Itchu Report

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Pleasure Offering satisfaction derived from the sheer luxury of premium quality Health Providing product features that promote health and vitality Excellence Bringing out your personal best in the workplace Relaxation Enabling comfort and peace of mind in all aspects of life Interview with the President
Textile Company President, Hitoshi Okamoto
Contents
The Way of Textiles

ITOCHU Corporation's Tex tile Company has long maintained a formidable presence in the textile industry, the source of which derives both from our unwavering confidence in the business potential of textiles, and from our consistent ability to create added value in a way that is unique to a general trading company. We are able to create added value simply because of our steadfast commitment to that task. The Textile Company boasts a wealth of experience, a vast range of knowledge, an obsession with professionalism, and a shrewd ability to take action. We combine those strengths in our efforts to create added value, a goal which is achieved through the drive of each and every one of our employees, the implementation of Textile Company marketing concepts, and a consistent push to take on challenges to innovate boldly. The Textile Company's eight departments, operated under four divisions, pursue a variety of business opportunities for which they persistently tap into a wealth of expertise primarily in the field of textiles, and work with numerous partners that we have come to tr ust. That sums up the ITO CHU Cor poration legac y our DNA that has been passed down uninterrupted over years.
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Making the most of textile-centered value chains while pursuing a notable presence as a marketing company
Company Divisions
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Textile Material & Fabric Division
Textile Material & Fabric Department

Building value chains that capitalize on value-added, demand-driven business opportunities
Fabric & Apparel Department

Drawing on our know-how in the ladies innerwear market to expand and improve our global sourcing capabilities
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Apparel Division
Apparel Department 1
Actively seeking synergies through capital alliances in ventures while primarily dealing with custom-tailored company uniforms and garment accessories
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Shifting from the OEM business to opportunities in ODM, and concurrently standing at the forefront of the industry in terms of environmental conservation
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Brand Marketing Division 1
Brand Marketing Department 1

Optimizing professional support capabilities to enhance brand allure

Pioneering new markets for brands with one-stop services and a vertically-integrated approach
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Dynamically pursuing textile-related business opportunities from men's wear fabrics to those involving Chinese conglomerates
Industrial Textile & Lifestyle Department

New non-woven textiles, composite materials, and company-wide involvement in Life & Healthcare
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History History of the Textile Company Global Perspective Poised for business success
The Way of Textiles
Company Divisions
Company Divisions
Company Divisions
Company Divisions
1
Textile Material & Fabric Department Fabric & Apparel Department
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Apparel Division
Apparel Department 1 Apparel Department 2
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Brand Marketing Department 1 Brand Marketing Department 2
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Brand Marketing Department 3 Industrial Textile & Lifestyle Department
Rapport
One of our principle strategies of the Textile Company going forward involves bolstering our capacity to build beneficial relationships. Accordingly, the four divisions of the Textile Company, active in all aspects of the textile business, effectively leverage the unparalleled strengths of companies in the Itochu group, as well as those of sub-licensees, distributors, and countless other partner enterprises. As we move toward the future, we are striving to create added value and to forge greater variety by strengthening our multi-faceted value chains so that we may more expediently and more fully pursue business opportunities both in Japan and overseas. to enter worldwide markets. 2
The Way of Textiles
Reach
We are shifting from a product-oriented approach to one that is more market oriented. Accordingly, above and beyond trading goods, we strive to energize markets through marketing concepts that give rise to added value. To that end, we have been working to develop the Textile Company as a marketing company and pursuing the forward evolution of our overall business model. Now, as we leverage our value chain to yield new models of business, we are extending our reach toward a broader range of business opportunities and challenging ourselves
The Way of Textiles
Pleasure
What is it about shopping, for instance, that brings pleasure to people's lives? Maybe it is the sense of exhilaration shoppers feel when they spot that special article of clothing in the store window, or their sense of anticipation when they remove clothing from the display and hold it up to the mirror. All it takes is one garment, one handbag, one pair of shoes. Ultimately, what it all boils down to is the appeal of fashionthe joy people derive from a single item of clothing. Indeed, the fashion an individual chooses is a direct expression of who they are. That is what lifts your spirits when you set out clad in your favorite attire, and is why you are truly elated when complimented on your taste in clothes. A chance encounter with that special item of clothing that lets you find new aspects of yourself. Moreover, a series of such discoveries can lead you to a more affluent life. Textiles merge with fabric design, giving rise to a limitless realm of expression, thereby igniting a sense of satisfaction at a renewed awakening of the self. Such are the pleasures that abound in the world of textiles.
Offering satisfaction derived from the sheer luxury of premium quality
The Way of Textiles
The Way of Textiles
Health
W hy, for instance, do people take up jogging? Maybe it is the sense of utter joy that joggers feel when body and soul are invigorated as their feet glide through the air, lightly touching the ground. Maybe it is a reflection of the wish shared by all that good health would last forever. Indeed, the many textile products to be found are designed w ith that in mind to suppor t healthy lifestyles. Textiles with specific properties are used to add various health and lifestyle benefits to a wide range of products. For instance, highly-absorbent, quick-drying fabric is used to make better jogging wear, and high-performance, non-woven fabric that guards against infection is used to make protective hospital masks. Needless to say, from everyday goods to medical supplies, textiles play an essential role in enhancing people's lives and promoting their health.
Providing product features that promote health and vitality
The Way of Textiles
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Excellence
Consider, for instance, the concept of excellence in regard to hotel hospitality. Here, professional hotel service involves maintaining just the right distance from the many hotel guests who are there to gather and meet with others, and to relax. In regard to railways, for instance, excellence can refer to the manner in which railway workers properly devote full attention to safety when managing trains coming and going in an environment where throngs of people are passing to and fro. Another example of excellence can be found in business meetings where participants adamantly negotiate in good faith. In such settings, business suits and company uniforms underpin the sense of importance inherent in the task at hand. Likewise, if it can be said that fashion is an expression of the self, then it can also be said
Bringing out your personal best in the workplace
that suits and uniforms are the language of business, and in that regard what you wear at work reflects the pride you feel toward your job, and also provides you with a source of courage and vibrancy. Indeed, the variety of designs and myriad features available with textiles lend vitality and excellence to everyday lives.
The Way of Textiles
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Relaxation
Consider how you feel when, for instance, you take a little time for yourself early in the day. You plop down on the sofa, and enjoy a quiet moment peering out the window framed by curtains softly swaying in the breeze. Indeed, this moment of relaxation flows ever more serenely in an interior space adorned with beautiful design elements, each meticulously selected, soft to the touch, and gentle on the eyes. Textiles are used in such design elements, better enabling interior spaces to express a sense of relaxation. Textiles are also used to ensure safety and peace of mind in a wide range of lifestyle applications including motor vehicles and architecture. Indeed, textiles have the potential to enhance all aspects of life in applications that can be seen and enjoyed, as well as in others hidden from v iew.
Enabling comfort and peace of mind in all aspects of life
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Inter view with the President
Interview with the President Textile Company President, Hitoshi Okamoto
Making the most of textile-centered value chains while pursuing a notable presence as a marketing company
April 1, 2010 marked a new start for the Textile Company. On that day, Hitoshi Okamoto was appointed the new president of the Textile Company, which concurrently underwent reorganization into four divisions consisting of eight departments. The Textile Company carries forward its legacy as the founding business of ITOCHU, and at the same time enters a new stage of development. President Okamoto shares his views on the future of the Textile Company.
stream of increasing revenues. It is precisely this resolute, no-nonsense mentality that has enabled the Textile Company to achieve healthy expansion of its business ventures. Indeed, the earnest and passionate attitude toward business exhibited by our customer-oriented, hands-on approach, acts as a wellspring of vitality to inspire employees throughout the ITOCHU organization. I am convinced that this vitality emanating from the Textile Company is why even today ITOCHU continues to regard itself as a company deeply involved in textiles, and why the Textile Company is able to significantly contribute to ITOCHU's overall profitability. The business environment within the textile industry is now undergoing radical changes; however, we feel proud to have continued establishing and developing new business opportunities, and taking leadership of the entire ITOCHU organization.
Proud to be an industry leader that has long adhered to a hands-on, customer-oriented approach to business
ITOCHU is the only general trading company with a division company that has the word Textile in its name. So, given ITOCHUs reputation and involvement in the textile industry, what role do you feel the Textile Company should play within the ITOCHU organization? Overall, general trading companies deal in a diverse array of products and raw materials, in fields ranging from energy to consumer markets and that cover clothing , food and housing. Likewise, ITOCHUs Division Companies are involved in wide-ranging areas of business, and of them, the Textile Company and the Food Company focus on the consumer-related sector. ITOCHU itself has a well-established track record of taking initiative and boldly entering new markets where it seizes opportunities to develop new business ventures. This is especially true in the consumer-related sector where the companys unrelenting efforts have paid off. ITOCHU maintains a sound approach to business while working closely with customers and stakeholders to attain a steady
Ongoing efforts to develop textile business value chains yield profitable products, services and new markets
The Textile Company pursues business opportunities at all levels of the textile industry, from textile raw materials, known as upstream, to consumer business, known as downstream. Given this breadth of involvement in the industry, what strengths can the Textile Company most successfully apply, and what would you think is required next? First, one of our strengths lies both in our comprehensive coverage at every level of the textile value chain, and in our steadfast presence in each of those areas of business. We are active at all levels of the value
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Inter view with the President
chain: textile materials and fabricsITOCHU's founding business, the OEM business dealing with apparel manufacturers, the profitable brand marketing business, and the industrial textile and lifestyle business with its potential long-term prospects. This comprehensive involvement lends us competitive strengths that have translated into significant growth. Moreover, competition among the divisions and their strong presence in each segment of the industry, have added vitality to the Textile Company in its entirety. However, with the diminishing scale of the domestic market, we are pursuing overseas markets aggressively. To do this successfully, we must reach across Divisional and Company lines, thereby joining hands and working together to develop business venturesand if we fail to do so, we could ultimately find ourselves out of the race. I am not saying that business on a Divisional level is no longer important. What I am saying is that only limited earnings can come without creating added value somewhere down the line. Accordingly, rather than dealing exclusively with textile materials and fabrics, the Textile Company is able to create new products and pioneer new market opportunities by turning those materials into final products and building a brand name around those products. Furthermore, above and beyond considering the value inherent in products themselves, we now increasingly need to be concerned with issues such as environment, raw material traceability, and fair trade guidelines. In addition to finding new value to add to products and services, we must also respond to present-day demands. In order to do so, we need to build a value chain that involves everyone from group companies of the Textile Company to our business partner organizations, and
work together as close allies. Although making the most of our value chain and expanding areas of business will undoubtedly contribute to our bottom line, such business ventures will also bring challenges in terms of time and human resource requirements; however, I am confident that our painstaking efforts to achieve success in such ventures will ultimately yield products that reflect our heartfelt desire to improve the lives of countless individuals. The Textile Company is committed to contributing to a better social infrastructure in the consumer-related sector.
human resources development programs, and is taking a multifaceted approach to mainland China which involves posting top-class employees to China. Assignments given to those employees include everything from market research to building networks of partner organizations. There are many differences between China and Japan in terms of regulations, legal systems, business practices, consumer sensibilities, and so forth; however, world business interests are eyeing China's enormous market, and so we must not waste any time in learning to deal with these differences. To achieve success in China, we need to follow the precept of "When in Rome, do as the Romans do. Accordingly, we need to join forces with partner companies familiar with local practices and work with them to fulfill our respective roles so that later our partner companies and we may reap the rewards of those efforts. Happily, ITOCHU apparently enjoys a solid reputation in China, and the Textile Company has formed alliances early on with Chinese companies in various fields. The key issue now concerns our efforts to transform these alliances into concrete business opportunities that function to draw steady revenue streams from various points on the value chain. I am confident that the Textile Company will successfully overcome individual hurdles along the way and act as a shining inspiration for others to follow. Such success also has the potential to help revitalize the entire textile industry. As we move forward, my sincere hope is that our group companies, our business partners, and especially consumers will come to regard us as an essential part of their lives and businesses, where they see us as a customer-oriented marketing company, a guide to global markets, a supporter of new business ventures, and moreover, a trustworthy business and lifestyle partner.
Time to swiftly develop solidly founded business opportunities in China
The Textile Company has been taking positive steps toward entering the Chinese market through strategic initiatives such as investments in Chinese conglomerates and major television shopping companies. Would you tell us about other strategic initiatives currently in the works? As I mentioned earlier, expectations are not very high in terms of future growth in the Japanese market, and it is essential that we pursue revenue-enhancing opportunities overseas. In that regard, although the Textile Company unfortunately has yet to draw positive revenue streams from its overseas ventures, I remain positive in terms of potential in this area. I would like to see us put more effort into China, our largest market. Indeed, China is rapidly growing and shifting from a production base to one of consumption. In view of these developments, the Textile Company has been implementing six-month Chinese training courses as one of its
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Te xtile Material & Fabric Division
Tex tile R aw materials
Shirts
Denim
Casual wear
Company Divisions
Innerwear
Functional fibers
Overseas factories (knit)
Overseas factories (cloth)
Pre-organic cotton program
URBAN ELK
OshKosh B'gosh
INKMA X
Wide-ranging upstream to downstream textile-related business ventures
Supplying eco-friendly raw materials and finished products
The Textile Material & Fabric Division engages in the founding business of ITOCHU, and thereby continues to uphold the company's origins. In so doing, the division has consistently pursued innovation based on traditions of ITOCHU's founding business that have been handed down uninterrupted throughout the history of the company over 150 years. Today, in addition to textile raw materials such as fibers and yarns, the division develops business opportunities in a diverse range of other areas including textiles, denim, shirts, innerwear, uniforms, casual wear, including Japanese textiles sourced from textile producing regions. The division serves markets worldwide, and today
Over the past several years, the Textile Material & Fabric Division has been focusing its efforts on business ventures that reflect awareness of environmental concerns. The division is already seeing ongoing business results in such areas as Pre-Organic Cotton Program which supports Indian cotton farmers transfer from conventional farming to organic farming, promote their products in to the market, and environmentally friendly dyeing services using ultrafine water-based pigment inks. With Pre-Organic Cotton in particular, by branding the products as catalysis for the revitalization to textile raw material business, the division goal is to create a new value and market for the entire Textile Company with the products. Striving to further globalize its operations, particularly in China, instead of pursuing competitive way of operation, the division has been successfully entering growing markets to establish sales network of textile and apparel initiating from women's innerwear. Intending to further pursue business involving value-added products, particularly those that yield trade opportunities, the division stands poised at the forefront of the textile industry, moving forward bolstered by ITOCHU's textile business origins.

Ongoing commitment to added value bolstered by new innovations springing from ITOCHU's founding business
The Textile Material & Fabric Department and the Fabric & Apparel Department
brings in roughly half of the revenues from overseas ventures. The Textile Material & Fabric Division, with its advanced technologies, deals with Japanese products, sets up competitive production systems in Asia, and delivers high value-added products to markets around the world. The division focuses exclusively on shirts and jeans in order to achieve and maintain high quality standards. As a result of this approach, the division now boasts overwhelming strength in regard to such merchandise in Asia, North America and Europe. In another value-added product segment, that of innerwear and uniforms, the division applies its strength in marketing as an organizer, and in so doing actively fuels development of its global operations from materials to finished products.
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increasing availability of organic cotton products made from cotton grown without the use of fertilizers or pesticides. However the shift from traditional to organic cultivation methods takes three years. Also, cotton farmers have to bear the heavy economic burden of that switch over. These factors have been major hurdles in terms of achieving greater farm acreage dedicated to organic cotton cultivation. The reason being is that during the transition period, there has been a 20%30% reduction in harvest yields and producers find themselves able to sell the raw cotton only at normal prices. At ITOCHU, the term Pre-Organic Cotton refers to raw cotton that the Textile Material Section has been involved with, and that was harvested during the transitional period. The Textile Company hopes to provide farmers with economic support, expand the amount of land dedicated to organic cotton cultivation, and help fuel market growth for organic cotton by both guaranteeing a price for Pre-Organic Cotton during the transition period, and by promoting use of the material. The Textile Company launched its The company Kurkku is working with the Textile Company to develop awareness and promote more widespread use of Pre-Organic Cotton. Music producer Takeshi Kobayashi, Kurkku's representative director, proposes that efforts toward a comfortable future with a healthy environment begin with food and goods. Initially, the Textile Company and Kurkku came together to sell promotional items made of organic cotton to fans through the 2007 Japanese nation-wide live performance tour of the musician group Mr. Children, and the outdoor music event known as the ap bank fes. By offering products at such venues, the two entities were able to achieve sales of roughly 100 tons of organic cotton in the form of t-shirts, scarf-style towels and other such products, and at the same time helped to make consumers more aware of environmental issues. Members of Kurkku later visited cotton farmers in India to observe their operations. During their visit, they came to realize the extent to which pesticides and chemical fertilizers had impacted the health of local cotton producers and community residents, and thereafter vowed to work hard to expand the market for Pre-Organic Cotton. Now, Kurkku draws on collaborative efforts of musicians and other artists to find ways to make Pre-Organic Cotton resonate with consumers, and the Textile Company has done its part by providing its know-how and stable supplies of textile raw materials. With the arrangement of the Jeans Section, Lee Japan has also come on board to join this beneficial partnership. In October 2010, a next-generation brand of jeans using eco-friendly Inkmax dye with Pre-Organic Cotton was launched under the dual brand name "Lee/kurkku". The material used to make the jeans is faithfully imprinted on both sides with patterns that realistically convey the look of natural fading, wear and tear of denim. Lee/kurkku jeans, which offer quality indistinguishable from that of traditional jeans, have drawn a lot of attention. From a standpoint encompassing both materials and

Alliance with Kurkku to make Pre-Organic Cotton available to consumers
Textile Material & Fabric Department
Pre-Organic Cotton Program in 2007 with those objectives in mind. The program has since benefited from collaboration that transcends division lines. Also, in 2008 the Textile Company established a partnership with one of the largest support associations for organic farming in India, boasting some 15,000 member farmers, and has successfully sourced supplies of raw cotton from independent cotton growers. Moreover, the companys reliance on the Indian jointventure partner spinning factory has resulted in integrated production turning harvested cotton into yarn locally in India. Another environmental project the department has initiated is referred to as the eco-friendly dye Inkmax. Inkmax is a nextgeneration dyeing technology by which ultrafine particle water-based pigment inks are applied to textiles. The technology simply entails
Building value chains that capitalize on value-added, demand-driven business opportunities
he Textile Material & Fabric Department consists of the Textile Material Section, Shirts Section, and Jeans Section. The three Sections within the Textile Material &
high value-added denim for use in premium-quality American jeans. Looking forward, the department plans to work toward further differentiation of materials including eco-friendly one, and to take initiatives in such business ventures. For instance, with the Pre-Organic Cotton Program the department is now pursuing a transformation from a conventional raw material trade to a vertical value chain. To that end, the Textile Material Section aims to secure competitive advantages resulting from collaboration between the Shirts Section and the Jeans Section. This transformation needs to be achieved as a primary business objective.
printing ink to textiles using an inkjet printer which reduces water consumption by 95% and CO2 emissions by 40% compared to conventional dyeing processes. In an attempt to establish business ventures that benefit society through consumer participation, the Textile Material Section has combined these environmental projects through which it will introduce POC (Pre-Organic Cotton)Inkmax products to markets worldwide.
Fabric Department strive to build the value chain of the department
by creating added value in all respective business segments, from raw materials to finished products. The Textile Material Section focuses on differentiated products and environmentally conscious products such as Pre-Organic Cotton and Inkmax eco-friendly dye. The Shirts Section supplies some 30 million dress shirts worldwide, builds vertically integrated manufacturing systems encompassing everything from sourcing raw materials to wholesaling throughout the world, formulates strategies to guide such operations, and drives those strategies forward. The Jeans Section supplies denim and finished products to major Japanese apparel manufacturers, and engages in exclusive sales of
Environmental projects: the Pre-Organic Cotton Program linked with Inkmax
production, these jeans have contributed to the retail segment of the value chain. Indeed, this venture provides a solid example of how the Textile Material & Fabric Department has made the most of its competitive strengths.
A growing environmental awareness in recent years has resulted in
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Fabric & Apparel Department
business expansion, manufacturing products at factories in China and Vietnam and exporting the finished products to the USA. Such business arrangements are effective due to Roy-Ne's expansive production base in China. In the first half of 1990, RoyNe established integrated factory operations in collaboration with the Textile Company consisting of knitting, dyeing, and sewing through a merger with a Chinese company. The factorys production has grown to where it now produces some 40 million pieces per year. Roy-Ne is well-regarded by American apparel manufacturers for its massive production capacity, high quality control standards, and its ability to develop textile materials all of which were contributing factors in it winning Calvin Klein's business. In 2010, to further expand the production base, Roy-Ne increased their productive capacity in China and established
Drawing on our know-how in the ladies innerwear market to expand and improve our global sourcing capabilities
The Fabric & Apparel Department consists of four sections and three major group companies. It places great emphasis on quality manufacturing and deals in
primarily focuses on company uniforms and other work clothes, as well as on casual wear, sportswear and ladies innerwear.
In the apparel industry the complex manufacturing is often outsourced, and the Textile Company has accumulated a vast wealth of know-how in regard to such outsourcing. As production has been moved overseas, the Textile Company is working effectively, engaging in the process of arranging the materials overseas, sewing the products there and shipping the finished products to Japan. In order to apply such strengths to the retail segment, the Textile Company completed a capital participation with Maruko Co., Ltd., the leading ladies' body-shaping innerwear retailer, in 2009. Maruko's body-shaping functional garments, with their premium quality and superb design, are popular with women in all age groups. Also in 2009, Dalian Yawen Underwear Co., Ltd., a leading specialty private-label apparel (SPA) retailer with 600 stores across China, became an ITOCHU group company. With China's rapidly growing economy, growth of its market for ladies innerwear is predicted to continue at a rate of 20% per year. Moreover, because women in China are earning increasingly higher incomes, upward demand for body-shaping innerwear and other such products seems certain. Finally, we have been looking into the possibility of having Dalian Yawen handle Maruko products in the future, and accordingly expectations remain high in regard to how such synergies might be put to work in the Chinese market.
dedicated production lines in Vietnam, thereby further globalizing its supply operation. The US innerwear market has traditionally been dominated by several large companies, making the prospect of market entry there a major challenge. However, Roy-Ne with its unsurpassed craftsmanship and the Textile Company with its overseas sales network, are working together and the door has started to open slowly but surely.
two product categories, textiles and apparel. In the textile segment, the department has formed alliances
Entering the Chinese market for women's innerwear
with leading manufacturers of textiles in the Hokuriku region, and sells high value-added textiles both within Japan and overseas. The products, esteemed worldwide for their superior quality, are used by leading sportswear brands and boast an overwhelming share of the market in the Middle East. The apparel segment handles a diverse range of products for which the department forms alliances with domestic and overseas manufacturers, remains involved in everything from designing to production, and supplies those products through Japanese apparel companies, retailers, and other sales channels. The department Even though the ladies innerwear market is smaller than that for outerwear, entering that market is no easy task. Production of brassieres and girdles, body-shaping products in the ladies innerwear segment, requires advanced manufacturing know-how. The manufacture of brassieres, for instance, poses difficulties because such products involve patterns with complex curved surfaces, use many types of materials, and come in a wide variety of sizes. Indeed, the innerwear business poses completely different challenges than those faced in the outerwear business.
Expanding overseas operations in the innerwear segment
Roy-Ne Co., Ltd., another major group company, affiliated with the Fabric & Apparel Department, is engaged in the innerwear OEM business for global apparel brands such as Paul Smith and Levis. The global brand Calvin Klein is a good example of their overseas
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Apparel Division
Linings
Garment accessories
Uniforms
Hi-tech ber -func
Company Divisions
Ladies wear
Sportswear
LEILIAN
Java Holdings
Progressing from OEM to ODM
Working with trustworthy partners
The Apparel Division focuses its efforts on quality manufacturing, mid-stream in the textile business value chain, where it boasts numerous competitive strengths. Since ITOCHU was founded, the Division has gained experience in numerous styles of textile business and accrued an extensive knowledge of materials and garments. With this background, it shows its strength in the formulation of plans from a marketing perspective; moreover, it has accumulated vast know-how in regard to logistics. With these capabilities, the Division has moved beyond involvement in original equipment manufacturing (OEM), and has spurred the evolution of the business into the area
Over the past several years, in an effort to deepen the ODM business, the Division has been actively pursuing strategic capital tie-ups with leading companies in respective areas of business. At present, the retail sector of the fashion apparel industry is accelerating its rate of change, which has forced manufacturers to drastically alter their ways as well. That has led companies to move away from the approach by which one company covers the entire process from materials procurement to product sales, and toward a strategy by which companies maintain their competitive edge by channeling individual product-related tasks to companies adept at each respective process. Promptly corresponding to such trends, the Apparel Division is to form new alliances both with a leading garment accessory company who forms an essential element of quality manufacturing, and also with a top-grade apparel manufacturer who is an excellent retailer as well. Learning more about consumers insatiable desire for well-crafted products has the Division further enhance its role as a true marketing company. Looking forward, the Division pursues opportunities in Asian markets, beginning with the Chinese market which is poised for further growth, and works with partners in trust, to promote quality manufacturing in response to a wide range of customer needs.
Apparel Division
Bolstering the ability to handle all types of apparel products from the marketing perspective
of original design manufacturing (ODM), proposing solutions related to the entire process, from product development to manufacturing. Today, the division boasts manufacturing capability sufficient to handle a full range of apparel products, from fashin clothing for men and women to sportswear, uniforms, and other types of functional garments. Moreover, making the most of its wealth of experience, the division engages in the business of responding to myriad customer needs in the area of OEM and ODM. Also, with partners and group companies in Japan and overseas, the division draws on comprehensive strengths inherent in ITOCHU, enabling it to achieve the goal of providing premium-quality, high-value-added
Apparel Department 1 and Apparel Department 2
products and services.
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Apparel Division
products in quick response to retailing trends. The Textile Company's strength in procuring products from overseas based on full sources of information there combines well with Sankei who fulfills the important role of connecting upstream, mid-stream, and downstream distribution channels in the apparel industry. By teaming up, both entities have realized synergies that make it possible to provide better products and services. In 2009, the division also has acquired a stake in Leilian Co., Ltd., operator of luxury women's apparel shops situated in department stores and other locations, thereby also making that company a consolidated subsidiary. The acquisition was decided upon firstly because ITOCHU has long maintained connections with Leilian since its founding in 1968, and secondly because although many apparel manufacturers have been struggling as a result of the world economic downturn, Leilian has continued to show sound earnings results thanks to its remarkably level-headed management practices. Leilian is also involved in the rose business where it sells roses cultivated in special rose gardens through its own specialty shops. Leilian's roses are renowned for their premium quality and The Leilian Rose Gallery brand name that comes along with Leilian also represents a valuable asset. By combining the strengths of the Textile Company with Leilian's strengths in the areas of product development, customer management and branding, the division aims to bring added vitality to its business endeavors, and thereby broaden the market itself.
from a different perspective. Leilian is known for the way in which its business model is unique compared to those of its competitors in the apparel industry. In line with its business model, the company begins w ith precise marketing studies to uncover products that consumers want, followed by a close point-by-point examination of those products while they are meticulously manufactured. The products are then individually sold in each of Leilian's retail locations. Carrying out each process using proprietary Leilian business practices in this way has enabled it to maintain excellence in the apparel industry over many years and to build up a proven track record. Its customer service, particularly at the individual shop level, acts as a core competency which manifests itself in sales processes and practices that sell products. Indeed, such strengths represent an aspect of its business that its competitors would not be able to implement easily. Joining forces with Leilian has enabled the entire Textile Company to access sales-related information that could lead to new business opportunities down the road. In today's business environment where, even in the area of garment accessories, companies cannot survive without providing various forms of added value, leveraging group synergies and generating demand for products has become essential. Accordingly, the Department is finding ways to create new value chains in its business, for example by using Sankei's sewing factories for Leilian OEM and ODM business and by taking a close look at group companies in an effort to streamline product distribution. Efforts to expand and improve its value chains are enabling the Division to leverage synergies not only in Japan, but also in overseas market headed by rapidly growing Asia. Indeed, there are high expectations among the apparel industry as a whole of the results of this strategy of the Division.
Actively seeking synergies through capital alliances in ventures while primarily dealing with custom-tailored company uniforms and garment accessories
Generating demand by combining complementary strengths

Bringing Leilian into the ITOCHU Group has provided
he Apparel Department 1 is engaged in business largely comprising the areas described in this section. First, it engages in planning, manufacturing and
As another pillar of business, the Division engages in business involving garment accessories primarily for linings. In recent years, it has moved ahead with a series of capital tie-up arrangements with a garment accessory manufacturer and an apparel manufacturer, which has brought attention in terms of textile industry revitalization.
the Textile Company with a better feel for conditions close to downstream business interests by enabling access to information
sales of custom uniforms for companies, and in that capacity works
with over 200 companies involved with uniforms for railways, airlines, banks and other enterprises. The Department offers such companies solutions in regard to materials and design, information technology and logistics, environmental concerns, and other productrelated aspects. Moreover, it led the uniform industry in establishing sewing factories in China and Vietnam where the premium-quality products are manufactured at competitive price, to the trading companys advantage. Going forward, particularly in China, the Division expects to gain further market access at an accelerated pace, not only with manufacturing, but also by entering the consumer market.
Sankei and Leilian become consolidated subsidiaries
In 2008, the Textile Company purchased a stake in leading fashion garment accessory manufacturer Sankei Co., Ltd., thereby making it a consolidated subsidiary. Within the apparel industry, while the production bases are expanding to China and to other countries throughout Asia, this calls for maintaining a sense of urgency in terms of procuring
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Apparel Division
Unfortunately however, the apparel industry has tended to deal with concerns surrounding environmental conservation inadequately. The truth is that products that use eco-friendly materials, but remain out of touch with current fashion sensibilities, will not gain a foothold in the market. This is especially the case in the world of women's fashion where there are many examples of products that merely use recycled fibers, organic cotton, and other eco-friendly materials, but are simply not fashionable. Such concerns have indeed been a significant barrier for manufacturers considering use of eco-friendly materials. The great thing about Fashion Earth PROJECT tags is that they do not diminish the fashionability of products, and at a cost of ten yen each, they make it easier for participants to contribute to trustworthy projects that aid environmental conservation
Shifting from the OEM business to opportunities in ODM, and concurrently standing at the forefront of the industry in terms of environmental conservation
he Apparel Department 2 provides retail support for sales of sportswear, men's wear, and ladies' wear to apparel manufacturers, specialty private-label apparel
model that looks ahead at the potential for capital participation opportunities. The Textile Company is able to leverage its organizational strengths to provide leadership across all aspects of the textile industry, which is precisely why the Department is able to implement the ODM business model.
conser vation efforts. The project got its start as a result of collaborative endeavors of the Textile Company and Hakuhodo DY Media Partners. Participation in the Fashion Earth PROJECT enables apparel manufacturers to contribute to United Nations projects aiming to keep global warming at bay. Participating companies purchase Fashion Earth PROJECT tags featuring the project logo from the project office for 10 yen each, and then attach the tags to their products to be sold in retail locations. The Fashion Earth PROJECT office sends the proceeds from the tags, minus production and administrative costs, to United Nations-approved projects that aim to reduce CO2. In the inaugural year of the project, support was provided to wind and hydroelectric power generation projects in India aiming for reductions in CO2 emissions of 20,000 tons per year. The Fashion Earth PROJECT adopts carbon offset principles to achieve emission reductions, and credits for CO2 reductions that have been achieved through the program are transferred to the Japanese government free of charge, thereby helping Japan to achieve its greenhouse gas reduction targets stipulated by the Kyoto Protocol. The project, which as of July 2010 is supported by 9 companies and has sold some 3.7 mi l lion Fashion Ear th PROJECT tags, is just beginning to gain steam.
initiatives. Junior members of the Apparel Department 2 first came up with the Fashion Earth PROJECT idea based on the realization that there was a need for a mechanism by which many thousands of people could easily participate in ongoing, rather than shortlived, environmental conser vation initiatives. Based on that realization, what they came up with was the concept of a product tag that could be attached to all apparel items. The Fashion Earth PROJECT has the potential to become a simple means of contributing to environmental conservation. However, in order to maintain the program's ongoing viability, a continuous effort is required to ensure proper implementation. We are therefore looking at the program from various angles to determine what sort of implementation mechanisms would allow for support of it by the maximum number of companies. Indeed, it seems that only the Textile Company, with its thorough knowledge of how the textile industry works, could have successfully launched such a project. The Fashion Earth PROJECT relies on campaigns to convey the project's message and to thereby establish the brand as one that consumers favor. To that end, Hakuhodo DY Media Partners is taking up the task of progressively getting the word out by ensuring that everything from the tags themselves to the project website reflects high standards of design. Going forward, the project team is aiming to further increase awareness of name of the Fashion Earth PROJECT, and plans to implement a public relations campaign to achieve its goals. The t-shirt logo printed on Fashion Earth Project tags is depicted to look like a piece of a jigsaw puzzle. This symbolizes the concept underlying the project in that linking of one piece of the puzzle to another, then to another, and so on, ultimately has a significant impact in terms of the overall picture.
(SPA) companies, multi-brand stores, general merchandising In today's market, companies are not able to survive if they passively engage in OEM business based on the reasoning that a focus on run-of-the-mill clothing for consumers presents lower
stores, and other retail channels.
Start of the Fashion Earth Project
barriers to entry. The Department is aware of such challenges, which is why it is shifting away from the original equipment manufacturing (OEM) business model in favor of original design manufacturing (ODM) business opportunities. Whereas OEM involves manufacturing only, ODM entails comprehensive planning of all stages, from suggesting materials to production and distribution, and is premised on a business Wishing to contribute to environmental conservation even in the fashion industry, the Department conceived the Fashion Earth PROJECT(FEP) in April 2010. The Fashion Earth PROJECT, which involves ties with apparel manufacturers, aims to create opportunities whereby project participants are able to contribute to environmental
ITOCHU's contribution to Fashion Earth PROJECT tags
The apparel industry is inextricably linked to the serious problem of global warming. This is because as global warming spurs a less pronounced change between seasons, there will be a decline in the culture of fashion, a culture which stems from the existence of four distinct and disparate seasons.
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Brand Mark eting Division 1
Syunsoku
mila schon
Paul Smith
Vivienne Westwood
Company Divisions
CASTELBAJAC CONVERSE kitson Outlast
The marketing edge
Building new sales platforms
The Brand Marketing Division 1 has been leading the industry in opening up the business of branding, which entails adding value to products in the form of a brand, and then selling those products. Its business once primarily involved importing famous US and European brands and playing an intermediary role by providing sub-licensees with licenses for acquired brands. Nowadays, however, what is being called for is its marketing competencies that draw on product-related strengths in terms of merchandise design and quality assurance, as well as comprehensive strengths made up of the ability to provide
business ventures. Although brand images change with the times, brands themselves will come to represent greater value if presented in a consistent manner over the long haul. Accordingly, the Brand Marketing Division 1 works to maximize the added value of brands by combining strategic alliances and acquisitions, and engaging in sales through merchandising activities. Leveraging a wealth of information and know-how developed throughout its history, the Division, with its more than 250 sub-licensees and distributors, now has a global reach. Going forward, it is becoming ever more crucial to seize the initiative in Asian markets with a central focus on markets in Chinaalready rapidly progressing from a model of production to one of consumption. Platforms being built for business expansion include a joint investment with a Korean conglomerate in a major Chinese television home shopping operator. Efforts to breathe new life into well-established brands and to spur growth of new ones will continue. All the while, the Brand Marketing Division 1 is taking on the challenges posed by its new business model which calls for expansion of the appeal of brands and delivering them to consumers worldwide.

Leader in the brand-related business, continuing to evolve in global markets
services, logistical support, and after-sales service. The Brand Marketing Division 1 is engaged in sophisticated brand-related business that involves rapidly applying a marketing perspective to areas such as the combining of import functions with product license arrangements, and is ambitiously working on a diverse range of business ventures involving the production of brand-name goods. In addition to apparel products in a wide range of areas, including luxury apparel, sportswear, and casual wear, the Brand Marketing Division 1 also handles a large number of brands associated with functional materials, shoes, handbags, sundries, and other products, and continues to play
Brand Marketing Department 1 and Brand Marketing Department 2
an active and leading role in this industry through brand-related
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quality, but on every minute detail of his stores, thereby working to produce stores that come alive in a manner that accurately reflects his brand concept. The Paul Smith was first launched in Japan in 1982. Since then, the Textile Company, as principal owner of the Paul Smith brands license in Japan, along with Joi'x Corporation and other sub-licensees, has been working with Paul Smith Limited in the UK to develop the brand. During that time, the Textile Company helped raise the popularity of the Paul Smith in Japan, which dramatically bolstered its worldwide brand image. These years saw a strong bond of trust built with the Paul Smith as a long-term partner, which eventually led to the capital participation arrangement. This close involvement with the Paul Smith based on capital participation means that the Department shares in profits during times of growth, but also shares the risks during times of stagnation. Accordingly, more than ever before, such involvement calls on as the Departments professional competence at each stage of the business process, from planning to production, sales and promotion. Under the global economic downturn from 2008, the capital participation arrangement was clearly a positive step. Notwithstanding a business climate in which the apparel industry was hit hard, the Paul Smith maintained healthy results and even posted a year-on-year increase in sales for 2009. The Paul Smith maintains its growth even today.
Based on its track record and strategy in Japan, the Paul Smith is aiming to enter Asian markets, centered on China which has become the predominant market in the region. The Paul Smith previously entered the Chinese market in 2005, and was involved in importing and selling merchandise made by Paul Smith Limited in the UK. However, the company subsequently opted to withdraw from the Chinese market in 2007 due to the impact of a spike in land prices on store operations which occurred before the Paul Smith had fully penetrated the Chinese market. Current plans call for re-entry into the rapidly growing Chinese market within one or two years. Rather than only introducing North American and European fashion to the market, products are featured in order to suit customers in Asia, while retaining the overall brand concept. With this high degree of adaptability, a significant competitive advantage exhibited by many Japanese companies, success in the Chinese market is much expected. Moreover, Joi'x Corporation has come to be well regarded for the premium quality turned out by its manufacturing operations, and the possibility of performing worldwide quality control functions in Japan has been reviewed. This arrangement, involving Japan as a hub for production in Asia of goods sold in North America and Europe, reflects a vision of overseas operations. Furthermore, in respect to practical considerations, a link up with London-based ITOCHU Europe PLC has facilitated information flows with Paul Smith Limited in the UK. Going forward, as the Department expands the scale of business in this area, it takes full advantage with logistics and information technology as those functions become ever more crucial. As a whole, the Brand Marketing Department 1 is engaged in a full range of efficiently-managed business ventures, above and beyond business, involving licensing, and provides support possible only with strategies employed by a general trading company to enhance brand allure.
Optimizing professional support capabilities to enhance brand allure
Drawing on capacity for adaptation in China and around the world
Over the last several years, the Paul Smith has been differentiating
each shop and further elevating the brand image. In the Japanese market, he Brand Marketing Department 1 handles prestige fashion brands mainly from Europe. In addition to import and sales of brands such as needs for the development of better brand-related business opportunities, and application of know-how amassed over the years to rapidly-growing markets in Asia. All the while, the Department tackles the challenges of its new business model with a view to global market expansion.
the Paul Smith operates shops specializing in jeans, as well as shops specializing in shoes and accessories, and is working to provide a more diverse range of items that fit well with the Paul Smith primary segment of the market in Japan: those people in their 20s and 30s.
Bvlgari, Lucien Pellat-Finet, Patrizia Pepe, it also engages in the licensing of brands such as Paul Smith, Mila Schon, and Vivienne Westwood, ambitiously developing business opportunities with its 250 sublicensees. A recently launched business venture involves comprehensive character licenses for the popular Syunsoku sport shoe brand targeting the junior market segment. The Brand Marketing Department 1 aspires to give each and every one of the brands ongoing appeal and vigor. This means bringing a high degree of professionalism to all aspects of business, from planning to production, sales and promotion, and constantly working to bolster brand value. Equally important is an agile response to changing consumer
Capital participation in Paul Smith Limited
In taking on the challenge of a new business model for globalization of the business, one initiative was a capital participation arrangement made with Paul Smith Group Holdings in 2005. The popular British brand, Paul Smith is known for its playful popart designs, and the fashion designer, Mr. Paul Smith, who continues to work as a designer, keeps a close eye not just on product design and
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Number one in the running wear market
Pioneering new markets for brands with one-stop services and a vertically-integrated approach
New Balance also provides a prime example of one-stop services in the brand business. Running has become an increasingly popular sport in Japan over the last few years, and the New Balance brand from the US has come to be favored by joggers and top runners who wear the shoes for support. The New Balance line of casual footwear also boasts many loyal fans. New Balance was started by a manufacturer of corrective footwear based on the company's mission of providing people who wear the shoes with a "new" sense of "balance". Later, the company established instep lacing, an original concept at the time, and in the latter 1970s the brand became popular with many runners for its
T
licensing.
he Brand Marketing Department 2 focuses on sports brands, and implements one stop services involving handling of everything from raw materials to finished
and retailing. This allows for maintenance of a presence not usually found in Japan's textile industry one exemplified by the ability to develop business opportunities vertically, at all levels of the value chain. The Departments involvement with Outlast, a material developed for NASA that functions to control temperatures, illustrates but one example of these unique capabilities. Specifically, although Outlast is a mere material, the branding approach taken to handling the product means exclusive rights in Japan for everything from its production to sale, and use of the brand name, resulting in significant advantages. Bolstering not only the value of Outlast but Converse, epoch-making products are created and momentum is accelerated, lending strength to both brands. Such business strategies are implemented thanks to the Departments business model and its ability to draw on one-stop services.
line of running shoes. In 2003, an alliance with the Textile Company NFC, Inc., was established to engage in the planning, production and sales of New Balance sportswear in Japan. New Balance in USA has called on NFC to become number one in the running-wear market in Japan. New Balance Japan develops the market for shoes and accessories, while NFC develops the market for apparel. This alliance was established thanks to the Textile Company and its ability to draw on comprehensive strengths vertically, at all levels of the value chain.
women runners and consist of a skirt attached to a pair of leggings. The product, in the form of a running skirt sold by New Balance in USA, first came to the Departments attention as it was marketed to women, the segment that drives the running wear market. However, NFC realized that the product, if introduced from the US as is to the Japanese market, would not gain acceptance among Japanese women who would prefer a product tailored to the Japanese market with different sizes, materials, colors, and patterns to those of the American version. Based on this realization, NFC altered every aspect of the product, from materials to design, so that it would better match Japanese preferences. Their efforts succeeded in creating a new running-wear market targeting primarily fashion-conscious women in Japan. Moreover, whereas people in America tend to focus on functionality in clothing, people in Japan tend to demand apparel that is fun to wear. This tendency is especially pronounced among Japanese women, and NFC has introduced a stream of fashionable designs specific to Japan accordingly. Moreover, because Japanese styles of fashion are well-regarded throughout Asia, the idea of introducing Japanese New Balance products to other countries is now being considered. The next focus is on men's wear. Running is seen as just an extension of track and field, but new proposals for sportswear design are attempting to do away with this firmly rooted notion. Going forward, expectation in the Department begin building in terms of the types of markets it will conceive for each and every one of its brands by drawing on the benefits afforded by one-stop services.
products. The Department offers major sports-related brands like Munsingwear, Converse, New Balance, and Head; casual brands such
as the Kitson brand belonging to the hip fashion shop from Los Angeles; and established European brands like Castelbajac, Ungaro, and Mario Valentino. The alliance with Descente, Ltd. has been strengthened through the development of new brands, products and overseas business expansion. Furthermore, the Departments new business model takes it above and beyond the business of brand The Brand Marketing Department 2 offers the full benefits of its one-stop services, and provides coverage for most all processes pertaining to the textile industry in terms of production, marketing
With the "running skirt" come new markets and a fresh apparel concept
One favorite item among consumers that NFC has helped fuel the popularity of is the running skirt. Running skirts were developed for
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Airbag
Carbon-ber composite
Heat resistant
Interior
Company Divisions
Hygiene Products
HDD Polishing
Superbers
Electric blanket factory
LANVIN
LeSportsac
FILA
DEAN & DELUCA
KidZania
Areas of business that transcend departmental lines
Taking up the challenge of potential new textile applications
The Brand Marketing Division 2 continues to focus on brands while expanding its distinctive business ventures that transcend business sectors and types. Its areas of business extend beyond apparel to cover food and lifestyle categories as well. Comprehensive business opportunities are being developed in the overall consumer-related products sector, which ITOCHU has targeted as a priority business area. One of the strengths of the Brand Marketing Division 2 is its ability to implement brand marketing strategies that have successfully driven development of the apparel segment. The Divisions expansion into more business areas has been through the exercising of its
The Life & Healthcare business is targeted by ITOCHU as a priority business area, and investment in Japan's largest linen supply company enables the building of new markets. Involvement in linen, lab coats, and hospital gowns has given rise to the potential for lateral access to various capabilities of ITOCHU Group companies involved in food, machinery, finance, leasing, and other sectors. The Brand Marketing Div ision 2 is also involved in e-commerce, a key to sales channel expansion. In the hope that its efforts will lead to wide-ranging business opportunities, the Division has been providing new sales channel platforms derived from the sub-licensee and distributor networks that it develops, and has been efficiently working to get a handle on consumer needs. Furthermore, work is being done to accelerate the Divisions pace of globalization. To that end, and in anticipation of further growth in the Chinese market, investments are being made in the country's largest conglomerate. This provides a more solid foothold with which to work together on a lateral, company-wide basis to develop business opportunities in China in fields such as energy, food products, and real estate development. From the starting point of textiles, the Division will continue to take up challenges posed by a broad spectrum of opportunities to expand its scope of business.

Spurring development of business opportunities with distinctive textile business practices
strengths in various sectors, ranging from apparel to food products. Moreover, in the area of industrial textiles, it offers a full range of fiber-related materials that incorporate cutting-edge technologies and high functionality. Such materials include everything from industrial textiles used in motor vehicles to non-woven fabrics for hygiene products used in paper diapers. Each of the materials dealt with must adhere to varying and stringent specifications and quality standards which require a great deal of specialized knowledge and know-how. Accordingly, the business platform built up has drawn on informationrelated capabilities and networks built up over many years in various fields and industries. The Division proposes long-term and stable
Brand Marketing Division 3 and Industrial Textile & Lifestyle Department
solutions to ensure compliance with those specifications and standards.
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stores will be operating in China by 2011, roughly 20% of the worldwide total. One of the most notable features of LeSportsac, which first opened in New York in 1974, is that every month they introduce and sell new designs featuring original artwork. This results in their offering 100 design variations every year and roughly 70 different items. The Tex ti le Company acquired LeSpor tsac in 2007, following three years of negotiations to arrange the jointacquisition with a US partner. At present, the Textile Company is setting out to expand its LeSportsac business worldwide, not only in Europe but in South America and the Middle East too. The business has also made a sudden breakthrough in China. The growing success of "Lespo" is a result of product planning based on the Textile Companys own market analysis, and connections formed with distributors in China a showcase example of the Textile Company making good use of its extensive business
distribution and settlement of online payments, which enables our customers to engage in non-store retailing without laying out an initial investment. Furthermore, this business venture implements a business model that involves prof it sharing arrangements with e-commerce sellers. Trial implementation of the business with LeSportsac is expected to bring in sales of 300 million yen in fiscal 2010. Other brands as well have reacted favorably to the ventures website design and usability, and some have indicated their intentions to take advantage of the service. In the business of branding , we used to predominately develop single brands in isolation, and in a vertical direction. Now with the Internet, however, we need to set our sights on horizontal brand development, encompassing various brands simultaneously. These days, the business of branding has come to involve ever-broadening development not only in Japan, but all over the world. Indeed, we are excited to see that new business opportunities that convey the dynamism of trading companies are beginning to unfold.
experience in China and its human network.
Dynamically pursuing textile-related business opportunities from men's wear fabrics to those involving Chinese conglomerates
Key importance of lateral development through leveraging of multifarious human resources
LeSportsacs New York-based creative division centrally oversees artistic design for the LeSportsac brand which is popular among people of all ages the world over. Although design preferences found in Asia, North America and Europe vary, overly catering to respective national preferences would result in a loss of brand control. That is why it is imperative that the brand not deviate from its origins, but adeptly incorporate essential elements of each market. Accordingly, based on our vast experience with
he Brand Marketing Department 3 is engaged in a wide range and variety of fields of business, and we actively promote business ventures worldwide. Our
Dean & Deluca from New York, and in licensing arrangements with the Fila and Lanvin brands. With textiles as our starting point, we respond flexibly and swiftly to societal shifts and changing times while dynamically creating new value from our business ventures. The Brand Marketing Department 3 handles a range of business ventures and implements operating strategies that epitomize the entire Textile Company in its current form.
brands, we are assembling a diverse and expansive range of information and communicating closely with the LeSportsac creative team to get such country-specific elements incorporated into product designs. Companies usually draw on the sensibilities of women when it comes to such planning efforts and retail-level visual merchandising. Women are generally considered to be better at conveying nuances of cuteness (or kawaii in Japanese). On the other hand, there are cases where we find that some of our junior male employees have better sensibilities, showing how the diversity of trading company employees can drive success in business ventures such as LeSportsac. The Brand Marketing Department 3 also engages in the business of e-commerce solutions. The Textile Company handles aspects of the business from website development to product
business endeavors include importing menswear fabric, which we have been doing since ITOCHU was founded, acting as the parent of Magaseek, a group company engaged in e-commerce
business solutions, and purchasing of rights to strong fashion brands such as Hunting World and LeSportsac. Furthermore, in 2009, we made Shanshan Group Co., Ltd. of China an equity-method associated company. By forming an alliance with a conglomerate that is engaged in not only textiles but also in finance, real estate, and a range of other businesses, we are able to gain access to information on diverse aspects of the Chinese market, and expand our marketing reach. We are also involved in the food business with specialty food retailer
LeSportsac gains popularity in China post-acquisition
LeSportsac, or "Lespo" as it is referred to in China, has performed well in that country amidst intensifying competition with other fashion brands. Forecasts indicate that over 100 LeSportsac
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Industrial Textile & Lifestyle Department
placing added emphasis on this area. Based upon this strategy, the Textile Company made Watakyu Seimoa Corporation an equitymethod affiliate in 2009. Watakyu Seimoa, a leading provider of linen supply services, supplies sheets, pillow covers, and gowns that are used in hospitals, care facilities, and other such institutions. Watakyu has 40 subsidiaries including companies involved in hospital food services and pharmacies, and is Japan's largest provider of outsourcing services to hospitals and care facilities. The Textile Company and Watakyu Seimoa have a relationship going back more than 50 years, during which time the two entities have deepened ties in regard to core textile business ventures involving textile materials. This new business arrangement will lead to growth in the overall life and healthcare sector for Watakyu Seimoa. At the same time, it opens up new possibilities for capitalization of
New non-woven textiles, composite materials, and company-wide involvement in Life & Healthcare
fabric, extending to countless other applications for textile fibers. It is precisely those areas of business that the Industrial Textile & Lifestyle Department engages in. As the name of the department implies, the fields it is active in can be divided into either business ventures related to industrial textiles, or those related to consumer lifestyles.
or most people, the textile industry conjures up images of apparel or fabric; however, the textile industry encompasses more than just apparel and
industrial products and provision of the latest performance materials. Its mission involves working with customers to develop new products and create markets for them. One prime example is raw materials for use in hygiene products. High-performance, non-woven fiber for paper diapers, sanitary napkins and other such products were selected for their superior qualities in terms of moisture resistance, absorbency, and softness, and later improved upon. Such efforts have facilitated the incubating out of new markets for hygiene products. Various industrial textiles are also offered for automobiles, such as automobile carpets, seat belts, airbags, and also fibers tires and power-transmission belts reinforcement. Furthermore, the Department provides glass fibers and carbon fibers for high-performance FRP and rubber composite materials. These composite materials are essential components in golf club
shafts, tennis rackets, and other sporting goods, and have applications in high-tech areas such as construction of airplanes and railway cars. In 2010, a special triaxial woven fabric developed by Textile Company affiliate Sakase Adtech was used in antennas for the sensational asteroid probe Hayabusa. In the electronics sector, the Department handles nonwoven textiles for polishing hard disk surfaces, non-woven water repellant fibers for roofing materials used in construction and civil engineering, and fibers that are embedded under road surfaces to ensure that water doesn't erode ground soil. The other chief business area of the Industrial Textile & Lifestyle Department, the consumer lifestyle-related business, mainly encompasses home interior items like curtains, carpets, and functional sleeping items such as electric blankets, electric carpets, and material for high-end down feather comforters. The Department is also involved with KidZania, a theme park that offers children a chance to try different professions, as one of its shareholders. A further business venture is management of the "Centrair Friends" mascot of the Central Japan International Airport. The Industrial Textile & Lifestyle Department is currently in the process of putting together a dynamic business model for the Life & Healthcare Department that will mainly target hospitals, care facilities, and other such institutions.
synergies that involve laterally drawing on capabilities, not only of other departments and divisions in the Textile Company but also of operating units throughout the entire ITOCHU organization. The new arrangement also gives the Textile Company access to Watakyu Seimoa's various networks and to new ideas and information about unmet customer needs based on Watakyu Seimoa's wealth of hands-on experience. These are significant benefits for the Textile Company, and should help open up new markets in the life and healthcare sector. This arrangement also gives rise to possibilities for diversified business opportunities involving support of Watakyu Seimoa across the entire ITOCHU organization. For instance, the Food Company may find opportunities to lend support with hospital food services, the Machinery Company with manufacturing equipment for factories, and the Finance, Realty, Insurance & Logistics Services Company with logistics operations. The Industrial Textile & Lifestyle Department goes forward confident that business opportunities involving life and healthcare can only increase and grow in importance.
A diverse range of fibers used in everything from paper diapers to satellites
The Industrial Textile & Lifestyle Departments business ventures include delivery of raw materials to manufacturers for use in
Investment in leading healthcare outsourcing Watakyu

Life & Healthcare services are extremely becoming essential in
Japan as the country addresses a falling birthrate and an increasing number of elderly people. ITOCHU Corporation has designated Life & Healthcare as a growth industry, and this Department is
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History
History of the Textile Company
Origins as an itinerant linen tradesman
foremost brand business. We apply know-how acquired in the area of fabrics to ready-to-wear fashion, introduce consumers to a wide range of worldwide brands, including up-scale imported brands, sportswear brands, and casual brands, and continue to expand business opportunities involving licensing of such brands.
The history of ITOCHU Corporation dates back to 1858 when the Company's founder, Chubei Itoh, set off from Toyosato Village in Shiga Prefecture to Nagasaki on a trip to sell merchandise. Among the goods he carried to Nagasaki was linen cloth. Then in 1872, he opened a drapery store under the name "Benichu" in Honmachi, Osaka. The store mainly handled linen and fabric from the Bino and Kanto regions. Later, in 1893, he established a cotton yarn wholesale store, "Itoh Itomise" in Azuchi-cho, Osaka, to which ITOCHU Corporation traces its roots. From the Taisho Era (19121926) and into the Showa Era (19261989), the company steadily expanded its range of business: exports of treated cotton fabrics, the spinning business, exports of viscose rayon yarns and fabrics, and other business involving everything from textile materials to woven fabrics. Later, the company went on to competently weather economic controls implemented before and during WWII, thereby emerging as a driving force in Japanese industry. Textiles are the founding business of ITOCHU Corporation, and are the embodiment of our history. As the Japanese economy entered its years of rapid growth, the textile industry began to look more toward internal demand rather than exports, and shifted from a focus on upstream business in raw materials to the midstream and downstream sectors, closer to finished goods. In 1978, amidst this shift, ITOCHU Corporation began to handle imported brands of order-made fabric for men's clothing. That marked the beginning of what is now the industry's
Continuing to create new business models
W hereas textile departments of other trading companies lost momentum when the textile market in Japan began to contract after peaking in 1992, only ITOCHU Corporation has managed to remain true to its roots, and even continues to achieve expansion ahead of its competitors. The Textile Company first set sail with the introduction of the Division Company organizational structure in 1997. Then in 1999, in an effort to ensure long-term stability of our commercial trade rights, we adopted a new strategy involving trademark right acquisition, rather than one of merely forming alliances, as well as corporate acquisition and capital alliance strategies. Today, the Textile Company goes beyond its involvement with raw materials, fabrics and apparel products to handle a wide variety of products and materials ranging from fashion accessories to tableware and gourmet foods. We also continue to expand our business into fields of high technology. We have successfully achieved such progress due to our constant efforts to create unique business models centered on textiles and branding concepts. We pledge to continue to create extra value while acting as a driving force in our industry.
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Global Perspective
Poised for business success
Integrating the entire value chain, from upstream to downstream
provide a source of added value for the Textile Company overall.
The Textile Company is involved in all areas of the textile industry from upstream textile raw materials, to downstream consumer businesses. In this capacity, we have been able to consistently add value to our textile-based business ventures, create new business models in relation to the business of branding, and lend those areas of business more substance. The Textile Material & Fabric Division continues to deel with ITOCHU Corporation's founding business of raw materials, and even today remains a world leader in that market. In addition, it also develops business opportunities with premium denim and shirts, and innerwear and uniforms, for which it exercises competitive strengths in terms of materials procurement and planning. The Textile Material & Fabric Division has also entered the eco-friendly business segment with Pre-organic Cotton, Inkmax , and other such business ventures, and meanwhile delivers added value through its commitment to tradition and innovation. The Apparel Division works principally in the field of OEM. It builds networks that integrate operations involving raw materials, fabrics, and production, and leverages Textile Company strengths to ensure high-quality manufacturing standards. The Apparel Division also collaborates with its business partners to expand its scope of business, and maintains a group of professionals who ensure craftsmanship standards of apparel and a wide range of other items. The Apparel Division's sophisticated marketing techniques and up-to-date merchandising practices
Competing in global markets
The Brand Marketing Division 1 leverages strengths stemming from the Companys number one branding business position among trading companies. In so doing , the Div ision has successfully developed existing brands, introduced new brands, and actively channeled investment funds into other brands over the last several years. It crafts new strategic business models that gather the import and sales operations into license operations, which in turn are incorporated into participation in management: a unique process of business modeling by which new brand value is created. The Brand Marketing Division 2 offers quality-of-life solutions by drawing on a marketing approach that is applied not only to fashion, but also to daily consumables and lifestyle products. It has broadened its scope beyond fashion, food, and lifestyle products to the life & healthcare and industrial textiles business segments, and is expanding its distinctive business ventures that extend across varying sectors and types of businesses. In the Tex tile Company, we continue to expand and reinforce all of our textile business ventures, and extend our competitive energies to markets worldwide. Our ability to create added value by drawing on our consumer-oriented marketing approach and trading company capabilities stands as the underlying strength of the Textile Company today, and will lend us competitive advantages as we go forward.
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Our Future
We are proud of our position as a leader in the textile industry, and as a member of ITOCHU Corporation. This pride lights our way forward and drives each and every Textile Company employee toward a better tomorrow. Moreover, our working environment, in which open dialog is valued, provides us with a great source of strength to take on new challenges boldly. We know that the performance of a trading company is determined solely by the quality of its workforce, and the company nurtures its employees, who in turn nurture the company. It's a positive cycle driven by the pride of employees working within an organization that encourages communication. Indeed, the energy of the Textile Company is linked to the vitality of the entire ITOCHU Corporation. Accordingly, we strive to enthusiastically contribute to the betterment of the social infrastructure in the consumer related sector. The Textile Company will provide support and cooperation that generates trust, as we continue to evolve.

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Itchu Report

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The Way of Textiles

Textile Material & Fabric Division

Textile Material & Fabric Department

Fabric & Apparel Department

Brand Marketing Division 1

Brand Marketing Department 1

Brand Marketing Department 2

Brand Marketing Division 2

Brand Marketing Department 3

Industrial Textile & Lifestyle Department

The Way of Textiles

Offering satisfaction derived from the sheer luxury of premium quality

The Way of Textiles

The Way of Textiles

Providing product features that promote health and vitality

The Way of Textiles

The Way of Textiles

Bringing out your personal best in the workplace

The Way of Textiles

The Way of Textiles

Enabling comfort and peace of mind in all aspects of life

The Way of Textiles

The Way of Textiles

Inter view with the President

Interview with the President Textile Company President, Hitoshi Okamoto

The Way of Textiles

The Way of Textiles

Inter view with the President

Time to swiftly develop solidly founded business opportunities in China

The Way of Textiles

The Way of Textiles

Te xtile Material & Fabric Division

Tex tile R aw materials

Overseas factories (knit)

Overseas factories (cloth)

Pre-organic cotton program

Wide-ranging upstream to downstream textile-related business ventures

Supplying eco-friendly raw materials and finished products

Textile Material & Fabric Division

The Way of Textiles

The Way of Textiles

Te xtile Material & Fabric Division

Alliance with Kurkku to make Pre-Organic Cotton available to consumers

Textile Material & Fabric Department

Building value chains that capitalize on value-added, demand-driven business opportunities

Fabric Department strive to build the value chain of the department

Environmental projects: the Pre-Organic Cotton Program linked with Inkmax

A growing environmental awareness in recent years has resulted in

The Way of Textiles

The Way of Textiles

Te xtile Material & Fabric Division

Fabric & Apparel Department

Entering the Chinese market for women's innerwear

Expanding overseas operations in the innerwear segment

The Way of Textiles

The Way of Textiles

Hi-tech ber -func

Progressing from OEM to ODM

Working with trustworthy partners

Apparel Department 1 and Apparel Department 2

products and services.

The Way of Textiles