ITOCHU Corporation Textile Company

Textile Company As a marketing company with strengths in consumer-related sectors,the Textile Company has for many years demonstrated a firm pres-ence in the textile industry. Itochu Textile Company is the only gener-al trading company in Japan which maintains "textile" as an inde-pendent business entity and is proud of its top billing among generaltrading companies in Japan. Operations cover all aspects of the textileindustry, ranging from the upstream businesses, the founding busi-ness of ITOCHU, in fiber raw materials, textiles and materials to mid-and downstream areas such as the apparel business, the brand busi-ness and retail operations. The Textile Company has always strived toplay a leading role in the industry and created new business models.Deeply rooted in the Textile Company's strengths is the concept of acustomer-oriented marketing company, based on which we developbusinesses by identifying new value in every aspect of a businessprocess. Unique aspect of a general tranding company can be foundas the Textile Company is expanding its portfolio by consolidating thecompetences of employees, including a wealth of experience, exten-sive and thorough expertise, commitment, and the capacity to takequick action, as well as by strengthening the value chain with numer-ous business partners. We will continue to fearlessly take on newchallenges to promote innovation and further deepen our ties withour business partners in order to achieve mutual growth.

Developing Businesses Related toAll Aspects of the Textile Industryto Supply Diverse Materials andProducts on a Global Scale

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Robust Value Chain that canDemonstrate its Potential WorldwideThe Textile Company currently conducts business across the globe-inEurope, North, Central and South America, the Middle East, China andother parts of Asia. In the future, we anticipate that an even moreproactive stance will be required to do business in overseas markets.Asian countries, in particular, are beginning to establish their presencenot only as manufacturing bases, but also as valuable consumermarkets. These markets are extremely important for the TextileCompany, however, they also involve numerous risks, making it diffi-cult for apparel companies to individually create a business portfolio inthese areas. Strategic utilization of the infrastructure possessed by theTextile Company as a general trading company can be expected to playa major role here.A reliable value chain has already been created in Japan within thenetwork of businesses operated by the Textile Company, spanning allareas of the textile industry. Through strong partnerships with variousleading companies in other countries, the value chain can demonstrateits full potential overseas as well. We must harness this potential to themaximum to organically combine our strengths, including the distinc-tive experiences in raw materials, our manufacturing network in appro-priate locations, our commitment to monozukuri (manufacturing), andthe wealth of experience we possess in the brand-related business, andstrive to provide highly attractive value added products. Aiming to fur-ther step up operations in overseas markets as the next stage, we willfurther bolster the value chain and expand our business in a dynamicand deliberate manner.As a textile company with wide-ranging operations across the con-sumer-related sector, the Textile Company will transition to a newstage while responding to changes in a timely manner, thus contribut-ing to the revitalization of the textile industry as a whole.

Customer-OrientedMarketing Company ConceptIn recent years, the Textile Company has been faced with many chal-lenges, significant among which was the issue of identifying potentialbusiness opportunities and developing them into profitable operationswhile responding to drastic changes in the business environment sur-rounding the textile industry, as well as market contraction in Japan.We strategically teamed up with leading companies in Japan and over-seas to create diverse and robust business portfolios and, even today,continue to expand our business fields.We believe that it was our approach as a customer-oriented marketingcompany that helped us take on these challenges and steadily trans-form it into company growth. Itochu Corporation has always been aninnately resilient company that proactively seeks out new businessopportunities in the market and develops that business to steadilyboost profits. Drawing on this strength, the Textile Company, despite aharsh economic climate, was able to expand its business to compre-hensively cover all areas of the textile industry, create a unique busi-ness model and evolve.In order to achieve growth under uncertain market conditions, it isnecessary to show initiative in all areas of business. Further, we muststrengthen and expand our business portfolio through cross-industrytieups and increased collaboration with partner companies. This meansadopting a customer-oriented marketing company approach to createhigh quality forms of business that will lead to the mutual growth ofboth the partner company and the Textile Company. We are commit-ted to enriching the lives of ever more people through our businessoperations and consider it our mission as a textile company within theconsumer-related sector to work towards perfecting our skills.

Expanding and Strengthening BusinessOperations to Achieve Mutual GrowthHitoshi OkamotoDirector Senior Managing Executive OfficerPresident, Textile Company

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Developing High Value Added Products and Services thatMeet Global Standards with A Thorough Emphasis on theCustomer-oriented ApproachItochu Corporation was founded to undertake linen and fabric trading operations.The materials business positioned upstream in the textiles industry was the originalbusiness of the company. Today, we supply high value added products and servic-es that utilize advanced technological capabilities, including fiber raw materialssuch as yarn and cotton, textiles and functional materials. We are continuingefforts to build on the vast knowledge and knowhow accumulated over the yearsand further expand our business network.The materials business is engaged in global sales of high-value added textiles incollaboration with prominent textile manufacturers from the Hokuriku and othertextile manufacturing regions in Japan. Further, through our competitive manufac-turing network throughout Asia we supply a diverse range of products and serviceson a global scale. These high value added products and services have been wellreceived by leading apparel manufacturers and manufacturers of top-end brands,as well as the Middle Eastern market. In the functional materials area, we areactively developing new products and creating new markets. The state-of-the-artfunctional materials we supply are developed in different locations around theworld and include temperature adjusting materials (with heat retention and coolingfunctions), as well as materials with anti-odor functions. The Pre-Organic Cotton(POC) program was launched in order to assist Indian cotton farmers to adoptorganic cultivation methods. The program has helped create a new market andproducts are being developed in cooperation with numerous apparel manufactur-ers.Moving forward, we will adopt a more customer-oriented approach to better under-stand consumer needs, develop high-value added products and services and supplythem worldwide.

From Materials to Lifestyle related Goods-Building a SupplyChain in the Non-textiles AreaIn the non-textiles area, we are expanding our business globally to cover all kindsof fibers and materials, from cutting-edge industrial fibers with advanced function-ality to non-woven textiles used for disposable diapers and other sanitary items.For automobile use, we handle fibers used for floor carpets, airbags, and seatbeltsas well as fibers used for tires and mechanical belt reinforcement. Our materialsbusiness also handles composites used to make golf club shafts and the interiors ofrailcars and aircraft. In addition, we deal in all kinds of adhesive tapes, abrasivecloths used in the electronics field, waterproof roofing materials and nonwovenfabrics used in construction and civil engineering, interior products such as cur-tains and carpets, and functional bedding products such as materials for luxurydown quilts. We are also focusing our efforts in the life & healthcare business area,where demand is expected to grow as society ages. Our initiatives in this areainclude linen supply for hospitals and medical and welfare facilities.The non-textile area business is projected to grow in the future, particularly inAsian countries and emerging markets. We are currently utilizing our global net-work to develop suppliers in each region. Recognizing the need for business trans-actions that cut across national boundaries by utilizing our production bases in theAsian region (China, Thailand, Indonesia and India), efforts are also underway tofurther expand and strengthen our robust value chain, drawing on the experienceand knowhow we have gained from operations to date.

Material

Enhancing BusinessOpportunities through theCreation of New Valuethat Draws on a GlobalProduction Network

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Fashion

Providing Added Value inAll Kinds of GarmentsThrough Proposals Based onthe Value Chain

Manufacturing with High Added Value and Proposals toRespond to Various Consumer NeedsOur apparel business, that focuses on apparel manufacturing, has production func-tions both in Japan and overseas to create high quality garments, ranging frommen's and ladies' fashion wear to casual clothing, sportswear and underwear aswell as uniforms and work clothes.Our capability to create high quality garments can be attributed to the experiencewe have accumulated in the course of handling diverse textiles since our founding,the knowledge we have gained of materials and garments, and the planning skillsfrom a marketing perspective and knowhow acquired with regard to logistics sys-tems. As a result, we are evolving from an original equipment manufacturing(OEM) business that is only engaged in manufacturing into an original design man-ufacturing (ODM) business covering everything from product development to pro-duction. In recent years, through collaborative efforts with our partners in Japanand overseas, we have further refined our skills in making ODM proposals and arecreating frameworks to raise value in all manufacturing processes from procure-ment of materials to production.Our apparel business boasts a broad range of sales channels, including apparelmanufacturers, department stores, boutique stores, SPA-type retailers, volume sell-ers, and mail-order sales. In addition to garments, we now offer a full range ofother fashion-related items such as bags, shoes, and accessories.

Capitalizing on Our Diverse Partnerships to Build A StrongerValue ChainIn recent years, we have proactively and strategically engaged in capital tieupswith leading companies in various business fields. As the speed of change in thefashion and apparel industry accelerates, this is a strategic move designed to gain acompetitive edge in the speedy supply of high quality products by capitalizing onthe synergy gained from combining the roles of each company in different process-es, from materials procurement to sales.Therefore we have entered into collaborative agreements with leading companiesrelated to the production of secondary materials that are indispensable for apparelmanufacture, as well as leading apparel retail companies and stores. Further, weare also expanding our production network. Overseas, in particular, we haveformed partnerships in China and have acquired a major UK-based apparel manu-facturer and wholesaler, thus extending our manufacturing bases to new locationsin India, Cambodia and other countries. In Japan, China and other parts of Asia,we are creating a structure that can organically cover the entire supply chain frommaterial development to garment production.Looking ahead, we will enhance our value chain while keeping an eye on trends inthe global market. In Japan and other Asian countries, and in Europe and the US,we will draw on our strength to produce high value added products at appropriatelocations, backed by our expertise in proposing materials and the ample number ofmanufacturing sources we operate. We will further strengthen our role as a truemarketing company to realize growth for Itochu and all our partners.

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Utilizing our Expertise in Merchandising to Expand Sales ofImported Brands from Japan to the Rest of AsiaThe Textile Company has pioneered the brand business in the textile industry throughthe development of a new business model, namely the provision of products withadded value in the form of a brand name. Positioned as a downstream business withinthe textiles industry, our brand business has evolved and expanded over time. Initially,our operations in this area revolved around licensing, the import of well known brandsfrom Europe and the US, acquisition of master licensing rights in Japan and forming ofalliances with sub-licensees. Today, however, our multilayered business models havemade us the industry leader in this area. Capitalizing on our unique marketing capabil-ities, we have established business models that include not only the import businessbut also license combinations, the production of branded products that we handle, aswell as the acquisition of trademark rights and participation in management.In addition to the wide range of garments we handle, ranging from luxury brands tosportswear to casual clothing, we also deal in numerous brands of shoes, bags andother accessories, consistently fulfilling our role as the industry leader. Together withmore than 250 sub-licensees and distributors, we are striving to maximize the value ofbrands in the global market.Drawing on our expertise in the brand business, we are expanding our scope of busi-ness to include all lifestyle-related products. By foraying into new areas, we are aimingto further evolve our business model.

Further Strengthening Our Capabilities for Global Expansion ofOperations from Product Planning to ProductionThe brand business today requires more than just design, quality and other featuresthat contribute to product attractiveness. Comprehensive strengths encompassing mer-chandising, global sourcing and logistical capabilities are also prerequisites. One suchbusiness model is the American casual bag brand, LeSportsac. We now own worldwidetrademark and distribution rights to this brand and handle all aspects of operation,from product planning to design, production and marketing, making it one of our corebusinesses.Creation of print designs for the LeSportsac brand is centralized in New York, whilevisual merchandising is carried out in Japan for the rest of the world and productionmanagement functions are consolidated in Hong Kong. Through skillful communica -tion between the different bases, we manage all processes from planning to productionand sales and are engaged in ongoing efforts to refine our competencies and respondin an appropriate manner to the diverse needs of markets worldwide.The Japanese market used to be the main focus of our brand business. From here onin, however, expansion of operations to other Asian and emerging markets centered onChina will be key to realizing further growth. We must not restrict our operations toacquiring trademark rights in Asia (including Japan) and emerging markets, but mustdevelop businesses based on a long-term perspective. In order to do this, we are confi -dent that the knowhow accumulated in global expansion of the LeSportsac brand willstand us in good stead.We will work towards extending the areas of operation in our brand business, as wellas aim for further growth while seeking out new business models to steadily expandour activities to overseas markets.

Brand

Expanding Operations to theGlobal StageThrough Consistent Effortsto Improve Brand Value

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GlobalNetwork

The Textile Company conducts business on a global scale, harnessing the expertiseand network it possesses as a general trading company. Operations are centered onfour major companies, Itochu Textile (China) Co., Ltd., Itochu Textile Prominent(Asia) Ltd (Hong Kong), Itochu Prominent USA LLC and Itochu Europe PLC, withother bases in Asia, the CIS, the Middle East and South America assigning numer-ous employees. Further, through collaborations with overseas partner companies,we have been able to establish large-scale production platforms and extensive salesnetworks. Utilizing these global networks to the maximum, the Textile Company isconstructing a value chain that can be adopted by all business processes.In the future, our operations in overseas markets will assume an increasingly crucialrole in the company's overall business. We are committed to expanding andstrengthening our global networks and will fearlessly strive to gain widespreadacceptance in markets in each region.

Seeking Out New Opportunities onthe Global Stage and Transforming Them intoSuccessful Businesses

In 2012 we acquired major UK-based manufac-turer and wholesaler Bramhope Group HoldingsLtd. that boasts as its main customer, therenowned UK retailer Marks & Spencer PLC.The company owns top-notch factories in India,Sri Lanka and Cambodia and also has collabora-tive ties with factories in China and other Asiancountries. Going forward, we plan to utilizeBramhope's production platform to the fullestand accelerate sales of textile products tomajor retailers in Europe, Japan and other partsof the world.

In China, we are strengthening domestic salesthrough Itochu Textile (China) Co., Ltd. We arealso working to strengthen relations with ourexcellent local business partners, includingShandong Ruyi Science and Technology Group,a leading textile conglomerate with widespreadoperations across the entire textile industry,and Ningbo Shanshan, that engages in collabo-rative activities with the entire Itochu Groupranging from brand marketing to real estate.Itochu Textile Prominent (Asia) Ltd. in HongKong is engaged in expanding domestic salesand bolstering our sourcing functions withinAsia.

In 2013, Itochu Prominent USA LLC acquiredthe sales rights for men's clothing brands in theUS. As consumption recovers in the US, weanticipate the market will return to its pre-recession size. We are taking proactive meas -ures to build a new business model that willallow us to enhance our share of the US mar-ket.

In 2012, the Textile Company dispatchedemployees to South America, who are nowbased in Brazil where the 2014 World Cup and2016 Olympics are scheduled to be held, to dis-cover new clothing brands and develop newmarkets. We have already introduced to Japana globally famous brand of sandals from Braziland future expectations of the region are high.

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History & Future

Role Played by the Textile Company in theTransformation from Itinerant Trading of Linento General Trading CompanyIn 1858, Chubei Itoh, the founder of Itochu Corporation, set out on a jour-ney from Toyosato Village, Shiga Prefecture, to Nagasaki, carrying somelinen in his bags. This was also the year Itochu Corporation was founded.In 1872, he established Benichu, a drapery shop in Honmachi, Osaka, tosell linen, woven fabrics, woolen cloth and other textiles. Itoh Itomise, athread and yarn wholesaler was founded in Azuchi, Shiga, in 1893. ItochuCorporation traces its roots to this store.In the early 1900s, the scope of business was gradually expanded toinclude the export of processed cotton fabric, management of a cottonyarn spinning company, and exports of rayon and rayon products. Havingovercome the economic controls imposed before and during the SecondWorld War, the company went on to become a leading industry presenceafter the war. As its history shows, the very origin of Itochu Corporationlies in textiles.As time went by, the textiles divisions of other companies began to losetheir momentum. Itochu Corporation on the other hand continued with itsoriginal business, expanding its operations to stay ahead of its competitorsin the race. The Textiles Company came into being in 1997 with the cre -ation of specialized divisions within the company.Today, the Textiles Company handles a wide range of products and servic-es focused on textiles. This growth, we believe, was made possible by ourconsistent efforts to create and adopt unique business models. Motivationfor these efforts was provided in part by the brand business. Begun in1978 to sell imported fabric for custom-made mens suits, our brand busi -ness currently boasts the strongest position in the industry. Since 1999, thebrand business has also been involved in strategic operations that requireclose communication with the brand owner companies, such as the acqui -sition of trademark rights and M & As.The success described above reflects an approach that is characteristic ofthe Textile Company-the continual evolution of business practices by gain -ing knowhow; developing networks that, from a marketing perspective,feed information on customer needs back to production divisions; and cre-ating unique business models that enable appropriate brand management.

Continual Evolution of the Business Modelto Stay Ahead in Consumer-related Sectors

Continuing to Work and Grow Together with AllBusiness PartnersThe strengths that underlie the Textile Company's continually evolvingbusiness model can be attributed to the access it enjoys to the functions ofa general trading company and its ability to create new value.In the raw materials field, we have commenced production of environmen-tally friendly products, one example of which is Pre-Organic Cotton. Weare also developing materials and lifestyle-related products and exploringpotential in non-textile areas as we continue to take on new challenges inthe textile industry, combining traditional and innovative methods andadding value through our sense of commitment. In the apparel business,based on our strong commitment towards manufacturing we have devel-oped a consolidated system that handles everything from raw materials tofabrics and the sewing of garments. We are implementing meticulous mar-keting strategies and merchandising practices that are in line with thetrends to realize high value added manufacturing. At the same time, weare also engaged in strengthening our partnerships with leading companiesin Japan and overseas with the objective of further expanding our businessareas through those collaborative relationships.In the brand business, the Textile Company has implemented strategic ini -tiatives to acquire trademark rights and participate in management, as wellas obtain master licensing rights from the perspective of imports and sales.Simultaneously, we are also making an entry into the entire lifestyle solu -tions business by expanding from the garments business into the marketingof food and housing.Through these initiatives the Textile Company is operating on a globalstage while working consistently to expand and strengthen its businessactivities in all areas of the textile industry. Added value is created byadopting a customer-oriented marketing company approach and by capi-talizing on the functions of a general trading company. The ability to trans-form these into successful forms of business is a strength of the TextileCompany. We will also draw on the expertise of our partner companiesand our robust value chain to actively promote global expansion of opera-tions.While focusing on textiles, its main pillar of business, the Textile Companywill continue to dedicate its efforts towards growing together with its part -ners in all areas of business.