3CHORI CO., LTD.

Tsumugu Report 2020

Overview of Chori

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

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

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

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

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CHORI CO., LTD.

Tsumugu Report 2020

Overview of Chori

Chori at a Glance

Chori’s Growth Foundation
Subsidiaries and Offices

39

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



Fiscal 2019 Business Results (Consolidated)
Net Sales

8.7￥

billion

356.5

DOWN

7.6 % YoY

Year of Establishment

billionUP

8.7

0.3 % YoY

329.4

1861

8.7

7.5

311.7

2017

2018

2019

(FY)

2017

2018

2019

Total Assets

ROA (Ordinary Income Basis)

Ratio of Net Sales
through Trade￥114.4billion

7.5

71.4%

%

(FY)

UP

UP

3.5 % YoY

0.2 point YoY

1.8 point YoY

7.5

2017

2018

2019

(FY)

2017

2018

2019

(FY)

2017

2018

* As of March 31, 2020

Male

Female

524

490

71.4

2019

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

69.6

6.9

1,014

2020 Health and Productivity Management Award(Large Enterprise Category)

7.3

114.4

Number of Employees (Consolidated)

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

72.3

118.5

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

* As of July 1, 2020

Certified as Sports Yell Company in Fiscal 2019

DOWN

119.1

(of which, 4 in Japan)

Ordinary Income

329.4

￥

locations

(FY)

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CHORI CO., LTD.

Tsumugu Report 2020

8

Overview of Chori

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

1861

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

1948

CHORI CO., LTD. established

1956

1952

Moves head office to Osaka

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

Launches Chemicals Business

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

1975	
Begins company restructuringwith drastic streamlining anddownsizing of management

	Designated as one of thefirst friendly trading companies
by China

2004	
Becomes a consolidated
subsidiary of TORAY
INDUSTRIES, INC.

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

1996	
Secures order for railway
project in Kazakhstan

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

2018	Makes KOZAKURA SHOKAI
CO., LTD., a trading company
specializing in chemicals, a
consolidated subsidiary	Establishes a joint venture with
MATSUOKA CORPORATION,
FAST RETAILING CO., LTD.,
and TORAY INDUSTRIES, INC.
in Indonesia
	Participates in first session ofChina–Japan Third-Party
Market Cooperation

1997	Establishes joint venture
Chongqing Dazu Red Butterfly
Strontium Industry Co., Ltd.
	Engages in capital participationin MEGACHEM LIMITED, a
trading company specializing inchemicals in Singapore
2013	
Makes PTI Japan Limited(currently CHORI GLEX CO.,LTD.), a trading company
specializing in chemicals, a
consolidated subsidiary1985	
Handling of angora sweaters
exceeds 300,000 units,
resulting in high market share

2002

1993	
Establishes CHORI(SHANGHAI) CO., LTD. as
first subsidiary in China

2003	
Commences Textiles Exhibition(currently CHORI Exhibition)

 pins off the Synthetic Resin
S
Business Division into aseparate company

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

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

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

Jinmu economic boom of the mid-1950s
Iwato economic boom of 1958–1961
Economic boom created by the Tokyo Olympic Games (1962–1964)
Izanagi economic boom (1965–1970) of JapanA Period ofGrowth2020
COVID-19
1973
First oil shock

1991–2000s
1979
Second oil shock

A Period of
1948–1970s

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

Setbacks

2008
G
 lobalFinancial Crisis

2011
Great East Japan
Earthquake

Collapse of bubble economy
Heisei depression

A Period of
1970s–2000s

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

Breakthrough Results

2000s–2020s

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

AFTER
COVID-19
Fortify
defensivemeasures

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CHORI CO., LTD.

Tsumugu Report 2020

Overview of Chori

Previous Medium-Term Management Plan

New Medium-Term Management Plan

Review of Chori Innovation Plan 2019

Chori Innovation Plan 2022
(FY2020–FY2022)

In fiscal 2018, Chori’s ordinary income and net income attributable to owners of the parent were its highest ever, achieving
the targets set out in the medium-term management plan one year ahead of schedule. In fiscal 2019, the final year of theplan, we felt the effects of COVID-19 as we were unable to reach our target for net sales. However, we continued to record
favorable results for both ordinary income and net income attributable to owners of the parent, for which we again reached
our targets and achieved record highs.
Chori made ASADA U CO., LTD., a sales company of automotive interior and other materials, a consolidated subsidiary andproceeded with the Fibers, Textiles, and Garments Business’s strategy of “expanding global development.” Meanwhile, in
the Chemicals Business, KOZAKURA SHOKAI CO., LTD., a trading company specializing in lubricating oil additives, fuel oil
additives, and other chemicals, became a consolidated subsidiary through an M&A.

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

Chori engaged in a joint venture for the sale of ECO BLUETM polyester pellets, which are generated through the recycling ofplastic bottles; participated in a chemical fertilizer production project in Nigeria; and actively carried out investments in otherinitiatives to further solidify its foundation for sustainable growth.
Chori complied with its basic policy of ensuring a dividend payout ratio of 25% or more of net income while increasing its
dividends for the seventh year in a row.

356.5

(Billions of yen)

311.7
280.0

330.0 329.4
300.0

8.7

8.7

7.5

8.5
7.8

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

FY2018FY2019￥280.0 billion(Reference: Trading Amounts￥350.0 billion)

Ordinary Income￥11.0 billion

Net Income Attributable to Owners of the
Parent￥7.3 billion

ROA (Ordinary Income Basis)

8% or more

ROE (Net Income Basis)

11% or more

Payout Ratio

30% or more

311.7

356.5

329.4

330.0

Ordinary Income (Billions of Yen)

7.5

8.7

8.7

8.5

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

4.7

5.6

6.1

5.5

ROA (Ordinary Income Basis)

6.9%

7.3%

7.5%

7.5%

ROE (Net Income Basis)

9.7%

10.7%

11.0%

10% or more

Accounting Standard for Revenue Recognition

Proxytransactions
Commission
incomeTransactions ofrelated party
Conventional

Trading Amounts
Net Sales

FY2019 (Targets)

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

Net Sales

FY2017 (Results) FY2018 (Results) FY2019 (Results)

Net Sales (Billions of Yen)

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

7.2

FY2017

FY2022

Commission
incomeTransactions ofrelated party

After adoption of revenue
recognition standard

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

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CHORI CO., LTD.

Tsumugu Report 2020

Overview of Chori

Corporate Governance

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

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

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

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

Payout ratio

Includescommemorative
dividend of ¥10

100

30% or more

(Yen)

90

80

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

Consolidated
Ordinary Income

8.7

11.0

Nonconsolidated
Ordinary Income

6.4

6.8

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

500

Governance Committee(FY2020–FY2022)
400

59

63

60

60
40

300

36

34

33

40
200

24

20
0

SawanoCommittee
chairman(Independent
Director)

100

2012
(Result)

2013(Result)

2014(Result)

2015(Result)

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

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

2016(Result)

2017(Result)

2018(Result)

2019(Result)

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

Investment in and development of
new businesses
M&A(Independent
Director)

Sakihama
Committee
member(President,
CEO & COO)

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

Compliance

Morikawa
Committee
memberCompensationof directors andexecutive
officers
Compensation
madeindividually

Director

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

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

Environmental and recycling, health, hygiene, andmaterials fields

Chemicals Business

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

Machinery Business

Global market development

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

M&A

ASADA U CO., LTD.
KOZAKURA SHOKAI
CO., LTD.

Business Investments

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

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

Nurture of Human Resources for Next Generation

U tilize

N urture

C onnectDramatically revamp thehuman resource system

Nurture future generations ofhuman resources

Realize diverse workstyles

Nurture employees of ouroverseas offices

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

Stimulate communication
through one-on-one interviews

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

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CHORI CO., LTD.

Tsumugu Report 2020

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

Message from the President
Review of Chori Innovation Plan 2019

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

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

President, CEO & COO,
President and Executive Officer

Kazuo Sakihama

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

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

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

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CHORI CO., LTD.

Tsumugu Report 2020

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

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

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

Examples of Cross-Sectional Projects
for the Fibers, Textiles, and Garments BusinessDistinctive Yarn

Expand lineup of special and distinctive yarn
Strengthen development of brands for distinctive yarn

Environment

Promote use of recycled yarn and other environment-friendly materials

SewingUnify and strengthen the Fibers, Textiles, and Garments BusinessExpand number of sewing factories in Mauritius and other parts of Africa

TextilesImplement the Global Textile Project in cooperation with textile
manufacturers in East Asia

Geopolitics

Build new sales channels while responding to changes in the global climate
Plan to reassign certain overseas production to Hokuriku region

Masks and Nonwoven
Fabrics

Expand lineup of products utilizing woven textiles
Address needs for medical gowns

Antiviral and Antibacterial
Treatment

Address needs for antiviral and antibacterial treatment

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

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

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

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

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

Chori’s Response to COVID-19
Project meetings in session(meeting room divided to maintain social distancing)With the Japanese government’s declaration of the state of
emergency in April 2020, Chori introduced measures toKazuo Sakihama



President, CEO & COO, President and Executive Officer

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