Special Feature

HitachiTakes on Global
Challenges
Targeting Global Growth
11 SECTION 1: Message from the CFO (Chief Financial Officer)
Implementing Financial Strategies to Succeed in Global Markets

12 SECTION 2: Message from the CMO (Chief Marketing Officer)
Working with Customers to Identify Their Challenges andProvide Innovative Solutions

13 SECTION 3: Message from the CTO (Chief Technology Officer)
Fostering Innovation That Shapes the Future of Society
through Customer-oriented R&D

14 SECTION 4: Message from the CTrO (Chief Transformation Officer)
Establishing a Globally Competitive Cost Structure throughthe Hitachi Smart Transformation Project

15 SECTION 5: Message from the CIO (Chief Information Officer)
Taking Aggressive Steps to Increase Management Efficiency andAchieve Business Growth through the Effective Use of IT

16 SECTION 6: Message from the Head of MONOZUKURI &Quality Assurance
Reinforcing the Foundation for Quality and Cost Competitiveness through
MONOZUKURI Capabilities

17 SECTION 7: Message from the CPO (Chief Procurement Officer)
Strengthening Competitiveness across the Value Chain throughReforms Targeting Global Integrated Procurement Operations

18 SECTION 8: Message from the CHRO (Chief Human Resources Officer)
Achieving Worldwide Business Growthwith Global Human Resources Management

19 SECTION 9: Message from the General Counsel
Supporting the Globalization of Hitachi withWorld-class Governance and Compliance10Hitachi, Ltd. | Annual Report 2014

SECTION 1

Message from the CFO

Implementing Financial Strategies to Succeed
in Global Markets
Focusing on strategic investment to strengthen Hitachi’s ability to generate cash
and expand the Social Innovation Business.

Bolstering Cash Flow Management
In fiscal 2013, Hitachi achieved new record highs in operating income—¥532.8 billion—
and in EBIT—¥580.1 billion. Nonetheless, we are aiming to reach the level of our overseas
competitors in global markets, and accordingly we are not satisfied with this performance.
Hitachi currently faces a shortage of the funds needed to be highly competitive andrecord growth in global markets. The recent trend in large M&A transactions is toward cash
deals instead of share exchanges, and Hitachi will need to secure sufficient cash to respondrapidly to these types of changes in the competitive environment. Accordingly, generatinga high level of profits, building a stronger balance sheet, and strengthening cash generation
capacity are urgent issues for Hitachi, and the Group has formulated measures to drive
improvements in those areas.
Specifically, we are taking steps to improve the Cash Conversion Cycle, such as reducing
the days working capital ratio. We are also striving to cut costs by shortening the lead timefrom order to delivery in order to reduce work in process and inventories. Moving forward,
we will take further steps to increase cash. For example, by raising the precision of demand
forecasting and responding in a timely manner to customer demand, we will shorten theaccounts receivable collection period and reduce excess inventories. To steadily execute
these types of measures, we are reforming the cost structure through the Hitachi Smart
Transformation Project and boosting our cash generation capacity through the E2E (End-toEnd) Supply Chain Project. These projects are being implemented on a Group-wide basis.
Strategic Investment to Expand the Social Innovation Business
Under the 2015 Mid-term Management Plan, we are conducting aggressive strategic
investment to expand the Social Innovation Business. We are carefully considering investment
effectiveness, including not only capital and R&D expenditures but also M&A transactions
implemented to rapidly secure management resources, such as customer service platforms
and solution development capabilities. At the same time, we are maintaining a focus on
the balance between implementing these investments, strengthening our financial
position,
ncial pos tion,and providing a return to shareholders.
In the Social Innovation Business, there are projects for which the periods arelong
re lon
lo
ng
g and
and
considerable amounts of time are required to recover the upfront investments.. Goi
Going
G
oin
ng
forward, we will strive to bolster our risk management, enhance the precision ofprojectof proj
pr
ojec
ectt
earnings forecasting, and establish a favorable cycle of strategic investment andcash
nd ccaashhgeneration. In these ways, Hitachi will achieve further growth.

Toyoaki Nakamura
Executive Vice President and Executive Officer,
CFO

11

Special Feature

SECTION 2

Message from the CMO

Working with Customers to Identify
Their Challenges and Provide Innovative Solutions
Strengthening our sales and engineering teams to accelerate global growthin the Social Innovation Business.

Driving Top-Line Growth
Hitachi’s 2015 Mid-term Management Plan includes the target of ¥10 trillion in revenues
for the Hitachi Group, and sales teams and front-end engineers are responsible for driving
progress toward the achievement of that target as well as further growth in the years ahead.
To realize global growth, we will strengthen our sales forces and expand our engineering
teams, which will cooperate closely with sales teams in each country and work to solve thechallenges of our customers. In this way, Hitachi will enhance and strengthen its system forthe proposal of solutions.
Marketing and Sales Strategies Targeting Business Growth
Looking at specific regions, Hitachi has reaffirmed the position of China and North America
as priority regions and will implement focused initiatives in these markets. China is an
important region that accounts for about 10% of the revenues of the Hitachi Group. With
ongoing urbanization and the development of the service industry, we expect the market in
China to continue to record stable growth. Although some matters of concern exist in China,
such as rising labor costs, we will take steps to strengthen our risk management system as we
strive to contribute to the resolution of social challenges, including environmental problems
and social infrastructure improvement.
Like China, North America accounts for about 10% of our total revenues. In the UnitedStates, there is a full-scale trend toward bringing manufacturing back to the domestic
market. Sales of automotive products are expected to increase, and new businesses arebeing created in the IT and other sectors. In this advanced market, the members of the
Hitachi Group will work together to expand solutions-related businesses, principally in IT
and infrastructure.
In Japan, strategic IT investment is rising, centered on the financial sector. We also
anticipate increased investment in social infrastructure as a part of national resilience projects,
as well as higher demand for transmission and distribution systems due to electric powersystemreform.
sy
stem
m re
form Moving forward, we will propose solutions for these domestic infrastructure
rebuilding
initiatives
and actively respond to demand related to the overseas advances of
reb
re
bui
uild
din
ng
g in
nitt
our
customers.
our ccu
o
sto
om
me
erss
Moreover,Hitachi will take steps to accelerate the growth of its global customer base as
M
Mor
Mo
reo
eove
ver,
r, H
true
a tru
tr
ue business
bu
busi
sine
ness partner that can contribute to solving the challenges of customers. To that

Ryuichi Kitayama
Senior Vice President and Executive Officer,
CMO, and General Manager of Corporate
Sales & Marketing Group

end
eend,
nd, wewe will
w ll aaggressively implement initiatives to attain top sales for clients with strong
growthpotentialin the energy, natural resources, and infrastructure fields.
gro
g
ow
wth
th p
po
ote
ten
n
Hitachi’s
sales
H
Hit
itaachhi’’s ssal
al and marketing divisions will propose solutions to achieve top-line growth
take
aand
nd w
willl tawiakeke tthe lead in markets around the world as the Hitachi Group works to expand
theInnovation
Business.
the Social
SSoociaal In
nno
o

12

Hitachi, Ltd. | Annual Report 2014

SECTION 3

Message from the CTO

Fostering Innovation That Shapes the Future of Society
through Customer-oriented R&D
We will push forward R&D to expand services and establish a global research network. In this way,
we will use innovative technologies to address the challenges facing society.

Customer-Oriented R&D
The Hitachi Group has approximately 5,000 people working in R&D and invests about 4% ofconsolidated revenues in R&D activities on an ongoing basis. With these resources, we areembarking on the R&D of technologies that will foster innovation. Through such innovation,
we will shape the future of society.
To resolve the challenges facing customers through the use of innovative technologies,
the most important task is to first identify and understand those challenges. To that end,
we emphasize a customer-oriented approach and conduct R&D in locations close tomarkets and customers.
The 2015 Mid-term Management Plan includes objectives of more than 40% for the service
revenue ratio and more than 50% for the overseas revenue ratio. For these objectives, weare focusing on two initiatives in particular. The first is the implementation of R&D activities
targeting the expansion of services. It will be extremely challenging to raise the service
revenue ratio from 32% in fiscal 2013 to more than 40% in fiscal 2015. To achieve that
objective, we are bolstering technical development related to product services, which entail
the provision of support throughout the entire product lifecycle, such as operation andmaintenance. These initiatives include the use of big data analysis for the infrastructure
facility failure predictive diagnosis system. In addition, to strengthen solutions for customers’issues as a service, we are focusing on technology development through such means as
an ethnography survey by which we closely observe customers’ operations and identify
substantial issues.
The second initiative is the establishment of a global research network targeting the
expansion of overseas business. We are aiming to expand our global customer base and toincrease the overseas revenue ratio to more than 50%. To meet those objectives, we will
promote R&D that is in line with local needs. Accordingly, we are expanding our overseas
bases, such as the Big Data Research Laboratory in the United States, the European Nuclear
Research Centre in the United Kingdom, and the European Rail Research Centre, also in the
United Kingdom. In addition, we will support the development of solutions throughglobalrough gloobasharing of the most advanced technology from each region.
Hitachi’s Mission and R&D
The Mission of the Hitachi Group is to “contribute to society through the development
elop
el
opm
me
ent
nt of
o
superior, original technology and products.” Conducting R&D into innovative tec
technologies
te
chn
hno
olo
ogi
giess
and services—and providing the results to customers in the form of products andservices—nd servndserviccees——
is the foundation of the value provided to society by Hitachi. It is also the source
ourrcce
e of ouourgrowth potential.

Keiji Kojima
Vice President and Executive Officer,
CTO, and General Manager of Research &Development GroupTo foster innovation around the world, we will not limit ourselves to conventional
technical
onall te
on
tech
chn
niccaldevelopment. Rather, we will accelerate customer-oriented activities targeting the resolutionof the challenges facing society.

13Special Feature

SECTION 4

Message from the CTrO

Establishing a Globally Competitive Cost Structure
through the Hitachi Smart Transformation Project
Improving our earning power and cash generation capacity by reducing costs as well as drasticallyoverhauling our business practices and organizational structure.

Transforming Hitachi through Cost Structure Reforms
To further enhance its position in global markets and keep pace with its competitors,
Hitachi has been implementing the Hitachi Smart Transformation Project since 2011.
This cost structure reform project is being implemented on a Group-wide basis. By drasticallyoverhauling our previous business practices and organizational structure, we have been
making steady progress toward our cost-reduction objective. In comparison with fiscal
2010, we aim to reduce costs by approximately ¥400.0 billion over the five years fromfiscal 2011 to 2015.
This project extends beyond conventional cost reductions, which center on loweringcosts in each division. It is also focused on improving earning power and cash generation
capacity to advance Hitachi to the next stage of growth. To that end, we are overhaulingbusiness practices from the perspective of overall global optimization and implementing
rigorous measures to increase the efficiency of operations and organizational structures.
Specifically, from the top down we are implementing shared initiatives that leverage theeconomies of scale of the Hitachi Group. These initiatives include IT platform consolidation,
supply chain reforms, and global, centralized purchasing initiatives. From the bottom up,
we are implementing advanced initiatives from the front lines, such as the use of modular
design to reduce the numbers of parts and shorten production processes. These initiatives
will be shared Group-wide.
In carrying out this project, the most important factor is transforming the mind-set of every
Hitachi employee around the world. It is natural to have some hesitation about changing
previous business practices, but for Hitachi to succeed in global competition, we must
sweep away preconceived ideas and aggressively advance the Group’s transformation.
Advancing to the Next Stage of Growth through Full-Scale Process Reforms
In the first stage of the project, we promoted measures to make reductions in the areas ofproduction costs, direct materials costs, and indirect costs. Through fiscal 2013, we achieved
cumulativea cumulativve ttotal reduction of about ¥220.0 billion. Moving forward, in the second stage,
m
we
will
furtherw
ew
willl ffururthhee deepen and enhance measures in each cost area and implement full-fledged
processreforms
pro
p
oce
cess
ss rrefeforormm through the reevaluation of business processes from end to end. To optimizethethe entire
eentntirree valuevaalu
u chain, from demand forecasting to development, marketing, design,
procurement,propoccureremmeentnt,, production, sales, installation, and service, we will standardize and consolidate

Tatsuro Ishizuka
Executive Vice President and Executive Officer,
CTrO, and Deputy General Manager ofSmart Transformation Project Initiatives Divisionbusinesspracticesand frameworks for each process and will rigorously eliminate any redunbus
b
usin
nes
esss ppra
act
ct
dancies.
will also enhance our organizational structure to ensure that the Hitachi Groupdandancciees.. W
Wee w
make
full
ccan
nm
mak
ke
e fu
ulll use of its capabilities.
measures, we will strongly drive increases in our ability to generate
TThrough
Th
hro
rou
ugh
gh these
tth
h
the
th
e ccashca
ashh thattha
th
att is necessary for investment in growth, and we will accelerate initiatives sothat Hitachi can realize sustained growth as a truly global company.

14

Hitachi, Ltd. | Annual Report 2014

SECTION 5

Message from the CIO

Taking Aggressive Steps to Increase Management
Efficiency and Achieve Business Growth throughthe Effective Use of IT
Hitachi will work to further enhance its management by effectively using IT, not only to implement
back-office functions but also to improve management decision making and operations.
IT’s Role in Management
In corporate management, IT is a platform for increasing management efficiency andachieving business growth. As CIO, it is my duty to achieve both of these objectives
through strategic IT investment.
To increase management efficiency, we are accelerating the process of reviewing
and improving operations by using IT to visualize activities throughout the operational
value chain, including order receipt, parts procurement, and management accounting.
The Hitachi Group’s business operations are expanding globally, and to respond rapidly tochanges in the management environment we have developed an IT platform that utilizes
cloud computing. In addition, we have established a Global Human Capital Database forthe purpose of nurturing and utilizing Hitachi Group employees worldwide, who havea diverse range of skills.
We are also actively using IT to advance business growth. In the past, the data handled
by IT systems was principally generated by corporate activities, such as business transactions
and management actions. The central role of IT in business was the efficient processing of
this type of information. Hitachi uses IT at a more advanced level. Through the analysis andevaluation of big data gathered and stored from sensors that monitor the operations ofequipment and systems, Hitachi is advancing initiatives to resolve its own management andoperational issues. In this way, the IT division, which was previously treated as a single
administrative division, is being repositioned as a frontline unit that provides support to
Hitachi’s management.
The fact that IT is one of Hitachi’s businesses is itself a strength in the use of IT within
the Group. Moving forward, we will strive to leverage the full capabilities of IT to further
enhance Hitachi’s management.
Boosting Cash Generation through the E2E Supply Chain Project
In fiscal 2013, we established the E2E (End-to-End) Supply Chain Project Division to
boost cash generation. Through the E2E Supply Chain Project, the division will w
work
ork ttooraise Hitachi’s overall operational efficiency by reevaluating operational processes,
ses, suc
ses
ssuch
uch
h aas
demand forecasting and service provision, with an end-to-end perspective. In add
aaddition,
ddit
itio
on,
n,
the division will take steps to improve the Cash Conversion Cycle through the vis
vvisualization
sua
ualiz
iza
atio
ion
n
of management information, such as cash receipts and disbursements. The cash
generatedsh gen
ge
ner
erat
ated
ed
by those improvements will then be used for growth investment.
We will aggressively implement initiatives to improve the Cash Conversion Cyc
Cycle
Cyclee tothe level of leading overseas companies by fiscal 2015. At the same time, we will
coordinate
w l coo
co
ord
din
nat
ate
e
these activities with the Hitachi Smart Transformation Project, a cost structure reform
initiative.
fo
orm
rm
m in
niti
tiattivve.

Shinjiro Iwata
Executive Vice President and Executive Officer,
CIO, and General Manager of End-to-End
Supply Chain Project Division15

Special Feature

SECTION 6

Message from the Head of MONOZUKURI & Quality Assurance

Reinforcing the Foundation for Quality and Cost
Competitiveness through MONOZUKURI Capabilities
Achieving highly efficient operations by accelerating the overseas shift of the value chain.

High-Quality Products at Low Cost
My mission is the prompt delivery of high-quality products that meet customer needs at
low cost. From the viewpoint of MONOZUKURI (design, manufacture, or repair of products),
Hitachi is advancing the shift of the value chain overseas bases—from demand forecasting,design, and procurement to manufacturing and service. We are taking steps to build the
optimal design and production system and conduct manufacturing in the best location.
In this way, we are enhancing the efficiency of our global operations.
In addition, the MONOZUKURI viewpoint is being used to bolster supply chain management
through the E2E (End-to-End) Supply Chain Project. Hitachi is implementing this project on
a Group-wide basis to strengthen cash generation. For example, we have introduced acloud system that facilitates the optimization of product inventories based on demand forecasting data, and we have increased efficiency in logistics through the consolidation of
warehouses. Through these efforts, we are improving cash flow by shortening lead times
and reducing inventories.
Strengthening MONOZUKURI Capabilities Globally with Modular Design
and Production in the Best Location
To increase design efficiency and enhance cost competitiveness, we are promoting
standardization in design and manufacturing through the introduction of modular design.
The modular design method reduces the number of different parts and shortens productlead times by modularizing and standardizing parts. First, we develop a thorough understanding of the specifications of the product needed by the customer. We then conduct
basic design in Japan, where we have a high level of technical skills, and detailed design at
local bases in line with regional needs. We have already completed the application of modular
design to eight products, and we have started to apply it to an additional 14 products.
Design determines about 80% of manufacturing costs, and accordingly the introduction ofmodular design will enable Hitachi to efficiently provide products that meet customer needs.
addition,Inn add tion, in order to globalize manufacturing in the best location, we are makingtheadv
aadvancesdvan
ancceses inin thh nurturing of overseas engineers, and enhancing operational efficiency bydelegating
to local design departments and rapidly implementing design that
del
d
eleg
ega
atin
ing
g au
aauthorityu
meets
detailedmeeetmetss deta
detaililed
ed needs in the local market. In Japan, Hitachi will strengthen its manufacturing
bases
and
utilizebasb
asees aan
nd
d ut
util
l them as “mother factories” to establish the technologies that theCompany
Co
C
om
mpa
pan
nyy willw l use to mass-produce new products.

Hiroshi Nakayama
Vice President and Executive Officer,
Head of MONOZUKURI & Quality Assurance

these
Som
SSome
ome
me off thethese
se initiatives will not generate results for a long period of time, perhaps five to10years.
by continually and steadily implementing initiatives Hitachi will build
1
0 ye
yea
arss. Nonetheless,
No
N
on
n
designmanufacturing system that can rapidly respond to changes in markets and
a des
d
esig
gn
n and
and m
customer needs. We are committed to MONOZUKURI backed by leading-edge technologies.
Moving forward, we will make continued progress with MONOZUKURI that offers superior
quality and cost competitiveness.

16

Hitachi, Ltd. | Annual Report 2014

SECTION 7

Message from the CPO

Strengthening Competitiveness acrossthe Value Chain through Reforms Targeting Global
Integrated Procurement Operations
Bolster its global competitiveness through Group-wide initiatives to accelerate reductions
in direct materials costs.
To provide products that meet the needs of markets and customers in terms of quality,
delivery and cost, Hitachi needs to strengthen competitiveness across the global value chain
by optimizing processes ranging from demand forecasting to design, manufacturing andservice delivery.
The Corporate Procurement Division is working to respond rapidly to changes in the needsof markets and customers. To that end, the division is advancing reforms to implement
Global Integrated Procurement Operations, which leverage optimal combinations of threeaxes—regions, businesses and products. In addition, the division is accelerating collaboration
with business partners. In these ways, the Corporate Procurement Division will strive tocontribute to gains in profitability and cash flow by reducing costs, centered on direct materials
costs, and to support the generation of new value in the development of products and services.
Specifically, we set targets for production costs from the product design, development,
and pre-order stages. On that basis, we work to implement “cost planning,” under which
we develop specifications to achieve those targets and select products and business partners.
We also take steps to expand and bolster “global procurement” and to augment “centralized purchasing.” To advance these initiatives, we must build close relationships withcompetitive business partners around the world, as well as with design, manufacturing
and other divisions throughout the Hitachi Group. To that end, the Corporate Procurement
Division is providing a range of proposals and consultations from the perspective of
procurement and taking steps to strengthen its capabilities in “Procurement Engineering,”
which will enhance the competitiveness of the Group’s value chain.
These initiatives have been positioned as one part of the Hitachi Smart Transformation Project,a cost structure reform project that the Company is implementing on a Group-wide basis.
Accordingly, the Corporate Procurement Division is working on joint initiatives in close
cooperation with other internal divisions, such as design, R&D, MONOZUKURI and quality
assurance, and with Group companies that have specialized functions related to pro
procurement
curem
men
activities. I believe that this aggressive advancement of procurement reform on a Gro
Group-wide
G
rou
upp-w
wid
de
e
basis is a major strength of the Hitachi Group in comparison with its competitors.
o s.
ors
In fiscal 2014, to reinforce Hitachi’s progress toward the achievement of the 2015
0 5
015
Mid-term Management Plan, the Corporate Procurement Division will focus on im
implementing
imp
mple
lem
meent
ntin
ng
g
the planned initiatives and work to increase its overall competitiveness. As we str
sstrive
trivve too bebea world-class procurement division, we will do our utmost to contribute to theoverall
e ov
ove
era
all
growth of Hitachi’s businesses.

Shinichiro Omori
Vice President and Executive Officer,
CPO, and General Manager of Corporate
Procurement Division17

Special Feature

SECTION 8

Message from the CHRO

Achieving Worldwide Business Growth with
Global Human Resources Management
Building a strong organization to lead the growth of the Hitachi Group by maximizing
the performance of diversified employees.

Globalization of the Management System and Human Resource Management
Human resource are the engine of Hitachi’s growth, and under the 2015 Mid-termManagement Plan, human resources play a central role in Hitachi’s initiatives to advancethe global development of the Social Innovation Business. Our most important challenge isthe nurturing and utilization of human resources that are well versed in the frontline situation in each country and can provide solutions in local markets. To enable our highly skilled,
diverse global talent around the world to work to their full potential, without regard tonationality, language or gender, we have commenced global human resource management.
We are accelerating initiatives for leaders on a Group-wide, global basis, such as implementing
standardized educational programs and rotations for candidates for Group management
positions and aggressively advancing the appointment of non-Japanese executives.
Strengthening the Foundation for Leveraging Human Resources
These initiatives are supported by the Group-wide human resource management platform,
and accordingly Hitachi has taken steps to strengthen this platform. First, in fiscal 2012,
we completed a Global Human Capital Database, which contains information for about
250,000 Hitachi Group employees. In fiscal 2013, we completed Hitachi Global Grading,which ranks management positions on a common scale that applies to approximately
50,000 managers. As a result, we have established a platform that enables us to searchamong Group employees worldwide to find the people who are the best fit for a specificproject and assign them to the optimal position. This framework enables Hitachi to respondrapidly to changes in the markets.
Also, in fiscal 2014 we are establishing Global Performance Management, which isa framework for goal management, evaluation, and coaching. We will strive to maximize
the performance of employee and organizations by clearly linking the objectives of the
Hitachi Group with those of individual employees and taking steps to reform work methods.
Going forward, we will endeavor to support Hitachi’s business growth by using thisplatform to nurture and leverage human resources with diverse backgrounds and toestablish strong organizations that can succeed in global competition.

Hidenobu Nakahata
Vice President and Executive Officer,
CHRO, and General Manager of
Human Capital Group18

Hitachi, Ltd. | Annual Report 2014

SECTION 9

Message from the General Counsel

Supporting the Globalization of Hitachi withWorld-class Governance and Compliance
We strive to achieve highly transparent and trustworthy management through initiatives targetinga rigorous approach to corporate governance and compliance. These initiatives reflect an emphasis on
diversity in governance and a global commitment to compliance.

Strengthening Corporate Governance to Address the Globalization of Management
In strengthening corporate governance, Hitachi is focusing on diversity. Hitachi has adopted
the Committee System, which provides a clear separation of the management oversight andbusiness execution functions. The Board of Directors, which is responsible for management
oversight, includes the Nominating Committee, Audit Committee, and Compensation
Committee, with outside directors accounting for the majority of members of eachcommittee. With this governance structure, Hitachi increases management transparency
and builds a decision-making framework that reflects a variety of viewpoints from insideand outside Hitachi. Since fiscal 2012, outside directors, including non-Japanese, haveaccounted for the majority of the members of the Board of Directors and brought global
perspectives to the Board of Directors through active discussions based on diverse experienceand expertise. We, Hitachi, held meetings of the Board of Directors in India in 2012 and in
the United States in 2013 and discussed the business strategies for each region. Moving
forward, the Board not only considers reports from the business execution side but also
steps up its function as a venue for brainstorming about specific strategies. In these ways,
the Board sets the course of Hitachi for increasing the corporate value of the Hitachi Group.
In advancing global business initiatives, the incorporation of diverse values has
special meaning from a risk management perspective. Hitachi will continue working toreflect a wide variety of opinions in its management and striving to further enhance its
corporate governance.

Thorough Compliance on a Group-wide BasisAs the Hitachi Group is advancing global initiatives for its Social Innovation Business,in these endeavors, it is extremely important for the Group to secure the trust of its stakeholders in each country. In addition, taking a rigorous approach to compliance overseas is
more important than ever before.
In fiscal 2009, the Hitachi Group formulated the Hitachi Global Compliance Pro
Programgram(HGCP) and has implemented auditing and employee education based on this pr
program.
p
rog
gra
ram
m.
The HGCP is designed to prevent corruption, which is the focus of strengthened
regulations
ed regegu
ulaatiotion
ns
worldwide. Under the HGCP, employees in each country follow unified rules toprevent
o pre
p
eve
vent
nt ttheheoccurrence of corruption, a major compliance risk. In addition, in 2010, the HitachiGroup
ittacchihi GroGrouuppestablished the Hitachi Group Codes of Conduct, which internalize ISO26000 andotherand ototheherrinternational rules. In this way, the entire Hitachi Group shares a more stringent
level
nt llev
evel
el of
o
ethical values than the laws of each country. The Hitachi Group will continue to str
sstrengthen
tren
eng
gth
heen
its compliance system, centered on the HGCP, and will rigorously implement the
Hitachi
he H
he
Hita
tach
chi

Toshiaki Kuzuoka
Senior Vice President and Executive Officer,
General Counsel & Head of Corporate Communication, andHead of Risk Management

Group Codes of Conduct.

19