C O R P O R A T E

P R O F I L E

Shimadzu (Hong Kong) Ltd.

Shimadzu (China) Co., Ltd.

Overview of Shimadzu China

2

Shimadzu (Hong Kong) Ltd.

Shimadzu (China) Co., Ltd.

1980

0.472 billion dollars(As of March 31, 2017)

1,126 (SHK and SSL)(As of March 31, 2017)

5

Established:

Consolidated Sales:

Total Number of Employees:

Consolidated Subsidiaries:

China in Overall Shimadzu Group Operations

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

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

Japan

51.1 %

Americas

12.4 %

Europe

7.3 %

China

16.4 %

Middle East, Oceania & Africa 2.9 %

Other Asian

Countries

9.6 %

DubaiSingapore Australia

ShanghaiSanjo Works

at Kyoto Head OfficeDuisburg, Germany

California, U.S.Maryland, U.S. Sao Paulo, Brazil

South America

ChinaJapanEurope

Middle East & AfricaAsia & Oceania

North America

3

Shimadzu China 2017 Net Sales by Division

(Results for Apr. to Dec.)

Model 2016 Results 2017 Results Year-on-Year

Analytical & Measuring

Instruments285 334 117 %

LC 103 113 110 %

GC 47 49 104 %

MS 51 61 120 %

Other 84 112 133 %

Medical Systems 28 42 153 %

Industrial Machinery 39 42 109 %

Total 352 418 119 %

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)

4

Analytical & Measuring Instruments

Net Sales by SectorPublic 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.

5

民需

官需

大学

2015 2016 2017

15 % 15 % 16 %

34 %31 %

27 %

51 %53 %

58 %

Private sector demand

Public sector demand

Academia

Analytical & Measuring Instruments

Net Sales by Segment

FY 2017 Percent of Main Industries

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.

Industry17/16

Sales Ratio

17/15

Sales Ratio

Pharmaceuticals,

Foods, and

Healthcare102 % 121 %

Chemical,

Electrical, and

Machinery138 % 133 %

Government and

Academia106 % 122 %

Contract Analysis 146 % 178 %

Other 138 % 135 %Overall 117 % 130 %

6

35%

23%

20%

12%

10%医薬・ヘルスケア・食品

化学・電気・機械

官公庁・大学

受託分析

その他

Pharmaceuticals,

healthcare, and foods

Chemical, electrical, and

machinery

Government and

academia

Contract analysis

Other

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.

7

152期 153期 154期 155期

中国年間

日本年間

中国上期

日本上期

152期 153期 154期 155期

中国年間

日本年間

中国上期

日本上期

Big difference

in sales

compared to

Japan

2017201620152014

Analytical & Measuring Instruments

Sales in Japan and China

Sales

catching up

to Japan

2017201620152014

China—Full Year

Japan—Full Year

China—First Half

Japan—First Half

152期 153期 154期 155期

中国年間

日本年間

中国上期

日本上期

Sales moving

significantly

closer to

Japan

2017201620152014

China—Full Year

Japan—Full Year

China—First Half

Japan—First Half

Medical Systems Sales in Japan and China

China—Full Year

Japan—Full Year

China—First Half

Japan—First Half

Industrial Machinery

Sales in Japan and China

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.

8

152期 153期 154期 155期

Net Sales—LC

中国年間

日本年間

中国上期

日本上期

152期 153期 154期 155期

Net Sales—MS

中国年間

日本年間

中国上期

日本上期

152期 153期 154期 155期

Net Sales—Environmental

中国年間

日本年間

中国上期

日本上期

152期 153期 154期 155期

Net Sales—GC

中国年間

日本年間

中国上期

日本上期

Exceeded Japan

for the first time

in two years.

Maintained highest

sales in the world.

Business expected to

expand further.

Achieved

higher sales

than Japan for

the first time

this term.

Exceeded Japan

for the first time

in two years.

2017201620152014

2017201620152014

2017201620152014

2017201620152014

China—Full Year

Japan—Full Year

China—First Half

Japan—First Half

China—Full Year

Japan—Full Year

China—First Half

Japan—First Half

China—Full Year

Japan—Full Year

China—First Half

Japan—First Half

China—Full Year

Japan—Full Year

China—First Half

Japan—First Half

Large Network in China

9

3 R&D centers

4 Manufacturing locations

5 Analysis centers

14+ Sales and service locations

90+ Joint research laboratories

Group Companies and Branches in China

Consolidated Sales: Approx. 0.6 billion dollars

Total Number of Employees: Almost 1,800

(Including 55 Expats)

• March 2018 estimate

Sales/Service Subsidiaries(1) Shimadzu (Hong Kong) Ltd. established in 1997

(2) Shimadzu (China) Co., Ltd. established in 1998

(3) Shimadzu (Guangzhou) Analysis & Technology

Services Co., Ltd. established in 2006

(4) Shimadzu Research Laboratory (Shanghai) Co., Ltd.

established in 2007

(5) Shimadzu-GL Sciences (Shanghai) Laboratory

Supplies Co., Ltd. established in 2007

Manufacturing Subsidiaries

(6) Beijing Shimadzu Medical

Equipment Co., Ltd.

Established in 1992Production of medical X-ray diagnostic imaging systems

(7) Tianjin-Shimadzu Hydraulic

Equipment Co., Ltd.

Established in 1994Manufacturing and sales of hydraulic gear pumps

(8) Shimadzu (Suzhou) Instruments

Manufacturing, Co., Ltd.

Established in 1998Production of analytical instruments and environmental measurement instruments

(9) Ningbo Shimadzu Vacuum

Technology Development Co., Ltd.

Established in 2005Manufacturing and sales of vacuum furnaces

Beijing Branch established in 1980*

Beijing Analysis Center established in 1994*

Shenyang Branch established in 1985*

Shenyang Analysis Center established

in 2008*

Nanjing Branch established in 2000*

Henan Branch established in 2012*

Shanghai Branch established in 1982*

Shimadzu Global Application Development

Center established in 2008*

Shimadzu China R&D Division established

in 2011*

Suzhou Office established in 2003*

Wuhan Branch established in 2008*

Shenzhen Branch established in 2003*

Guangzhou Branch established in 1984*

Urumqi Branch established in 2001*

Xian Branch established in 2001*

Sichuan Branch established in 1994*

Chengdu Analysis Center established in 2012*

Kunming Branch established in 2002*

Chongqing Branch established in 2001*

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R&D Centers

11

January 2011

Analytical instruments for China markets

Established:

R&D Field:

Shimadzu China R&D Division

March 2013

Advanced mass spectrometry technologies

Established:

R&D Field:

Shimadzu Research Laboratory

(Shanghai) Co., Ltd.

Application Research and Development Center

12

October 2015

MS applications for China and

world-wide markets

Clinical, food safety,

environmental, pharmaceuticals,

chemicals, etc.

Established:

R&D Fields:

Shimadzu China Mass

Spectrometry Center (Beijing)

Manufacturing Locations

13

SSM (Suzhou)

BSME (Beijing)

NSC (Ningbo)

TSH (Tianjin)

Analytical Instruments Industrial Machinery

Medical Systems Fluidics Devices

Analysis Center

14

Shanghai, Beijing, Guangzhou,

Shenyang, and Chengdu

Various contract analysis

and analysis on request

LC, GC, LCMS, GCMS,

ICPMS, AA, UV, FTIR, etc.

Analytical Fields:

Xian Analysis Center to be established

in May 2018

Offering Customers Total Solutions

15

Shimadzu (Guangzhou) Analysis & Technology

Services Co., Ltd. (SAT)

Analysis service for automotive, consumer

electronics, toys, fibers, and food industries

Company:

Business Fields:

Contract Analysis Service

Shimadzu-GL Sciences (Shanghai) Laboratory

Supplies Co., Ltd. (SGL)

Sale of consumables for analytical instruments

(For Shimadzu and non-Shimadzu brands)

Company:

Business Fields:

Consumables Sales

Large Network of Joint Laboratories

Breakdown by Industry

Pharmaceutical

Food

SafetyEnvironmental

Academic and Research Institutions

Public Safety and Police

Contract Analysis

Materials

Entry-Exit Inspection and Quarantine Bureau

2017 Shimadzu Joint Laboratories

16

０

17

History of Business in China

Shimadzu Corporation Business Development in China(1) From 1956: Transactions started and

(2) From 1978: Chinese economic reforms started

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Year Events in China Shimadzu China

1949 People's Republic of China established.

1953 First 5-year plan started.

1956Guangzhou/China Export Product Exhibition held

(predecessor of Canton Fair).

Participation in First Beijing-Shanghai Japan

Trade Fair

First Shimadzu delegation to visit China (Toyozo

Nishikawa and others)

1958

Nagasaki National Flag Incident and all China-Japan

trade canceled.

Chinese Great Leap Forward campaign started.

1960 China-Japan trade resumes. (Friendly trade starts.)

1966Third 5-year plan started.

Cultural Revolution starts.

1968 Cultural Revolution continues and Deng Xiaoping exiled. First Annual Cooperation Agreement signed.

1972Japan-China Joint Communiqué signed and Japan-

China relations normalized.

1973 Deng Xiaoping reinstated in Beijing. Participation in Canton Fair

1976Premier Zhou Enlai dies (January 8).

Chairman Mao Zedong dies (September 9).China Automation Equipment Exhibition

1978

China-Japan Peace and Friendship Agreement signed.

Path for Chinese economic reforms and Deputy

Premier Deng Xiaoping visits Japan.

1979Prime Minister Ohira visits China and officially offers

Japanese-government-backed yen loan.

Analytical instrument service station

established in Beijing.

1980Special economic zones designated in Shenzhen,

Zhuhai, Shantou, and Xiamen.Beijing Branch established.

1982 One-child policy started. Shanghai Branch established.

1984Prime minister Nakasone visits China and 21st Century

Committee for Japan-China Friendship inaugurated.Guangzhou Branch established.

1985 Import/export tariff ordinance implemented. Shenyang Branch established.

President Ryoji Uenishi meets

with Premier Zhou Enlai in 1973

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 National 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.

Shimadzu Corporation Business Development in China(3) From 1990: Period of Introducing Market Economy

19

Year Events in China Shimadzu China

1992Deng Xiaoping gives "South Tour

Speeches."

Beijing Shimadzu Medical Equipment Co.,

Ltd. established.

1993 Jiang Zemin appointed as President.

1994General reforms implemented for

external trade system.

Tianjin-Shimadzu Hydraulic Equipment Co.,

Ltd. established.

Beijing Analysis Center established.

Sichuan Branch established.

1997 Hong Kong returned to China. Shimadzu (Hong Kong) Ltd. established.

1998Jiang Zemin visits Japan (first time

since the country was founded).

Shimadzu (China) Co., Ltd. established.

Shimadzu (Suzhou) Instruments

Manufacturing, Co., Ltd. established.

1999 Macau returned to China.

2000Jiang Zemin submits "Three

Represents" theory.Nanjing Branch established.

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."

Medical Device Plant

(BSME)

1992

Hydraulic Equipment

Plant (TSH)

1994

Hong Kong Office

(SHK)

1997

Analytical Instruments

Plant (SSM)

1998

Trade Office (SSL)

1999

Shimadzu established joint venture

manufacturing subsidiaries for medical

devices in Beijing and gear pumps in

Tianjin.

Shimadzu also steadily established a

business base that integrated

manufacturing and sales operations in

China, such as by establishing a wholly-

owned analytical instrument

manufacturing subsidiary in Suzhou.

Shimadzu Corporation Business Development in China(4) From 2001: Opened markets by joining WTO

20

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

2001 China joins WTO.

Chongqing Branch established.

Xian Branch established.

Urumqi Branch established.

2002Policy to comprehensively build a

moderately prosperous society.Kunming Branch established.

2003Hu Jintao appointed as President.

SARS outbreak occurs.

Shenzhen Branch established.

Suzhou Office established.

2004Goals for a harmonious society

submitted.

2005Ningbo Shimadzu Vacuum Technology

Development Co., Ltd. established.

2006Eight Honors and Eight Shames

submitted.

Shimadzu (Guangzhou) Analysis &

Technology Services Co., Ltd. established.

2007Scientific Outlook on Development

submitted.

Shimadzu Research Laboratory (Shanghai)

Co., Ltd. established.

Shimadzu-GL Sciences (Shanghai)

Laboratory Supplies Co., Ltd. established.

2008Sichuan earthquake occurs.

Beijing Olympics

Wuhan Branch established.

Shenyang Analysis Center established.

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.

Contract Analysis

Subsidiary (SAT)

2006

Basic Research

Laboratory (SRLS)

2007

Consumable Sales

Subsidiary (SGL)

2007

Application

Development Center

(G-COE)

2008

Shimadzu Corporation Business Development in China(5) From 2010: Becoming the World's Second Largest Economy

21

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

2010

GDP surpasses Japan to become the world's second

largest.

Expo 2010 Shanghai China

2011Environmental protection philosophy "Lucid waters

and lush mountains are invaluable assets" submitted.

Shimadzu China R&D Division

established.

CIPO (Procurement Department)

established.

2012 Xi Jinping appointed as President.Henan Branch established.

Chengdu Analysis Center established.

2013 Air pollution action plan announced.

2014

One Belt and One Road Initiative announced and

Chinese economy reaches new normal state.

Anti-corruption problems surface and APEC forum

held in Beijing.

2015

Tianjin explosion accident occurs.

One-child policy eased.

"Bakugai" (explosive spending) becomes a popular

new term in Japan.

Shimadzu China Mass Spectrometry

Center established.

2016Asian Infrastructure Investment Bank (AIIB) started.

G20 Summit held in Hangzhou.

2017First International One Belt and One Road Initiative

Collaboration Summit held.

Shimadzu Vacuum Equipment

(Shanghai) Co., Ltd. established.

2018 Presidential term limits abolished. Xian Analysis Center established.

As China evolves into a global market and

achieves additional growth, Shimadzu

established high-end development

locations specialized in mass

spectrometers and other R&D locations.

Using talented human resources within

China, we aim to release products and

applications designed specifically for

Chinese markets.

Given the many companies in China with

expertise in AI and other new technologies,

we intend to strengthen alliances and

develop businesses that originate in China.

22

Policies for Business in China

Vision

23

Shimadzu Brand Products Originating in China

and Expanding Throughout the World

This expresses Shimadzu's global identity.

Thus far, we have achieved a certain amount of

success by implementing activities based on

business expansion as our greatest mission.

However, in the future, we must establish

business capabilities able to achieve sustained

growth, from short, medium, and long-term

perspectives.

Given the expanding influence of businesses in

China within the Shimadzu Group, it is essential

to create awareness and capabilities for taking a

leadership role within the Group. Due to the

rapid market expansion and changes in China,

there are many potential business sprouts.

Therefore, accurately identifying such

opportunities is a key prerequisite for deploying

new businesses.

Strengthen ability to create

businesses.1

Strengthen ability to expand

businesses.2

Acquire ability to deploy businesses

in a smart manner.3

Develop human resources able to

achieve sustained growth.4

Basic Policies

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

24

25

Key Measures

Direction of Market Changes in China

26

• Increased investment in environmental issues indicated in the 13th 5-year plan (air, water, and soil pollution)

• Increased number of environment monitoring stations for regulatory compliance in China

Expanding

Environmental Markets

• Healthcare reforms and increased number of secondary hospitals and medical checkup clinics to reduce healthcare costs

• Shift from treatment to increased investment in prevention (pharmaceuticals and health foods)

Expanding Healthcare Markets, Including

Medical Treatment and Foods

• Academia markets activated, mainly due to "Double First-Class University Plan"

• Increased investment in science and technology at various scientific research institutions

Expanding Academia and Scientific Research

Markets

• Government structural reforms are expanding rights that were previously concentrated at prefectural-level institutions out to regional/city-level institutions as well.

• Increased investment in prefectural-level projects and expanded use of contract analysis companies

Development of Peripheral Markets

• Technological reforms are progressing due to national policy for becoming the global leader in AI by 2030.

• Building large-scale network infrastructure by retaining domestic companies

Rapid Development of

Information Communication

Technologies

27

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.

The ability to serve

customers needs to

be strengthened in

inland regions with

economic

development.

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.

Economic Development Status Within ChinaIndustrial Company Sales by Region

Sale

s (

100

Myuan) 2.9 fold sales

growth of industrial

companies in

China during the

past 10 years

South

Southwest

Central

East

Northwest

North

Northeast

Percent of Industrial

Company Sales by RegionIndustrial growth was

high in inland regions.

Northeast North Northwest East Central Southwest South

Deployment of Shimadzu Sales

and Service Capabilities

Beijing Branch established in 1980*

Beijing Analysis Center established in 1994*

Shimadzu China Mass Spectrometry Center

established in 2015*

Shenyang Branch established in 1985*

Shenyang Analysis Center established

in 2008*

Nanjing Branch established in 2000*

Henan Branch established in 2012*

Shanghai Branch established in 1982*

Shimadzu Global Application Development

Center established in 2008*

Shimadzu China R&D Division established

in 2011*

Suzhou Office established in 2003*

Shenzhen Branch established in 2003*

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

Kunming Branch established in 2002*

Sichuan Branch established in 1994*

Chengdu Analysis Center established

in 2012*

Xian Branch

established in 2001*

Urumqi Branch established in 2001*

Wuhan Branch established in 2008*

The functions

performed at

locations in

respective regions

have been

strengthened as the

economy expanded

in China.

Northeast North Northwest East Central Southwest South

2015

2016

Given the overall market share,

there is room for additional growth.Analytical & Measuring

Instruments Sales Ratio by

Region in China

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.

28

Territories Districts Cities/Prefectures Cities

Sales of

Industrial

Companies

(100 B yuan)

Number of

Regular High

Schools

Gross Domestic

Product

(100 B yuan)

Number of

Regular High

School Students

(Tens of

thousands)

BranchesAnalysis

CentersParts Warehouses

SPK Northeast Jilin Province Changchun 22,322 58 5,530 43

Heilongjiang Province Harbin 11,719 81 5,751 66

Liaoning Province Dalian 33,243 116 7,732 29

Shenyang 7,272 40 r

North Hebei Province Shijiazhuang 45,648 118 5,441 42

Shanxi Province Taiyuan 14,624 79 2,735 42

Tianjin City Tianjin 27,970 55 16,538 51

Inner Mongolia Hohhot 18,926 53 3,091 24

Beijing City Beijing 18,865 91 23,015 60

Northwest Gansu Province Lanzhou 8,689 45 2,096 42

Xinjiang Uygur

Autonomous Region

Urumqi

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 r

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 r

Shandong Province Qingdao 145,629 143 9,300 32

Ji'nan 6,100 71

Shanghai City Shanghai 34,172 67 25,123 51

Zhejiang Province Hangzhou 63,214 105 10,050 48

Ningbo 8,004 16

Central Henan Province Zhengzhou 73,366 129 7,312 82

Hunan Province Changsha 35,410 124 8,510 57

Hubei Province Wuhan 43,179 126 10,906 96

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

Region

Lhasa 136 6 377 2

Guizhou Province Guiyang 9,877 59 2,891 37

SKC South Hainan Province Haikou 1,662 17 1,162 15

Fujian Province Fuzhou 39,591 88 5,618 32

Xiamen 3,466 14

Guangxi Nanning 20,443 71 3,410 38

Guangdong Province Shenzhen 119,158 143 17,503 9 r (NDI only)

Guangzhou 18,100 104

Total 13 5 3

By City/Prefecture (2015) By Major City (2015) Development of Shimadzu Locations in China

Currently, there is no analysis center in

central China, so establish a central

location in Wuhan, the largest city in

central China.

Given the increase in new plants and

other facilities in Xian in recent years,

new service locations are being

established or being strengthened.

Establish/strengthen analysis

centers.

Establish technical service parts

centers (Shanghai, Beijing, and

Guangzhou only).

Requirements for Central Locations

Recent Trends and Future Development

Note: "" Planning to establish; "r" Small location

Source of data broken down by city/prefecture or by major

city: National Bureau of Statistics of China

1. Strengthen CapabilitiesStrengthen Service Capabilities and Establish Multi-Level Revenue

29

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.

Pre-sales

Post-sales

Customer Service

Feedback

1. Integrate Call Centers with R&D Dept.

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

by strengthening pre-sales coverage.

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

Fully start operation of a reagent sales

business.

2. Market Measures Accommodate China-Specific Needs—Strengthen

Development Capabilities

Technology Research Laboratory

BUBusiness Units

ADCApplication

Development

30

SRLS RDCMSC(CSC)

Head Office

in Japan

Shimadzu China

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.

31

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.

32

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.

1.• Expand network business

2.• Expand reagent sales business.

3.• Launch cell-related businesses.

4.• Satisfy online business.

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

33