April7,2000Page1SharedServicesisGainingIncreasingMomentuminJapanDueto:CompetitiveSignificantrestructuringactivitiesduetoloworminusgrowthTrendtoreducethenumberofgroupcompaniesunderacorporateumbrella(11.5%ofcorporationsreducedthenumberofoperatinggroups1998versus3.5%in1997)*RegulatoryRecentregulatorychangesrelatedtoholdingcompanyformationcreatesanadditionaloptionforSharedServicesRecentregulatorychangesrelatedtoconsolidatedaccountingisencouragingcompaniestore-thinktheirfinanceandaccountingorganizationsandprocessesTechnologyWidespreaduseofInternetandconnectivityIncreasingpresenceofoutsourcingserviceproviders*Source:1998ToyoKeizaisurveyofJapanesecompaniesApril7,2000Page2SampleofSharedServicesinJapanAvarietyofJapanesecompaniesarealsoworkingonSharedServices....SourceCompanyProjectDescriptionJREastInApril1998,JREast(9020)established“JREastManagementService,”whichperformsaccountingactivitiesforits82groupcompanies.NikkeiBusinessJune21,1999DaicelChemicalIndustriesDaicelChemicalIndustries(4202)willintegrateaccountingandfinancialgroupsinitsheadquarteroffice,reducingstaffsfrom45to25byMarch2001.Itwillalsoslashaccountingoperationsinitsfactories.Thereafter,allaccountingworkswillbeexecutedonlyinitsheadquarter,basedondatatransmittedfromfactories.Priortothisreorganization,itupgradeditsinformationsysteminApril1999.NikkeiFinancialNewspaper,June29,1999NoritakeCo.NoritakeCo.(5331)willintegrategeneralaffairsandaccountingoperationsofitsgroupcompanies.Afterthereorganization,onesharedservicecenterwillbesetupperregion.Itexpectsindirectcostreductionof10%fromthisrestructuring.NikkeiIndustryNewspaper,March14,1999SumitomoCorp.SumitomoCorp.(8053)willreorganizeitstwentycarsalessubsidiariesinEurope.ItwilltransferthemundertheumbrellaofnewadministrativecompanyinBrussels,whichwillcontrolaccounting,humanresource,andinventoryofallcompanies.NikkeiNewspaper,March11,1999ToshibaCorp.ToshibaCorp.(6502)willintegrateitsdomesticfinanceoperationtotheheadquarter.Consequently,itwillcompleteglobalfundraisingandmanagementoperationstofourregionalfinancesubsidiariesinSingapore,NewYork,London,andTokyo.NikkeiNewspaper,April28,1997April7,2000Page3SampleofSharedServicesinJapan….OthersareprovidingserviceslikeanoutsourceserviceproviderSourceCompanyProjectDescriptionFujiBankFujiBank(8317)willstartaservicethatwillenablecompaniestocentralizefundcontrolinEuropeduringFY1997.Thebalancebycurrencyafterbalancesettlementwillbesenttoclients.NikkeiFinancialNewspaper,August19,1997IndustrialBankofJapanIndustrialBankofJapan(8302)providesgroupfinancemanagementservices,fundmanagement,surrogatepayment,netting,andsoon.Usingthisservice,IBJandHitachiLtd.(6501)willstartane-commerceservicethatwillenableconsecutiveprocedure,fromordertopayment.NikkeiNewspaper,July9,1999General“Recently,somenon-financialcompanieshaveestablished‘specialtysharedservicecompany’andtranslatedfinancialoperationsofgroupcompanies:fundraising,assetmanagement,securitizationofloans,fundandforeignexchangemanagementetc.DiamondHarvardBusiness,Apr-May,1999,ATKearneyPetroleum/ChemicalCompanyShowa-ShellrecentlyoutsourcedmuchofitsITsupportfunctionsandisplanningtooutsourceaccountingprocessesformanyofits100subsidiaries.Ernst&YoungInfiniumThisShellChemical/Exxonjointventureoutsourcedmostregionaltransactionalaccountingandtaxfunctions(includingforJapanoperations)toathird-partyserviceprovider(Ernst&Young)inSingapore.Ernst&Young