Sojitz is engaged in a variety of business activities across the
world’s four major regions comprising the Americas,
Europe/Africa, China and Asia. In addition, the Company oper-
ates in regions under the direct control of headquarters
including Oceania, the Middle East, Russia and the CIS Region.
The Company’s overseas business strategy plays a critical
role in its overall operating vision and the development of
activities on a global scale. In the future, this role will assume
increasing importance and impact on every facet of the
Company’s business activities. Accordingly, Sojitz will pursue its
CHINA
RUSSIA AND THE CIS REGION
ASIA
OCEANIA
KOREA
TAIWAN
EUROPE &
AFRICA
THE
MIDDLE
EAST
CHINA
42
O V E R S E A S O P E R A T I O N S
OVERSEAS BUSINESS
STRATEGY
YUTAKA KASE
Executive Vice President, Overseas Operations
NORTH, CENTRAL AND
SOUTH AMERICA
Group Company
Regions under the Direct
Control of Headquarters
Major Regions
Branch
Office
43
overseas business strategy from the perspective of developing
global business as the core of its overall activities as follow s:
•responding to the grow ing trend tow ard m arket
globalization,
•cultivating new businesses from a global perspective,
•enhancing global capabilities and functions, and
•pursuing opportunities on a global scale.
In scal 2004, the scal year ended M arch 31, 2005, and the
rst year of the C om pany’s N ew Business Plan, Sojitz
im plem ented SC VA , its risk/return m anagem ent indicator
across each of its overseas activities. Through a careful process
of selection and focus, Sojitz w orked to create the optim um
business portfolio. H aving com pleted this process w ith
signi cant results, the C om pany has shifted to a proactive
stance and is aggressively pursuing existing and new business
opportunities. W e are com m itted to proactively developing
business throughout global econom ies and overseas m arkets.
44
O V E R S E A S O P E R A T I O N S
NORTH, CENTRAL AND
SOUTH AMERICA
SCOPE OF BUSI NESS AND REGI ONAL FOCUS
Sojitz is a function-oriented trading com pany com m itted to m axim izing
incom e by creating new value and bringing w orld m arkets together. To
that end, w e are w orking to leverage the unique features of diverse
regions and form ulate product and m arket strategies that re ect regional
characteristics. O ur m ajor focus is trade am ong countries in the N orth
A m erica Free Trade A greem ent (N A FTA ), the w orld's largest econom ic
zone. O ther im portant regions for our business is the free-trade bloc of
M ercosur and the M esoam erican-A ndean nations, w hich are expected to
prosper w ith further regional integration through free-trade agreem ents.
Sojitz anticipates increased opportunities in the A m ericas in line w ith
expanding com m ercial zones.
Speci cally, Sojitz focuses in four m ajor business areas. The rst is
trade in N orth A m erica, the largest consum er-driven m arket. In that
region, w e are expanding business in autom obiles, electronics, and
consum er products. The second focus is on abundant natural resources in
the A m ericas. W e are developing new trade in m ineral resources, lum ber
and building m aterials, and agriculture. Energy-related investm ent is also
signi cant. The third area is new business investm ent in hi-tech. W e are
investing in and initiating new business in hi-tech aspects of the
inform ation technology eld, essential to the com m ercial aviation, defense
and aerospace and telecom m unications industries. The fourth is that w e
establish a strong business presence in areas in w hich w e have expertise,
such as in our m ajor rail car projects in N orth A m erica. The projects draw
on our strength in this eld and take full advantage of the C om pany’s
functional capabilities.
Building on these industries, Sojitz is expanding sales channels
through parallel trade efforts in the A m ericas in concert w ith trade in
Japan, and expanding trade in m arkets such as foodstuffs, iron and steel
and lum ber in em erging m arkets such as C hina and the A sia region. A s a
result, the C om pany is evolving tow ard a quality earnings m odel.
FI SCAL 2004 RESULTS
In this scal year, Sojitz posted strong earnings in operations in the
A m ericas. Because of our stable, ongoing relationship w ith w ell-know n
international corporations such as Boeing, Bom bardier, N ike, A ltria and Rio
D oce, w e w ere able to establish consistent earnings over tim e. In addition,
w e fostered increased incom e by developing other m arkets in deals related
to printing, satellite com m unications, of ce m achines and hom e electronics.
These steps had a positive effect on our overall earnings.
W e are fortunate at Sojitz to have a talented and skilled hum an
resource pool. W e bring to the table a w ealth of business inform ation. Their
know ledge is com bined in our w orldw ide netw ork of branches and in-depth
regional focus. W ith a proactive, energetic approach, Sojitz is particularly
suited to putting individual know -how to w ork on global solutions.
JUN MATSUMOTO
President & CEO for the Americas
45
Sojitz supplies control systems for
application in diesel-electric engines
ELECTRICAL EQUIPMENT FOR AC
LOCOMOTIVES
Sojitz C orporation of A m erica w as
aw arded a long-term , exclusive contract
to supply air-conditioning equipm ent
(H VA C ) and inverter equipm ent for the
new A C electric diesel locom otives of
Electro-M otive D iesel, Inc., a w orld leader
in the locom otives m arket. Since 2001,
Sojitz, M itsubishi Electric and EM D have
jointly developed H VA C and inverter
equipm ent. W e anticipate sales to exceed
10 billion yen over the next ve years.
Engine-Dressing for GM/Bowling Green
AUTRANS CORPORATION
(80% Sojitz Corporation of America, 20% Sojitz Corporation)
Business is strong at A utrans C orporation. M ajor activities
are perform ing logistics services for autom otive m anufac-
turers and both Tier-1 and Tier-2 suppliers, providing
sub-assem bly and serving as a just-in-tim e coordinator.
The com pany has targeted high value-adding services
from increased distribution of products related to the
N issan plant in Sm yrna, Tennessee. The A utrans branch in
Ingersoll, O ntario facilitated higher value-adding services
by providing engine-transm ission sub-assem bly services to
C A M I A utom otive (a joint venture betw een Suzuki M otor
C orporation and G eneral M otors of C anada) for the
C hevrolet Equinox and other m odels.
A prim e exam ple of how w e capitalized on our netw orking abil-
ities can be found in the M ineral Resources group. This division took
full advantage of our prow ess in linking buyers and sellers as it
m atched suppliers of iron and steel to consum er m arkets around the
w orld.
A nother addition to our pro t base cam e from A utrans
C orporation, the C om pany’s subsidiary in the autom otive industry.
A utrans im plem ented new value-adding sub-assem bly services in
C anada w ith restructuring and sales channel developm ent
strategies. It signi cantly added to the C om pany’s nancial w ell-
being.
In scal year 2004, Sojitz also greatly reduced its operating
expenses through recent m ergers. U nderpinned by efforts to create
a robust asset portfolio and sound nancial position, the C om pany
has becom e m ore aggressive in pursuit of business opportunities.
BUSI NESS STRATEGY
W e envision scal year 2005 as the year in w hich Sojitz w ill
com plete its evolution to a quality earnings structure in the A m ericas
region. W e generate steady earnings from continuous business in
textiles, chem icals and plastics, construction m aterials, foodstuffs
and various im ports to the U .S. dom estic m arket. To accelerate earn-
ings, w e utilize the unique features of m arkets in the A m ericas. W e
w ill expand and diversify businesses in consum er goods, natural
resources, energy-related investm ent, and new technologies in
industries such as aerospace. Based on these initiatives, the
C om pany w ill focus on increasing earnings through grow th.
In addition, w e w ill reinforce our rail and transit business
relationship w ith RO TEM , a m ajor rail car m anufacturer located in
South Korea. W e expect substantial grow th in the com m ercial
aircraft business. G iven the advances of the past year—our
w orldw ide netw ork, know -how , nance arrangem ent and
innovative business practices—w e are m ore ready than ever to take
advantage of business opportunities.
The C om pany is increasingly adopting a proprietary
m anagem ent tool, know n as SC VA or Sojitz C orporation Value
A dded, to m easure risk and rew ard. W hile enhancing our risk-m an-
agem ent structure, w e w ill effectively m anage our nancial
resources and increase internal evaluations for each project as w e
shift into a m ore vigorous business m odel.
BUSI NESS DEVELOPMENT AND TOPI CS
46
O V E R S E A S O P E R A T I O N S
EUROPE & AFRICA
DI STI NGUI SHI NG FEATURES AND STRENGTHS
Leveraging its traditional strength in Europe, the Company is active
across two core domains comprising marine equipment and automobile-
related products, and highly functional packaging materials. In marine
equipment and automobile-related products, Sojitz has acquired trading
rights and licenses from leading suppliers both in and outside Europe,
and is delivering machinery, equipment and components to customers
across the region. Recently, the Company is experiencing rising sales of
equipment for LNG facilities, LNG vessel turbines and specialty materials,
and large-scale vessel engines. In the automobile industry, Sojitz boasts a
solid track record in the supply of engine components, optical ?ber
harnesses, and components for two-wheel vehicles. In the ?eld of
packaging materials, the Company deals mainly in BOPA ?lm, a product
in which Sojitz has undertaken direct investment, and EVOH resin. We
are engaged not only in the sale of these products, but are also engaged
in their development. Sojitz further strives to cultivate new markets utiliz-
ing its comprehensive business resources. Through these endeavors,
Sojitz enjoys a high share of intra-regional and offshore trade. The
Company consistently takes the initiative to proactively pursue business
opportunities. The Group promotes collaboration among headquarter
operating divisions and pursues synergy bene?ts with the aim of expand-
ing business activities. Our European management puts more emphasis
on generating synergy bene?ts through effective cooperation among
operating divisions within the region for further maximization of our
business.
In Africa, Sojitz operates across four key locations. The Company is
active in the trade of energy resources and the development of energy-
related projects. As a whole, the African region will require additional
care and time to achieve complete political and social stability.
FI SCAL 2004 RESULTS
On a consolidated basis, operations in Europe in ?scal 2004 reported net
sales of ¥157.0 billion, gross trading pro?t of ¥4.9 billion, and operating
income of ¥0.6 billion. In net sales and gross trading pro?t, the Company
recorded a drop in revenues and earnings. This was the result of the with-
drawal from iron and steel businesses. Buoyed by effective reductions in its
selling, general and administrative expenses, Sojitz saw a year-on-year
increase at the operating income level.
By business segment, results in the communications infrastructure and
industrial machinery businesses were impacted by differences in year-end
balance dates. Construction machinery and large-scale carriage
transactions were down due to a slump in demand. Despite these dif?cult
conditions, the Company’s Plastics and Chemicals division bene?ted in
Europe through strong performances in sales and operating income across
all business rights including those related to synthetic resins and specialty
chemicals, and an increase in sales of food additives. In energy projects
including electric power generation, Sojitz experienced a drop in revenues
and earnings re?ecting a reduction in electric power generation and ener-
YASUSHI HOSHIKA
President & CEO for Europe & Africa
47
gy projects. Through efforts to reduce and stream line selling, gener-
al and adm inistrative expenses, the C om pany w as successful in
attem pts to m inim ize the decline in operating incom e. In the
Foodstuffs division, the results w ere below expectation as Sojitz
incurred slow operating conditions w ith little progress in the
developm ent of com m ercial rights.
In A frica, at the recurring pro t level, results exceeded initial
estim ates. This w as the result of contributions from the C om pany’s
Johannesburg of ce.
BUSI NESS STRATEGY
In Europe, the C om pany w ill focus on tw o m ain pillars com prising
the Industrial Projects division and Plastics & C hem icals division.
Sojitz w ill review operations in Europe in line w ith this initiative and
w ork to consolidate its business structure w ithin the region in an
effort to m axim ize ef ciency and secure optim al synergy effects.
W ithin the region, w e w ill reinforce local trade and prom ote
greater initiative through our local operations. Efforts w ill also be
supported by im proved collaboration w ith headquarters operating
divisions and w ith regional enterprises of other Japanese
com panies. A s a regional strategy, Sojitz w ill look beyond the 25-
m em ber European U nion and target form er eastern European
countries, Russia, the C IS region and Turkey as a source of future
grow th. The C om pany is com m itted to the proactive allocation of
hum an resources and funds in all of these areas to support this
regional strategy. W e w ill prom ote a strategy in our business oper-
ations that places greater em phasis on nurturing and increasing
the role of local staff and at the sam e tim e pursue a regional strat-
egy in the developm ent of new businesses in Europe, w here Sojitz
w ill w ork to im prove business ef ciency and enhance risk m anage-
m ent.
In A frica, the C om pany w ill be guided by headquarters
operating divisions in the pursuit of its business activities through-
out the region.
Above, a sample of food packaging made
from highly functional packaging materials
handled by Sojitz
Below, a BOPA ?lm plant of Biaxis OY Ltd., a
Sojitz af?liated company
DEVELOPMENTS IN THE HIGHLY
FUNCTIONAL PACKAGING
BUSINESS
Through Biaxis, a com pany in w hich Sojitz
m aintains a 49% interest, and Europe’s
second largest m anufacturer of BO PA
lm , the C om pany is active in the business
of product developm ent, m arketing and
sales. Through these com prehensive m ea-
sures, Sojitz is in a position to add m arket
value and continues to expand trade of
EVO H resin and other highly functional
packaging m aterials.
Tank yard located at Gebze port, near
Istanbul, Turkey
SOLVENT TANK OPERATIONS IN
TURKEY
Boasting a track record of 14 years, Sojitz
currently operates 41 solvent storage
tanks in Turkey. The C om pany is sourcing
solvent m aterials for use in paints and ink
from petrochem ical producers in Europe,
the M iddle East and South A m erica, and
pursuing sales in Turkey. Sojitz now
m aintains a 40% share of this m arket.
Marine diesel engine
SALES OF MARINE EQUIPMENT
Buoyed by robust conditions in the ship-
ping industry, Sojitz enjoys continued
sales grow th of m arine equipm ent.
Results are driven by increased sales of
large-scale engines for ships, the im port
and export w ith Japan of a variety of
equipm ent and devices for LN G vessels,
and im proved offshore trade.
BUSI NESS DEVELOPMENT AND TOPI CS
O V E R S E A S O P E R A T I O N S
CHINA
DI STI NGUI SHI NG FEATURES AND STRENGTHS
N ichim en and N issho Iw ai, the tw o com panies that m erged to form Sojitz
C orporation, have a long history of trade w ith C hina. Both com panies
w ere trailblazers in both establishing and developing business in the
region and built a strong reputation grounded in long-standing goodw ill.
Based on this tradition and a history of achievem ent, Sojitz continues to
leverage its strengths and pursue opportunities across a variety of elds.
O ne such exam ple is its trade in natural resources, including both im port
from and export to C hina. W e boasted a top share in coal exports from
C hina to Japan. Follow ing C hina's dram atic econom ic grow th, strong
dem and for energy resources, and a recent lack of dom estic supplies,
Sojitz is now active in the stable supply of coal to C hina from Vietnam ,
Indonesia and other countries. The supply to C hina of H ot Briquette Iron
(H BI) and iron-ore are additional exam ples of our role in third-country
trade. C reating opportunities in collaboration w ith C hinese partners is
another gatew ay for business grow th. Boasting specialized technology
and a highly com petitive price structure, Sojitz has com m enced efforts to
support C hina-based com panies in petrochem ical and steel plant propos-
als to third countries. Based on a deep m utual understanding fostered
through close com m unication over m any years, Sojitz enjoys collaborative
relationships w ith a large num ber of C hinese com panies. W e are also
allocating business investm ent tow ard establishing and developing a local
m arketing netw ork. Sojitz is developing a proprietary sales netw ork and
expanding activities in the sale of plastic m aterials to electronic hom e
appliance m anufacturers and to autom obile m anufacturers, as w ell as in
the southern and eastern regions of C hina, the sale of chem icals, tuna,
and prem ixed our.
FI SCAL 2004 RESULTS
In scal 2004, results signi cantly exceeded initial forecast targets. The
C om pany enjoyed robust results particularly in synthetic resins, electronic
com m unications and forest products and building m aterials. In the scal
year under review , the Sojitz G roup experienced large-scale grow th in
synthetic resin transactions ow ing m ainly to the acquisition of other
com pany business rights. This in turn led to an increase in pro t. Results
w ere also buoyed by efforts to reinforce the C om pany’s sales netw orks in
the southern and eastern regions of C hina and concrete expansion in new
m arketing channels. G row th in the C om pany’s electronic com m unications
transactions is a m easure of its com posite trading structure. The Sojitz
G roup m aintains a com prehensive system for trade in discrete
com ponents. This system extends from the supply of raw m aterials
through consignm ent m anufacturing and delivery m anagem ent. Export of
C hinese com m unications devices to third countries also contributed to the
G roup’s earnings results. In forest products and building m aterials, dram atic
grow th in housing starts in C hina served to drive an increase in activity. In
the scal year under review , the Sojitz G roup expanded its supply of
m aterials from traditional sources such as the South Paci c and Russia. In
C hina’s north-east region, the C om pany has constructed a supply structure
YOSHIMI OTA
President & CEO for China
48
of Russia-based m aterials. Boasting high quality and cost
com petitiveness, construction m aterials are expected to provide the
platform for future grow th and increased earnings.
BUSI NESS STRATEGY
Earnings stability in the C om pany’s C hina business is grounded in
traditional im port and export transactions. In addition to this, the
C om pany w ill strive to secure increased earnings by focusing
particularly in synthetic resins, chem icals, electronic
com m unications, and bearings. A t the sam e tim e, w e w ill continu-
ously m ake new investm ent in these elds, in order to reinforce
our sales netw ork targeting the dom estic m arket. In the plant busi-
ness, w e w ill prom ote collaboration w ith C hinese m anufacturers
and pursue opportunities for the export of petrochem ical and steel
plants to third countries. In addition to existing com plete knock
dow n (C KD ) com ponents, the C om pany w ill com m ence new activi-
ties in the autom obile business. N ew activities include the export of
vehicles assem bled in C hina and C hinese-produced autom otive
com ponents to third countries, as w ell as efforts to expand dom es-
tic sales of m aterials. W ith an eye to the future, w e w ill develop
opportunities for coal and new energy developm ent from a
m edium - to long-term perspective. Furtherm ore, the C om pany w ill
leverage its distribution capabilities in the dom estic m arket and
build an im proved retail and w holesale structure for the sale and
distribution of food. Through products such as tuna, prem ix our
and other foodstuffs, w e are w orking to establish higher earning
pow er. In forest products and building m aterials, Sojitz is active in
the processing of Russian-based m aterials in C hina. W e w ill contin-
ue these efforts and reinforce sales and exports to Japan.
Processing tuna (top) and a plate of tuna
“HONMAMON” TUNA IN CHINA
In the last 15 years sashim i has appeared
in certain sections of the C hinese diet.
U nderpinned by its focus on safety, relia-
bility and health and buoyed by its
com petitive advantage in refrigerated dis-
tribution, D alian G lobal Food C orporation
is active in the w ide-ranging distribution
of the additive-free and natural
H onm am on tuna.
Logs transported to the processing plant
MANZHOULI FOREST PRODUCTS
AND BUILDING MATERIALS
PROCESSING PLANT
A forest products and building m aterials
processing plant w hich has very strong
collaboration ties w ith Sojitz G roup lies in
the grasslands of M ongolia. In m id
w inter, tem peratures reach m inus 50
degrees C elsius, w hich parallels
conditions in Russia. Leveraging the
bountiful supply of forest products and
raw m aterials in Russia w ith the process-
ing techniques and cost advantages in
C hina, Sojitz is supporting activities to
produce value added products for sale
both in the dom estic C hinese m arket and
for export to Japan.
BUSI NESS DEVELOPMENT AND TOPI CS
49
O V E R S E A S O P E R A T I O N S
ASIA
DI STI NGUI SHI NG FEATURES AND STRENGTHS
A sia is in the m idst of robust econom ic grow th. From Southeast through
Southw est A sia, the region is enjoying considerable global attention.
Forecast to reach tw o billion in 2010, the population of A sia offers
unlim ited potential as an econom ic and consum er m arket.
D riven prim arily by dem and for tw o- and four-w heel m otor vehicles,
as w ell as electronic hom e appliances and devices, the m anufacturing
industry is providing the engine for rem arkable econom ic and industrial
grow th in Southeast A sia. In particular, India, w ith its signi cant popula-
tion and high education level is seen as the next grow th driver w ithin the
region.
C ontinued increase in the m iddle incom e stratum and im proved liv-
ing standards and changes in lifestyles is a form ula for substantial
potential and grow ing dem and.
Efforts w ithin the region tow ard free trade agreem ents are a rallying
call and are providing the im petus for further econom ic vitality. C aught
in the m iddle of this w ave of change, Sojitz is endeavoring to expand its
business content in line w ith A sia’s continuous econom ic grow th. W e w ill
aggressively pursue opportunities in the pursuit of our goals.
FI SCAL 2004 RESULTS
In scal 2004, Sojitz experienced de nitive grow th in regional gross trading
pro t in line w ith robust econom ic expansion and dynam ic product
m arkets.
In particular, the C om pany experienced a substantial jum p in the vol-
um e of synthetic resin m aterials handled, buoyed by signi cant grow th in
dem and from autom obile m anufacturers in Thailand and explosive grow th
in tw o-w heel vehicles in Indonesia, a country previously on the brink of
econom ic disaster.
The overall im provem ent in pro ts w as also the result of contributions
from PTA for synthetic ber, and a notable increase in the volum e of
chem ical products handled for use in adhesives and paints. Sojitz also ben-
e ted from increased business in w heat, oils for foods and feedstuff.
In addition to m ainstay transactions in M alaysia, the C om pany
expanded sales channels in Thailand to support the full- edged
com m encem ent of non-ferrous raw m aterials trading.
In the m achinery eld, Sojitz continued to receive large-scale orders
for infrastructure facilities for electric transform ation pow er facilities and
cem ent plants in Vietnam . In other A sian regions, the C om pany began full-
? edged handling of energy-related equipm ent and com m unication
facilities.
A fter accounting for these factors, recurring pro t surged 66% year
on year.
HIROSHI KANEMATSU
President & CEO for Asia
50
BUSI NESS STRATEGY
The A sian region is characterized for its excessive requirem ents and
dem ands for m aterials and com ponents. Q uick to grasp these
needs and opportunities, Sojitz continues to leverage the strengths
of the Sojitz G roup as a com prehensive supplier of a full range of
products and services. O n the back of continued grow th through-
out A sia, w e are expanding business by prom oting trade w ith
Japan as w ell as international and third country trade. The
C om pany is focusing on plastic m aterials, non-ferrous m etals and
other products, targeting the four- and tw o-w heel vehicle
industries, electronic hom e appliances, O A equipm ent and a
variety of related areas. In the future, Sojitz w ill w ork to address
the needs of the region as a w hole, adapting to changes in each of
its business segm ents. The C om pany w ill pursue opportunities in
the basic industries through the supply of chem icals, the lifestyle
industries through the trade of foods and textiles, and
infrastructure industries through the supply of com m unication
equipm ent and electric pow er generation facilities.
W e w ill bolster the business and functions of our regional
headquarters for A sia, located in Singapore, and transfer local sub-
sidiaries throughout A sia to regional headquarter control. A t the
sam e tim e, w e established a local com pany in India, w hich is expe-
riencing rem arkable grow th, and both adopted and im plem ented a
policy designed to unify operations throughout the region.
Aerial view of the Coral Bay Nickel
Corporation, Nickel Processing Plant
COMPOSITE TRADING OF CORAL
BAY NICKEL IN THE PHILIPPINES
C oral Bay N ickel, a com pany in w hich
Sojitz m aintains an 18% interest,
com m enced com m ercial production of
nickel cobalt com pound, an interm ediate
product used in nickel re ning, in A pril
2005. O perations are proceeding
sm oothly, w ith the plant w ell on track to
produce approxim ately 10,000 tons of
nickel and approxim ately 700 tons of
cobalt annually by the end of the current
year. The C om pany is accordingly
prom oting com posite trading, utilizing
the collective strengths of the Sojitz
G roup, through the m anufacture and
export of products as w ell as the supply
of secondary raw m aterials such as coal,
sulfuric acid, calcium hydroxide and
m ethanol.
Colored plastic resins and molded plastic
parts
DEVELOPMENT OF THE SYNTHETIC
RESIN BUSINESS
Sojitz boasts a leading position in the
m arket for synthetic resin. The
developm ent of the C om pany’s business
in A sia rests on the collective strengths of
the G roup. In order to address increasing
dem and for resin m aterials from the vehi-
cle carriage, electronic hom e appliances
and O A equipm ent industries, the
C om pany is leveraging its abundant sup-
ply source, com petitive resin com pound
facilities, and its extensive netw ork of
processors and distributors. Based on
these initiatives, Sojitz is creating a
uniform system and structure to service
equally the needs of all custom ers.
BUSI NESS DEVELOPMENT AND TOPI CS
51
52
O V E R S E A S O P E R A T I O N S —R E G I O N S U N D E R T H E D I R E C T C O N T R O L O F H E A D Q U A R T E R S
OCEANIA
THE MIDDLE EAST
In the Middle East, Sojitz maintains a network spanning 15 countries and 10 locations. The
executive responsible for overseeing the region is based in Dubai, the hub of the United
Arab Emirates.
The Company participates in a number of businesses speci?c to the region. Sojitz is
active in energy development and has formed collaborative arrangements such as those
with Ras Laffan LNG through LNG Japan and Al Karkara oil ?eld with Cosmo Oil in Qatar.
We maintain an export network for the distribution and sale of motor vehicles throughout
the region as well as the automobile CKD business in Iran. Sojitz also deals in the export of
white shrimps from Saudi Arabia through NPC, one of the world's leading companies, for
exclusive exports to Japan and China. In Oman, we succeeded in securing the contract for a
large-scale fertilizer project and we are active in petrochemical, electric power generation
and other plant business in the region. Through ALBA, we participate in the aluminum
business in Bahrain and undertake reciprocal transactions such as the purchase of interme-
diate aluminum products and provision of facilities and equipment for aluminum re?ning.
As part of the Company’s future growth strategy, Sojitz will promote businesses relat-
ed to energy plants throughout the Middle East, particularly in natural gas development
and through the effective use of competitive gas in petrochemicals, electric power genera-
tion, and aluminum plant businesses. In the area of upstream concession rights, the
Company is actively pursuing the development of natural gas and petroleum in the Middle
East and in North Africa. Furthermore, we are constantly examining new business models
and opportunities in the robust ?eld of automobile-related operations.
HIDEO YAMASHITA
General Manager for Oceania
FUMIMASA MURAKOSHI
General Manager for the Middle East
In the Oceania region, Sojitz leverages its geographical advantage and actively engages in
ef?cient resource investment in areas such as Energy & Mineral Resources, Forest Products
and Foodstuffs.
In the ?eld of Energy & Mineral Resources, and our existing investment in resources
such as coal (Jellinbah East, Coppabella, and others) and non-ferrous metals (Worsley
Alumina JV), we are focusing on product expansion, and at the same time, several new
investments earmarked for exploration and development.
We are also engaged in the Afforestation and Woodchip Business in the state of
Victoria (GPFL, EPFL), and have an investment in Hakubaku Australia Pty Ltd., which manu-
factures and retails dried noodles made from organically grown wheat.
In addition, we are in the process of establishing a multi-faceted business with leading
Australian companies. For instance with the Futuris Group we are participating in the
woodchip business with ITC and, in foodstuffs, participating in joint-venture businesses
with Elders Ltd.
In relation to the importation business to Australia, we are endeavoring to widen sales
channels in niche markets in the ?elds of metals, machinery, plastics and chemicals.
53
KOREA
YUTAKA TAKEMURA
General Manager for Russia and the CIS Region
MASAHIRO NAKAHIRA
President, Sojitz Korea Corporation
RUSSIA AND THE CIS REGION
Russia and the C IS region, w hich separates Europe from A sia is experiencing annual grow th
rates in excess of 7% . A bundant opportunities exist across a broad cross section of elds
including resources, plant and m achinery for w hich the C om pany m aintains a
representative of ce in Russia and a local subsidiary in the C IS region for chem icals, plastics,
and consum er goods. In addition to this tw o-structure, tw o-region netw ork, the C om pany
m aintains a headquarters controlled m arketing and operating of ce. In the scal year
ended M arch 31, 2005, this structure generated $500 m illion in contracts.
In the energy eld, w hich continues to drive grow th in the Russian econom y, Sojitz is
w orking to retain its top position as the w orld’s leading exporter of coal to Japan. W e are
also a leading exporter of tim ber and am ong Japan’s m ajor suppliers of gas com pressor sta-
tions to G azprom , the w orld’s largest natural gas production com pany. In consum er goods,
Sojitz is enjoying strong im port sales through its joint venture w ith Subaru and expects to
expand C KD business in concert w ith Isuzu in the U kraine. Rebuilding business in tradition-
ally strong elds such as the m etallurgical, pow er and com m unication industries, the
C om pany w ill also pursue grow th through its local subsidiary activities in the health and
beauty, foods and related m arkets.
Running parallel w ith its trading transactions, Sojitz is investing in resource-related
businesses. W e are pursuing opportunities through joint ventures w ith Russia-based
com panies in the m achinery and equipm ent, m aterials for m anufacturing and in consum er
goods. Sojitz w ill focus on establishing new business m odels that m atch the needs of the
region in an effort to create a sustainable source of incom e.
Since the establishm ent of a branch in Seoul in 1979, and the incorporation of a local sub-
sidiary in 1995, Sojitz has cultivated and developed close relationships w ith som e of Korea's
leading com panies for a period exceeding 25 years. In addition to the im port and export of
products betw een Korea and Japan, the C om pany has established trade to third countries
and regions including South East A sia, India and the M iddle East, in partnership w ith
Korean com panies.
Sojitz is engaged in the supply of steel m achinery m anufactured in Japan to iron w orks
located in Korea. The C om pany has also entered the m arket for m obile com m unication
devices in w hich Korea leads the w orld in technology and ideas. In the elds of transporta-
tion, Sojitz supports Korean m anufacturers in the area of autom obiles to C entral and South
A m erica. The C om pany w as also quick to recognize the potential of Korea's light rail
business and has suggested various business plans. W hile Sojitz continues in its activities in
the general-purpose chem ical and lifestyle-related product elds, the C om pany is also culti-
vating new custom ers in IT-related and electronic m aterials. Sojitz is a valued partner to
m any Korean com panies in the trade of iron and steel, nonferrous m etals and energy-related
products. In each of these elds, w e boast a w ide product handling base. To advance activi-
ties in steel m achinery and related products, w e m aintain project of ces in Pohang and
Kw angyang.
To further grow th in Korea, Sojitz w ill pursue tie ups w ith Korea-based plant
com panies and w ork to build com m ercial relationships in the elds of iron and steel, large-
scale electric pow er generation and light rail projects. In com ponents for the IT sector,
Sojitz w ill continue to expand business at each opportunity. In steel-related businesses, in
addition to expanding transaction volum es in traditional steel products, Sojitz w ill nurture a
new consum er segm ent in specialty steels for autom obile com ponents.
54
OVERSEAS OPERATI ONS—REGI ONS UNDER THE DI RECT CONTROL OF HEADQUARTERS
TAIWAN
KOJI MATSUMOTO
President and CEO, Sojitz Taiwan Corporation
G enerally, the Taiw an econom y has been characterized by its high dependence on exports.
This trend has becom e increasingly evident in recent years. Export of electronics and
inform ation-related products has provided the engine for econom ic grow th and this
rem ains the de ning feature of the m arket. In addition, Taiw an is experiencing strong
dem and for facilities, com ponents, and m aterials, as w ell as interm ediate and nished
goods. The Sojitz G roup is active in a variety of elds in Taiw an and pursues business
through each of its operating divisions. M ainly in collaboration w ith G roup com panies,
though independently as w ell, w e are active in the im port and export—not only w ith Japan
but also w ith third countries—of chem icals, synthetic resin, m achinery, nonferrous m etals
and other item s. The foundation for our grow th in Taiw an rests in the electronics and IT
elds. Sojitz w ill continue to expand activities in these areas through each departm ent and
operating division. W e w ill reinforce the autonom y, nancial health, and credibility of our
operations in Taiw an and at the sam e tim e prom ote Taiw anese exports as the backbone of
our operations. Sojitz is com m itted to pursing new opportunities in Taiw an and is actively
investing in new proposals.
doc_235496136.pdf
world’s four major regions comprising the Americas,
Europe/Africa, China and Asia. In addition, the Company oper-
ates in regions under the direct control of headquarters
including Oceania, the Middle East, Russia and the CIS Region.
The Company’s overseas business strategy plays a critical
role in its overall operating vision and the development of
activities on a global scale. In the future, this role will assume
increasing importance and impact on every facet of the
Company’s business activities. Accordingly, Sojitz will pursue its
CHINA
RUSSIA AND THE CIS REGION
ASIA
OCEANIA
KOREA
TAIWAN
EUROPE &
AFRICA
THE
MIDDLE
EAST
CHINA
42
O V E R S E A S O P E R A T I O N S
OVERSEAS BUSINESS
STRATEGY
YUTAKA KASE
Executive Vice President, Overseas Operations
NORTH, CENTRAL AND
SOUTH AMERICA
Group Company
Regions under the Direct
Control of Headquarters
Major Regions
Branch
Office
43
overseas business strategy from the perspective of developing
global business as the core of its overall activities as follow s:
•responding to the grow ing trend tow ard m arket
globalization,
•cultivating new businesses from a global perspective,
•enhancing global capabilities and functions, and
•pursuing opportunities on a global scale.
In scal 2004, the scal year ended M arch 31, 2005, and the
rst year of the C om pany’s N ew Business Plan, Sojitz
im plem ented SC VA , its risk/return m anagem ent indicator
across each of its overseas activities. Through a careful process
of selection and focus, Sojitz w orked to create the optim um
business portfolio. H aving com pleted this process w ith
signi cant results, the C om pany has shifted to a proactive
stance and is aggressively pursuing existing and new business
opportunities. W e are com m itted to proactively developing
business throughout global econom ies and overseas m arkets.
44
O V E R S E A S O P E R A T I O N S
NORTH, CENTRAL AND
SOUTH AMERICA
SCOPE OF BUSI NESS AND REGI ONAL FOCUS
Sojitz is a function-oriented trading com pany com m itted to m axim izing
incom e by creating new value and bringing w orld m arkets together. To
that end, w e are w orking to leverage the unique features of diverse
regions and form ulate product and m arket strategies that re ect regional
characteristics. O ur m ajor focus is trade am ong countries in the N orth
A m erica Free Trade A greem ent (N A FTA ), the w orld's largest econom ic
zone. O ther im portant regions for our business is the free-trade bloc of
M ercosur and the M esoam erican-A ndean nations, w hich are expected to
prosper w ith further regional integration through free-trade agreem ents.
Sojitz anticipates increased opportunities in the A m ericas in line w ith
expanding com m ercial zones.
Speci cally, Sojitz focuses in four m ajor business areas. The rst is
trade in N orth A m erica, the largest consum er-driven m arket. In that
region, w e are expanding business in autom obiles, electronics, and
consum er products. The second focus is on abundant natural resources in
the A m ericas. W e are developing new trade in m ineral resources, lum ber
and building m aterials, and agriculture. Energy-related investm ent is also
signi cant. The third area is new business investm ent in hi-tech. W e are
investing in and initiating new business in hi-tech aspects of the
inform ation technology eld, essential to the com m ercial aviation, defense
and aerospace and telecom m unications industries. The fourth is that w e
establish a strong business presence in areas in w hich w e have expertise,
such as in our m ajor rail car projects in N orth A m erica. The projects draw
on our strength in this eld and take full advantage of the C om pany’s
functional capabilities.
Building on these industries, Sojitz is expanding sales channels
through parallel trade efforts in the A m ericas in concert w ith trade in
Japan, and expanding trade in m arkets such as foodstuffs, iron and steel
and lum ber in em erging m arkets such as C hina and the A sia region. A s a
result, the C om pany is evolving tow ard a quality earnings m odel.
FI SCAL 2004 RESULTS
In this scal year, Sojitz posted strong earnings in operations in the
A m ericas. Because of our stable, ongoing relationship w ith w ell-know n
international corporations such as Boeing, Bom bardier, N ike, A ltria and Rio
D oce, w e w ere able to establish consistent earnings over tim e. In addition,
w e fostered increased incom e by developing other m arkets in deals related
to printing, satellite com m unications, of ce m achines and hom e electronics.
These steps had a positive effect on our overall earnings.
W e are fortunate at Sojitz to have a talented and skilled hum an
resource pool. W e bring to the table a w ealth of business inform ation. Their
know ledge is com bined in our w orldw ide netw ork of branches and in-depth
regional focus. W ith a proactive, energetic approach, Sojitz is particularly
suited to putting individual know -how to w ork on global solutions.
JUN MATSUMOTO
President & CEO for the Americas
45
Sojitz supplies control systems for
application in diesel-electric engines
ELECTRICAL EQUIPMENT FOR AC
LOCOMOTIVES
Sojitz C orporation of A m erica w as
aw arded a long-term , exclusive contract
to supply air-conditioning equipm ent
(H VA C ) and inverter equipm ent for the
new A C electric diesel locom otives of
Electro-M otive D iesel, Inc., a w orld leader
in the locom otives m arket. Since 2001,
Sojitz, M itsubishi Electric and EM D have
jointly developed H VA C and inverter
equipm ent. W e anticipate sales to exceed
10 billion yen over the next ve years.
Engine-Dressing for GM/Bowling Green
AUTRANS CORPORATION
(80% Sojitz Corporation of America, 20% Sojitz Corporation)
Business is strong at A utrans C orporation. M ajor activities
are perform ing logistics services for autom otive m anufac-
turers and both Tier-1 and Tier-2 suppliers, providing
sub-assem bly and serving as a just-in-tim e coordinator.
The com pany has targeted high value-adding services
from increased distribution of products related to the
N issan plant in Sm yrna, Tennessee. The A utrans branch in
Ingersoll, O ntario facilitated higher value-adding services
by providing engine-transm ission sub-assem bly services to
C A M I A utom otive (a joint venture betw een Suzuki M otor
C orporation and G eneral M otors of C anada) for the
C hevrolet Equinox and other m odels.
A prim e exam ple of how w e capitalized on our netw orking abil-
ities can be found in the M ineral Resources group. This division took
full advantage of our prow ess in linking buyers and sellers as it
m atched suppliers of iron and steel to consum er m arkets around the
w orld.
A nother addition to our pro t base cam e from A utrans
C orporation, the C om pany’s subsidiary in the autom otive industry.
A utrans im plem ented new value-adding sub-assem bly services in
C anada w ith restructuring and sales channel developm ent
strategies. It signi cantly added to the C om pany’s nancial w ell-
being.
In scal year 2004, Sojitz also greatly reduced its operating
expenses through recent m ergers. U nderpinned by efforts to create
a robust asset portfolio and sound nancial position, the C om pany
has becom e m ore aggressive in pursuit of business opportunities.
BUSI NESS STRATEGY
W e envision scal year 2005 as the year in w hich Sojitz w ill
com plete its evolution to a quality earnings structure in the A m ericas
region. W e generate steady earnings from continuous business in
textiles, chem icals and plastics, construction m aterials, foodstuffs
and various im ports to the U .S. dom estic m arket. To accelerate earn-
ings, w e utilize the unique features of m arkets in the A m ericas. W e
w ill expand and diversify businesses in consum er goods, natural
resources, energy-related investm ent, and new technologies in
industries such as aerospace. Based on these initiatives, the
C om pany w ill focus on increasing earnings through grow th.
In addition, w e w ill reinforce our rail and transit business
relationship w ith RO TEM , a m ajor rail car m anufacturer located in
South Korea. W e expect substantial grow th in the com m ercial
aircraft business. G iven the advances of the past year—our
w orldw ide netw ork, know -how , nance arrangem ent and
innovative business practices—w e are m ore ready than ever to take
advantage of business opportunities.
The C om pany is increasingly adopting a proprietary
m anagem ent tool, know n as SC VA or Sojitz C orporation Value
A dded, to m easure risk and rew ard. W hile enhancing our risk-m an-
agem ent structure, w e w ill effectively m anage our nancial
resources and increase internal evaluations for each project as w e
shift into a m ore vigorous business m odel.
BUSI NESS DEVELOPMENT AND TOPI CS
46
O V E R S E A S O P E R A T I O N S
EUROPE & AFRICA
DI STI NGUI SHI NG FEATURES AND STRENGTHS
Leveraging its traditional strength in Europe, the Company is active
across two core domains comprising marine equipment and automobile-
related products, and highly functional packaging materials. In marine
equipment and automobile-related products, Sojitz has acquired trading
rights and licenses from leading suppliers both in and outside Europe,
and is delivering machinery, equipment and components to customers
across the region. Recently, the Company is experiencing rising sales of
equipment for LNG facilities, LNG vessel turbines and specialty materials,
and large-scale vessel engines. In the automobile industry, Sojitz boasts a
solid track record in the supply of engine components, optical ?ber
harnesses, and components for two-wheel vehicles. In the ?eld of
packaging materials, the Company deals mainly in BOPA ?lm, a product
in which Sojitz has undertaken direct investment, and EVOH resin. We
are engaged not only in the sale of these products, but are also engaged
in their development. Sojitz further strives to cultivate new markets utiliz-
ing its comprehensive business resources. Through these endeavors,
Sojitz enjoys a high share of intra-regional and offshore trade. The
Company consistently takes the initiative to proactively pursue business
opportunities. The Group promotes collaboration among headquarter
operating divisions and pursues synergy bene?ts with the aim of expand-
ing business activities. Our European management puts more emphasis
on generating synergy bene?ts through effective cooperation among
operating divisions within the region for further maximization of our
business.
In Africa, Sojitz operates across four key locations. The Company is
active in the trade of energy resources and the development of energy-
related projects. As a whole, the African region will require additional
care and time to achieve complete political and social stability.
FI SCAL 2004 RESULTS
On a consolidated basis, operations in Europe in ?scal 2004 reported net
sales of ¥157.0 billion, gross trading pro?t of ¥4.9 billion, and operating
income of ¥0.6 billion. In net sales and gross trading pro?t, the Company
recorded a drop in revenues and earnings. This was the result of the with-
drawal from iron and steel businesses. Buoyed by effective reductions in its
selling, general and administrative expenses, Sojitz saw a year-on-year
increase at the operating income level.
By business segment, results in the communications infrastructure and
industrial machinery businesses were impacted by differences in year-end
balance dates. Construction machinery and large-scale carriage
transactions were down due to a slump in demand. Despite these dif?cult
conditions, the Company’s Plastics and Chemicals division bene?ted in
Europe through strong performances in sales and operating income across
all business rights including those related to synthetic resins and specialty
chemicals, and an increase in sales of food additives. In energy projects
including electric power generation, Sojitz experienced a drop in revenues
and earnings re?ecting a reduction in electric power generation and ener-
YASUSHI HOSHIKA
President & CEO for Europe & Africa
47
gy projects. Through efforts to reduce and stream line selling, gener-
al and adm inistrative expenses, the C om pany w as successful in
attem pts to m inim ize the decline in operating incom e. In the
Foodstuffs division, the results w ere below expectation as Sojitz
incurred slow operating conditions w ith little progress in the
developm ent of com m ercial rights.
In A frica, at the recurring pro t level, results exceeded initial
estim ates. This w as the result of contributions from the C om pany’s
Johannesburg of ce.
BUSI NESS STRATEGY
In Europe, the C om pany w ill focus on tw o m ain pillars com prising
the Industrial Projects division and Plastics & C hem icals division.
Sojitz w ill review operations in Europe in line w ith this initiative and
w ork to consolidate its business structure w ithin the region in an
effort to m axim ize ef ciency and secure optim al synergy effects.
W ithin the region, w e w ill reinforce local trade and prom ote
greater initiative through our local operations. Efforts w ill also be
supported by im proved collaboration w ith headquarters operating
divisions and w ith regional enterprises of other Japanese
com panies. A s a regional strategy, Sojitz w ill look beyond the 25-
m em ber European U nion and target form er eastern European
countries, Russia, the C IS region and Turkey as a source of future
grow th. The C om pany is com m itted to the proactive allocation of
hum an resources and funds in all of these areas to support this
regional strategy. W e w ill prom ote a strategy in our business oper-
ations that places greater em phasis on nurturing and increasing
the role of local staff and at the sam e tim e pursue a regional strat-
egy in the developm ent of new businesses in Europe, w here Sojitz
w ill w ork to im prove business ef ciency and enhance risk m anage-
m ent.
In A frica, the C om pany w ill be guided by headquarters
operating divisions in the pursuit of its business activities through-
out the region.
Above, a sample of food packaging made
from highly functional packaging materials
handled by Sojitz
Below, a BOPA ?lm plant of Biaxis OY Ltd., a
Sojitz af?liated company
DEVELOPMENTS IN THE HIGHLY
FUNCTIONAL PACKAGING
BUSINESS
Through Biaxis, a com pany in w hich Sojitz
m aintains a 49% interest, and Europe’s
second largest m anufacturer of BO PA
lm , the C om pany is active in the business
of product developm ent, m arketing and
sales. Through these com prehensive m ea-
sures, Sojitz is in a position to add m arket
value and continues to expand trade of
EVO H resin and other highly functional
packaging m aterials.
Tank yard located at Gebze port, near
Istanbul, Turkey
SOLVENT TANK OPERATIONS IN
TURKEY
Boasting a track record of 14 years, Sojitz
currently operates 41 solvent storage
tanks in Turkey. The C om pany is sourcing
solvent m aterials for use in paints and ink
from petrochem ical producers in Europe,
the M iddle East and South A m erica, and
pursuing sales in Turkey. Sojitz now
m aintains a 40% share of this m arket.
Marine diesel engine
SALES OF MARINE EQUIPMENT
Buoyed by robust conditions in the ship-
ping industry, Sojitz enjoys continued
sales grow th of m arine equipm ent.
Results are driven by increased sales of
large-scale engines for ships, the im port
and export w ith Japan of a variety of
equipm ent and devices for LN G vessels,
and im proved offshore trade.
BUSI NESS DEVELOPMENT AND TOPI CS
O V E R S E A S O P E R A T I O N S
CHINA
DI STI NGUI SHI NG FEATURES AND STRENGTHS
N ichim en and N issho Iw ai, the tw o com panies that m erged to form Sojitz
C orporation, have a long history of trade w ith C hina. Both com panies
w ere trailblazers in both establishing and developing business in the
region and built a strong reputation grounded in long-standing goodw ill.
Based on this tradition and a history of achievem ent, Sojitz continues to
leverage its strengths and pursue opportunities across a variety of elds.
O ne such exam ple is its trade in natural resources, including both im port
from and export to C hina. W e boasted a top share in coal exports from
C hina to Japan. Follow ing C hina's dram atic econom ic grow th, strong
dem and for energy resources, and a recent lack of dom estic supplies,
Sojitz is now active in the stable supply of coal to C hina from Vietnam ,
Indonesia and other countries. The supply to C hina of H ot Briquette Iron
(H BI) and iron-ore are additional exam ples of our role in third-country
trade. C reating opportunities in collaboration w ith C hinese partners is
another gatew ay for business grow th. Boasting specialized technology
and a highly com petitive price structure, Sojitz has com m enced efforts to
support C hina-based com panies in petrochem ical and steel plant propos-
als to third countries. Based on a deep m utual understanding fostered
through close com m unication over m any years, Sojitz enjoys collaborative
relationships w ith a large num ber of C hinese com panies. W e are also
allocating business investm ent tow ard establishing and developing a local
m arketing netw ork. Sojitz is developing a proprietary sales netw ork and
expanding activities in the sale of plastic m aterials to electronic hom e
appliance m anufacturers and to autom obile m anufacturers, as w ell as in
the southern and eastern regions of C hina, the sale of chem icals, tuna,
and prem ixed our.
FI SCAL 2004 RESULTS
In scal 2004, results signi cantly exceeded initial forecast targets. The
C om pany enjoyed robust results particularly in synthetic resins, electronic
com m unications and forest products and building m aterials. In the scal
year under review , the Sojitz G roup experienced large-scale grow th in
synthetic resin transactions ow ing m ainly to the acquisition of other
com pany business rights. This in turn led to an increase in pro t. Results
w ere also buoyed by efforts to reinforce the C om pany’s sales netw orks in
the southern and eastern regions of C hina and concrete expansion in new
m arketing channels. G row th in the C om pany’s electronic com m unications
transactions is a m easure of its com posite trading structure. The Sojitz
G roup m aintains a com prehensive system for trade in discrete
com ponents. This system extends from the supply of raw m aterials
through consignm ent m anufacturing and delivery m anagem ent. Export of
C hinese com m unications devices to third countries also contributed to the
G roup’s earnings results. In forest products and building m aterials, dram atic
grow th in housing starts in C hina served to drive an increase in activity. In
the scal year under review , the Sojitz G roup expanded its supply of
m aterials from traditional sources such as the South Paci c and Russia. In
C hina’s north-east region, the C om pany has constructed a supply structure
YOSHIMI OTA
President & CEO for China
48
of Russia-based m aterials. Boasting high quality and cost
com petitiveness, construction m aterials are expected to provide the
platform for future grow th and increased earnings.
BUSI NESS STRATEGY
Earnings stability in the C om pany’s C hina business is grounded in
traditional im port and export transactions. In addition to this, the
C om pany w ill strive to secure increased earnings by focusing
particularly in synthetic resins, chem icals, electronic
com m unications, and bearings. A t the sam e tim e, w e w ill continu-
ously m ake new investm ent in these elds, in order to reinforce
our sales netw ork targeting the dom estic m arket. In the plant busi-
ness, w e w ill prom ote collaboration w ith C hinese m anufacturers
and pursue opportunities for the export of petrochem ical and steel
plants to third countries. In addition to existing com plete knock
dow n (C KD ) com ponents, the C om pany w ill com m ence new activi-
ties in the autom obile business. N ew activities include the export of
vehicles assem bled in C hina and C hinese-produced autom otive
com ponents to third countries, as w ell as efforts to expand dom es-
tic sales of m aterials. W ith an eye to the future, w e w ill develop
opportunities for coal and new energy developm ent from a
m edium - to long-term perspective. Furtherm ore, the C om pany w ill
leverage its distribution capabilities in the dom estic m arket and
build an im proved retail and w holesale structure for the sale and
distribution of food. Through products such as tuna, prem ix our
and other foodstuffs, w e are w orking to establish higher earning
pow er. In forest products and building m aterials, Sojitz is active in
the processing of Russian-based m aterials in C hina. W e w ill contin-
ue these efforts and reinforce sales and exports to Japan.
Processing tuna (top) and a plate of tuna
“HONMAMON” TUNA IN CHINA
In the last 15 years sashim i has appeared
in certain sections of the C hinese diet.
U nderpinned by its focus on safety, relia-
bility and health and buoyed by its
com petitive advantage in refrigerated dis-
tribution, D alian G lobal Food C orporation
is active in the w ide-ranging distribution
of the additive-free and natural
H onm am on tuna.
Logs transported to the processing plant
MANZHOULI FOREST PRODUCTS
AND BUILDING MATERIALS
PROCESSING PLANT
A forest products and building m aterials
processing plant w hich has very strong
collaboration ties w ith Sojitz G roup lies in
the grasslands of M ongolia. In m id
w inter, tem peratures reach m inus 50
degrees C elsius, w hich parallels
conditions in Russia. Leveraging the
bountiful supply of forest products and
raw m aterials in Russia w ith the process-
ing techniques and cost advantages in
C hina, Sojitz is supporting activities to
produce value added products for sale
both in the dom estic C hinese m arket and
for export to Japan.
BUSI NESS DEVELOPMENT AND TOPI CS
49
O V E R S E A S O P E R A T I O N S
ASIA
DI STI NGUI SHI NG FEATURES AND STRENGTHS
A sia is in the m idst of robust econom ic grow th. From Southeast through
Southw est A sia, the region is enjoying considerable global attention.
Forecast to reach tw o billion in 2010, the population of A sia offers
unlim ited potential as an econom ic and consum er m arket.
D riven prim arily by dem and for tw o- and four-w heel m otor vehicles,
as w ell as electronic hom e appliances and devices, the m anufacturing
industry is providing the engine for rem arkable econom ic and industrial
grow th in Southeast A sia. In particular, India, w ith its signi cant popula-
tion and high education level is seen as the next grow th driver w ithin the
region.
C ontinued increase in the m iddle incom e stratum and im proved liv-
ing standards and changes in lifestyles is a form ula for substantial
potential and grow ing dem and.
Efforts w ithin the region tow ard free trade agreem ents are a rallying
call and are providing the im petus for further econom ic vitality. C aught
in the m iddle of this w ave of change, Sojitz is endeavoring to expand its
business content in line w ith A sia’s continuous econom ic grow th. W e w ill
aggressively pursue opportunities in the pursuit of our goals.
FI SCAL 2004 RESULTS
In scal 2004, Sojitz experienced de nitive grow th in regional gross trading
pro t in line w ith robust econom ic expansion and dynam ic product
m arkets.
In particular, the C om pany experienced a substantial jum p in the vol-
um e of synthetic resin m aterials handled, buoyed by signi cant grow th in
dem and from autom obile m anufacturers in Thailand and explosive grow th
in tw o-w heel vehicles in Indonesia, a country previously on the brink of
econom ic disaster.
The overall im provem ent in pro ts w as also the result of contributions
from PTA for synthetic ber, and a notable increase in the volum e of
chem ical products handled for use in adhesives and paints. Sojitz also ben-
e ted from increased business in w heat, oils for foods and feedstuff.
In addition to m ainstay transactions in M alaysia, the C om pany
expanded sales channels in Thailand to support the full- edged
com m encem ent of non-ferrous raw m aterials trading.
In the m achinery eld, Sojitz continued to receive large-scale orders
for infrastructure facilities for electric transform ation pow er facilities and
cem ent plants in Vietnam . In other A sian regions, the C om pany began full-
? edged handling of energy-related equipm ent and com m unication
facilities.
A fter accounting for these factors, recurring pro t surged 66% year
on year.
HIROSHI KANEMATSU
President & CEO for Asia
50
BUSI NESS STRATEGY
The A sian region is characterized for its excessive requirem ents and
dem ands for m aterials and com ponents. Q uick to grasp these
needs and opportunities, Sojitz continues to leverage the strengths
of the Sojitz G roup as a com prehensive supplier of a full range of
products and services. O n the back of continued grow th through-
out A sia, w e are expanding business by prom oting trade w ith
Japan as w ell as international and third country trade. The
C om pany is focusing on plastic m aterials, non-ferrous m etals and
other products, targeting the four- and tw o-w heel vehicle
industries, electronic hom e appliances, O A equipm ent and a
variety of related areas. In the future, Sojitz w ill w ork to address
the needs of the region as a w hole, adapting to changes in each of
its business segm ents. The C om pany w ill pursue opportunities in
the basic industries through the supply of chem icals, the lifestyle
industries through the trade of foods and textiles, and
infrastructure industries through the supply of com m unication
equipm ent and electric pow er generation facilities.
W e w ill bolster the business and functions of our regional
headquarters for A sia, located in Singapore, and transfer local sub-
sidiaries throughout A sia to regional headquarter control. A t the
sam e tim e, w e established a local com pany in India, w hich is expe-
riencing rem arkable grow th, and both adopted and im plem ented a
policy designed to unify operations throughout the region.
Aerial view of the Coral Bay Nickel
Corporation, Nickel Processing Plant
COMPOSITE TRADING OF CORAL
BAY NICKEL IN THE PHILIPPINES
C oral Bay N ickel, a com pany in w hich
Sojitz m aintains an 18% interest,
com m enced com m ercial production of
nickel cobalt com pound, an interm ediate
product used in nickel re ning, in A pril
2005. O perations are proceeding
sm oothly, w ith the plant w ell on track to
produce approxim ately 10,000 tons of
nickel and approxim ately 700 tons of
cobalt annually by the end of the current
year. The C om pany is accordingly
prom oting com posite trading, utilizing
the collective strengths of the Sojitz
G roup, through the m anufacture and
export of products as w ell as the supply
of secondary raw m aterials such as coal,
sulfuric acid, calcium hydroxide and
m ethanol.
Colored plastic resins and molded plastic
parts
DEVELOPMENT OF THE SYNTHETIC
RESIN BUSINESS
Sojitz boasts a leading position in the
m arket for synthetic resin. The
developm ent of the C om pany’s business
in A sia rests on the collective strengths of
the G roup. In order to address increasing
dem and for resin m aterials from the vehi-
cle carriage, electronic hom e appliances
and O A equipm ent industries, the
C om pany is leveraging its abundant sup-
ply source, com petitive resin com pound
facilities, and its extensive netw ork of
processors and distributors. Based on
these initiatives, Sojitz is creating a
uniform system and structure to service
equally the needs of all custom ers.
BUSI NESS DEVELOPMENT AND TOPI CS
51
52
O V E R S E A S O P E R A T I O N S —R E G I O N S U N D E R T H E D I R E C T C O N T R O L O F H E A D Q U A R T E R S
OCEANIA
THE MIDDLE EAST
In the Middle East, Sojitz maintains a network spanning 15 countries and 10 locations. The
executive responsible for overseeing the region is based in Dubai, the hub of the United
Arab Emirates.
The Company participates in a number of businesses speci?c to the region. Sojitz is
active in energy development and has formed collaborative arrangements such as those
with Ras Laffan LNG through LNG Japan and Al Karkara oil ?eld with Cosmo Oil in Qatar.
We maintain an export network for the distribution and sale of motor vehicles throughout
the region as well as the automobile CKD business in Iran. Sojitz also deals in the export of
white shrimps from Saudi Arabia through NPC, one of the world's leading companies, for
exclusive exports to Japan and China. In Oman, we succeeded in securing the contract for a
large-scale fertilizer project and we are active in petrochemical, electric power generation
and other plant business in the region. Through ALBA, we participate in the aluminum
business in Bahrain and undertake reciprocal transactions such as the purchase of interme-
diate aluminum products and provision of facilities and equipment for aluminum re?ning.
As part of the Company’s future growth strategy, Sojitz will promote businesses relat-
ed to energy plants throughout the Middle East, particularly in natural gas development
and through the effective use of competitive gas in petrochemicals, electric power genera-
tion, and aluminum plant businesses. In the area of upstream concession rights, the
Company is actively pursuing the development of natural gas and petroleum in the Middle
East and in North Africa. Furthermore, we are constantly examining new business models
and opportunities in the robust ?eld of automobile-related operations.
HIDEO YAMASHITA
General Manager for Oceania
FUMIMASA MURAKOSHI
General Manager for the Middle East
In the Oceania region, Sojitz leverages its geographical advantage and actively engages in
ef?cient resource investment in areas such as Energy & Mineral Resources, Forest Products
and Foodstuffs.
In the ?eld of Energy & Mineral Resources, and our existing investment in resources
such as coal (Jellinbah East, Coppabella, and others) and non-ferrous metals (Worsley
Alumina JV), we are focusing on product expansion, and at the same time, several new
investments earmarked for exploration and development.
We are also engaged in the Afforestation and Woodchip Business in the state of
Victoria (GPFL, EPFL), and have an investment in Hakubaku Australia Pty Ltd., which manu-
factures and retails dried noodles made from organically grown wheat.
In addition, we are in the process of establishing a multi-faceted business with leading
Australian companies. For instance with the Futuris Group we are participating in the
woodchip business with ITC and, in foodstuffs, participating in joint-venture businesses
with Elders Ltd.
In relation to the importation business to Australia, we are endeavoring to widen sales
channels in niche markets in the ?elds of metals, machinery, plastics and chemicals.
53
KOREA
YUTAKA TAKEMURA
General Manager for Russia and the CIS Region
MASAHIRO NAKAHIRA
President, Sojitz Korea Corporation
RUSSIA AND THE CIS REGION
Russia and the C IS region, w hich separates Europe from A sia is experiencing annual grow th
rates in excess of 7% . A bundant opportunities exist across a broad cross section of elds
including resources, plant and m achinery for w hich the C om pany m aintains a
representative of ce in Russia and a local subsidiary in the C IS region for chem icals, plastics,
and consum er goods. In addition to this tw o-structure, tw o-region netw ork, the C om pany
m aintains a headquarters controlled m arketing and operating of ce. In the scal year
ended M arch 31, 2005, this structure generated $500 m illion in contracts.
In the energy eld, w hich continues to drive grow th in the Russian econom y, Sojitz is
w orking to retain its top position as the w orld’s leading exporter of coal to Japan. W e are
also a leading exporter of tim ber and am ong Japan’s m ajor suppliers of gas com pressor sta-
tions to G azprom , the w orld’s largest natural gas production com pany. In consum er goods,
Sojitz is enjoying strong im port sales through its joint venture w ith Subaru and expects to
expand C KD business in concert w ith Isuzu in the U kraine. Rebuilding business in tradition-
ally strong elds such as the m etallurgical, pow er and com m unication industries, the
C om pany w ill also pursue grow th through its local subsidiary activities in the health and
beauty, foods and related m arkets.
Running parallel w ith its trading transactions, Sojitz is investing in resource-related
businesses. W e are pursuing opportunities through joint ventures w ith Russia-based
com panies in the m achinery and equipm ent, m aterials for m anufacturing and in consum er
goods. Sojitz w ill focus on establishing new business m odels that m atch the needs of the
region in an effort to create a sustainable source of incom e.
Since the establishm ent of a branch in Seoul in 1979, and the incorporation of a local sub-
sidiary in 1995, Sojitz has cultivated and developed close relationships w ith som e of Korea's
leading com panies for a period exceeding 25 years. In addition to the im port and export of
products betw een Korea and Japan, the C om pany has established trade to third countries
and regions including South East A sia, India and the M iddle East, in partnership w ith
Korean com panies.
Sojitz is engaged in the supply of steel m achinery m anufactured in Japan to iron w orks
located in Korea. The C om pany has also entered the m arket for m obile com m unication
devices in w hich Korea leads the w orld in technology and ideas. In the elds of transporta-
tion, Sojitz supports Korean m anufacturers in the area of autom obiles to C entral and South
A m erica. The C om pany w as also quick to recognize the potential of Korea's light rail
business and has suggested various business plans. W hile Sojitz continues in its activities in
the general-purpose chem ical and lifestyle-related product elds, the C om pany is also culti-
vating new custom ers in IT-related and electronic m aterials. Sojitz is a valued partner to
m any Korean com panies in the trade of iron and steel, nonferrous m etals and energy-related
products. In each of these elds, w e boast a w ide product handling base. To advance activi-
ties in steel m achinery and related products, w e m aintain project of ces in Pohang and
Kw angyang.
To further grow th in Korea, Sojitz w ill pursue tie ups w ith Korea-based plant
com panies and w ork to build com m ercial relationships in the elds of iron and steel, large-
scale electric pow er generation and light rail projects. In com ponents for the IT sector,
Sojitz w ill continue to expand business at each opportunity. In steel-related businesses, in
addition to expanding transaction volum es in traditional steel products, Sojitz w ill nurture a
new consum er segm ent in specialty steels for autom obile com ponents.
54
OVERSEAS OPERATI ONS—REGI ONS UNDER THE DI RECT CONTROL OF HEADQUARTERS
TAIWAN
KOJI MATSUMOTO
President and CEO, Sojitz Taiwan Corporation
G enerally, the Taiw an econom y has been characterized by its high dependence on exports.
This trend has becom e increasingly evident in recent years. Export of electronics and
inform ation-related products has provided the engine for econom ic grow th and this
rem ains the de ning feature of the m arket. In addition, Taiw an is experiencing strong
dem and for facilities, com ponents, and m aterials, as w ell as interm ediate and nished
goods. The Sojitz G roup is active in a variety of elds in Taiw an and pursues business
through each of its operating divisions. M ainly in collaboration w ith G roup com panies,
though independently as w ell, w e are active in the im port and export—not only w ith Japan
but also w ith third countries—of chem icals, synthetic resin, m achinery, nonferrous m etals
and other item s. The foundation for our grow th in Taiw an rests in the electronics and IT
elds. Sojitz w ill continue to expand activities in these areas through each departm ent and
operating division. W e w ill reinforce the autonom y, nancial health, and credibility of our
operations in Taiw an and at the sam e tim e prom ote Taiw anese exports as the backbone of
our operations. Sojitz is com m itted to pursing new opportunities in Taiw an and is actively
investing in new proposals.
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