INVESTOR RELATIONS

Today we will introduce TKR Manufacturing Philippines Inc. (TKR Philippines), registration of which was completed in June.

The main entrance of TKR Philippines		The exterior of the building of TKR Philippines
The office of TKR Philippines		The factory of the manufacturing consignee

To date, nms Group has developed businesses in Japan, China (Hong Kong), Malaysia, Vietnam, and Thailand. As announced in ONO’s Voice last month, the Group entered the market in Cambodia to complement its business in Thailand. The Philippines has become our sixth market.

Our key clients, Japanese manufacturers, previously used a vertically integrated model. In other words, they did everything from design development to production to customer service.

Now a horizontally integrated model is being implemented, especially in the electrical appliances manufacturing industry. Subcontractors can be hired for any of the processes and products can be purchased from specialized manufacturers.

We at nms Group have supported Japanese manufacturers with the horizontally integrated model as the contract manufacturer, the consignee for manufacturing, the electronics manufacturing service provider, or the specialized manufacturer that sells alternative power supplies.

We have constructed and operated factories that meet the demands of our clients. However, TKR Philippines will use local electronic manufacturing service providers. We already have the know-how to manage subcontractors in Japan, China, and the U.S. Therefore, we are not concerned about a Japanese quality of production from overseas electronic manufacturing service providers.

In the past many Japanese manufacturers chose China as an overseas location. Today they are shifting their manufacturing sites to other countries mainly in ASEAN, because the manufacturing environment in China no longer cost-efficient. It used to be possible for us to meet the needs of our clients while we had factories in China, however, now there are many options, including Vietnam, Philippines, Thailand, Malaysia, and Indonesia.

We aim to enter as many markets as possible where our clients are located while trying to adapt to their needs, with an emphasis on speed. We will be able to engage in manufacturing by securing reliable subcontractors in advance and managing them in these new markets. Additionally we will construct our own factories. We plan to develop our business while responding to the needs of our clients with a multifaceted and quick approach, taking into account the transition of clients from a vertically integrated model to a horizontally integrated model.