Shimadzu (Hong Kong) Ltd. (China) Co., Ltd. CORPORATE PROFILE Overview of Shimadzu China

Shimadzu (Hong Kong) Ltd. Shimadzu (China) Co., Ltd.

Established: 1980 Consolidated Sales: 0.472 billion dollars (As of March 31, 2017) Total Number of Employees: 1,126 (SHK and SSL) (As of March 31, 2017) Consolidated Subsidiaries: 5

2 China in Overall Shimadzu Group Operations

We are expanding our global organization to meet the needs of each region.

North America South America Percent of Net Sales by Region (Year ending March 2017)

Middle East, Oceania & Africa 2.9 % Maryland, U.S.California, U.S. Sao Paulo, Brazil Other Asian Countries Europe China 9.6 % China Japan 16.4 % 51.1 %

Duisburg, Germany Sanjo Works Shanghai at Head Office Asia & Oceania Middle East & Africa Europe 7.3 % Americas 12.4 %

Singapore Australia Dubai

3 Shimadzu China 2017 Net Sales by Division (Results for Apr. to Dec.) Achieved 19 % growth (YoY) overall, with particular expansion in Analytical & Measuring Instruments and Medical Systems segments. Analytical & Measuring Instruments segment also achieved high growth in other categories (environmental, large projects, testing machines, and NDI). (MUSD) Model 2016 Results 2017 Results Year-on-Year Analytical & Measuring 285 334 117 % Instruments LC+GC+MS 201 223 111 % Other 84 112 133 % Medical Systems 28 42 153 % Industrial Machinery 39 42 109 % Total 352 418 119 %

4 Analytical & Measuring Instruments Net Sales by Sector Public sector demand: Served as driver of sales for several years, but growth has slowed due to convergence in government projects and privatization of some institutions (from Entry- Exit Inspection and Quarantine Bureau to contract analysis). Startup of 13th 5-year plan is expected to increase demand. Academia: Over 20 % growth achieved for two consecutive years, due to the government's "Double First-Class University Plan." Private sector demand: Demand is strong in pharmaceutical (regulatory compliance) and contract analysis (privatization) fields. Continued growth is expected, due to recovery in chemical engineering and petrochemical markets and other factors.

民需Private sector demand 27 % 官需Public sector demand 31 % 58 % 34 % 大学Academia 53 % 51 %

16 % 15 % 15 %

5 2015 2016 2017 Analytical & Measuring Instruments Net Sales by Segment

Growth slowed in FY 2017 due to fewer government projects in pharmaceutical, food, and healthcare fields, but growth continues in the pharmaceuticals market, which accounts for the largest portion. Growth is high in chemistry, electrical, and machinery fields, due to strengthened Shimadzu capabilities within China and continued recovery of market activity. Government and academia sales are in a transient period of government projects, but sales to academia are strong, mainly for the Double First-Class University Plan. Contract analysis sales are growing significantly, not only in food and environmental testing fields, as before, but also in the healthcare field. 17/16 17/15 FY 2017 Percent of Main Industries Industry Sales Ratio Sales Ratio Pharmaceuticals, 10% Foods, and 102 % 121 % Healthcare 医薬・ヘルスケア・食品Pharmaceuticals, 12% 35% healthcare, and foods Chemical, 化学・電気・機械Chemical, electrical, and Electrical, and 138 % 133 % machinery Machinery 官公庁・大学Government and academia Government and 20% 受託分析Contract analysis Academia 106 % 122 % その他Other Contract Analysis 146 % 178 % 23% Other 138 % 135 % Overall 117 % 130 % 6 China vs. Japan—Net Sales by Division

 The Analytical & Measuring Instruments sales ratio versus Japan decreased from 1:1.7 to 1:1.5, where China headed toward becoming the number one region in the world.  The Medical Systems sales ratio versus Japan decreased from 1:5.7 to 1:5.4, but the gap is still large. Measures need to be implemented strategically.  The Industrial Machinery sales moved significantly closer to Japan, with the sales ratio versus Japan decreasing from 1:3.3 to 1:1.6, due to major expansion of TMP and glass winder sales. Measures to maintain the strong expansion are expected to be deployed. Medical Systems Sales in Japan and China Analytical & Measuring Instruments Sales in Japan and China Big difference Sales in sales 中国China—Full 年間 Year catching up compared to 中国China—Full 年間 Year 日本Japan—Full 年間 Year to Japan Japan 日本Japan—Full 年間 Year 中国China—First 上期 Half 中国China—First 上期 Half 日本Japan—First 上期 Half 日本Japan—First 上期 Half

Industrial Machinery

152期2014 153期2015 154期2016 155期2017 Sales in Japan and China 152期2014 153期2015 154期2016 155期2017

Sales moving significantly closer to 中国China—Full 年間 Year Japan 日本Japan—Full 年間 Year 中国China—First 上期 Half 日本Japan—First 上期 Half

152期2014 153期2015 2016 154期2017 155期 7 China vs. Japan—Net Sales by Model (Analytical & Measuring Instruments)

 In the first half, LC, MS, GC, and environmental results exceeded Japan.  In addition to environmental and spectrometry products, where China continues to achieve the highest regional sales in the world, China has also surpassed sales in Japan for the first time in two years for LC and GC products and for the first time ever for MS products. Net Sales—LC Net Sales—MS Achieved Exceeded Japan higher sales for the first time than Japan for in two years. 中国China—Full 年間 Year the first time this term. 中国China—Full 年間 Year 日本Japan—Full 年間 Year 日本Japan—Full 年間 Year

中国China—First 上期 Half 中国China—First 上期 Half 日本 上期 Japan—First Half 日本Japan—First 上期 Half

152期2014 2015 153期2016 154期2017 155期 152期2014 153期2015 154期2016 2017 155期

Net Sales—GC Net Sales—Environmental Exceeded Japan Maintained highest for the first time sales in the world. in two years. Business expected to expand further. 中国China—Full 年間 Year 中国China—Full 年間 Year 日本Japan—Full 年間 Year 日本Japan—Full 年間 Year 中国China—First 上期 Half 中国China—First 上期 Half 日本Japan—First 上期 Half 日本Japan—First 上期 Half

152期2014 2015 153期2016 154期2017 155期 152期2014 2015 153期2016 154期2017 155期 8 Large Network in China

3 R&D centers 4 Manufacturing locations 5 Analysis centers 14+ Sales and service locations 90+ Joint research laboratories

9 Group Companies and Branches in China

Sales/Service Subsidiaries Consolidated Sales: Approx. 0.6 billion dollars (1) Shimadzu (Hong Kong) Ltd. established in 1997 Total Number of Employees: Almost 1,800 (2) Shimadzu (China) Co., Ltd. established in 1998 (Including 55 Expats) Beijing Branch established in 1980* (3) Shimadzu (Guangzhou) Analysis & Technology • March 2018 estimate Beijing Analysis Center established in 1994* Services Co., Ltd. established in 2006 (4) Shimadzu Research Laboratory (Shanghai) Co., Ltd. Shenyang Branch established in 1985* Shenyang Analysis Center established established in 2007 in 2008* (5) Shimadzu-GL Sciences (Shanghai) Laboratory Supplies Co., Ltd. established in 2007 Nanjing Branch established in 2000*

Urumqi Branch established in 2001* Henan Branch established in 2012*

Shanghai Branch established in 1982* Shimadzu Global Application Development Xian Branch established in 2001* Center established in 2008* Shimadzu China R&D Division established in 2011* Sichuan Branch established in 1994* Chengdu Analysis Center established in 2012* Suzhou Office established in 2003*

Wuhan Branch established in 2008*

Kunming Branch established in 2002* Shenzhen Branch established in 2003* Chongqing Branch established in 2001* Guangzhou Branch established in 1984* Manufacturing Subsidiaries (6) Beijing Shimadzu Medical (7) Tianjin-Shimadzu Hydraulic (8) Shimadzu (Suzhou) Instruments (9) Ningbo Shimadzu Vacuum Equipment Co., Ltd. Equipment Co., Ltd. Manufacturing, Co., Ltd. Technology Development Co., Ltd. Established in 1992 Established in 1994 Established in 1998 Established in 2005 Production of medical X-ray Manufacturing and sales of Production of analytical instruments and Manufacturing and sales of vacuum diagnostic imaging systems hydraulic gear pumps environmental measurement instruments furnaces 10 R&D Centers

Shimadzu China R&D Division

Established: January 2011

R&D Field: Analytical instruments for China markets

Shimadzu Research Laboratory (Shanghai) Co., Ltd.

Established: March 2013

R&D Field: Advanced mass spectrometry technologies

11 Application Research and Development Center

Shimadzu China Mass Spectrometry Center (Beijing)

Established: October 2015

R&D Fields: MS applications for China and world-wide markets Clinical, food safety, environmental, pharmaceuticals, chemicals, etc.

12 Manufacturing Locations

Analytical Instruments Industrial Machinery

SSM (Suzhou) NSC (Ningbo)

BSME (Beijing) TSH (Tianjin)

Medical Systems Fluidics Devices

13 Analysis Center

Shanghai, Beijing, Guangzhou, Shenyang, and Chengdu

Analytical Fields: Various contract analysis and analysis on request LC, GC, LCMS, GCMS, ICPMS, AA, UV, FTIR, etc.

Xian Analysis Center to be established in May 2018

14 Offering Customers Total Solutions

Contract Analysis Service

Company: Shimadzu (Guangzhou) Analysis & Technology Services Co., Ltd. (SAT)

Business Fields: Analysis service for automotive, consumer electronics, toys, fibers, and food industries

Consumables Sales

Company: Shimadzu-GL Sciences (Shanghai) Laboratory Supplies Co., Ltd. (SGL)

Business Fields: Sale of consumables for analytical instruments (For Shimadzu and non-Shimadzu brands)

15 Large Network of Joint Laboratories

2017 Shimadzu Joint Laboratories

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Pharmaceutical Food EnvironmentalSafety Academic and Research Institutions Breakdown by Industry Public Safety and Police Contract Analysis Materials Entry-Exit Inspection and Quarantine Bureau 16 History of Business in China

17 Shimadzu Corporation Business Development in China (1) From 1956: Transactions started and (2) From 1978: Chinese economic reforms started

Participation in the first Beijing-Shanghai Japan Trade Fair in 1956 gave Shimadzu a lead over competitors in starting trade with China. Due to Chinese economic reforms in 1978, a service location was established in Beijing with the help of the China Instruments Import & Export (Group) Corporation in 1979. Representative offices were established in Beijing, Shanghai, Guangzhou, Shenyang, and Chengdu to deploy activities closer to markets. Later, an infrastructure of service centers and analysis centers were established to cover all of China.

Year Events in China Shimadzu China 1949 People's Republic of China established. 1953 First 5-year plan started. Participation in First Beijing-Shanghai Japan Guangzhou/China Export Product Exhibition held Trade Fair 1956 (predecessor of Canton Fair). First Shimadzu delegation to visit China (Toyozo Nishikawa and others) Nagasaki National Flag Incident and all China-Japan 1958 trade canceled. Chinese Great Leap Forward campaign started. 1960 China-Japan trade resumes. (Friendly trade starts.) Third 5-year plan started. 1966 Cultural Revolution starts. 1968 Cultural Revolution continues and Deng Xiaoping exiled. First Annual Cooperation Agreement signed. Japan-China Joint Communiqué signed and Japan- 1972 China relations normalized. 1973 Deng Xiaoping reinstated in Beijing. Participation in Canton Fair Premier Zhou Enlai dies (January 8). 1976 China Automation Equipment Exhibition Chairman Mao Zedong dies (September 9). China-Japan Peace and Friendship Agreement signed. 1978 Path for Chinese economic reforms and Deputy Premier Deng Xiaoping visits Japan. Prime Minister Ohira visits China and officially offers Analytical instrument service station 1979 Japanese-government-backed yen loan. established in Beijing. Special economic zones designated in Shenzhen, 1980 Beijing Branch established. Zhuhai, Shantou, and Xiamen. 1982 One-child policy started. Shanghai Branch established. President Ryoji Uenishi meets Prime minister Nakasone visits China and 21st Century 1984 Guangzhou Branch established. with Premier Zhou Enlai in 1973 Committee for Japan-China Friendship inaugurated. 18 1985 Import/export tariff ordinance implemented. Shenyang Branch established. Shimadzu Corporation Business Development in China (3) From 1990: Period of Introducing Market Economy

In the 1990s, China implemented a full-scale introduction of a market economy and promoted rapid liberalization of trade. During that decade, China attracted significant attention as the "factory to the world." Year Events in China Shimadzu China Shimadzu established joint venture Deng Xiaoping gives "South Tour Beijing Shimadzu Medical Equipment Co., 1992 manufacturing subsidiaries for medical Speeches." Ltd. established. devices in Beijing and gear pumps in 1993 Jiang Zemin appointed as President. Tianjin-Shimadzu Hydraulic Equipment Co., Tianjin. General reforms implemented for Ltd. established. 1994 external trade system. Beijing Analysis Center established. Shimadzu also steadily established a Sichuan Branch established. business base that integrated 1997 Hong Kong returned to China. Shimadzu (Hong Kong) Ltd. established. Shimadzu (China) Co., Ltd. established. manufacturing and sales operations in Jiang Zemin visits Japan (first time 1998 Shimadzu (Suzhou) Instruments since the country was founded). China, such as by establishing a wholly- Manufacturing, Co., Ltd. established. owned analytical instrument 1999 Macau returned to China. Jiang Zemin submits "Three 2000 Nanjing Branch established. manufacturing subsidiary in Suzhou. Represents" theory.

Medical Device Plant Hydraulic Equipment Hong Kong Office Analytical Instruments Trade Office (SSL) (BSME) Plant (TSH) (SHK) Plant (SSM) 1999 1992 1994 1997 1998 19 Shimadzu Corporation Business Development in China (4) From 2001: Opened markets by joining WTO

Joining the WTO in 2001 marks an era of opening markets, after which China achieved dramatic economic growth. During that period, markets are hit by waves of global competition and China began transitioning from a "factory to the world" to a "market of the world." Year Events in China Shimadzu China Chongqing Branch established. 2001 China joins WTO. Xian Branch established. Urumqi Branch established. Policy to comprehensively build a 2002 Kunming Branch established. moderately prosperous society. Contract Analysis Hu Jintao appointed as President. Shenzhen Branch established. Basic Research 2003 Subsidiary (SAT) SARS outbreak occurs. Suzhou Office established. Laboratory (SRLS) 2006 2007 Goals for a harmonious society 2004 submitted. Ningbo Shimadzu Vacuum Technology 2005 Development Co., Ltd. established. Eight Honors and Eight Shames Shimadzu (Guangzhou) Analysis & 2006 submitted. Technology Services Co., Ltd. established. Shimadzu Research Laboratory (Shanghai) Consumable Sales Application Scientific Outlook on Development Co., Ltd. established. 2007 Subsidiary (SGL) Development Center submitted. Shimadzu-GL Sciences (Shanghai) 2007 (G-COE) Laboratory Supplies Co., Ltd. established. 2008 Wuhan Branch established. Sichuan earthquake occurs. 2008 Shenyang Analysis Center established. Beijing Olympics G-COE established. Due to the total support capabilities and R&D capabilities required for responding to such market changes, such as application support capabilities and laboratory product/service package offerings, Shimadzu decided to strengthen comprehensive customer support functions and start building R&D locations in China. 20 Shimadzu Corporation Business Development in China (5) From 2010: Becoming the World's Second Largest Economy

In 2010, China's GDP surpassed Japan's to become the second largest economy in the world. Though China continued to achieve over 6 % growth, various problems were also revealed, such as environmental problems, overproduction, and zombie companies. Meanwhile, China continues to increase their presence in the global economy with measures such as the One Belt and One Road Initiative and Asian Infrastructure Investment Bank (AIIB). Within China, they are developing a new service-based economy and aim to

become the world's number one IT country. Year Events in China Shimadzu China GDP surpasses Japan to become the world's second 2010 largest. As China evolves into a global market and Expo 2010 Shanghai China achieves additional growth, Shimadzu Shimadzu China R&D Division Environmental protection philosophy "Lucid waters established. 2011 established high-end development and lush mountains are invaluable assets" submitted. CIPO (Procurement Department) locations specialized in mass established. Henan Branch established. 2012 Xi Jinping appointed as President. spectrometers and other R&D locations. Chengdu Analysis Center established. Using talented human resources within 2013 Air pollution action plan announced. One Belt and One Road Initiative announced and China, we aim to release products and Chinese economy reaches new normal state. 2014 applications designed specifically for Anti-corruption problems surface and APEC forum Chinese markets. held in Beijing. Tianjin explosion accident occurs. Given the many companies in China with One-child policy eased. Shimadzu China Mass Spectrometry 2015 expertise in AI and other new technologies, "Bakugai" (explosive spending) becomes a popular Center established. new term in Japan. we intend to strengthen alliances and Asian Infrastructure Investment Bank (AIIB) started. 2016 develop businesses that originate in China. G20 Summit held in Hangzhou. First International One Belt and One Road Initiative Shimadzu Vacuum Equipment 2017 Collaboration Summit held. (Shanghai) Co., Ltd. established. 2018 Presidential term limits abolished. Xian Analysis Center established.

21 Policies for Business in China

22 Vision Shimadzu Brand Products Originating in China and Expanding Throughout the World

This expresses Shimadzu's global identity.

23 Basic Policies

Using Self-Awareness and an Action-Oriented Approach to Lead Global Businesses of the Shimadzu Group

Thus far, we have achieved a certain amount of Strengthen ability to create success by implementing activities based on 1 businesses. business expansion as our greatest mission. However, in the future, we must establish business capabilities able to achieve sustained Strengthen ability to expand 2 growth, from short, medium, and long-term businesses. perspectives. Given the expanding influence of businesses in China within the Shimadzu Group, it is essential 3 Acquire ability to deploy businesses to create awareness and capabilities for taking a in a smart manner. leadership role within the Group. Due to the rapid market expansion and changes in China, there are many potential business sprouts. Develop human resources able to 4 Therefore, accurately identifying such achieve sustained growth. opportunities is a key prerequisite for deploying new businesses. 24 Key Measures

25 Direction of Market Changes in China

• Increased investment in environmental issues indicated in the 13th 5-year Expanding plan (air, water, and soil pollution) Environmental Markets • Increased number of environment monitoring stations for regulatory compliance in China

Expanding Healthcare • Healthcare reforms and increased number of secondary hospitals and Markets, Including medical checkup clinics to reduce healthcare costs Medical Treatment and • Shift from treatment to increased investment in prevention (pharmaceuticals Foods and health foods)

• Academia markets activated, mainly due to "Double First-Class University Expanding Academia and Plan" Scientific Research • Increased investment in science and technology at various scientific Markets research institutions

• Government structural reforms are expanding rights that were previously concentrated Development of Peripheral at prefectural-level institutions out to regional/city-level institutions as well. Markets • Increased investment in prefectural-level projects and expanded use of contract analysis companies

Rapid Development of • Technological reforms are progressing due to national policy for becoming Information Communication the global leader in AI by 2030. Technologies • Building large-scale network infrastructure by retaining domestic companies

26 1. Strengthen Capabilities Establish System with Seven Locations—Strengthen Inland Business Locations

 In the past, locations were expanded based on economic development in coastal regions and functions of respective locations were strengthened based on coastal regions.  As development increases in inland regions (central, southwest, and northwest regions) in recent years, it has become necessary to strengthen coverage in inland regions.

Beijing Branch established in 1980* Beijing Analysis Center established in 1994* Economic Development Status Within China Deployment of Shimadzu Sales Shimadzu China Mass Spectrometry Center Industrial Company Sales by Region and Service Capabilities established in 2015* Shenyang Branch established in 1985* Shenyang Analysis Center established in 2008* 2.9 fold sales Nanjing Branch established in 2000* The functions growth of industrial South performed at Henan Branch established in 2012* Southwest companies in locations in Urumqi Branch established in 2001* Central Shanghai Branch established in 1982* China during the respective regions Shimadzu Global Application Development East have been Center established in 2008* past 10 years Xian Branch Shimadzu China R&D Division established strengthened as the established in 2001* in 2011* Northwest economy expanded Sales (100Sales M yuan) Sichuan Branch established in 1994* Suzhou Office established in 2003* North in China. Chengdu Analysis Center established in 2012* Wuhan Branch established in 2008* Northeast Shenzhen Branch established in 2003* Kunming Branch established in 2002*

Chongqing Branch established in 2001* Guangzhou Branch established in 1984*

Percent of Industrial Industrial growth was Analytical & Measuring Given the overall market share, Company Sales by Region high in inland regions. Instruments Sales Ratio by there is room for additional growth. Region in China

The ability to serve customers needs to 2015 be strengthened in inland regions with economic development. 2016

Northeast North Northwest East Central Southwest South Northeast North Northwest East Central Southwest South Source: National Bureau of Statistics of China; Note: "sales growth of industrial companies" refers to primary sales earnings of companies with primary sales earnings over 5 million yuan. 27 1. Strengthen Capabilities Establish System with Seven Locations—Strengthen Inland Business Locations  Based on expansion to inland regions with economic development, establish central locations in seven regions in China. (Establish system with seven locations.)  In addition to sales functions, also establish and strengthen analysis centers at the central locations.  Centralize technical service parts and improve operating efficiency at three locations—Beijing, Shanghai, and Guangzhou.

By City/Prefecture (2015) By Major City (2015) Development of Shimadzu Locations in China Number of Sales of Number of Gross Domestic Regular High Industrial Analys is Territories Districts Cities/Prefectures Cities Regular High Product School Students Branches Parts Warehouses Companies Centers Schools (100 B yuan) (Tens of Requirements for Central Locations (100 B yuan) thousands) SPK Northeast Jilin Province Changchun 22,322 58 5,530 43 Heilongjiang Province Harbin 11,719 81 5,751 66  Establish/strengthen analysis Liaoning Province Dalian 33,243 116 7,732 29 Shenyang 7,272 40   centers. North Hebei Province Shijiazhuang 45,648 118 5,441 42 Shanxi Province Taiyuan 14,624 79 2,735 42  Establish technical service parts Tianjin City Tianjin 27,970 55 16,538 51 Inner Mongolia Hohhot 18,926 53 3,091 24 centers (Shanghai, Beijing, and Beijing City Beijing 18,865 91 23,015 60   Northwest Gansu Province Lanzhou 8,689 45 2,096 42 Guangzhou only). Xinjiang Uygur Urumqi Autonomous Region 8,204 44 2,632 18  Qinghai Province Xining 2,171 12 1,132 7 Ningxia Yinchuan 3,473 18 1,494 10 Shaanxi Province Xian 19,691 92 5,801 85   SSH East Anhui Province Hefei 39,064 119 5,660 53 Jiangxi Province Nanchang 32,955 97 4,000 59 Jiangsu Province Nanjing 147,074 162 9,721 81   Recent Trends and Future Development Shandong Province Qingdao 145,629 143 9,300 32 Ji'nan 6,100 71 Shanghai City Shanghai 34,172 67 25,123 51   Given the increase in new plants and Zhejiang Province Hangzhou 63,214 105 10,050 48 Ningbo 8,004 16 other facilities in Xian in recent years, Central Henan Province Zhengzhou 73,366 129 7,312 82  new service locations are being Hunan Province Changsha 35,410 124 8,510 57 Hubei Province Wuhan 43,179 126 10,906 96  established or being strengthened. Southwest Yunnan Province Kunming 9,830 69 3,968 44  Sichuan Province Chengdu 38,646 109 10,801 76  Chongqing City Chongqing 20,902 64 15,717 72  Tibet Autonomous Lhasa 136 6 377 2 Currently, there is no analysis center in Guizhou Province Guiyang 9,877 59 2,891 37 SKC South Hainan Province Haikou 1,662 17 1,162 15 central China, so establish a central Fujian Province Fuzhou 39,591 88 5,618 32 location in Wuhan, the largest city in Xiamen 3,466 14 Guangxi Nanning 20,443 71 3,410 38 central China. Guangdong Province Shenzhen 119,158 143 17,503 9   (NDI only) Guangzhou 18,100 104   Total 13 5 3 Note: "" Planning to establish; "" Small location Source of data broken down by city/prefecture or by major city: National Bureau of Statistics of China 28 1. Strengthen Capabilities Strengthen Service Capabilities and Establish Multi-Level Revenue

Product sales growth rate exceeds competitors, but strengthen capabilities for aftermarket service and consumables sales. Infrastructure has been built for commercializing businesses, such as establishment of a TMP service center in Xian, but now foster businesses that will fully make a major contribution to the profitability of Shimadzu China.

1. Integrate Call Centers with R&D Dept. Pre-sales Improve the ability to generate inquiries/sales leads by improving customer satisfaction with improved customer response capabilities, by increasing the number of Shimadzu fans, and Customer by strengthening pre-sales coverage. Service 2. Strengthen Online Sales Capabilities In addition to previous direct sales and distributor sales networks, also establish online sales capabilities for consumables. 3. Establish New Revenue Sources Post-sales Fully start operation of a reagent sales business. Feedback 29 2. Market Measures Accommodate China-Specific Needs—Strengthen Development Capabilities

Shimadzu has three development departments in China—SRLS (basic research), RDC (product development), and MSC (application development). To strengthen the ability to satisfy needs unique to China, such as on-site analysis and portability, change systems so that the organization can accurately identify and quickly respond to market business opportunities in a comprehensive manner from within China, including development, manufacturing, and sales.

Head Office Technology ADC Research BU Application in Japan Laboratory Business Units Development

MSC Shimadzu China SRLS RDC (CSC)

30 3. New Business Development Expand Alliances in the Clinical Medicine Market

Given the government's measures to strengthen preventive and basic healthcare, clinical medicine is currently one of the fastest growing markets in China. However, entering the market requires overcoming high barriers to entry, such as developing specialized reagents, establishing diagnostic methods, and obtaining CFDA certification. Getting up to speed in this rapidly expanding and developing market and capturing market share will involve the essential problem of building an alliance with a Chinese company that already has established the expertise for satisfying the market. Therefore, we will actively build alliances to quickly enter the market.

31 3. New Business Development Start Businesses to Establish Multiple Revenue Levels

In order to achieve business operations that provide reliable high profitability in rapidly changing markets, another important issue for the future is achieving a business structure that can provide diverse sources of revenue, not only from hardware, but also from software, consumables, and service, for example. Consequently, we will actively start new businesses toward reforming the profit structure accordingly.

• Expand network business 1.

• Expand reagent sales business. 2.

• Launch cell-related businesses. 3.

• Satisfy online business. 4.

32 33