participates in First China–Japan
Forum on Third-Party
Market Cooperation

2019

Establishes joint project with
Utsumi Recycle Systems Inc. forthe sale of recycled pellets

	Participates in chemical fertilizer
production project in Nigeria

Under Chori Innovation Plan 2022, our medium-term management planunveiled in fiscal 2020, we are working to lay a solid foundation for our
new stage of consistently delivering ordinary income of ¥10.0 billion or
more. Since its founding, Chori has continued to grow its business byframing the drastic changes that have occurred in its business environment as opportunities and fully embracing them. Moving ahead, we willremain firmly committed to enhancing our corporate value with the goalof realizing sustainable growth.

2021

Makes Sumitex International Company Limited, aspecialized trading company in textiles, a consolidated subsidiary

4

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CHORI CO., LTD.

Overview of Chori

Our Expanding Footprint Overseas
Following the resumption of private foreign trade in 1949, Chori began selling textiles to markets in Southeast Asia
and South America. Our exports to Southeast Asia, Africa, North America, and Central and South America also
resumed thereafter, while our global network expanded with the establishment of overseas bases in the UnitedStates, Germany, Canada, Australia, Hong Kong, South Korea, the Philippines, and other locations.

Our Long-Standing Business Ties
with Greater China* Establishedthrough Our 14 Business Locations
Chori has a long history of business relations in China, as
demonstrated by its designation as one of the first friendly trading
companies by the Chinese government in 1961. China is regarded not
only as one of our regions of production but also as a strategic basefor offshore trade and, in view of this, we are moving full steam ahead
with the strengthening and growth of our business in this region.
* Includes China, Taiwan, and Hong Kong

Major Overseas Bases and
Net Sales in Japan and Overseas*

Net sales surpasses

700.0-billion mark￥Net sales surpasses

Overseas bases shown in italics have either discontinued operations
or are currently inactive.

500.0-billion mark￥* Based on the results of securities reports

30

1957

Global network expands tocountries
with the additions of Chori East Africa Co.,
Ltd., Chori Canada, Ltd., and Chori Australia
Pty Ltd.

Establishes Chori New York Co., Ltd.
(currently CHORI AMERICA, INC.)

Domestic sales
Import sales
Export sales
Overseas sales

1987
Establishes CHORI CO.,(HONG KONG) LTD.

1963
1973

Establishes Chori GmbH(currently Chori Europe GmbH)

Establishes CHORI SINGAPORE PTE LTD

1974

1989

Establishes THAI CHORI CO., LTD.

Overseas Subsidiaries

Establishes CHORITRADING(MALAYSIA) SDN.
BHD.

1976
Establishes Chori Iran Co., Ltd.

1960

1970

1980

Moscow (Russia)

1990
Tashkent (Uzbekistan)Beijing (China)

Qingdao (China)
Santiago (Chile)

Representative Offices

1950–1970s

1972 inmu economic boom ofJthe mid-1950s

Iwato economic boom of
1958–1961

 conomic boom created byE
the Tokyo Olympic Games(1962–1964)

Izanagi economic boom of
1965–1970

Major developments in Japan1978

 ormalization of Japan–
N
China diplomatic relations
1971

Nixon Shock

Major developments overseas

1973

First oil shock1985

 onclusion of Japan–China Treaty
Cof Peace and Friendship
1979

Second oil shock

Plaza Accord
1990

Reunification of
East and West
GermanyTsumugu Report 2021

Establishment of Chori New YorkCo., Ltd. (Currently CHORIAMERICA, INC.)
Chori began sourcing materials from Southeast Asia and otherregions across the globe by taking full advantage of the higheconomic growth period that transpired after World War II aswell as of its distinctive global network. In particular, Chori New

Expansion of Overseas Tradewith Central and South America
through the Establishment of
CHORI COMERCIAL DE
MEXICO, S.A. DE C.V.

York Co., Ltd. expanded as a hub for the import and export ofJapanese-made textiles with markets in North America.

In the 1960s, representative offices were established in
El Salvador, Lima, and Sao Paolo to serve as core bases
for overseas trade with Central and South America. With theestablishment of CHORI COMERCIAL DE MEXICO, S.A. DE
C.V. in 2017, our business in Central and South America has
expanded ever since through the supply of materials of a major
automaker to the region and other initiatives.

2012

2016

Establishes
CHORI KOREA
CO., LTD.

Establishes CHORI VIETNAM
CO., LTD.

2014

2017

Establishes
CHORI TRADING INDIA
PRIVATE LIMITED

Establishes CHORI COMERCIAL
DE MEXICO, S.A. DE C.V.

2018
Establishes TAIWAN CHORIMERCHANDISE
COOPERATION LTD.

2004
Establishes CHORI (TIANJIN)
CO., LTD. and CHORI(DALIAN) TRADING CO., LTD.

2019

1993

2005

2009

Establishes
CHORI (SHANGHAI) CO., LTD.

Establishes CHORI (CHINA)
CO., LTD.

Establishes Chori
Trading (Thailand)Co., Ltd.

Establishes CHORI (DALIAN)
COMMERCIAL IMPORTEXPORT CO., LTD.

1995
Establishes PT. CHORI INDONESIA

2001
Establishes
Chori Middle
East FZE

2000
Ho Chi Minh City (Vietnam)

2010Jeddah (Saudi Arabia)

Charlotte (the U.S.)

Nantong (China)

Shenzhen (China)
Ruian (China)

1991–2000s

Collapse of bubble economy

2001 reat Hanshin-Awaji
G
Earthquake

Cambodia

2003

SARS epidemic

Lima (Peru)
Istanbul (Turkey)

Manila (Philippines)
Wuhan (China)

2011

Multiple terrorist attacks in the U.S.

 reat East JapanG
Earthquake

Heisei depression
1995

2020

Guiyang (China)
Dhaka(Bangladesh)

2008

Global Financial Crisis

2017

Inauguration of former U.S.
President Donald J. Trump
2020

COVID-19
pandemic

6

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CHORI CO., LTD.

Overview of Chori

Chori’s Strengths

Cultivated Since Its Foundation

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

Procurement
Capabilities

Responsiveness(Promptness)

Ability to

Develop a Global
UniqueSupply Chain

Global NetworkAn extensive business network

Global bases and sales routes

Credibility(a proven track record)

Product management teamProduct procurement network
Marketing capabilities
Know-how in overseas trade

History

Network

 ne of the first friendlyO
trading companies to be
designated by China

Tsumugu Report 2021

Strength

1

Strength2

3Strength

UniqueGlobal Network

Human
Resources

History

Our Unique ProductProcurement Network andKnow-How in Overseas Trade

Timely Responses to
Customer Needs Provided
by Our Team of Experts

Our Proven Track Record andDistinctive Business Ties
Accumulated over 160 Years

In 1949, private overseas trade resumed

At Chori, our employees are assigned toOver the course of its long history, Choriupon the conclusion of World War II,

either the Fibers, Textiles, and Garments

has developed solid relationships withand Chori proceeded in full force toBusiness, the Chemicals Business, or

prominent suppliers across the globe. Our

resuscitate its overseas business. At

the Machinery Business over the longconnection with China has been particularly

Chori, we have built a global network

term and, for that reason, they are wellstrong, with our designation as one of thethat currently consists of 969 employ-versed in their respective fields. Their

first friendly trading companies in 1961,ees on a consolidated basis and 35

expert knowledge encompasses a wideprior to the normalization of Japan–China

locations overseas, encompassing

range of domains, including productdiplomatic relations, serving as a prime

China and other parts of Asia as wellquality, manufacturing know-how, andexample. In 2005, we also established aas the Middle East, Africa, and Souththe technological capabilities of our

trading company subsidiary with the rights

America. Through the growth of our

suppliers. The ability to utilize this exper-

to sell and trade in China. On the strength

global network over the years, we havetise to identify the needs of the market

of its long-nurtured and solid business ties

enhanced our line of expertise andand propose solutions to customers

with China, Chori has built a formidable

competitive advantages in various

represents one of Chori’s competitive

supply chain in the country. China serves

markets. In addition, our sales outside

strengths. Moreover, we address theas a hub for the production, procurement,of Japan have expanded on thevarious needs of our customers throughand domestic sales activities of our Fibers,

strength of our long-cultivated know-

not only the efforts of our operations in

Textiles, and Garments Business as well

how in overseas trade, with overseas

Japan but also through uniting together

as for exports to third-party markets in thetransactions accounting for roughly

as an organization and sharing

Chemicals and Machinery businesses,

70% of our total net sales.

information with our subsidiaries andwhich we will fully exploit in a bid tooffices overseas.

con­tinue the expansion of our businessin this country.

8

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CHORI CO., LTD.

Overview of Chori

Kazuo Sakihama
President, CEO & COO,
President and Executive Officer

Tsumugu Report 2021

President’s Message

We will continue to evolve with an eye

on the next generation by consistently delivering­ordinary income of ¥10.0 billion or more.

Commemoration of Our 160th Anniversary

Overview of Fiscal 2020 Results

Founded as a raw silk wholesaler in 1861, Chori celebrated

In fiscal 2020, the initial year of Chori Innovation Plan 2022,

the 160th anniversary of its founding in 2021. This year also

its medium-term management plan, Chori’s business seg-marks the 73rd year since CHORI CO., LTD. was establishedments were hit hard by the effects of COVID-19, particularly

in 1948. While riding the wave of economic growth in Japanin the first quarter. While gradually recovering the profitability

after World War II and continuously expanding the scale of itsof core businesses from the second quarter, ultimately bothbusiness, Chori suffered hardships during a period of around

net sales and ordinary income in fiscal 2020 fell from the28 years that started in the latter half of the 1970s. As a result

previous year, as net sales amounted to ¥216.2 billion,of enormous losses incurred in the leisure and real estateordinary income totaled ¥4.7 billion, and net income attrib-

businesses, Chori underwent a rigorous selection andutable to owners of the parent came to ¥1.2 billion. The

concentration process in order to breathe new life into its

lower ordinary income is mainly attributable to the recording

business. What materialized out of these efforts and whatof provision of allowance for doubtful accounts equivalent tocontinues to live on and serve as the pillars of our operations

the entire amount of accounts receivable of ¥5.1 billion

today are the Fibers, Textiles, and Garments, Chemicals, andpertaining to the Chengxing Group in China. I would like to

Machinery business segments. We have been able to create a

express my sincere apologies for the great deal of concern

solid business foundation through the refinement of theseand inconvenience this has caused to all of our stakehold-three business segments over the years. Meanwhile, theers. Going forward, we will monitor developments in the

global outbreak of COVID-19 in fiscal 2020 has reaffirmed theChengxing Group’s reconstructive bankruptcy proceedings

importance of this foundation. The global impact and unprec-

and make every effort to collect on the chattel mortgage

edented nature of the COVID-19 pandemic has served as aover collective property that has already been obtained andtrue test of strength for Chori’s procurement and sales capa-

on repayments from reconstruction plans. At the outset ofbilities and the long-cultivated global supply chain on whichfiscal 2020, our goal, with the impact of COVID-19 in mind,

they are built. More than anything, the employees at Chori,

was to achieve net sales of ¥200.0 billion and ordinary

who are well versed in their respective fields, and our

income of ¥7.0 billion. While we did not reach these targets,

organizational capabilities that hinge on the strengths of eachordinary income would have amounted to ¥9.7 billion if notindividual are the reasons why we have been able to over-for the recording of provision of allowance for doubtful

come the challenges presented by COVID-19.

accounts, which would have exceeded its fiscal 2019

For these reasons, I am fully confident that we will con-results. Recognizing this fact, I believe fiscal 2020 was atinue to evolve as a company as we proceed ahead into theyear in which we were able to lay a solid foundation for our

future. I look forward to your continuous support of Chori as

new stage, at which we will consistently deliver ordinary

it continues to adapt to changes in the times and to evolve

income of ¥10.0 billion or more, as set forth in Choriin tune with society.

Innovation Plan 2022.

10

11

CHORI CO., LTD.

Overview of Chori

I truly appreciate the hard work of our Group employees in

was hit severely by the effects of COVID-19. However, carthis regard. Amid circumstances in which employees were notseats, hygienic materials, and other non-apparel items madeable to come to the office or take business trips, the fact thata steady recovery as the Fibers, Textiles, and Garments

we managed to continue to fulfill our procurement tasks by

Business’s unification of three divisions into one began to bear

maintaining our supply chain and, in particular, the fact that wefruit. Positioning the Fibers, Textiles, and Garments Businesswere able to procure and deliver the materials necessary forunder a single large roof has enabled information on the haz-masks, protective garments, and hygienic materials in a timely

ards of COVID-19 to be shared with Group headquarters andmanner through the collective efforts of our organization

affected areas in need of recovery through the efforts of thedeserve strong recognition.

entire business segment.

As it moves forward, Chori will rigorously enforce risk

Moreover, we bolstered the collective strengths of the­management and other defensive measures and firmly grasp

business in June 2021 by making Sumitex International

business opportunities in order to position itself to respondCompany Limited a consolidated subsidiary. While the strength

quickly to the drastic changes taking place in its social andof this company lies in natural fibers and despite its providing

economic environments.

raw materials to all customer categories in the apparel sector
as an original equipment manufacturer (OEM), the customer

Recording of Provision of Allowance for Doubtful Accounts
Tohcho Co., Limited, a consolidated subsidiary of CHORI CO., LTD., wasa supplier of chemical raw materials for the Chengxing Group, a chemical
manufacturing company in China. However, due to the sluggish performanceof the Chengxing Group’s main petrochemical business as a result of
COVID-19, payments to Tohcho for raw materials began to fall behindfrom April 2020. The Chori Group quickly proceeded with legal action andfiled a lawsuit to collect the outstanding payments and, after assessing
the recovery status of accounts receivable and the progress of litigation
hold procedures in the first quarter, recorded provision of allowance for
doubtful accounts in the amount of ¥2,474 million, equivalent to around
50% of the entire amount of accounts receivable.
In February and March 2021, a major bank in China filed for reconstructive bankruptcy proceedings against two companies operated by theChengxing Group, for which the court accepted reconstructive bankruptcy
proceedings, and the initial creditors’ meetings related to these proceedings
were held in April 2021. Upon receiving reports from the bankruptcy trustee
on the financial status of each company and conducting a comprehensive
assessment of the financial position of each company, the estimated value ofthe chattel mortgage over collective property that has already been obtained,
and the developments of the reconstructive bankruptcy proceedings, underaccounting procedures provision of allowance for doubtful accounts equivalent to the entire amount of accounts receivable of ¥5,085 million was recorded(an additional amount of ¥2,708 million was recorded in the fourth quarter).

JIANGYIN CHENGXING INDUSTRIAL GROUP CO., LTD.

Outstanding
payments

generation of synergies in the form of stronger exit strategies.
This new subsidiary also owns a factory in Vietnam, which
could be utilized to diversify our production in the near future.
I am looking forward to seeing this synergy make great contributions to our medium- to long-term growth.
Meanwhile, the Chemicals Business also felt the drastic
effects of COVID-19 as the cost of various products took adownturn in the first quarter. The market was particularly sluggish for the organic chemicals and electronics materials sectors in the first half of fiscal 2020; however, they were on theroad to recovery in the second half. In the area of functional
materials, such as intermediates for pharmaceutical products
and food additives, we will likely see improvements in thismarket in fiscal 2021. In terms of investments in the Chemicals
Business, we are currently at a standstill due to the impact of
COVID-19. In view of this, however, Chori will remain firmly
engaged in the lithium compound production project in Chile,which it began undertaking prior to the advent of COVID-19,

Chengxing GroupJIANGYIN CHENGOLDPACKAGING MATERIALS
CO., LTD.

base differs from that of Chori. As such, we can expect the

JIANGSU CHENGXINGPHOSPH-CHEMICALSGROUP I/E CO., LTD.

Sales of
Outstanding
raw materials payments

Other chemical
manufacturing
companies
Reconstructive bankruptcy
proceedings filed by amajor bank in China

Sales of raw
materials

Tohcho Co., Limited(a consolidated subsidiary of CHORI CO., LTD.)

while actively seeking opportunities to invest in growth fields,such as the environment and 5G, moving forward.
In the Machinery Business, the enforcement of lockdowns
in the sales markets of Central and South America, Europe,and Africa affected our ability to conduct sales activities in thefirst half of fiscal 2020. However, owing to the global recoveryof the automotive market, we were able to achieve a level ofordinary income that exceeds the target we set out to achieve
in fiscal 2022, the final year of Chori Innovation Plan 2022. In
fiscal 2021, we have gotten off on the right foot thus far, as weare on pace to surpass our fiscal 2020 results.
Despite the challenges posed by COVID-19 to each of our

Progress of Chori Innovation Plan 2022

three businesses in the first half of fiscal 2020, we are optimis-

The downstream field in the Fibers, Textiles, and Garments

road to recovery. We will continue to make steady strides in

Business, which handles apparel and other finished products,

each business with the goal of achieving ordinary income oftic about the future as all three businesses are currently on theTsumugu Report 2021

¥11.0 billion (Fibers, Textiles, and Garments Business: ¥5.2

clearly disclose the social benefits thereof in the form of non-billion; Chemicals Business: ¥5.3 billion; and Machinery

financial indicators, such as the reduction of CO2 emissions.

Business: ¥0.5 billion), the target we have set out to achieve

Meanwhile, I do not expect significant changes goingin fiscal 2022, the final year of our current medium-term

forward from the perspective of Chori’s role as a trading

management plan.

company. Although we will continue to adhere to therequests of governments and municipal authorities for thepromotion of telework and the implementation of basic mea-

Our Direction Going Forward in Anticipation of the
New Normalsures to prevent the spread of the virus, so long as we are

Changes in consumer behavior will most likely persist in thecustomers and our support for newly graduated employees

current and post-COVID-19 eras; however, they are believedthat can only be provided on-site will continue to be an

to be short-lived. Meanwhile, the various measures that will be

important part of our business. While valuing the importance

enforced to address the most vulnerable areas uncovered asof such on-site activities, we will flexibly adapt to the needs ofa result of COVID-19 and the issues expected to emerge sev-

the times by providing the option of staggered working hours

eral years from now are sure to speed up the pace of changes

and telework, incorporating online solutions, and implement-in society. Among these issues, I am particularly concerned

ing other measures to offer a diverse array of workstyles.

a trading company, direct face-to-face contact will remaina critical aspect of our business. Our interactions with newabout the lack of advancement in digitalization within the public
and private sectors in Japan that has come to light recently.
Chori has been going about its day-to-day business with thisissue in mind for several years now, but we are well aware that

To All of Our Stakeholders

this lag in digitalization is a matter of great concern. We have

I would like to sincerely apologize once again for the great

declared the consistent delivery of ordinary income of ¥10.0

deal of concern and inconvenience that the actions of thebillion or more as a major goal for our current medium-term

Chengxing Group in fiscal 2020 have caused to all of ourmanagement plan. The realization of this goal and the continu-

stakeholders. Regardless of this incident, the management

ous growth of our business will entail the restructuring of our

foundation and profitability that Chori has built over the years

business through the further advancement of digitalization andare making steady progress as we proceed toward realizing

the eventual arrival of digital transformation. As we look ahead

the targets set out in Chori Innovation Plan 2022. I am con-to the next medium-term management plan, we will speed up

vinced we will be able to demonstrate the proof of our continu-

the pace of our digitalization while developing infrastructure

ous growth over the years in fiscal 2021, the second year of

conducive to the achievement of our continuous growth as

our current medium-term management plan. I sincerely hopea company.

that we continue to receive support and encouragement fromThrough this advancement of digitalization, I believe weall of our stakeholders in the years ahead.

must work to quantify our nonfinancial indicators. At Chori, we
handle such products as ECO BLUE™ recycled polyester fiberand plant-based meat (alternative meat derived from plants),
and are participating in a lithium compound production project in Chile that relies on a new environment-friendly lithiumproduction process. Moving forward, we must not only continue to engage in such social contribution activities but also

Kazuo Sakihama

President, CEO & COO,
President and Executive Officer

12

13

CHORI CO., LTD.

Overview of Chori

Medium-Term Management Plan

Chori Innovation Plan 2022
Under Chori Innovation Plan 2022, our current medium-term management plan covering the period from fiscal 2020 to fiscal
2022, Chori will rigorously enforce risk management and other defensive measures in order to position itself to respond quickly
to the drastic changes taking place in its social and economic environments. We will forge 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,” with the aim of realizing sustainablegrowth. By doing so, 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 continue to enhance its corporate value.
356.5

 et sales (target)NNet sales (result) rdinary income (target)OOrdinary income (result)330.0 329.4(Billions of yen)

291.6
280.0

311.7

300.0
270.9

260.0
248.4
6.8

8.7

8.7

7.5

7.5

6.2

300.0

280.0

8.5

7.8

7.2

7.0

6.0

(%)

5.5

ROA
(Ordinary Income Basis)

7.3

6.0

7.1

6.9

7.3

7.5

ROE
(Net Income Basis)

10.7

10.2

10.7

9.7

10.7

11.0

FY2014FY2015FY2016

Yakushin 2016

Corporate philosophy

Strengthened the management base,Initiated M&A strategy

FY2017FY2018FY2019Chori Innovation Plan 2019
Strengthening consolidated
management

Converting businessmodel by investing

Enlargement ofGroup companies

Under Yakushin 2016, our previous medium-term management planof recording provision of allowance for doubtful accounts equivalent

covering the period from fiscal 2014 to fiscal 2016, we fell short of ourto the entire amount of accounts receivable of ¥5.1 billion pertaining

targets due to the decline in overseas trade precipitated by the impact

to the Chengxing Group in China, ordinary income came to ¥4.7of the appreciating Japanese yen in fiscal 2016. Nonetheless, ourbillion, a 46.4% decrease from the previous fiscal year, while bothresults fared well overall thanks to the execution of large-scale M&A,

ROA (ordinary income basis) and ROE (net income attributable tosuch as the consolidation of Miyako Kagaku Co., Ltd. into the Group.

owners of the parent basis) fell temporarily. However, if not for thisUnder Chori Innovation Plan 2019, our previous medium-term

one-time loss, ordinary income would have amounted to ¥9.7 billion.

management plan covering the period from fiscal 2017 to fiscal 2019,

We will continue to promote initiatives such as the consolidation of

we solidified the foundation for reinforcing our consolidated manage-

Sumitex International Company Limited into the Group with a view toment structure by making ASADA U CO., LTD. and KOZAKURA

realizing ordinary income of ¥11.0 billion in fiscal 2022, the final year

SHOKAI CO., LTD. consolidated subsidiaries. This culminated in theof this medium-term management plan.

achievement of our highest-ever results for ordinary income and net
income attributable to owners of the parent in fiscal 2018 and of ourmanagement plan targets one year ahead of schedule.

Standard for Revenue Recognition led to a 34.3% year-on-year
decline in net sales in the first year of the plan. Moreover, as a result

Net Sales

2020, the impact of COVID-19 and the adoption of the Accounting

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

Proxytransactions
Commission
incomeTransactions ofrelated party
Conventional

Trading Amounts
Net Sales

Under Chori Innovation Plan 2022, which commenced in fiscal

Accounting Standard for Revenue Recognition

Commission
incomeTransactions ofrelated party
After adoption of revenue
recognition standard

Tsumugu Report 2021

Becoming a corporate group that continues to evolve and change on

a global scale, underpinned by its exceptional capabilities and expertise
280.0

280.0
11.0

AFTER COVID-19

To a new normal

10.0
216.2
200.0

7.0

Take steps to address COVID-19

4.7

Respond instantly to a dramatically changing business environment
Fortify defensive measures
ROA(Ordinary Income Basis)

ROE(Net Income Basis)

FY20204.1

9.0

8% or more

2.2

11.0

11% or more

FY2021 (Forecasts)

Numerical Targets

FY2022 (Targets)

Chori Innovation Plan 2022
Lay a solid foundation for a new stage
Consistently deliver ordinary income of ¥10.0 billion or more

Enhancing corporate
governance

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

Ordinary Income¥11.0 billion

Net Income Attributableto 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

* In the first quarter of fiscal 2020, Chori adopted the
Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, issued on March 30, 2018).

Continuing to implement CHORI Innovation
Activities (Companywide activities)

Awareness of External Business Environment (Fiscal 2020)
Chori will rigorously enforce risk management and other defensive measures and firmly grasp business opportunities inorder to position itself to respond quickly to the drastic changes taking place in its social and economic environments.

Positive Impacts

Negative Impacts• Increased demand for car seats due to recovery
in automobile production• Steady demand for hygienic materials• Increased demand for sports apparel due toincreased health awareness• Demand for apparel declined due tostay-at-home orders

Chemicals
Business• Strong demand for pharmaceutical intermediates,etc.
• Increased demand for automobile-related materials
due to recovery in automobile production• Demand for cosmetics and food additives declined
due to reduced store opening hours and people’s
refraining from going outdoors

MachineryBusiness• Recovery of vehicle markets in Europe, South andCentral America, and Africa• Stringent conditions for vessels, soaring container
shipping rates, etc.

Fibers, Textiles,
and Garments
Business

14

15

CHORI CO., LTD.

Overview of Chori

The Basic Strategies of Chori Innovation Plan 2022
Chori will press ahead 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 drasticallychanging social environment.

1

Reinforcement of Consolidated Management Structure

From the perspective of reinforcing the consolidated management structure, Chori willC
 onsolidated management centered on
global businessincrease the consolidated-to-nonconsolidated ordinary income ratio, enhance thecapabilities of core subsidiaries, and promote Group management.

Strengthening of Consolidated-to-Nonconsolidated
Ordinary Income RatioC onsolidated management
P ortfolio management

Projected toincrease
1.6 timesD igital management(Billions of yen)
12
9
6

5.4

7.5 6.0

FY2016FY20177.0

30

Consolidated ordinary income

2

8.7

6.1

FY2018

8.7

11.0
6.4

FY2019

4.7

6.8
2.2

FY2020

FY2022 (Targets)

Nonconsolidated ordinary income

Creation of Next-Generation Business Models

We will maintain the Business Investment Committee and proactively invest in growth fields
and areas. In particular, we will proceed with the business investments outlined below centered on the themes of the environment, health, sustainability, and cutting-edge technology.

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

Focusing on Investment in Growth Fields and Areas
Fibers, Textiles,
and Garments Business

Environmental and recycling, health, hygiene,
and materials fields

Chemicals Business

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

Machinery Business

Global market development

TOPIC

Acquisition of Sumitex International
Company Limited
In June 2021, the Chori Group acquired all shares of Sumitex
International Company Limited from Sumitomo Corporationand made it a wholly owned consolidated subsidiary. Sumitex
International, which originated as a business that handled raw
materials for fibers (cotton), is a trading company specializing
in natural fibers that provides such raw materials to all customer categories in the apparel sector as an original equipment manufacturer (OEM). We are expecting to createsynergies with this globally expanding company that boasts a
production network consisting of Japan and various othercountries in Asia.

Overview of Sumitex International Company Limited
Name and Title ofRepresentative

President, CEO & COO / President and Executive Officer
Masahiro Takamaru

Location

3-26, Kanda Nishiki-cho, Chiyoda-ku, Tokyo

Capital¥830 million

Date of Establishment March 1987 (founded in 1898)
Details of Business

Manufacturing and distribution of textile-related products (clothing,fabric materials, etc.)

Employees

232 (as of April 1, 2021)

Overseas Bases

China (Shanghai, Qingdao), Hong Kong, and Vietnam (Ho Chi Minh City)

Website(in Japanese only)

http://www.stx.co.jp/

Tsumugu Report 2021

3

Corporate Governance

At Chori, we have a Governance Committee in place, which mainly consists of outside directors and serves as an advisory body to the Board of Directors. Through the enhancement andstrengthening of corporate governance, we will pursue further increases in corporate value,
while delivering performance-based dividends of 30% or more. Meanwhile, our basic dividend
policy is to provide performance-based dividends in accordance with the standards for net
income attributable to owners of the parent from the perspectives of flexibly 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)100

G roup governanceE nhancement of Chori’s brand valueC HORI Innovation Activities(Companywide activities)

Governance Committee(Yen)(FY2020–FY2022)

84

90

80

500
400

59

60

63

60
40

C
 ontinuation of stock-based
compensation and enhancement thereof

Payout ratio

30% or more

Includes commemorative
dividend of ¥10(Yen)E stablishment of Governance CommitteeImprovement of dividend policy

300

33

34

40

36

37

200

24

20

100

0

2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022 0(Result) (Result) (Result) (Result) (Result) (Result) (Result) (Result) (Result) (Forecast) (Target) (FY)Dividends per year (left scale)4

Net income per share (right scale)Committee
Chairman
SawanoCommittee
MemberMorikawa

Committee
MemberSakihama(Independent Director) (Independent Director) (President, CEO & COO)

Outside director
Appointment or
dismissal of directors
and executive officers

Compensation of
directors andexecutive officers

Successor planningand training

Compensation
made individually

Director

Assessment oftransactions andother dealings withthe parent
company group

Compliance
Through the reinforcement of corporate ethics, elimination of legal
violations, and strengthening of supervisory functions at consolidated
subsidiaries, we ensure thorough compliance throughout our operations.
As we continue to evolve our business globally, we will adhere to thelaws, regulations, and customs of Japan and other countries and instillsuch awareness in our employees through internal training sessions andR einforcement of corporate ethics
E limination of legal violations
G lobal risk management
S trengthening of supervisory functions at
consolidated subsidiaries

legal compliance manuals for the purpose of preventing legal violations.

5

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 with them,” Chori regards
each and every one of its Group employees as its most valuable management resource andN urture of human resources fornext generation

strives to ensure their health and well-being. Further, by promoting the following measures inP romotion of health and productivity
management

line with the key principles of “utilize,” “nurture,” and “connect,” we will cultivate our human(Please see page 44 for details)

resources for the next generation.

Nurture of Human Resources for Next Generation

Utilize

NurtureConnectR ealize diverse workstyles
Stimulate communication
through one-on-one interviews

Nurture future generations ofhuman resources
Nurture employees of ouroverseas offices
Promote active roles for womenEnergize and unify the ChoriGroup through mobilization of
employees within the Group

16

17

CHORI CO., LTD.

Overview of Chori

Financial Strategy

We will continue on our path
toward our new stage
on the strength of our solid equity.
Shigemasa Yabu
Director, Senior Managing Executive Officer

Overview and Assessment of Fiscal 2020 Results
At the end of May 2020, Chori announced its targets for Chori

Chengxing Group in China, ROA (ordinary income basis) and ROE

Innovation Plan 2022, which reflect the impact of COVID-19, after(net income attributable to owners of the parent basis) both declined

the announcement was postponed from its initially scheduled datetemporarily; however, earnings in our main business started to rise inat the end of April 2020 due to the pandemic. Despite the effects ofthe second quarter on the back of cost-cutting measures.

COVID-19, our fiscal 2020 results came very close to reaching their

Accordingly, our efforts to lay a solid foundation for our new stage

respective targets thanks to the strenuous efforts of our businessof consistently delivering ordinary income of ¥10.0 billion or more—asegments. While net sales ended up falling below that in fiscal 2019,major theme of the current medium-term management plan—madeit bounced back in the third quarter. Meanwhile, due to the recording

favorable progress, as we are within reach of our ordinary incomeof provision of allowance for doubtful accounts equivalent to the entire

target of ¥10.0 billion.

amount of accounts receivable of ¥5.1 billion pertaining to the

Changes in Consolidated Business Results (on a Quarterly Basis)
FY2019

1Q
Net Sales
After Adoption of AccountingStandard for Revenue Recognition*
Operating Income (Loss)
Ordinary Income (Loss)
Excluding the Provision of
Allowance for Doubtful Accounts
Net Income (Loss) Attributable to
Owners of the Parent

2Q

3Q

4Q

(Billions of yen)

Full-year
total

FY2020

1Q

2Q

3Q

4Q

Full-year
total

83.2

81.2

85.1

79.9

329.4

49.0

53.2

55.2

58.9

216.2

62.1

63.1

61.7

61.6

248.5

49.0

53.2

55.2

58.9

216.2

2.3
2.4

2.3
2.5

2.1
2.3

1.5
1.5

8.2
8.7

(0.9)
(0.7)

2.5
2.5

2.4
2.5

(0.3)
0.3

3.7
4.7

1.8

2.5

2.5

2.9

9.7

(1.2)

1.4

1.6

(0.6)

1.2

1.6

1.6

1.5

1.4

6.1

Note: In the first quarter of fiscal 2020, Chori adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, issued on March 30, 2018).

Policy on Growth Investments
At Chori, our basic policy on business investments is to ensure exten-

the M&A Promotion Committee, headed by the general manager ofsive marketing and risk management, in addition to adequate returns.

the Corporate Planning Division, discuss and deliberate on the appro-

Investments are determined on the basis of their impact on our finan-

priateness of risk-return assessments and plans and the feasibility ofcial position while minimizing the risks involved. This policy stems fromimportant investments and M&As.

our unfortunate experience of incurring a massive amount of losses in

In terms of our focus on investing in growth fields and areas as aour noncore businesses prior to the year 2000. Our investments arepart of our “creation of next-generation business models,” a basic

generally made within the perimeters of our core businesses of Fibers,

strategy of Chori Innovation Plan 2022, we are currently in the process

Textiles, and Garments, Chemicals, and Machinery, while emphasizingof determining such opportunities as a result of COVID-19. Our devel-

the importance of marketing. Furthermore, the Business Investment

opment of new businesses has also been put on hold due to theCommittee, chaired by the president and representative director, andeffects of COVID-19 because of our inability to have face-to-faceTsumugu Report 2021

dialogues. However, when the time comes for everyone to be able

and other growth areas. While doing so, we will continue to firmly

to move freely from one place to another, we will certainly takeengage and expand our efforts in ongoing projects such as the lithium­advantage of every opportunity to invest in growth fields, such as 5G,

compound production project in Chile and ECO BLUE™ recycledenvironmental, and hygiene, as well as in the ASEAN region, Africa,

polyester fiber.

Chori’s Financial Position
In terms of our financial base, we continue to maintain a high equity

hinges on the accumulation of profits, our basic policy is to maintainratio, achieving 53.2% in fiscal 2020, even after recording provision

it at a positive level.

of allowance for doubtful accounts. During the period of our Reborn
Management Plan, from fiscal 2003 to fiscal 2004, our equity ratio was

Financial Soundness

a mere 1% and our interest-bearing debt was ¥120.0 billion. In other(Billions of yen)words, Chori was at its lowest point when it began to rebuild the orga-

120

nization. However, we have built Chori into a company that continues

80

to maintain an equity ratio of 50% or more to this very day. Therefore,
unlike in years past, our level of capital has not become a major concern, even in light of COVID-19. Moreover, investments will be carriedout within the framework of maintaining our financial soundness.
Looking back on the years of hardship Chori has suffered, simply
raising the level of ROE will not be enough. I believe we must solidify
our equity, thereby sustaining our business, and enhance our corporate value, and this is one way of giving back to our stakeholders.
Given that Chori is a trading company, we are able to flexibly
manage cash flows in accordance with changes in net sales andtransaction makeup. However, due to the fact that free cash flow

114.4

(%)

110.6

75

53.2

50.0

58.8

57.2

50
25

40
0

0

(12.0)(15.5)–40

Mar. 31, 2020

Mar. 31, 2021

Total assets

Net interest-bearing debt

Total equity

Equity ratio

Profitability / Capital Efficiency
ROA (Ordinary Income Basis)
ROA (Net Income Basis)
ROE (Net Income Basis)Mar. 31, 2020

Mar. 31, 2021

Difference

7.5%

4.1%

–3.3%

5.2%

1.1%

–4.1%

11.0%

2.2%

–8.8%

Shareholder Returns
Our basic policy on shareholder returns is to flexibly return profits toaccounts, a year-end dividend of ¥23 per share (for an annual divi-shareholders while securing a sufficient level of capital for investments

dend of ¥37 per share) was paid as announced on February 8, 2021

in growth strategies, in addition to providing performance-based

for fiscal 2020, upon a comprehensive evaluation of our recent perfor-

dividends commensurate with the standards for net income attribut-mance trends and sound financial details. While our dividend pay-able to owners of the parent from the perspective of ensuring stablements decreased in fiscal 2020, we will steadily promote various

operations and finances. In addition, our dividend payout ratio wasmeasures under our current medium-term management plan and,increased from 25% or more to 30% or more in fiscal 2020.

in turn, provide an annual dividend of ¥84 per share, which we are

Despite the recording of provision of allowance for doubtful

targeting for fiscal 2021 (please refer to page 16 for more details).

In Anticipation of the New Normal
Chori has designated ordinary income as one of its key performanceachieve. Moreover, we improved our financial stability and maintained a

indicators (KPIs) to serve as a true measure of the profitability of its

certain level of equity in fiscal 2020 as we drew on the lessons learned

core businesses. We also place emphasis on ROA (ordinary income

over our long history. We have established a framework for embracing

basis) as we make it a general rule not to retain assets that are

new challenges on the back of our stable equity, and I therefore hopedeemed unnecessary to our business. These are key metrics thatyou look forward to the continuous growth of Chori in the years ahead.

will continue to remain intact in the post-COVID-19 era.
At the same time, we will fortify defensive measures and strengthen

Chori Innovation Plan 2022 Targets
FY2020Resultsrisk management by closely monitoring any potential human rights(Billions of yen)

FY2021
Forecasts

FY2022
Targets

issues that may occur along our supply chain and which impact our

Net Sales

216.2

280.0

280.0

reputation, as well as our compliance, credit control, and legal risk.

Ordinary Income

4.7

10.0

11.0

Net Income Attributable to
Owners of the Parent

1.2

6.8

7.3

ROA (Ordinary Income Basis)
ROE (Net Income Basis)

4.1%
2.2%

Looking back on fiscal 2020, I believe we have positioned
ourselves to be fully able to consistently deliver ordinary income of¥10.0 billion or more, a goal we are continuously striving set out to9.0% 8% or more
11.0% 11% or more

18

19

CHORI CO., LTD.

Special Feature: Chori’s Sustainability-Focused Business

Our Desire to Provide Ethical Dye Solutions
through the Use of Natural Coloring

Natural Dye
An in-depth look at Chori’s Natural Dye initiatives and their influence on
realizing a sustainable society

Tsumugu Report 2021

Tatsuya Maekawa
Manager, Apparel Department
Technical Material & Garments Business Department

Natural Dye
In contrast with ordinary dyes, which utilize chemical dyes,
plant dyes, as the name implies, are natural colorants derived
from plants and other resources. While plant dyes have existed
for years, there have been concerns over their sensitivity tosweat and sunlight as well as discoloring and fading when
washed. Natural Dye is a line of environment-friendly apparelthat overcomes such concerns. For over 15 years, Chori has
been teaming up with CIHON TEC CO., LTD., a company
specializing in plant dyes, to promote the development of
its Natural Dye business.
In recent years, Natural Dye has gained exposure as anenvironment-friendly line of apparel that not only poses alimited impact on the environment in comparison with chemical dyes but also uses coffee grounds and other types offood residue as coloring, in addition to plants and flowers.

20

21

CHORI CO., LTD.

While chemical dyes are absorbed
evenly onto fabrics due to the minuteness of their particles, the particles ofplant-derived natural coloring offer evengreater benefits. Natural Dye fabrics
diffuse sunlight while exposing the richness of colors even on plain fabrics. In

01

Plant dyes are more sensitive tosunlight and more prone to fading andcolors that cannot be attained by means

discoloration than chemical dyes, whichof chemical dyes.

is why there were issues regarding their

Origin and Distinctive
Features of Natural Dye

other words, Natural Dye can realize

The vast array of colors that can bemass production in the past. With

realized is another unique feature of

Natural Dye, however, we were able

Natural Dye. The research facility of ourto achieve a certain level of fastnessbusiness partner houses roughly 2,300

despite its use of natural coloring derived

varieties of raw materials used for color-from plants and other resources. Whileing, and each plant consists of roughly

it was difficult to dye fibers with natural

200 types of colors. What may appear

When Natural Dye originated over 15coloring at first, we used a special pro-

to be green at first glance is actually ayears ago, the term “sustainability” itself

prietarily developed paste, which firmly

complex mixture of multiple colors. This

was not widely used. However, thisabsorbed the natural coloring. By apply-is the reason why Natural Dye canplant-dye project was launched as

ing this uniquely developed dyeing

realize warm and complex colors andChori foresaw the need for environmen-

method, natural coloring can be usedpatterns. Additionally, Natural Dye cantal considerations in the years

to dye not only natural fibers but also

also be made with ore and a variety ofthat followed.

synthetic fibers.

other substances.

02

Our Respect for People and the Environment

Chemical dyeing processes are often

Natural Dye is also gaining promi-such waste through the use of wilted

associated with concerns over environ-nence from a local-production-for-local-

flowers as coloring for Natural Dye.

mental contamination due to the artificial

consumption point of view, as it enables

Because Natural Dye does not entail thesubstances contained in its wastewater.

the use of vegetable waste and otherpurchase of any additional products orConversely, with Natural Dye an extremely

foods that contribute to food loss as

the use of plantations, it also contributes

low amount of residue dye remains in thecoloring. The local-production-for-local-

to the reduction of environmental impact.

wastewater as the constituents of plants

consumption aspect stems from Naturalthat generate the coloring are firmly

Dye’s recycling-based process of utilizing

absorbed onto the fiber. Accordingly,

the waste produced on local soil, such as

there is very little concern over the issue

the lees of a region’s well-knownof water or soil contamination. Moreover,Japanese sake or lees of locally produced

because plants come with a range ofwines, as coloring and converting it

medicinal benefits, it is believed that

into clothing.

Natural Dye products come with the

Meanwhile, concerns have arisen oversame benefits due to the use of suchthe accumulated waste of flowers thatplants as coloring. For instance, products

were intended to be used as decorations

utilizing roses as coloring are said to bein the various events canceled due toeffective for relaxation, better sleep, and

COVID-19. However, at Chori we have

improving skin texture.

always contributed to the reduction of

Tsumugu Report 2021

03

Natural Dye Earning
Widespread Recognition

as a part of its line of ethical fashion thatembraced its commitment to always makecontributes to the betterment of society

use of Japanese technology, which is highly

and the global environment. The textile

respected around the world, and contribute

While Natural Dye has been a part of ourindustry undergoes a production cycle into the growth of industries in Japan. As abusiness for over 15 years, it seems as

which products for the respective season

result of our limited production capacity andthough its demand has grown only overare designed and manufactured over a

manpower, our lead time to production in

the last three or four years. Consideration

period of six months, and this holds true

response to the recent growth in demand

for the global environment and sustain-

for Natural Dye as well.

has been increasing. However, statedability have become an important topic in

While demand for Natural Dye contin-

every industry, and the textile industry is

ues to rise, the factories we utilize for its

demand and reputation we have built

no exception.

production are limited to those based inover the years for Natural Dye.

Chori’s Natural Dye line of apparel has

Japan. This stems from the fact that, everbeen adopted by MARUI GROUP CO., LTD.

since the creation of Natural Dye, Chori has

04

differently, this is a testament to the solid

physical characteristics of each indi-

Our Direction Going Forward

vidual, such as with made-to-measure
and custom-ordered suits, I believe weare now in an age when quality takes
precedence over quantity. Therefore,

In addition to Japan, Natural Dye is gaining

environment-friendly Natural Dye dyeing

I believe the concept of Natural Dye will

widespread recognition in Europe and thetechnology. Along with the rich colors they

be highly embraced and its differenti-

United States, regions with a high level ofgenerate, these natural fibers are highly

ated products will likely play a prominent

sustainability awareness. Prior to theattuned to Natural Dye’s concept ofrole in the years ahead. For Chori, theemergence of the COVID-19 pandemic,

environment-friendliness. As we movefact that it engages in such a meaningful

Chori showcased Natural Dye aroundforward, we will look to continue to fusebusiness has extraordinary significance.

three times at an exhibition held in Italy.

our Natural Dye technology with products

We hope you look forward with great

Our exhibit included Natural Dye productsthat adhere closely to its concept.

anticipation to our Natural Dye initiatives

created through a collaborative effort with

Furthermore, Natural Dye is not aa company in Niigata Prefecture, an area

scheme designed to expand sales butof Japan known for the production ofrather a business that we are undertaking

sweaters, and products made of fiber

despite our limited production capacity

used in washi (Japanese paper). In theseand human resources. For that reason,

ways, Japan’s one-of-a-kind technologies

our goal is not to expand this business forand the uniqueness of Japanese products

the sake of profit but to develop it into

are stirring up great interest overseas.

something that helps improve the global

At Chori, we handle such naturalenvironment and which contributes to thefibers as MILLENNIUM ORGANIC™,

growth of industries in Japan. We hope wean ultra-white cotton cultivated in

can work together with customers who

Uzbekistan, and MEDITERRANEAN

resonate with this philosophy going forward.

GIZA™, and we are currently under­
taking efforts to combine them with ourIn the manner that more and moreproducts nowadays are tailored to theover the coming years.

22

23

CHORI CO., LTD.

Overview and Strategies by Business Segment

Fibers, Textiles, andGarments Business

Chemicals BusinessIn light of the severe operating environment, our overseas
business, including hygienic materials, stood strong, whileapparel products and other sectors in the Japanese market felt
the effects of COVID-19, leading to store closures that translated into a loss of sales opportunities and weaker consumer
sentiment. As a result, the Fibers, Textiles, and Garments
Business posted net sales of ¥90.1 billion (compared with
¥114.5 billion in fiscal 2019) and ordinary income of ¥3.9 billion(down 3.8% year on year) in fiscal 2020.
Moreover, the adoption of the Accounting Standard for
Revenue Recognition, etc., resulted in a ¥5.8 billion decreasein net sales.

Despite signs of recovery in the latter half of fiscal 2020, we
could not offset the deterioration of the organic chemicals andelectronic materials markets fueled by the effects of COVID-19,
resulting in net sales of ¥123.3 billion (compared with ¥150.6
billion in fiscal 2019). In terms of profit, provision of allowancefor doubtful accounts equivalent to the entire amount ofaccounts receivable of ¥5.1 billion pertaining to the Chengxing
Group that was recorded under selling, general and administrative expenses led to an ordinary loss of ¥0.3 billion (comparedwith ordinary income of ¥3.5 billion in fiscal 2019).
Moreover, due to the adoption of the Accounting Standard
for Revenue Recognition, etc., net sales fell ¥2.8 billion.
(Billions of yen)200 176.5(Billions of yen)
150
120.2

150.6

114.5

120

123.3

150
90.1
10

90

3.9

3.6
6

3.7

4.3

3.7

4.0

4.2

5

3.9

3.2

3.5
(0.7) (0.3)

0

3
0

2018

Net sales

2019

Operating income

2020

(FY)

Ordinary income

–5

2018

Net sales

Operating income (loss)

Over viewGroup Structure

2019

2020

Ordinary income (loss)(As of March 31, 2021)

CHORI CO., LTD.

Major Subsidiaries

Main Business

Fibers, Textiles, andGarments Business:
10 companies

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

Sales of automotive interior and packaging materials
Planning of fashion apparel

Chemicals Business:
9 companies

Miyako Kagaku Co., Ltd.
Sales of chemical products, industrial materials, pharmaceuticals, and food-related ingredients
KOZAKURA SHOKAI CO., LTD. Sales of lubricating oil additives and various other chemicals
CHORI GLEX CO., LTD.
Import sales of chemical products, construction materials, and industrial products

Machinery Business:
1 company

Chori Machinery Co., Ltd.

Sales of transportation equipment and other products

Other: 2 companies

Business Anchor Corporation

Outsourcing of administrative work

CHORI AMERICA, INC.

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

Overseas subsidiaries:
CHORI (CHINA) CO., LTD.
20 companies
THAI CHORI CO., LTD.

(FY)

Tsumugu Report 2021

Machinery BusinessPrimarily due to the impact of the adoption of the AccountingStandard for Revenue Recognition, etc., in fiscal 2020, theMachinery Business posted net sales of ¥2.7 billion (comparedwith ¥64.1 billion in fiscal 2019). Owing to profitability improvement measures, ordinary income amounted to ¥0.7 billion (up69.0% year on year).
Moreover, net sales decreased ¥33.1 billion due to theadoption of the aforementioned standards.

Fiscal 2020 Net Sales by Segment

Machinery

Other (incl. corporate
adjustments)¥2.7 billion¥0.1 billion(1.3%)(0.0%)Net Sales¥216.2 billion

Fibers, Textiles,
and Garments

Chemicals¥90.1 billion¥123.3 billion(41.7%)(57.0%)(Billions of yen)
100
80

64.1

59.7
60

Fiscal 2020 Net Sales by Region

420

Net sales

2.7
0.3

0.3

2018

0.5
2019

Operating income

0.4

0.5
2020

Ordinary income

0.7
(FY)

Middle East

Europe, the U.S.,
and others¥3.4 billion¥8.2 billion(1.6%)(3.8%)

Central andSouth America

Japan(Domestic sales)¥4.3 billion¥73.1 billion(2.0%)

Domestic Sales:
Amount ofdomestic sales(33.8%)

Overseas
Transactions
Asia¥31.9 billion(14.8%)

Japan (Imports)

Greater China*¥58.2 billion¥37.0 billion(26.9%)(17.1%)

Overseas Transactions 66.2%
Import sales: 	Amount of net sales fromoverseas to Japan
Export sales: mount of net sales from
A
Japan to overseas

Overseas sales:	Amount of net sales fromoverseas transactions* Includes China, Taiwan, and Hong Kong

24

25

CHORI CO., LTD.

Overview and Strategies by Business Segment

Fibers, Textiles, andGarments Business
Synthetic
Fiber
Business
Dept.

Fiber Raw
Materials Dept.

Technical
Textiles Dept.

TextileDivision

Technical
Material &Garments
Business
Dept.

Technical Fiber
Garments Dept.

Automotive Materials
and Fabrics Dept.

Textile-Fabric
Dept.

Apparel Dept.

Intimate Apparel
Dept.

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

By merging the three divisions of
the Fibers, Textiles, and Garments
Business to form a single divisionin fiscal 2020, Chori established its
Textile Division. Doing so has eliminated divisional boundaries andunited the divisions to operate asa single entity.
The ability to seamlessly conduct
operations as a result of establishing this single division has allowed
the Fibers, Textiles, and Garments
Business to conduct cross-divisional
projects, share ideas and know-how,and engage in joint efforts with
manufacturers as well as with­partners in industry and academia.
The restructuring has also facilitatedthe development of unique materials
with water-repellent, odor-eliminating,and antibacterial features, in addition
to proposals of optimal solutions at
each stage of the material production process.

SWOT Analysis of the Fibers, Textiles, and Garments Business
Strengths

Weaknesses• Two-pronged business model involving manufacturing andcommercial capabilities in fiber, fabric, and other products• Customer base in the Hokuriku region, the largest textile-producing
region in the world• Well-versed team of personnel in Japan and overseas• Operation of original equipment manufacturer business that
integrates supply chain processes, encompassing production
to distribution, by leveraging the capabilities of production
sites in China, Thailand, and Vietnam• Responsiveness to customer needs by drawing on
global networkS• Late start to globalization in downstream fields• Digitalization measures• Deterioration of business sectors employing
defensive strategies

W

Opportunities

Threats• Growing demand for car seats stemming fromrecovery of automotive market• Growing demand for hygienic materials• Increasing demand for sports apparel owing to greater
health awareness• Expansion of textile product market due to a rise in global population

O

T• Boycott of products made in China as a result of
U.S.–China trade conflict• Coups d’état in emerging countries and discontinuation of production and supply

Tsumugu Report 2021

Road to Achieving Chori Innovation Plan 2022“

We will continue to grow byadapting to changes in needs

through our collective strengths”

in textiles.

Hiroshi Yoshida
Managing Executive Officer
General Manager of Textile Division

Overview of Fiscal 2020 Performancein the Fibers, Textiles, and Garments BusinessIn fiscal 2020, net sales in the Fibers, Textiles, and Garments Business came to ¥90.1 billion, aroughly 20% decline from the previous fiscal year. However, ordinary income amounted to ¥3.9
billion, falling just below its highest result ever despite the effects of COVID-19. While cost
reductions certainly contributed to this result for ordinary income, I believe this is the product ofintegrating the three divisions into a single division. This integration has allowed us to share information on the risks associated with COVID-19 throughout the entire division while addressing theneeds for masks and protective garments in a timelier manner. Thanks to these collective
strengths, we were able to overcome the sluggish performance of apparel and other downstream
fields in the first half of fiscal 2020.
COVID-19 has certainly shifted the lifestyles of consumers; however, demand for basic
needs—food, clothing, and shelter—is not likely to undergo significant changes. In fact, we saw
an increase in demand for TEXBRIDTM highly stretchable yarn, dust wipes, and other productsthat contribute to a more comfortable and relaxing time at home.
Japan’s apparel market, which is currently at the scale of roughly ¥9 trillion, was previously
expected to shrink to ¥7 trillion by 2030.* However, now the market is projected to contract to thislevel by 2025 due to the impact of COVID-19. With that said, this will not hold back our optimism
for the future. That is because the global apparel market will likely grow at an average annual rateof 5% as a result of the growing population.* Accordingly, outing wear, which saw the market
shrink temporarily due to COVID-19, is also expected to see an upturn in demand going forward.
* Source: The Future of Apparel in 2030: When Japanese Companies Become Half the Size, Minoru Fukuda (Toyo Keizai Inc., 2019)(Billions of yen)

FY2019FY2020Difference

After Adoption of Accounting Standard
for Revenue Recognition*

114.5
106.4

90.1
90.1

–24.4
–16.3

–21.3%–15.3%

Ordinary Income (Segment Profits)

4.0

3.9

–0.2

–3.8%

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

Ratio

26

27

CHORI CO., LTD.

Overview and Strategies by Business Segment

Road to Achieving Chori Innovation Plan 2022

Basic Strategies and Progress ofChori Innovation Plan 2022
Basic Strategies of the Fibers, Textiles, and Garments Business① Bolster collective strength in the business② Enhance global supply chain management③ Strengthen global proposals and marketing capabilities for Chori’s original products

In addition to restructuring the business to form a single division, we ① bolstered the collective
strength of the Fibers, Textiles, and Garments Business by making Sumitex International Company
Limited—a specialized trading company in textiles—a consolidated subsidiary inJune 2021. We expect to generate synergies through this consolidation in the form of stronger
exit strategies. The company owns various commercial rights that were not at Chori’s disposal,
such as for loading methods and low-price zones for specialty store retailers of private label
apparel (SPAs), and is a major domestic supplier of cotton yarn, one of the two main raw materialsof fiber. By combining this with Chori’s strengths in synthetic fiber, we will look to enhance ourlineup of products and enhance our exit strategies in the form of sales contacts.
From the perspective of ② enhancing global supply chain management, we are expanding ourlineup of products for the ASEAN region. While sustaining our business in China, where we havebroadened our footprint over the years, we will funnel more efforts and resources into our projects
in the ASEAN region, firmly preparing for such geopolitical risks as the trade conflict between the
U.S. and China. Because Vietnam and other ASEAN countries are currently the target region ofvarious countries across the globe for the production of textile products in lieu of China, processing
and other costs have been on the rise. Chori can, however, minimize these higher costs by taking fulladvantage of a Group subsidiary’s factory in Vietnam. We will continue to devote our attention to
the ASEAN region as a platform for our supply chain in lieu of China.
By expanding Chori’s original product line, which includes ECO BLUETM recycled polyester fiber
and TEXBRIDTM highly stretchable yarn, we have ③ strengthened global proposals and marketing
capabilities for such original products. ECO BLUETM was initially developed under the sole initiativeof recycling used plastic bottles (“First”). However, we have expanded the scope of ECO BLUETM toinclude the reuse of yarns and fabric waste (“Loop”) and the creation of nylon yarn through the useof used fishing nets (“Ocean”) and corn waste (“Earth”). Another initiative we have rolled out is ahighly durable material that draws on the elasticity capabilities of TEXBRIDTM highly stretchable
yarn, which will be used in white coats and other types of workwear and uniforms.

Progress toward Fiscal 2022 Targets
In fiscal 2020, ordinary income amounted to the equivalent of 75% of the ¥5.2 billion targeted forfiscal 2022. This fiscal 2022 target is certainly an ambitious figure; however, Chori has put in place
an array of project teams to address the needs that have come to light in fiscal 2020 as a result of
COVID-19.
“Progressive” and “unceasing” are two of my favorite words. We at Chori will take a“progressive” approach to firmly grasp and address the changes in our external businessenvironment while making an “unceasing” effort to reinvigorate our businesses that were affectedby COVID-19, along our path to realizing Chori Innovation Plan 2022.

Ordinary Income of Fibers,
Textiles, and Garments Business(Billions of yen)
6

5.2
3.9

4

2

0

FY2020(Result)

FY2022(Target)Tsumugu Report 2021

Chori’s Sustainability-Focused Initiatives

Init iat iv e

ECO BLUETM Recycled Polyester Fiber
Ensuring Stable Supplies of Ultra-White Fiber
To help resolve the issue of plastic pollution, which has been gaining greater attention in recent years, Chori has been expanding its lineup of recycled materials
derived from plastic bottles. While ECO BLUETM recycled polyester fiber has been apart of our product lineup for some time, in 2019 we established a joint project with
Utsumi Recycle Systems Inc., one of the largest manufacturers of recycled pellets
for textile materials in Japan. This joint project has allowed Chori to establish traceability for this brand, which is essential to managing the quality and realizing asystem that ensures stable supplies of these ultra-white, high-quality pellets.
With this system in place, Chori boasts the capacity to recycle approximately
one billion plastic bottles per year. Moreover, ECO BLUETM is also certified with the
Global Recycled Standard as it generates less carbon dioxide during production
compared with virgin polyester. Going forward, we will redouble our efforts to maintain traceability for ECO BLUETM through actions such as providing information thatverifies the use of Chori’s recycled pellets in apparel products.
蝶理

環境配慮型総合ブランド

Expanding the Scope of ECO BLUETM-loop-first--ocean--earth-Along with our “First” initiative of creating recycledmaterials through the use of used plastic bottles, ECO
BLUETM has been expanded to include three otherinitiatives: “Loop,” “Ocean,” and “Earth.”
Under the “Loop” initiative, yarn waste, greige yarn,
and used fibers of apparel and other products are reused
and recycled to recreate clothing and acoustic materials
utilized in automobiles. We intend to roll out this initiative inthe Hokuriku region, where we have built strong ties over
the years, and expand it elsewhere thereafter. In the“Ocean” initiative, used fishing nets are used as a raw
material to create material-recycled and chemically recycled nylon yarn. These materials are characterized by thefact that they are post-consumer recycled and by thetransparency of fishing nets as a raw material. In the “Earth”
initiative, highly sophisticated nylon yarn is created throughthe use of bio-based raw materials such as corn waste.
By expanding its range of initiatives for ECO BLUETM,
Chori will continue to recycle valuable resources andthereby contribute to realizing a sustainable society.

28

29

CHORI CO., LTD.

Overview and Strategies by Business Segment

Chemicals Business

Chemical &Materials
Business
Dept.

Chemicals
DivisionLife & Fine
Chemicals
Business
Dept.

Performance
Chemicals Dept.

Inorganic Fine
Materials Dept.

Industrial
Chemicals Dept.

Fine Chemicals
Dept.

Life Science Dept.

Logistics Dept. (Chemicals)
Business Administration Sec. (Chemicals)

Established in 1956, the Chemicals
Business has a track record spanningover 60 years. We have continued
to take advantage of our global
network not only in terms of procurement and sales within China
but also through exports and intermediary transactions with the
Middle East, Russia, and otherregions. Through these efforts,
coupled with our ability to meet theneeds of our clients for niche products, we have set ourselves apartfrom our competitors and enhanced
our market presence.
With an extensive productportfolio that encompasses theenvironmental, electronics andbattery materials, and 5G-related
fields, Chori caters to the wide
range of needs of its customers.

SWOT Analysis of the Chemicals Business
Strengths

Weaknesses• Lack of brand recognition and smallness of businessscale within B2B market relative to major competitors overseas• Length of time needed for new businesses tocontribute to revenue• Global network centered on China• Diverse lineup of high-performance materials• Exceptional synergies created with subsidiaries• Product development and product supply capabilities thatdraw on the market-in approach

S

W

Opportunities• Growing demand for automotive-related materials• Increasing demand for products in the field ofsustainability

Threats

O

T• Trade conflict between the U.S. and China andboycott of products made in China• Discontinuance of production and disruptions to
supply routes in emerging countries• Supply–demand imbalance stemming from market
deterioration• Limited desire among potential customers to switch
to other products due to economic recession

Tsumugu Report 2021

Road to Achieving Chori Innovation Plan 2022“

We will pursue our medium-

term targets while continuing
to forge ahead with our”sustainability-related business.
Yoshihiro Teratani
Managing Executive Officer
General Manager of Chemicals Division

Overview of Fiscal 2020 Performance in the Chemicals BusinessIn the first half of fiscal 2020, the initial year of Chori Innovation Plan 2022, the Chemicals Businessfelt the drastic effects of COVID-19. All of Chori’s products were affected by the pandemic to a certain
degree; however, demand for automobiles started to regain momentum in around September 2020
while sales of chemicals also gained ground in the latter half of the fiscal year. Meanwhile, sales ofpharmaceuticals and agrochemicals remained firm throughout the year, leading to net sales of¥123.3 billion and an ordinary loss of ¥0.3 billion. The ordinary loss is mainly attributable to therecording of provision of allowance for doubtful accounts equivalent to the entire amount of accounts
receivable of ¥5.1 billion pertaining to the Chengxing Group in China. If not for this negative impact,
the ordinary loss of ¥0.3 billion would have instead resulted in ordinary income of ¥4.8 billion, anamount that would have surpassed its results from the previous year.
While COVID-19 has hit our business hard in a variety of ways, we have also benefited throughthe establishment of a remote operating system. Through the use of this system, the audits thatwere traditionally carried out on-site at our overseas facilities can now be conducted from a remotelocation. Without the need to visit our overseas facilities, we have also increased production anddecreased costs. The global economy has slowly begun regaining traction, so we will steadily look
to reap the benefits of the subsequent growth in demand moving forward.

(Billions of yen)

Net Sales

After Adoption of Accounting Standard
for Revenue Recognition*

Ordinary Income (Loss)(Segment Profits (Loss))

FY2019FY2020Difference

150.6
139.5

123.3
123.3

–27.3
–16.2

–18.1%–11.6%

3.5

(0.3)

–3.8

–109.2%* In the first quarter of fiscal 2020, Chori adopted the Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, issued on March 30, 2018).

Ratio

30

31

CHORI CO., LTD.

Overview and Strategies by Business Segment

Road to Achieving Chori Innovation Plan 2022​

Basic Strategies and Progress ofChori Innovation Plan 2022
Basic Strategies of the Chemicals Business① Enhance business investments and promote development of new businesses② Accelerate global expansion③ Transfer business headquarters to optimal location④ Strengthen subsidiaries centered on Miyako Kagaku Co., Ltd.
⑤ Expand business domain through M&A

Unlike the Fibers, Textiles, and Garments Business, which originated 160 years ago when the Company
was founded, the Chemicals Business has only been in operation for over 60 years. As such, we havealways been on the lookout for new opportunities to expand this business. Our strategy of ① enhancing
business investments and promoting the development of new businesses remains unchanged, as we
continue to keep track of developments in the environmental, 5G-related, and other growth fields.
Proceeding with new projects currently poses quite a challenge due to the inability to meet customers
face to face. Nonetheless, we must continue to take an active stance toward business investments
and product development to ensure that we do not miss out on key opportunities. Also, we willremain firmly committed to our ongoing lithium compound production project and other initiatives.
Chori’s strong ties with China are clearly evident in chemical products as well. We will look tocontinue ② accelerating our global expansion by exporting to Japan and other countries the products of chemical manufacturers in China, a country that recovered quickly from the effects of
COVID-19. In addition, we are currently planning to establish new businesses and expand our presence not in only China but also in ASEAN countries as well as India, a pharmaceutical powerhouse.
In a bid to create more synergies, we will aim to ④ strengthen our subsidiaries, centered on
Miyako Kagaku Co., Ltd., while ⑤ expanding our business domain through M&A. Miyako Kagaku is a
trading company that engages in sales of chemical products, industrial materials, pharmaceuticals, andfood-related ingredients. With our sights set on achieving the goals laid out in Chori Innovation Plan
2022, we will continue to work in tandem with Miyako Kagaku while adopting a more environmentally
responsive approach aimed at achieving a carbon-neutral society, such as by reducing sludge at plants
through the use of biodisinfectants and rolling out biodegradable resin to the agricultural industry. In
regard to M&A, our focus will be on the promotion of initiatives toward realizing a more extensive product lineup in the pharmaceutical field, which mainly relies on the handling of raw materials nowadays.

Progress toward Fiscal 2022 Targets
The path to realizing our ordinary income target of ¥5.3 billion in fiscal 2022 began with the posting of an
ordinary loss of ¥0.3 billion in fiscal 2020. However, had it not been for the recording of provision of allowance for doubtful accounts in the amount of ¥5.1 billion, this result would have come to ordinary incomeof ¥4.8 billion, the equivalent of approximately 90% of the ¥5.3 billion targeted for fiscal 2022. As statedearlier, it is not the most ideal time to proceed with new projects; however, the projects that were alreadyin the pipeline prior to the emergence of COVID-19 will likely come to fruition in fiscal 2021 and fiscal 2022.
Our sustainability-related businesses are also projected to expand in scale. Chori’s plant-based
meat is currently in the development stage and approaching its final stage. Amid concerns over ashortage in the supply of protein stemming from global population growth, plant-based meats areseen as a solution to such issues. These alternative meat products are also expected to reduce theamount of water and energy used to produce livestock. Moreover, Miyako Kagaku has begun handlingcricket powder to function as an alternative source for protein. We also handle alternative paper
and alternative plastic products made primarily of limestone procured in Japan. We will continue toinfuse more energy into our sustainability-related business, for which we foresee further growth in
the years ahead, with the goal of realizing our fiscal 2022 targets.

Ordinary Income (Loss) of
Chemicals Business(Billions of yen)

5.3

6

4

2

(0.3)
0

FY2020(Result)

FY2022(Target)Tsumugu Report 2021

Chori’s Sustainability-Focused Initiatives

Init iat iv e

1

Init iat iv e

2

Init iat iv e

3

Lithium Compound Production Project in Chile
The evaporation method commonly used to extract lithium components from brinewater was associated with concerns over its significant environmental impact.
In contrast, Chori has been participating in a project to produce lithium compounds
through the use of a new method that enables only lithium components to be
extracted from brine water, thereby maintaining the water volume of salt flats.
Compared with our conventional approach, this new extraction method contributes
to significant reductions in production time, and, because it does not hinge on
weather conditions, the production volume can be adjusted in line with market
conditions. Through such means, Chori will address the needs of the lithium-ion
battery market, which we anticipate will expand even more going forward.

Biodegradable Resin
At Chori, we have recently been expanding our lineup of biodegradable resin,a raw material used in seed sheets. Seed sheets serve as a means to prevent theevaporation of soil moisture and are used for weed and pest control. As they are
made of biodegradable resin, they eventually decompose into water and carbon
dioxide. Accordingly, they eliminate the need for disposing waste while reducing theuse of plastic and, because the seed sheets do not need to be collected, they help
enhance agricultural productivity.
We are also working to enhance our lineup of biodegradable resin derived fromplants such as cassava and taro, which we are utilizing as a raw material for
garbage and shopping bags due to the soft texture they generate.

Supplying of Ingredients for Plant-Based Meat
With the global population estimated to reach 10 billion people by 2050, there are
growing concerns over the potential breakdown in balance between the supply anddemand for beef, pork, and other sources of protein. At Chori, we procure ingredientsfrom overseas derived from soybeans, wheat, and green peas of the highest
standard in terms of safety and quality that comply with the Non-GMO Project
Standard and provide them to food processing companies in Japan. These plantbased meats offer the texture and appearance of real meat and are flavored to suit
the tastes of Japanese people. Through the growth in popularity of our alternative
meat, as well as the prevention of deforestation for livestock and the reduced useof water and crops, we will continue to help resolve environmental issues.

32

33

CHORI CO., LTD.

Overview and Strategies by Business Segment

Machinery Business
Operating Company
Chori Machinery Co., Ltd.

Wholly owned
consolidated
domestic subsidiary

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

With the aim of providing greater
flexibility, in April 2017 Chori spun
off Chori Machinery Co., Ltd., asupplier of automobiles, machinery,and related materials.

China

EuropeSouth
Korea Japan

AfricaMexico

India
ASEAN

Centraland South
AmericaSouth
AfricaSupplier
MarketSupplierand market

Leveraging the Group’s unique global network, which has expanded
over the years, Chori Machinery commercializes products acquired from
China, India, South Africa, and other countries in markets such as
Europe; the ASEAN region; North, Central, and South America; andWest Africa. 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 Africa andother emerging markets, in particular. By drawing on its long-cultivatedknow-how in global trade and unique trade routes, Chori Machinery willcontinue to expand its business in the years ahead.

SWOT Analysis of the Machinery Business
Strengths• Sophisticated information and global networks• Creation of niche market by leveraging unique customer base• Market-in proposals by employees deeply familiar
with markets• Ability to develop customer relations worldwide bydrawing on individual capabilities

Weaknesses• Need for improvements to flexibility andorganizational capabilities that draw on the strengthsof each individual• Timeliness of digital transformation measures

S

W

Opportunities• Global recovery of automotive market• Expanding product line in Africa, Southeast Asia,and other thriving emerging markets• Growing business opportunities associated with shift toenvironment-friendly vehicles• Expanding product line in non-vehicles businesses

Threats

O

T• Country risk and risk of pandemics, coups d’état,and economic crises in emerging countries• Market fluctuations resulting from intenseclimate change

Tsumugu Report 2021

Road to Achieving Chori Innovation Plan 2022“

We will continue to expand

our business by tapping into

new markets and establishinga new revenue model.
Jun Hayami
President & Representative Director
Chori Machinery Co., Ltd.

”

Overview of Fiscal 2020 Performancein the Machinery BusinessIn the first half of fiscal 2020, we suffered the effects of COVID-19 while concerns were raised
temporarily in regard to the collection of accounts receivable at an overseas subsidiary. However,
we managed to collect on the accounts receivable without any major consequences, and theautomotive market, which Chori Machinery relies on heavily for its major products, was clearlyon the road to recovery. In particular, automobiles and other transportation equipment are an
essential infrastructure for the lifestyles of the citizens of emerging countries; therefore, thesemarkets are regaining ground quickly around the world. Ultimately, in fiscal 2020, the initial yearof Chori Innovation Plan 2022, net sales amounted to ¥2.7 billion and ordinary income totaled¥0.7 billion in the Machinery Business. This net sales result takes into account a decrease of¥33.1 billion resulting from the adoption of the Accounting Standard for Revenue Recognition, etc.
Consumer spending, which diminished in fiscal 2020, will more than likely bounce back in
fiscal 2021, leading to the regrowth of markets around the world. The rejuvenation of markets will
be particularly evident in emerging countries, the core markets of Chori Machinery’s products.
Meanwhile, the rising cost of logistics precipitated by the global imbalance between supply anddemand is a prominent issue that has surfaced in light of COVID-19. This issue has come into playin a variety of facets of our business, so the situation will be monitored carefully moving forward.

(Billions of yen)

FY2019FY2020Difference

Net Sales

After Adoption of Accounting Standard
for Revenue Recognition*

64.1
2.6

2.7
2.7

–61.4
+0.2

–95.7%+6.4%

Ordinary Income (Segment Profits)

0.4

0.7

+0.3

+69.0%* In the first quarter of fiscal 2020, Chori adopted the Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, issued on March 30, 2018).

Ratio

34

35

CHORI CO., LTD.

Overview and Strategies by Business Segment

Road to Achieving Chori Innovation Plan 2022

Basic Strategies and Progress ofChori Innovation Plan 2022
Basic Strategies of the Machinery Business① Develop markets of four regions + India② Expand product lineups through vehicles business and convert to revenue model③ Promote strategic alliances with global corporations in each region

One of the basic strategies laid out in Chori Innovation Plan 2022 for the Machinery Business is① developing the markets of four regions and India. Over the years, the Machinery Business has
continued to expand its presence in a number of emerging countries, alongside its core market of
China. In addition to Mexico and Central and South America, the Middle East and Africa, Southeast
Asia, and Europe, which comprise our four regions, we will look to tap into and enhance ourpresence in the Indian market going forward. With the geopolitical risks that exist in other countries,
Chori Machinery is looking to ramp up its business in India due to the significance of this market interms of its population size and economic scale, which is paralleled only by China.
Another basic strategy we are embracing as a part of Chori Innovation Plan 2022 is ②
expanding our product lineups through the vehicles business and converting to a revenue model.
While the import and export business has traditionally been the lifeblood of trading companies,
in order to take one step further and expand their businesses, such companies constantly consider
the possibility of engaging in business investments and joint ventures with investees. In fact, oneof our projects involves the development of three-wheeled vehicles, which emerged through thesynergy created by our business, which made its start in automobiles. We will pursue alliances withother companies in an effort to engage in production and sales activities in Africa and thereby
capitalize on the explosive economic growth expected in the region.
In regard to ③ promoting strategic alliances with global corporations in each region, we havebeen working in partnership with a company based in Mexico to carry out semi-knocked-down
production and sales of automobiles in the country for Chinese automakers. Our expectations arequite high for this business as Mexico will likely follow on the heels of the U.S. and steadily revive
its economy in the near future. We will continue to seek ways in which the universal knowledge
accumulated through this partnership, including the range of solutions invented over the years,
particularly in automobile sales, can be leveraged as intangible assets in other markets.

Progress toward Fiscal 2022 Targets
On the back of the revitalized automotive market mentioned earlier, in fiscal 2020 ordinary income
amounted to ¥0.7 billion, exceeding our target of ¥0.5 billion for fiscal 2022. Looking ahead, we willcontinue to set our sights on raising the level of our profits by tapping into new markets and developing a new revenue model.
Chori Machinery is still in its fifth year of business after it was established through the spin-offof the Machinery Business, which had been a part of the former Chemicals and Machinery
Business of CHORI CO., LTD. until 2017. Accordingly, our path has just begun and, because ofthat, one of the issues we must address is the strengthening of our business foundation, particularly the establishment of a solid human resource foundation and organizational structure. We willcontinue to expand the Machinery Business in the coming years by proposing solutions throughits market-in approach, made possible by our wealth of market knowledge accumulated over theyears. In so doing, we will become a corporate entity that makes a difference to society by staying
closely attuned to the lifestyles of our customers around the world, addressing their needs at all
times wherever they are, thereby enhancing our corporate value.

Ordinary Income ofMachinery Business(Billions of yen)
1.0

0.7
0.5
0.5

0

FY2020(Result)

FY2022(Target)Tsumugu Report 2021

Core Initiatives of the Machinery Business1

Init iat iv e

Semi-Knocked-Down Production in Mexico
In semi-knocked-down production, automobile parts and com­ponents are transported to the country of destination, where
they are assembled and the automobile is completed. It differsfrom completely knocked-down production in that the frame,
engine, powertrain, and other main components have alreadybeen assembled by the time they are transported overseas.
Semi-knocked-down production offers a variety of
economic benefits, such as job creation as well as tax
benefits for the country of destination. As a result, more

Plant in Mexico

Joint venture

Benefit from cost due
to semi-knocked-down
production

Chineseautomobile

employment opportunities are available for local residents
in not only assembly processes but also at sales agents andfor after-sales services. In 2017, Mexico’s annual automobile
production volume nearly reached the 4.0 million-unit mark.
Moving forward, Chori Machinery will continue to seek
greater business opportunities centered on Mexico’s
mainstream automotive industry.

Assembly

Automotive
retailer in Mexico

User

Init iat iv e

Economic Community of West African States (ECOWAS)The Economic Community of West African States (ECOWAS) is a subregional groupconsisting of 15 nations that promotes the economic integration of the countries
constituting West Africa. Of these nations, Nigeria accounts for the majority of thegroup’s GDP.
By joining forces with a local company, Chori Machinery has been engaging in
the business of assembling automobiles through semi-knocked-down production in
the West African nation. In addition, we are planning a number of projects for a varietyof business domains geared to Nigeria, Ghana, and other nations of ECOWAS.
ECOWAS

Nigeria

ECOWASThe Economic Community of West African States(ECOWAS) was founded in 1975 as a subregionalgroup that promotes the economic integration of thecountries constituting West Africa.

Joint venture (Nigeria)

Three-wheeled vehicle (India)

2

36

37

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 business activities and that it is
our responsibility to address environmental issues in a proactive manner.

Basic Principle

Basic Policies

With a view to generating substantive value and helping to realize a more enriched

1. Consideration for the global
environmentsociety, Chori strives to provide accurate information and exceptional products tailored to

2. Compliance with environmental laws
and regulations

the needs of its customers. As the environment continues to garner global attention, we
believe the role we play in contributing to environmental conservation is essential to3. Establishment and continuous
improvement of environmental
management systemestablishing a solid management foundation.

Environmental Management Structure (As of April 1, 2021)
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

Textile Division

Chemicals DivisionCorporate Management Division

Division Head

Division Head

Division Head

Division Environmental Manager

Division Environmental Manager

Division Environmental Manager

EMS Facilitator

EMS Facilitator

Synthetic Fiber Business
Dept.

Technical Material &Garments Business Dept.

Logistics Dept. (Textile)

Chemical & Materials
Business Dept.

Life & Fine Chemicals
Business Dept.

Logistics Dept. (Chemicals)* EMS: Environmental management system
Note: EMS facilitators concurrently serve as internal environment auditors and conduct internal audits in other divisions.

EMS Facilitator
Corporate Management
Dept.

Human Resources &General Affairs Dept.

Information System Dept.

Internal Auditing Dept.

Pharmacovigilance &Quality Assurance Office

Health Insurance Society

Business Anchor
Corporation

Chori Machinery Co., 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 the2015 standard in December 2017, acquired ISO 14001 certification for our Hokuriku Branch and Okayama
Liaison Office in December 2019, and continue 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

CHOI-Katsu 2020 Theme

We instill the importance of respecting the environment when conducting our business activities in

1

Keep Chori Basics!

our employees through the combination of ISO 14001 and Chori Innovation Activities (“CHOI-Katsu”),

Health and compliance are essential to Chori’s success.

Chori’s original Companywide initiative. Through the selection of themes for CHOI-Katsu 2020

1

Compliance(as shown in the diagram on the right), we engaged in various initiatives such as the advancement2Health2of digitalization to reduce overtime work, which will lead to lower energy use.

Change Our Workstyle!

In fiscal 2020, we reduced labor time by roughly 400 hours through a range of initiatives

Let’s seek better ways to work!

designed to improve operating efficiency, including the employment of robotic process automation

1(RPA) on routine simple tasks.

3

Digitalization
Cleanliness2
4C ommunicationL earning

Tsumugu Report 2021

Chori’s Environment-Friendly Initiatives
At Chori, we handle a wide range of environment-friendly products. At the CHORI Exhibition, a major trade convention for textile products, weshowcase our diverse line of products, including our originally developed materials and environment-friendly materials that are paired withvarious other materials.
ECO BLUE™
Domestic Recycling System of ECO BLUE™

To help resolve the issue of plastic pollution, which has been gaining greaterattention in recent years, and realizing the importance of plastic bottles, Chorihas been handling ECO BLUE™ recycled polyester fiber, which derives from

Consumers

Collect

Produceplastic pellets

Generate
product

Weave/knit

Create yarnsuch resources. Since 2019, we have maintained traceability for this brand,which is essential to ensuring a stable supply and managing the quality of theseultra-white, high-quality pellets. ECO BLUE™ is also certified with the Global
Recycled Standard as it generates less carbon dioxide during production

Plastic bottles are recycled into
new, completely different products.

compared with virgin polyester (please refer to page 28 for details).

MILLENNIUM ORGANICTM
MILLENNIUM ORGANICTM is made of 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, nongenetically modified cotton
derived from ultra-white raw cotton.
While Europe and certain countries in Asia have strengthened regulations on harmful substances in recent
years, MILLENNIUM ORGANICTM has received the OEKO-TEX® STANDARD 100 Class 1 certification, theworld’s highest safety standard for textile products, and is a highly trusted product for babies and toddlers.

MEDITERRANEAN GIZATM
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 engages in the business of MEDITERRANEAN GIZATM, which is made from theseeds of Giza cotton grown in Israel. As Israel is mainly a dry region, we have been working to minimize dailywater use through the use of AI technology. This high-tech, environment-friendly agricultural technology has
earned us BCI* certification. Moving forward, we will expand our lineup of environment-friendly materials andhelp realize a sustainable society.
* Better Cotton Initiative: An international certification standard that promotes the sustainable growth of cotton production and cotton
industries worldwide.

Close Up
In Pursuit of the SDGs
Chori’s initiatives in pursuit of the Sustainable Development Goals (SDGs) are featured on its official YouTube channel. The channel
offers viewers an illustrated look into Chori’s involvement in the world of environment-friendly, plant-based meats and its participationin the lithium compound production project in Chile.

https://www.youtube.com/watch?v=EfGtYiJVL0E

38

39

CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives
Business 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, andother activities.

CSR Procurement

Conflict Minerals

Once every two years, in principle, Chori conducts a CSR procurement survey subject to theConflict minerals are mineral resources extracted inconflict zones such as Africa. Specifically, the DoddFrank Act in the U.S. requires that the use of conflictminerals (tin, tantalum, tungsten, and gold) be
disclosed by all listed companies.
Global cooperation is critical to ensuring thatconflict minerals do not become a means for armed
forces to carry out inhumane acts on the innocent
civilians of the countries in which we operate.

“Operating Rules Regarding CSR Procurement” of the Toray Group. The survey is intended toconfirm matters concerning the CSR promotion system, legal compliance, environmental conservation, and risk management, in addition to verifying any potential occurrences of forced labor,child labor, unfair low-wage labor, and other forms of human rights issues. In addition, Chori strives
to eliminate the use of conflict minerals by confirming that its primary suppliers are conflict-free.

Ensuring of Strict Compliance
Recognizing the importance of complying with laws and social norms when engaging in business activities with our suppliers, we u­ndertakethe 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 with Export-Related
Regulations” and “Regulations on Fair Reporting and Management of Imports and Exports.” We undertake strict export controls to prevent countries in possessionof weapons of mass destruction and conventional weapons from getting access to the highly sophisticated 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

Chief Export Control Officer President

Sales Department, the Corporate Management Department conducts final
approval. In October 2020, we began implementing a system that integrates

Regulatory Trade Control Officer General Manager of Corporate Planning Division

the management of information on export products and transactions, ensuring

Export Control Officer
Manager ofCorporate Management Department(approval of transaction screening)rigorous security trade control and stronger compliance measures. This system
is also designed to improve work efficiency and eliminate the use of paper.
In addition, Chori encourages its employees to obtain the STC Associate

Export Control Representative
Corporate Management Department(transaction screening / consultation)

Logistics Department (Textile) / Logistics Department (Chemicals)(transaction screening)certificate and holds internal workshops and training sessions to enhancetheir understanding of export control. In fiscal 2020, 37 employees acquired
the STC Associate certificate.

Sales Department(application for transaction screening)

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

Arrange

Product Safety Inspection Committee
Chair: D eputy General Manager of Corporate Planning Division(Human Resources & General Affairs Department and Information System
Department) and inspection committee members
Held: As necessary• Inspect product safety

Request product safety inspection anduse of company name, etc.

Product Safety Management Manager
Managers of business administration sections• Aggregate and analyze issues• Comply with relevant laws andcompile information

ReportSecretariat (Human Resources & General Affairs Department)• Secretariat of product safety• Provisional point of contact in theevent of accidents• Store and manage relevant
documents• Product liability insurance coverage• Cooperate with TORAY INDUSTRIES’ • Report to and consult with relevant andaffiliated divisions (reports,
supervising ministries, National Instituteconsultations,etc.)
of Technology and Evaluation (NITE), etc.

Command• Deliberate on important productsafety matters

Instruct and provide information

Departments• Prepare product management
procedure• Manage product safety• Respond to and resolve accidents• Store and manage relevant
documents• Provide advice to and cooperate withsubsidiaries and affiliates

Legal Compliance Committee
Chair: President
Members: Officers and department managers ofcorporate planning divisions and managers
of business administration sections ofsales divisions
Supervisor: Audit & Supervisory Committee

Propose productmanagement procedure
Report accidents andsubmit detailed report

Approve productmanagement procedureTsumugu Report 2021

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

Ensuring of the Safety of Our Employees Overseas
In the event of a natural disaster or a terrorist attack, whether in

identify the location of each employee at a particular point in time.

Japan or overseas, we must be fully prepared to immediately iden-

Employees dispatched overseas and their families as well as

tify the whereabouts of our directors and employees, confirm theiremployees on business trips outside of Japan are also enrolled insafety, and respond appropriately in a timely manner. Chori has inChori’s overseas healthcare support program, which provides

place a proprietary system dubbed Overseas Business Trip Inquiry

medical assistance in Japanese in the event of an accident or(OBTI), which manages the overseas business trips of domestic

illness while abroad. The program helps to minimize employee

employees as well as the business trips of employees dispatched

concerns regarding healthcare overseas due to its differences

abroad and of the employees of overseas offices and helps tofrom Japan.

Business Continuity Plan (BCP)
Chori’s business continuity plan (BCP) has been designed to place
Crisis Response Headquarters

the utmost priority on the safety of its directors and employees andIncident

to enable the 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 course is also held once a year, ensuring that wePrimary Recipient ofInformation

Convene Primary Members for Response Measures
Employees of Human Resources &General Affairs Dept.

Department Manager of
Human Resources &General Affairs Dept.

ReportEstablish contact /share information

Cooperate

are fully prepared in the event of an emergency.
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

Deputy General Manager
of Corporate Planning
Division

DivisionsManager ofCorporate
Management Dept.

Relevant
Companies

Supervisor ofOverseas Stores(Human Resources &General Affairs Dept.)

established a response headquarters and operational procedures

President

in preparation for major disasters and pandemics.

Safety and Health Management
Each month, a Safety and Health Committee member visits our head
offices in Tokyo and Osaka to assess the workplace environment.

Topic

Contact System

The committee comprises employees of the Human Resources &Office etiquette has undergone drastic changes in the current COVID-19

General Affairs Department, nurses of our in-house health clinics,

era. Chori has established a contact system called KIITE through which

and representatives from the Chori Labor Union who regularly

employees can anonymously report legal or regulatory violations and othermonitor the humidity, temperature, and CO2 concentration levels

matters. Employees are constantly reminded to wear masks and talk quietly

to ensure a safe workplace environment for all of our employees.

within work facilities, and through such measures, Chori strives to ensure a

In terms of preventive measures for COVID-19, staggered work

comfortable workplace environment (please see page 50 for details).

hour and telework systems have been established, plexiglass
barriers and alcohol disinfectants are available for use, and bodytemperatures are measured at the entrance of the reception andoffice areas of our facilities. Moreover, our Tokyo and Osaka head
offices, Hokuriku Branch, and Okayama Liaison Office operate incompliance with the Building Sanitation Law of the Ministry of
Health, Labour and Welfare, with the facilities constantly ventilated
at a rate of 30 m3/h or more per person.

Reception area of Tokyo Head Office

Meeting area

40

41

CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives
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 withthem.” We will utilize, nurture, and connect people to continue to grow as an organization and cultivate our next generation.

Human Resource Development
As globalization continues to spread at a rapid rate, employees will be expected to utilize their full capabilities. We cultivate our employees tobe able to respond quickly to changes, to think and act on 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.

2.

Always act responsibly asa member of Chori andkeep the Company
charter close to their heart

3.

Have a spirit ofindependence

4.

Constantly work hard andcome up with creativeideas as results-focused
professionals

Expect the best andprepare for the worst

5.

Respect the values andcultures of people fromaround the world

New Employee Training
At the Natural Dye plant coloring event, which is held in support of recovery from the Great East
Japan Earthquake, our new employees take part as representatives of Chori with the aim of cultivating their awareness of being a Company employee. (The event was canceled in fiscal 2020 due
to the COVID-19 pandemic.)
Upon joining the Company, new employees receive orientation to acquire the basic knowledge
and proper etiquette to become a responsible working adult and attend 30 lecture sessions andtake certification exams twice a year. In fiscal 2020, these programs were held online as a measure
to prevent the spread of COVID-19.

Career Development Support
At Chori, we hold level-specific training for directors and employees, invite instructors from outsideof the Company, and conduct lectures led by our employees. In fiscal 2020, these programs were
held online as a measure to prevent the spread of COVID-19. Moreover, to speed up the pace of
globalization, we have implemented a system for the dispatch of trainees overseas while continu-

C-TUBE
Chori has been holding a Companywide

ing to conduct our in-house training program.

meeting, an internal financial results conference,and group training for its employees twice a

Groupwide Training System
Level-Specific Training

Manager

Director training

Management
training

OrganizationSelfBased Training Development

E-Learning

an internal video streaming platform called
C-TUBE was established to conduct these
activities online. This online streaming platform
allows employees to view the content as manytimes as they want, at any time, and because
the resources used in training by the Sales
Department are utilized in the videos, it
contributes to information sharing throughout

Compliance, etc.

Self-development assistance program

Division-specific training

Overseas employee training

Study abroad programs

Overseas trainee system

In-house English language courses (TOEIC)

In-house training program

Various workshops

Mid-career employee
and contract employee training“Let’s” intensive
courseCareer management training

Follow-up
training for new
employees

Employee

put a halt to these activities and, as a result,
Overseas
Training
Pre-departure training for overseas assignments (including language courses)

Directoryear. However, the impact of COVID-19 has
In-House
Training
Coursethe Group.

Tsumugu Report 2021

Promotion of 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 workplaceenvironments that allow them to work in a healthy and active manner. We conduct the following initiatives with this in mind, particularly with the aim ofproviding employees with a healthy work–life balance. Moreover, we have been working to improve our employees’ operational efficiency through ourCompanywide CHORI Innovation Activities (“CHOI-Katsu”), established in fiscal 2013 with the aim of achieving department- and division-specific goals.

Encourage Employees to Take Annual
Paid Leave

Eliminate Long Work HoursIn principle, designate one day of the week as ano-overtime day

Promote Flexible Workstyles
Improve
flextime system (no core hours)Introduce
work-at-home system (temporarily) and
web-conferencing system

Mandatory use of annual paid leave (five days)
Encourage employees to take seasonal holidays

All staff must leave their workplace by 9 p.m. every day

Maintain records of paid leave taken in departmentspecific systems

Restrict the number of overtime hours
Automate
work processes with robotic processautomation (RPA)

 ncourage male employees to take childcare leaveE
Conduct
one-on-one meetings between employeesand their superiors

Eliminate restrictions on the number of times half-day
leave can be taken for the purpose of childcare,nursing care, or hospital visitsImprove the efficiency of meetings

Provideoption to relocate to other locations (transfer
to other branches domestically and regionally)Supporting the Balance of Work Life and Childcare
Chori has various childcare systems in place to promote the balance ofwork and family life. While the period of leave is relatively short, the numberof male employees taking childcare leave has been on the rise, with 10
taking time off in fiscal 2020. We also have a support system in place asa part of our employee benefit program that provides employees with

FY2018
Number of Employees Taking
Childcare Leave

FY20195(1 of whom is male)

Number of Employees Working
Shorter Hours Due to Childcare

FY202017

20(6 of whom are male) (10 of whom are male)

11

11

10

financial assistance for childbirth, self-development, and childcare.

 romoting Workforce Fluidity and SupportingP
Self-Development

Number of Recipients of Self-Development Subsidy

We promote workforce fluidity within the Group by assigning employees

120

96

106

to affiliates in Japan and overseas and facilitating the exchange of personnel. We also support our employees’ self-development by subsidizing

102
89

80
80

the tuition and fees necessary to acquire Company-designated certification. In fiscal 2020, this financial assistance program was utilized by 89

40

employees, despite the inability to take examinations due to COVID-19.

0

2016

2017

2018

2019

2020

(FY)

Recruiting Diverse Human Resources
As a part of its action plan based on the Act on Promotion of Women’s

making proactive efforts to promote the hiring of people with disabilities.

Participation and Advancement in the Workplace, Chori established the goal

Chori’s initiatives to increase the number of senior employees areof raising the percentage of women among new graduates to 20% between

also making strides with various programs in place for retirees looking

fiscal 2016 and fiscal 2020. In fiscal 2020, women accounted for 39.7% (upto reenter the workforce and leverage their knowledge and experi-

6.9% from fiscal 2019) of our entire workforce. In addition, we have beenence, network of contacts, and other strengths.

Number of New Graduates

Ratio of People with Disabilities(Number of employees)

(%)
3.0

30

20

17
6

10

0

Male

20

21

9

8

4

13

14

2019

2020

18
11
3

11

11

8

2016

2017

2018

Female

2.6

2.7

2.0

2.0

2016

2017

2.4
2.0

2.0

2.9

2.3

2.2

2.3

2019

2020

1.0

(FY)

0

Company employment rate

2018

Statutory employment rate

Note: Results as of March 31 of each fiscal year

(FY)

42

43

CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives
Local Communities and Society
For a company to realize sustainability, it must be fully committed to coexisting with local communities. As amember of these local communities, Chori will continue to engage in various initiatives in its mission to growtogether with society.

Provision of Food to Africa throughProduction of Chemical Fertilizers

Partially finance construction and supply raw materials
for chemical fertilizers

Since fiscal 2019, Chori has participated in a chemical fertilizer production project in Nigeria. Nigeria boasts the largest population in all of

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

Africa with roughly 190 million people and relies on agriculture as oneof its major industries. With the expectation that increased demand forcrops fueled by population growth will continue in Africa, the need forchemical 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 rangeof crops. Through the sale of chemical fertilizers, we will contribute

Sell chemicalfertilizers in Nigeria

to a stable food supply and higher agricultural efficiency in Africa.

Enhance agricultural
efficiency throughfertilizers

Provide stable
food supply

Hokuriku Yarn Fair
While the Hokuriku region has always been a hotbed for synthetic
fiber, it had not played host to a materials exhibition for many years.
Chori has always had deep ties to the region that stem from its long
history of doing business with local textile companies. In 2015, theRaw Material Presentation Exhibition was held in Ishikawa Prefecture,

Inaugural Hokuriku Yarn Fair

Chori’s booth at Hokuriku Yarn Fair in 2020

answering the long-awaited wishes of local companies for an

Based on the slogan “Everything begins with yarn,” unveiled in the

exhibition in their hometown. The event was a tremendous success,event’s inaugural year, over the years the participating companies

setting the stage for an even bigger event in 2016, the inaugural

have showcased materials that were differentiated in many ways

Hokuriku Yarn Fair. A total of 13 companies, including Chori, took

through the demonstration of their unique plying and processing

part in this event, which was attended by roughly 550 people.

capabilities. In 2020, the Hokuriku Yarn Fair featured a wide range of

Due to its success and the desires of those within and outsideenvironment-friendly sustainable materials and, while admission wasof the Hokuriku region for the continuation of such events, thelimited to prevent the spread of COVID-19, 2,160 people attended

Hokuriku Yarn Fair has been held annually ever since through theover the course of two days. Chori will continue to inject energy into

support of textile associations in Ishikawa and Fukui prefectures.

the Hokuriku region by conveying the glamour of its textiles.

Close Up
Our business ties with the Hokuriku region date back to the outset of the Showa Period. It all began with theestablishment of branches in Fukui Prefecture in 1929 and Ishikawa Prefecture in 1934, which eventually led to the formation of the Hokuriku Chori Committee in 2000. The committee organizes parties and meetings that are attended each yearby the member companies and Chori’s directors and employees, and at the beginning of each year, the committee issues
a publication called “Chori Future” to share information and promote member interaction.
With a rich history in textile production that extends over 400 years, the Hokuriku region continues to produce fabrics
of exceptional quality through the use of fine thread. The region also boasts the ability to develop materials that are intricately made of threads and fabrics and that can contend with those produced overseas. In support of the region and its
textile production, in 2016 Chori launched its Ishikawa Fabrics Project as a way to communicate the brand power offabrics made in Ishikawa Prefecture to the rest of the world by placing this brand label on apparel products.

Tsumugu Report 2021

Promotion of Health and Productivity Management
Recognizing the importance of the health of our employees and their families to achieving sound corporate
management, we formulated our Health Declaration in 2018 to promote efforts toward health and­productivity 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 theCompany. Based on this belief, we strive on an ongoing basis to enhance awareness of 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 with the goal of realizing health andproductivity 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 makea 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 and have

Paper for Chori’s Health Management is held once a year to assess thesince been promoting efforts to realize health and productivity manage-

current state of health management and to discuss any issues.

ment. Chaired by Satoko Nakayama, deputy general manager of the
Corporate Planning Division, the Health Promotion Committee consists

Chair: Deputy General Manager of Corporate Planning Divisionof industrial physicians and nurses from Chori’s in-house health clinics as(In Charge of Human Resources & General Affairs Department)

well as the employees of the Human Resources & General Affairs
Department and members of the Chori Health Insurance Society.
Through the initiatives of the Health Promotion Committee, Chori aims tomaintain and improve the health of its employees and their families andHuman Resources & General
Chori Health Insurance Society
Affairs Department
Health Promotion Committee
In-house Health Clinics

Chori Labor Union

fulfill its Health Declaration. In addition, a debriefing session on White

Ensuring the Health of Employees
We conduct oral and dental checkups and flu vaccinations on a yearly

physician in the following month. In these ways, we work to ensure thebasis. In addition, employees aged 30 and 35 years and over are eligible

health of our employees through the support of medical experts.

to receive a comprehensive medical checkup once a year at theexpense of the Company, while dependents aged 35 years and over ofthe insured party are entitled to receive up to ¥32,000 in subsidies for

Rate of Employees and Family Members
Who Undergo Regular Health Checkups

medical checkups.
We also conduct stress checks to prevent the possibility of ouremployees suffering from mental illnesses. Employees who work over 40hours of overtime in a month are required to consult with an industrial

Comment

FY2018FY2019

Employees

100%

100%

FY2020100%*

Family Members

70.3%

72.0%

52.9%

* Excludes expatriates who were unable to return to Japan due to COVID-19

We are here to ensure the physical and mental well-being of all of Chori’s employees.
At Chori’s head offices in Tokyo and Osaka, we have in-house health clinics in place with nurses and public healthnurses on hand to offer support. As such, employees can receive consultations immediately after receiving their healthcheck results as well as undergo additional examinations and medical treatment to prevent conditions from worsening.
In fiscal 2020, we saw responsible alcohol consumption improve as a result of COVID-19. Our in-house healthclinics also offer treatment to help employees quit smoking, as a result of which the smoking rate of Chori’s male
employees is on the decline. Meanwhile, we have noticed an increasing number of cases of lipid metabolism disorders

Keiichiro Yoneyama
Supervising Physician
in-house health clinic
at the Tokyo Head Officein those at high risk of such disorders stemming from lack of exercise and improper eating habits.
There is a saying in Japanese that goes “one who perseveres unscathed reigns supreme” and this applies in many ways
to the health of our employees. That is because the health and mental and physical well-being of our employees are what

keep our business running. We at the in-house health clinics will continue to offer our support to help employees maintain good physical and mental health.

44

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CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Corporate Governance
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.

Corporate Governance Structure (As of June 17, 2021)
General Meeting of Shareholders
Election/dismissal

Audit/
supervision

Election/dismissal

Board of Directors

Election/dismissal

Accounting Auditor

Audit & Supervisory Committee

Directors Who Are Not Audit & Supervisory Board
Members

Audit & Supervisory
Committee Members

1 outside director

2 outside directors

1 internal

Inquiry

2 outside

Direct control

Report on the status ofimportant businessexecution and other matters

Supervision
Business
execution

Executive Committee

Cooperation

director

Cooperation

directors

ReportReportGovernance Committee

1 internal director

4 internal directors

Legal Compliance
Committee

Cooperation

President andRepresentative Director

Internal Auditing
Department

Executive Officers

Supervision

Accounting audit

Business Execution Organization(Business Departments / Administrative Departments) / Group Companies

Internal
audit

Overview of Corporate Governance Structure and Reasons for Its Adoption
To strengthen the management transparency and oversightfunction of the Board of Directors, Chori has an Audit &Supervisory Committee in place, the majority of which consistsof outside directors.
At the Board of Directors’ meetings, the directors (including
those who are Audit & Supervisory Committee members)
engage in lively and sufficient discussions and deliberations
from a free and independent perspective in regard to the supervisory status of decision-making and business execution. The
Board also consists of two outside directors who are Audit &Supervisory Committee members that audit the legitimacy andappropriateness of the status of business execution from anexternal perspective in an objective and rational manner. The
Company therefore believes that it is sufficiently fulfilling its
management supervisory function. Moreover, to ensure theprioritization of results, the Company has set the term of officeof directors (excluding those who are Audit & Supervisory
Committee members) and executive officers to one year andhas established a management structure that can respond tochanges in business conditions in a timely manner.
Organizational Structure

Company with an Audit andSupervisory Committee

Number of Directors

5 (of whom, 1 is an outside director) Term of Office of Directors According
1 yearto the Articles of Incorporation
Number of Directors Who Are Audit &Supervisory Committee Members

3 (of whom, 2 are outside directors) Term of Office of Directors Who Are
Audit & Supervisory Committee
Members According to the Articles
of Incorporation

2 years

Number of Independent Officers

3

Executive Officer System

Yes

Performance-Linked Remuneration
SystemYes

Accounting Auditor

Deloitte Touche Tohmatsu LLC

Tsumugu Report 2021

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

Description

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.

Executive
Committee

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

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.

GovernanceCommittee

The Governance Committee aims to enhance the Company’s corporate governance structure in order to strengthen 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 is chaired by the president and representative director and consists of the general manager of the
Corporate Planning Division, the heads of corporate divisions, and other members. The committee deliberates on importantcompliance-related issues and reports the results to the Board of Directors and the Executive Committee as necessary.

Business Investment
Committee

Chaired by 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.

M&A Promotion
Committee

The M&A Promotion Committee consists of the general manager of the Corporate Planning Division, the general manager of theSales Department, and other members. The committee deliberates on and examines matters pertaining to the business portfolio ofGroup companies, including M&A and the Group’s medium- to long-term management plan, from the perspective of improving
consolidated management.

Committee Members and Activities

: Committee chair: Committee member: Nonmember attendee

Fiscal 2020 Attendance (Meetings Attended / Meetings Held*1)
Name

Position

Kazuo
Sakihama

Audit &
Supervisory
Committee

GovernanceCommittee

Legal
Compliance
Committee

Business
Investment
Committee(5 times /5 times)(6 times /6 times)(2 times /2 times)(6 times /6 times)(2 times /2 times)

Board ofDirectors*2

Executive
Committee

President, CEO &COO / President andExecutive Officer(18 times /18 times)(25 times /25 times)

Shigemasa
Yabu

Director / Senior
Managing Executive
Officer(18 times /18 times)(25 times /25 times)

Kazuhiro
Tohge

Director / Executive
Officer(18 times /18 times)(25 times /25 times)

MitsuoOhya

Director (Part-Time)

Hiromasa
Suzuki

Outside Director

Jun
FuruyaDirector / Full-Time
Audit & Supervisory
Committee Member(18 times /18 times)

Masaaki
SawanoOutside Director /Audit & Supervisory
Committee Member(18 times /18 times)(16 times /16 times)(5 times /5 times)(2 times /6 times)

NorikoMorikawa

Outside Director /Audit & Supervisory
Committee Member(18 times /18 times)(16 times /16 times)(5 times /5 times)(4 times /6 times)

M&A
Promotion
Committee(4 times /4 times)(13 times /14 times)—(25 times /25 times)(16 times /16 times)(6 times /6 times)*1 Indicates the number of meetings held during the term of each director*2 The number of Board of Directors’ meetings held includes two meetings that shall be deemed to have been held through a resolution in writing passed by the Board of Directors pursuant
to Article 370 of the Companies Act and Article 28 of the Articles of Incorporation of the Company.

46

47

CHORI CO., LTD.

Management Foundation Tailored to Sustainable GrowthDiversity of the Board of Directors
The Board of Directors must decide on matters in a transparent, fair, prompt, and decisive manner, and therefore consists ofmembers with a diverse range of views, experience, and skills. To strengthen corporate governance by ensuring the objectivity andappropriateness of decisions made by the Board of Directors, at least one-third of the members are independent outside directors.
Directors
Name

Gender

Kazuo
Sakihama
Shigemasa
Yabu
Kazuhiro
Tohge
MitsuoOhya
Hiromasa
Suzuki

Length ofService*1

Area of Expertise and Experience
Independent Director
Corporate Management(Outside)

Global Business

Finance & Accounting

Legal & Compliance

8 years
6 years
3 years
1 yearNewly
appointed*1 Indicates number of full years of service as of June 30, 2021

Directors Who Are Audit & Supervisory Committee Members
Name

Jun
FuruyaMasaaki
SawanoNorikoMorikawa

GenderLength ofService*1

Area of Expertise and Experience
Independent Director(Outside)

Corporate
Management

Global Business

Finance & Accounting

Legal & Compliance

3 years*2
3 years
3 years*1 Indicates number of full years of service as of June 30, 2021
*2 Jun Furuya served as a director of the Company for two years prior to concurrently serving as an Audit & Supervisory Committee member

Reason for Nomination of Outside Directors
The Company’s outside directors were nominated for the reasons outlined below and their ability to supervise managementfrom an external point of view, such as through the proactive exchange of opinions and advice at the Board of Directors’ andother important meetings. In June 2021, Mr. Hiromasa Suzuki was appointed as an outside director as he is expected to draw
on his wealth of experience in corporate management.
NameReason for Nomination

Hiromasa
SuzukiHe has been appointed as an outside director based on his many years of involvement in the management of Fujirebio Inc.
and his wealth of experience in group management as a top executive of a company, which involved orchestrating theestablishment of Miraca Holdings Inc. As an outside director, he is expected to provide appropriate advice regarding themanagement of the Company. In addition, it has been deemed that he has no material conflict of interest with the Company
and that no conflict of interest will arise with general shareholders.

Newly
appointed

Masaaki
SawanoHe has been appointed as an outside director as he is expected to provide appropriate advice regarding the managementof the Company and on the grounds that he is deeply familiar with corporate legal work as a lawyer and has sufficientinsight to supervise corporate management. In addition, it has been deemed that he has no material 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 appropriate advice regarding the managementof the Company and on the grounds that she is well versed 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.

Tsumugu Report 2021

Executive Remuneration
Executive remuneration consists of three types: monthly basic remuneration, yearly bonuses, and restricted stock compensation.
Remuneration of directors (excluding directors who are Audit & Supervisory Committee members) is based on a compensation
structure that aligns with returns to shareholders to ensure that it functions effectively as an incentive toward the sustainable
increase of corporate value. When determining the remuneration of each director, our basic policy is to provide an appropriate levelof compensation based on a consideration of their position within the Company, individual performance, and other factors.
Meanwhile, from the perspective of their role and independence, remuneration of directors who are Audit & Supervisory Committee
members and outside directors consists solely of fixed remuneration, determined based on their role within the Company.
Overview of Executive Remuneration System
Fixed remuneration

Variable remuneration55%

10% (medium

35% (single year)

to long term)

Note: Percentages apply in the case of full achievement of targets

Basic Remuneration

Bonuses

Performance-Linked Stock Compensation

Fixed remuneration

Short-term incentive remuneration
Linked to performance in relevantbusiness year

Medium- to long-term incentive compensation
Linked to degree of achievement of medium-term
management plan

Eligible
Recipients• Directors who are not Audit &Supervisory Committee members• Directors who are Audit & Supervisory
Committee members• Outside directors• Directors who are not Audit &Supervisory Committee members• Directors who are not Audit & Supervisory
Committee members

Grant Method

Cash

Cash

Restricted stock compensation•C onsolidated ordinary income results• Progress of medium-term
management plan, etc.

• Consolidated ordinary income over three-year period• Progress of medium-term management plan, etc.

Directors who are not Audit &Supervisory Committee members:
No more than ¥300 million annually

Directors who are not Audit &Supervisory Committee members:
No more than ¥300 million annually

Directors who are not Audit & Supervisory Committee
members: No more than ¥100 million annually(However, excludes the portion of employee salaryof directors who concurrently serve as employees)(However, excludes the portion of
employee salary of directors who­concurrently serve as employees)

Remuneration
Type

Evaluation
Index (Variable
Remuneration)

Maximum
Amount ofRemuneration—

Directors who are Audit & Supervisory
Committee members: No more than¥100 million annually(However, excludes the portion of employee salary of directors
who concurrently serve as employees)(Resolution passed at the 69th General Meeting of
Shareholders held on June 15, 2016)(Resolution passed at the 69th General Meetingof Shareholders held on June 15, 2016)(Resolution passed at the 70th General Meeting of
Shareholders held on June 15, 2017)

Fixed amount paid monthly based on roleand position within the Company• Paid at a certain time of the year
according to position within the
Company• Amount calculated according to
the progress of the medium-term
management plan and consolidated ordinary income in the given
business year

• Level of remuneration determined based on position
within the Company• Payment made upon determining the annual basecompensation for each position and, in principle, bydividing the amount equivalent to compensation for
the execution of director duties over the same threeyear period as the medium-term management planby the standard stock price and determining thenumber of shares to grant for each position.

Grant andCalculation
MethodCondition subsequent:
Withdrawn in accordance with the degree of achievement ofconsolidated ordinary income targets under the medium-term
management plan and work performance

Director Remuneration in Fiscal 2020
Classification

Total Amount of
Remuneration(Millions of Yen)

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

Restricted Stock
Compensation

BonusesNumber of
Directors Eligible

Directors (Excluding Audit & Supervisory Committee Members)*(Excluding Outside Directors)

208

142

42

24

7

Directors (Audit & Supervisory Committee Members)(Excluding Outside Directors)

18

18

—

—

1

Outside Directors

17

17

—

—

2

* Excludes one director who did not receive any remuneration.

48

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CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Measures to Strengthen Corporate Governance
Chori recognizes that the enhancement of its corporate governance is a matter of priority for management and has taken andwill continue to take the following measures. We have expanded our profit margin through the introduction of a performancelinked remuneration system and the efforts of directors to instill the same level of awareness for profits in all shareholders inorder to strengthen the Company’s performance over the medium to long term.
2001

2005

2012

2015

2016

2017

2018

2020

Separation ofManagement andExecution

Promotion ofCompliance

Revision of
Remuneration
SystemRealization of
Effective
Corporate
Governance

Strengthening ofAudit Function

Revision of
Remuneration
SystemPromotion ofDiversity

Management
Transparency and
Fairness

Introduces the
Executive Officer
SystemEstablishes the Legal
Compliance Committee,
with the president as
the chairman

Discontinues the
Directors’ Retirement
Benefits System

Begins complying with
the Corporate
Governance CodeTransitions to a
Company with an Audit
and Supervisory
Committee

Introduces the Restricted
Stock Transfer
Remuneration System

Effectiveness of
the Board of
Directors

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

Conducts questionnaires to evaluate theeffectiveness of theBoard of Directors

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 effectivenessof the Board of Directors for fiscal 2020. The Board of Directors is composed of suitably qualified members that include
outside directors, and the Board of Directors’ meetings are held in a free and open environment that facilitates constructive
discussions and the exchange of opinions. Accordingly, it has been deemed that the Board of Directors is operating appropriately on the whole and that its effectiveness is ensured.
Respondents

All 10 directors (including those who are Audit & Supervisory Committee members) in fiscal 2020 (registered questionnaire)

Method of Evaluation
and Analysis

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

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 Governance Committee, which was established in March 2020, conducted in-depth discussion on matters concerning the succession plan for the representative director, executive remuneration, and the appointment and dismissal ofmanagement executives, which were identified as being in need of more discussion in the previous year, and the details ofsuch discussions were shared appropriately with the Board of Directors.
Meanwhile, it was deemed that there is a need for further discussions on the major direction of our corporate strategies,
compliance, and business risks as well as for more opportunities to train directors. Going forward, we will hold morein-depth discussions on the medium- to long-term policies and plan at the Board of Directors’ meetings and improve thetraining of our directors in order to continue to enhance the effectiveness of the Board.
In addition, we will look into the use of third-party external consultants in our evaluations and analyses of the effectiveness of the Board of Directors.

Maintenance of a Certain Level of Independence from Our Parent Company
As of March 31, 2021, Chori’s parent company TORAY

credibility, and enjoy other benefits that come with being a

INDUSTRIES, INC. held 52.78% of voting rights in the Com-

Group company.

pany. We constantly work to strengthen the combination

With the exception of one director who does notof our ability to sell and collect information on textiles andexecute business, the executives and employees at Chori

chemicals, which represent our core business, in Japan anddo not concurrently serve as executives or employees at theoverseas and TORAY INDUSTRIES' ability to develop mate-parent company or Group companies and the Company

rials in order to generate synergies and enhance corporate

does not accept employees through transfers from othervalue for both companies. By operating under a parent

companies. In addition, at Chori we have our own manage-

company, Chori is able to gain a better understanding ofment plan in place, through the execution of which we havemarket trends and the business environment, enhance its

developed and will continue to develop our business.

Tsumugu Report 2021

Risk Management
At Chori, we take measures under normal circumstances to
identify potential risks in our business activities and mitigate suchits effectiveness, and uncover and improve on any issues.
The management team at Chori has classified the majorrisks and prevent crises before they occur. We have establishedrisks that are believed to have a significant impact on thea system for taking appropriate measures in the event of a crisis

financial position, business results, and cash flow of thethat could have a significant impact on our business and formu-

consolidated company according to the risks listed below,

lated our Risk Management Rules to enable swift and accurate

each of which will be assigned a committee or division

responses to such emergencies while maintaining control of the

responsible for preventing their occurrence.

situation and regaining a state of normalcy as quickly as possible.
Under the direction of the president and representative director,

Business and Other Risks
 xternal business environment /E
country risk

Business investment risk

 xchange and interest rateEfluctuations

 isk of natural disasters andRcontagious diseases

 oncentration on specific regionsCand markets

 isk associated with informationRsystems and security

risks in advance and providing the necessary education and isk associated with fluctuations
R
in raw material prices

Compliance risk

training in a voluntary and systematic manner. In addition, efforts

Inventory risk

are made to follow up on the results of our crisis response, verify

Bad debt risk

who assumes overall responsibility of the Company’s risk management activities, measures are taken to identify material issues
pertaining to potential risks, mitigate such risks, and prevent suchrisks from occurring while formulating various methods to detect

Risk of impairment on securities

 isk associated with securingRof personnel

Ensuring of Thorough Compliance
Rules concerning compliance systems such as the Guidelines

Chori whereby executives and employees (including contract,

for Corporate Behavior shall be established to set compliancetemporary, and other employees) can receive consultation andwith laws and regulations and social ethics as a code of con-report on compliance violations and other matters. In this way,duct of our business. In order to make all directors, executive

we have established a framework for reporting incidents byofficers, and employees of the Group fully aware of the initia-

ensuring the full confidentiality of the whistleblower, who is able

tives for compliance, corporate divisions shall collaborate toto receive consultation either in-house or through an external

hold compliance training and other training programs. The

point of contact depending on the nature of the incident.

Legal Compliance Committee, with the president and representative director as the chairman, shall discuss importantInternal Whistleblower System
Consultant

matters regarding the compliance of the Group and report theresults to the Board of Directors and the Executive Committee
as necessary. In the event of a significant legal violation orcompliance violation on the part of a management executive,in accordance with the laws and regulations and the Articles
of Incorporation, the Governance Committee shall deliberateon the dismissal of the management executive in question

KIITE (Fully confidential)
A system of contact through which whistleblowers can receive consultation and request warnings to
be given to the person being reported while maintaining full confidentiality and without undergoingan in-depth investigation.

Human Resources & General Affairs Department
KOTAETE (Confidentiality possible at the request of the whistleblower)
A system of contact through which requests for consultation and investigation involving both thewhistleblower and the person being reported can be made and matters such as workplace harassment and serious compliance violations requiring investigation can be reported.

and the Board of Directors shall adequately discuss andLegal Compliance Committee

consider his or her dismissal based on those results.
A system of contact has been established throughout

Internal
hotlineChori Labor Union
Audit & Supervisory Committee

External
hotline(Law firm
Advisory office /external firm)

Internal Control
Our Basic Policy on Internal Control System was formulated
in May 10, 2006 to serve as a set of fundamental guidelines
for the establishment of a framework for ensuring thecorporate management and sustainable growth.
Since then, this policy has been amended to reflect changes
in the Group’s business environment and business activities.

appropriate execution of business toward realizing soundFor details on our internal control system, please refer to our Corporate Governance Report.
https://www.chori.co.jp/csr/governance.html (in Japanese only)

50

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CHORI CO., LTD.

Management Foundation Tailored to Sustainable GrowthInternal Audit
In regard to internal audits, the Company has establishedOutside directors and the Audit & Supervisory Committee

the Internal Auditing Department (consisting of four

receive reports regularly on audits conducted by the Internal

members) directly under the president and representative

Auditing Department and verify the status of business execu-

director. The Internal Auditing Department conducts auditstion of each department and subsidiary. The Audit &on the appropriateness and efficiency of the Company’s

Supervisory Committee reports the results of audits to andbusiness activities from a fair and independent point of view.

exchanges opinions with the Internal Auditing Department.

The Internal Auditing Department also evaluates the status

The Audit & Supervisory Committee requests the Internalof implementation and operation of internal controls con-Auditing Department to provide information or conduct inves-cerning financial reporting in accordance with the Financial

tigations when necessary, thereby working closely together toInstruments and Exchange Act.

ensure that audits are carried out efficiently.

Cross-Shareholdings
The Company and its subsidiaries may acquire and hold shares

The Company appropriately exercises the voting rights ofof listed companies (hereinafter “cross-shareholdings”) in ordercross-shareholdings from the perspective of whether or not

to maintain, expand, and sustainably develop their businesses.

the Company and the investee company can expect increases

In such cases, the Board of Directors and other bodies decidein their corporate value over the medium to long term, whileon acquisitions after determining the department in charge ofrespecting the management policies of investee companies.

the acquisition and considering the business conditions of the
Directors verifies the significance of the cross-shareholdings

Holding of Shares for Purposes Other Than Pure
Investment (Cross-Shareholding)each year and considers the sale or reduction of shares that are

FY2018FY2019FY2020investees and the profitability of the investment. The Board ofdeemed to be of no significance. Those shares that are held are

Shares Held

32

30

30

verified each year for their economic rationality from the per-

Total Amount(Billions of Yen)

4.0

3.4

4.1

spectives of the significance of each acquisition and holding,
profitability of the investment, transaction scale, and relevant
profits, and are either held or replaced upon resolution of theNote: The shareholdings of CHORI CO., LTD. for which the largest monetary amount isrecognized on the balance sheets in relation to investment in equity securities (themonetary amount of equity securities recognized) have been stated.

Board of Directors and other bodies.

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 mattersrelated to IR and public relations, cooperates with the Corporate
Planning Division and relevant departments, and communicates­information to shareholders and investors.

• 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.

(2) The relevant internal departments proactively cooperate toward theachievement of constructive dialogues with shareholders through the
preparation of disclosure materials and the sharing of important­information while conducting their business activities.

• Institutional investors
The Company holds financial briefings through the attendance of thepresident 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 various questions,and collects the opinions of its shareholders. In addition, the departments in charge of IR and public relations conduct individual visits andbriefings for institutional investors.

(3) Methods of dialogue other than individual meetings• General meeting of shareholders
The Company regards the general meeting of shareholders as anopportunity to fulfill its responsibility of providing explanations toshareholders and works accordingly to carefully address theirquestions and understand the intent of their opinions. In the event ofimportant announcements regarding management information, suchas the medium-term management plan, the Company reports on its
current status and collects the opinions of shareholders throughsuch measures as the holding of briefings on the management plan
upon the conclusion of the general meeting of shareholders.

(4) Feedback
The Company promotes the sharing and use of information obtained
from dialogues through the reporting of opinions of shareholders to therespective committees and their disclosure to the directors, management executives, and relevant departments as necessary.
(5) T he Company takes appropriate measures to ensure thorough information management through compliance with the Insider Trading
Prevention Regulations.

Tsumugu Report 2021

Messages from Outside Directors
In fiscal 2020, despite the influence of COVID-19, Chori put up solid results and made steadystrides with its medium-term management plan, including the M&A of Sumitex International
Company Limited. Conversely, further investigation needs to be conducted to obtain moredetails on the cause of the Chengxing Group’s debt issues while formulating and enforcing
measures to prevent similar incidents from occurring again in the future. I also believe that more
improvements need to be made to the effectiveness of Chori’s corporate governance.
Corporate governance made its way into the industry in the first place to serve as ameans for monitoring the activities of management by shareholders. Legal experts such as
myself believe that it is our duty to determine and state the legality of the decisions of management at the Board of Directors’ meetings, as well as the intent behind such decisions
when they involve significant risks, even if made in a legal manner.
The Board of Directors’ meetings are held in a free and open environment that encourages
the exchange of opinions. Moreover, the corporate entity, headed by the president, is actively
engaged in running business activities. On the other hand, the Company is in need of a framework for conducting business audits on its subsidiaries. I will offer more advice in regard to

Masaaki Sawano
Outside Director, Audit &Supervisory Committee Member

this as we move forward.
While we are currently in an era full of uncertainties due to COVID-19, Chori’s basic stanceis to develop new businesses in its areas of expertise, employ sound risk management practices, and expand the scope of its business. Moreover, as it continues to expand its businessaround the world, Chori must constantly remain up-to-date on and seek solutions tobusiness- and human rights-related issues as well as the SDGs, in order to continue to growits business in the years ahead.
In fiscal 2020, despite the impact of COVID-19, Chori was able to address various needs,
including those for hygienic materials, which made an impact on both society and its operating results. I also believe that given the nature of its business, the Company has done an
outstanding job of overcoming the challenges associated with conducting all aspects of its
business remotely by improvising according to the situation. To achieve the goals of Chori
Innovation Plan 2022 under this unprecedented business environment, all of Chori’s employees will be expected to enhance their skill sets going forward.
My hope is that management takes action to orchestrate the Company’s further growth
while ensuring awareness of its mission and reason for existence among all of its stakeholders.
The framework underpinning all of this is corporate governance. Chori has been strengthening
its corporate governance over the years, as exemplified by the establishment of its GovernanceCommittee, which is headed by an outside director, in 2020. Meanwhile, I see a need for im­
proving the transparency and reinforcing the internal control and governance functions of its
subsidiaries and overseas affiliates. I hope to be able to continue to analyze, assess, and facilitate the growth of Chori’s business by drawing on the experience I have gained at an audit firm

Noriko Morikawa
Outside Director, Audit &Supervisory Committee Member

and through my role in managing all aspects of a corporate management division at a foreigncompany, including overseas assignments. Chori is expected to take a more active approach toincorporating the SDGs and ESG initiatives into its growth strategies, and I hope to aid in thiscapacity by offering specific solutions that are truly relevant and valuable to Chori’s business.
Chori is a company that has overcome trying times over its 160-year history through thecollective efforts of its employees. As such, there is a sense of unity among its employees. I
look forward to seeing Chori develop its business to a whole new level on the strengths of its
outstanding teamwork and flexibility.

52

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CHORI CO., LTD.

Management Foundation Tailored to Sustainable Growth

Directors, Audit & Supervisory Committee
Members, and Executive Officers(As of July 1, 2021)

Directors
President, CEO & COO,
President and Executive Officer

Director, Senior Managing
Executive Officer

Kazuo Sakihama

Shigemasa Yabu

Number of shares held: 32,617N umber of shares held: 21,282

CEO & COO

General Manager of Corporate Planning Division,
Executive Chief Representative for China of theCompany, and General Manager of
Pharmacovigilance & Quality Assurance OfficeOutside Director*

Director, Full-Time Audit &Supervisory Committee Member

Hiromasa Suzuki
Number of shares held: 0

Jun Furuya
Number of shares held: 4,930

Independent Director

Executive Officers (Excluding Those Who Concurrently Serve as Directors)
Managing Executive Officer

Managing Executive Officer

Hiroshi Yoshida

Yoshihiro Teratani

Number of shares held: 12,519

Number of shares held: 12,378

General Manager of Textile Division, Senior
Manager of Synthetic Fiber Business Department,
General Manager of Logistics Department (Textile)of the Company, and General Manager of
Hokuriku Branch

General Manager of Chemicals Division, Senior
Manager of Life & Fine Chemicals Business
Department, and General Manager of Logistics
Department (Chemicals) of the Company

Executive Officer

Executive Officer

Masao Nakamura

Naohiko AshidaNumber of shares held: 0
Senior Manager of Chemical & Materials Business
Department

Number of shares held: 0
Senior Manager of Technical Material & Garments
Business Department, Chairman of CHORI(DALIAN) TRADING CO., LTD., and Chairman of
CHORI (DALIAN) COMMERCIAL IMPORTEXPORT CO., LTD.

Tsumugu Report 2021

“Number of shares held” indicates the number of CHORI CO., LTD. shares held.

Director, Executive Officer

Director (Part-Time)

Kazuhiro Tohge

Mitsuo OhyaN
 umber of shares held: 0

Number of shares held: 9,151
Special Appointee of the President (in relation to
the Textile Division)

Significant concurrent positions

Outside Director,* Audit &Supervisory Committee Member

Outside Director,* Audit &Supervisory Committee Member

Masaaki Sawano

Noriko Morikawa

Executive Vice President and Representative
Member of the Board of TORAY INDUSTRIES, INC.

N
 umber of shares held: 0

Number of shares held: 0
Significant concurrent positions

Significant concurrent positions•M ember of Advisory Council on Fundamental Issues in
Corporate Management of Urban Renaissance Agency• Outside Director of Showa Denko K.K.
• Outside Director of Mitsubishi Heavy
Industries, Ltd.

• Member of Advisory Council on Fundamental Issues in
Corporate Management and Rent Council of Urban
Renaissance Agency

Independent Director• Member of Business Evaluation Monitoring Committeeof Urban Renaissance Agency

Independent Director• 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

Senior Executive Officer

Senior Executive Officer

Satoko Nakayama

Tatsuyuki Sakoda

Number of shares held: 13,829
Deputy General Manager of Corporate Planning
Division (Human Resources & General Affairs
Department, Information System Department), andGeneral Manager of CHORI Innovation Activities of
the CompanyN umber of shares held: 6,774
President & CEO of Miyako Kagaku Co., Ltd.

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

54

55

CHORI CO., LTD.

Fact Data

11-YearFinancial Summary

Medium-Term
Management Plan

Medium-Term Management Plan

Yakushin 2013

Yakushin 2010

CHORI CO., LTD. and Group Companies

FY2010FY2011FY2012FY2013

Net sales*1

222,074

217,825

221,847

244,286

Gross profit

18,81820,02019,77021,530Operating Results:

Selling, general and administrative expenses

13,641

14,103

14,66516,037

Operating income

5,177

5,916

5,105

5,492

Ordinary income

5,343

6,118

5,466

5,831

Net income attributable to owners of the parent

5,372

3,497

2,944

3,715

64,39067,46571,851

78,221

25,826

28,69831,38536,417(8,635)(6,650)(7,491)(8,820)Cash flows from operating activities (A)(1,098)

(263)

5,792

1,716

Cash flows from investing activities (B)(295)(1,153)(2,980)(208)(1,393)(1,417)

2,812

1,508

(623)

(318)

(1,641)(506)

Net income per share

224.11145.91117.57151.54

Net assets per share

1,025.35

1,131.43

1,275.84

1,481.00

Dividends per share*4

20.00

29.00

24.00

33.00

2.4

2.8

2.5

2.4

Financial Position (As of March 31):
Total assets
Net assets
Net interest-bearing debt*

2

Cash Flows:Free cash flows (A+B)
Cash flows from financing activities
Per Share Data*3 (Yen):

Key Indicators (%):
Ordinary income to net sales
5

Return on assets (ROA)*

8.8

9.3

7.8

7.8

Return on equity (ROE)*6

22.8

12.9

9.8

11.0

Equity ratio

39.8

42.4

43.5

46.4

Consolidated dividends payout ratio

8.9

19.9

20.4

21.8

Price earnings ratio

4.4

7.0

9.1

7.4

Price book-value ratio

1.0

0.9

0.8

0.8

Other Data:
Stock price at end of March (yen)*3

990

1,020

1,066

1,124

Number of employees (consolidated)

1,113

1,084

1,286

1,292

Number of consolidated subsidiaries

24

23

26

27

*1 In the first quarter of fiscal 2020, Chori adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, issued on March 30, 2018).
*2 Net interest-bearing debt = Interest-bearing debt – (Cash and deposit + Deposit paid in subsidiaries and affiliates)*3 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 2010 based on this reverse stock split. Dividends per share and stock price at year-end for fiscal years prior to the reverse stock split have been retroactively adjusted
to reflect its impact.

Tsumugu Report 2021

Medium-Term Management Plan

Medium-Term Management Plan

Yakushin 2016

Chori Innovation Plan 2019

Medium-Term Management Plan

Chori Innovation
Plan 2022(Millions of yen)
FY2014FY2015FY2016FY2017FY2018FY2019FY2020248,396

291,578

270,908

311,705

356,537

329,360

216,233

22,157

24,79925,14926,40028,58528,31026,357

16,604

19,42918,701

19,174

20,53820,091

22,693

5,552

5,369

6,448

7,226

8,047

8,219

3,663

5,966

5,518

6,967

7,499

8,660

8,685

4,656

4,153

4,297

4,780

4,730

5,630

6,101

1,247

84,28998,736

97,983

119,055

118,499

114,400

110,591

41,47342,882

46,34351,15353,89757,27958,831(10,703)(8,029)(6,824)(11,134)(10,887)(11,962)(15,547)

3,320

4,992

625

6,653

3,196

2,857

5,889

(813)

(4,442)58

821(1,421)

8

(357)

2,507

550

683

7,474

1,774

2,866

5,532

(840)

(1,510)(1,363)(2,352)(4,350)(1,899)(887)

169.40175.31

195.00192.74229.28248.4650.73

1,688.74

1,746.27

1,887.37

2,079.84

2,191.45

2,328.79

2,390.06

34.00

36.00

40.00

59.00

60.00

63.00

37.00

2.4

1.9

2.6

2.4

2.4

2.6

2.2

7.3

6.0

7.1

6.9

7.3

7.5

4.1

10.7

10.2

10.7

9.7

10.7

11.0

2.2

49.1

43.4

47.2

42.9

45.4

50.0

53.2

20.1

20.5

20.5

30.6

26.2

25.4

72.9

10.9

8.3

9.9

10.9

6.8

6.2

33.2

1.1

0.8

1.0

1.0

0.7

0.7

0.7

1,851

1,457

1,939

2,097

1,556

1,537

1,685

1,091

924

939

991

1,023

1,014

969

25

27

27

29

29

29

30

*4 Dividends per share in fiscal 2017 include a commemorative dividend of ¥10 for the Company’s 70th anniversary.
*5 Return on assets (ROA) = Ordinary income / Total assets (Avg. of beginning and end of fiscal year) x 100*6 Return on equity (ROE) = Net income attributable to owners of the parent / Total equity (Avg. of beginning and end of fiscal year) x 100

56

57

CHORI CO., LTD.

Fact Data

Chori’s Global Network(As of July 1, 2021)

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 in various 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	Chori Middle East FZE (Dubai)
Representative office	Jeddah

Asia
Subsidiaries	CHORI (CHINA) CO., LTD. (Shanghai)
CHORI (SHANGHAI) CO., LTD. (Shanghai)
THAI CHORI CO., LTD. (Bangkok)
CHORI (TIANJIN) CO., LTD. (Tianjin)
Chori Trading (Thailand) Co., Ltd. (Bangkok)
CHORI (DALIAN) TRADING CO., LTD. (Dalian)
PT. CHORI INDONESIA (Jakarta)
CHORI (DALIAN) COMMERCIAL IMPORTCHORI SINGAPORE PTE LTD (Singapore)
EXPORT CO., LTD. (Dalian)
CHORI TRADING (MALAYSIA) SDN. BHD. (Kuala Lumpur)
CHORI CO., (HONG KONG) LTD. (Hong Kong)
CHORI VIETNAM CO., LTD. (Ho Chi Minh City)TAIWAN CHORI MERCHANDISE COOPERATION LTD. (Taipei) CHORI TRADING INDIA PRIVATE LIMITED (Mumbai)
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 2021

Major Overseas Subsidiaries
and Affiliates
QINGDAO RED BUTTERFLY PRECISION MATERIALS CO., LTD. (China)
Production and sales of inorganic chemicals

U.S.A.
Subsidiary	CHORI AMERICA, INC. (Jersey City)
Representative office Charlotte

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
MEGACHEM LIMITED (Singapore)
Trading company specializing in chemicals
DALIAN 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 automotive interior and packaging materials
CHORI MODA CO., LTD.
Planning of fashion apparelSumitex International Company Limited
Trading company specializing in textiles(apparel, raw materials, etc.)
Miyako Kagaku Co., Ltd.

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

Trading company specializing in chemicals
CHORI GLEX CO., LTD.
Trading company specializing in chemicals
KOZAKURA SHOKAI CO., LTD.
Trading company specializing in chemicals
Chori Machinery Co., Ltd.
Trading company specializing in transportation equipment
Business Anchor Corporation
Outsourcing of administrative work

Subsidiary
Representative office(Japan: 4 locations Overseas: 35 locations)

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

58

59

CHORI CO., LTD.

Fact Data

Corporate Information(As of March 31, 2021)

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

Number of Employees

Consolidated: 969
Nonconsolidated: 408(Including 68 employees dispatched to other companies)

Corporate Website

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

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

Automotive Materials andFabrics Dept.
Technical Textiles Dept.
Textile-Fabric Dept.

Organization (As of April 1, 2021)
Textile Division

Technical
Material &Garments
Business Dept.

Technical Fiber Garments Dept.
Apparel Dept.
Intimate 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.

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

Legal
Compliance
Committee

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 2021

Investor Information

 reakdown of Shareholders
B
by Investor Type
8014
(First Section of the Tokyo Stock Exchange)

Securities CodeTotal Number of Shares Authorized
to Be Issued

55,000,000

Total Number of Shares Outstanding

25,303,478

Number of Shareholders

4,406

Trading Unit

100

Shareholder Register Agent for
Common Stock

Mizuho Trust & Banking Co., Ltd.

Accounting Auditor

Deloitte Touche Tohmatsu LLC

Brokerages
0.56%

Treasuryshares
2.78%

Foreigninstitutions
andindividuals
19.15%

Japanese
corporations
58.10%

25,303,478 shares

Financial
institutions
11.68%
Individuals
and others
7.73%

Major Shareholders

Number of shares held(Thousand shares)

Percentage of shares held(%)

TORAY INDUSTRIES, INC.

12,96752.71

BBH FOR FIDELITY PURITAN TR: FIDELITY SR INTRINSIC OPPORTUNITIES FUND

Shareholder name

1,566

6.37

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

822

3.34

Hurex Co., Ltd.

735

2.99

Wacoal Corporation

548

2.23

Custody Bank of Japan, Ltd. (Trust Account)

537

2.18

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

484

1.97

STATE STREET BANK AND TRUST CLIENT OMNIBUS ACCOUNT OM02 505002

325

1.32

MLI FOR CLIENT GENERAL OMNI NON COLLATERAL NON TREATY-PB

296

1.20

HSBC PRIVATE BANK (SUISSE) SA GENEVA, CLIENT ACCOUNT

204

0.83

Notes:
1. In addition to the above, the Company owns 703,266 shares (2.78%) of treasury stock.
2. The percentages of shares held excludes the 703,266 shares of treasury stock.
3. All shares held by the Master Trust Bank of Japan, Ltd. (Trust Account) and Custody Bank of Japan, Ltd. (Trust Account) are related to trust services.

Stock Price

Total Shareholder Return (TSR)-Related Data
FY2015FY2016FY2017FY2018FY2019FY2020

1,457

1,939

2,097

1,556

1,537

1,685

Dividends per share (yen)

36

40

59

60

63

37

Total dividends per share (yen)(from fiscal 2016)—

Stock price at year-end (yen)300

TSR (%)

40

99

159

222

259

Chori

135.8

150.7

117.7

120.7

133.4

TOPIX (incl. dividends)

114.7

132.9

126.2

114.2

156.2

* TSR is based on investments carried out at the closing price on March 31, 2016.

200

100

0

Chori

2017/4

TOPIX 2018/4

2019/42020/42021/3

Note: Based on closing price on March 31, 2017 as 100

60

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 2021