Non-Resource Strategy Propels ITOCHU to Top
Thanks to a conscious strategy of minimizing the volatile commodities sector and focusing instead on consumer and other non-resource business, ITOCHU International's parent company ITOCHU Corporation is expected to record the highest profit among Japan's leading trading houses (sogo shosha) for the current fiscal year. A recent article by Bloomberg says that the global commodities slump may result in as much as $13 billion in write downs by the trading houses while ITOCHU, which has only limited exposure to resources, is among the most likely to avoid large write downs.

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ITOCHU Strengthens its Chinese Language Communication Skills
ITOCHU Corporation, parent of ITOCHU International Inc., further bolstered its already strong presence in China in early 2015 with the largest ever investment in a Chinese company by a Japanese firm. ITOCHU's recent announcement that it would greatly increase the number of employees fluent in Chinese attracted media attention on both sides of the Pacific.

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Sonoma County Firm to Energize Organic Bakery
October 4, 2010 -- ROHNERT PARK, Calif.—(Business Wire) Question: What smells like fresh bread and creates energy from the sun? Answer: The roof at Alvarado Street Bakery in Petaluma, California.

“All basic components of the system are made or assembled here in America, providing green jobs at a crucial moment in this economy. Stellar Energy applauds Alvarado Street Bakery’s leadership in deploying this exciting solar project, one of the first in the bakery industry.”
Stellar Energy, a leading renewable energy firm, is installing a large solar electric system on one of the North Bay’s best known and beloved organic bakeries.

Alvarado Street Bakery has a large facility in Petaluma, California; the roof area is almost 1.5 acres, and it will soon carry an innovative and effective solar electric system, installed by Stellar Energy. “This 404 kilowatt system will offset close to 40% of the bakery’s power needs, generating enough electricity to power about 90 average homes,” said Matt Lugar, Vice President of Sales for Stellar.

The system will consist of 1,722 Sharp® brand 235 watt solar panels, installed on a special rack system that minimizes roof attachments and prevents water leaks.

According to Lugar, “All basic components of the system are made or assembled here in America, providing green jobs at a crucial moment in this economy. Stellar Energy applauds Alvarado Street Bakery’s leadership in deploying this exciting solar project, one of the first in the bakery industry.”

Joseph Tuck, CEO of Alvarado Street Bakery, enthused about the system as well. “We will be reducing our carbon footprint by saving energy and cutting down on fossil fuels used to generate electricity.”

Tuck added: “As a worker owned company deeply committed to health and sustainable prosperity, we are thrilled to be working with Stellar Energy on this project.”

About Stellar Energy G.P. Inc.
Stellar Energy is one of the nation’s foremost solar energy integrators, with complete system design, engineering, procurement and construction management capabilities. With installations spanning government, education and a wide variety of commercial customers, Stellar’s portfolio of successful projects makes the company one of the top ten solar installers in the nation. Stellar is a subsidiary of Itochu International, Inc., a New York based global trading company. For more information, please contact Chris Phipps at chrisp@stellarenergy.com, 707-992-3130, or visit the Stellar website at www.StellarEnergy.com

About Alvarado Street Bakery
Alvarado Street Bakery is one of the most successful worker-owned cooperatives in the US.. For over 30 years Alvarado Street Bakery has been a leader in producing healthy, organic whole grain breads. Alvarado Street Bakery sprouted breads and bagels can be found in grocery and natural food stores throughout the country. For more information please visit the Alvarado Street Bakery website at www.alvaradostreetbakery.com
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Under ITOCHU ownership, DC Power Systems Ramps Up
From the North Bay Business Journal,  June 28, 2010
by Loralee Stevens, Business Journal Staff Reporter
ROHNERT PARK – DC Power Systems is in growth mode, bulking up its staff and product portfolio under Japanese owner Itochu Corp.
The leading distributor of clean-energy products in the Americas has sustained revenue growth of 50 percent for the past two years. Projected revenues for 2010 are more than $200 million.
Recently moved from its Healdsburg digs into 30,000 square feet of office and warehouse space in the Sonoma Mountain Village in Rohnert Park, DC Power has added 55 employees in the last six months.
According to vice president of marketing Chris Phipps, at least 20 more will join the staff of 140 before the end of the year.
“As a frame of reference, when I joined the company in late 2006 we had 26 employees,” he said.
DC Power supplies solar panels and system products to most of the North Bay’s solar providers and distributes local clean-energy products to 5,000 contractor customers throughout the U.S., Canada and South America.
Enphase Energy microinverters, Gridlock Solar security systems, Solmetric solar test and measurement equipment and Xandex SunMizer solar output booster are some of the local companies that benefit from having a major distributor in the neighborhood.
“Our products are featured in DC Power’s catalogs, which go out to about 10,000 contractors,” said Tyson Berg, Gridlock’s director of business development. “We have our own page on their website.”
DC Power distributes wind turbines and hydro-electric systems, but 85 percent of its products are solar panels and system components, mostly from Japan-based Sharp Electronics.
Last week the company announced an agreement to sell solar equipment from Yingli Green Energy Americas, Inc., a subsidiary of corporate giant Yingli of China. It’s one of the largest supply agreements for Yingli Americas this year.
China is the leading manufacturer of solar panels, which tend to cost about 10 percent less than panels from non-Chinese companies, according to Mr. Phipps.
“For large installations, the price savings can be considerable, so many contractors prefer to buy Chinese products,” he said.
DC Power was courted by many Chinese manufacturers before selecting Yingli for its high-quality, reliable modules and strong product warranty commitments, said Daniel Marino, founder of DC Power and currently executive vice president.
The contract with Yingli runs through the end of 2010, but Mr. Marino and executives of both Yingli China and Yingli Americas spoke of a long-term partnership.
Globally, the market for solar products was about $25 billion in 2009, down from $40 billion the year before when panels were in shorter supply, according to BankAmerica Merrill-Lynch analysts. The Solar Energy Industries Association said residential grid-connected photovoltaic installations are showing particularly strong growth, with projected increases of 100 percent.
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Joint Venture Between ITC and Toda America Breaks Ground
A joint venture between ITOCHU Corporation and Toda America broke ground this month in Battle Creek, Michigan for a production facility for cathode materials for rechargeable lithium-ion batteries. The governor of Michigan and the mayor of Battle Creek attended the groundbreaking ceremony. 
The global market for cathode materials is projected to expand sharply with the widespread adoption of hybrid electric and electric vehicles as well as the growing market penetration of mobile phones and personal computers. Earlier this year, ITOCHU and Toda America’s Japanese parent company, Toda Kogyo Corp., joined with Shanshan, an important partner of ITOCHU in China and one of that nation’s leading cathode materials manufacturers, in announcing construction of a cathode materials plant in China.    

Battle Creek Enquirer.com
Toda draws big investment

Japanese firm says it will help extend reach

Elizabeth WillisThe Enquirer • April 21, 2010

A Japanese trading firm announced Tuesday it is partnering with Toda America Inc. to expand its reach in Battle Creek by supplying cathode materials for lithium-ion batteries.Officials said Itochu Corp.'s joint venture injects confidence in Toda, allowing the company to create the promised 57 highly skilled jobs and to continue to propel Battle Creek into the hybrid vehicle age. Bulldozers drowned out the speeches of dignitaries Tuesday on the site of the $70.1 million project at 4750 W. Dickman Road in the Fort Custer Industrial Park. The work didn't stop, even for Gov. Jennifer Granholm, who attended the ceremonial dig for Toda, a Japanese producer of iron oxide and mixed metal oxide particles used in rechargeable lithium- ion batteries. Toda is under a tight schedule to start production by early 2011 and has plans to expand further by 2013.

"We expect that this is going to be a sumo (-sized) project," Granholm said.

Itochu is a wealthy, global leader in sales and marketing, and is investing "several hundred million dollars" in Toda, said David Han, a Toda consultant. The relationship is critical to Toda's expansion, Han

"We are extremely excited to be a part of this project," said Yuji Fukuda, Itochu Chemical Division's chief operating officer.

The governor, reflecting on her first trip to Japan with Jim Hettinger, former Battle Creek Unlimited president and chief executive officer, said they aggressively sought to make Michigan the nation's hybrid vehicle supply chain hub.

Together with federal, state and local incentives, Granholm said, "We would make them an offer they can't refuse."

Toda received a $35 million grant from the U.S. Department of Energy through the 2009 American Investment and Recovery Act covering half the cost of construction, plus state incentives of nearly $10 million and up to $5.5 million in local up-front investments to clean soil at the site formerly contaminated by military use.

"We know they will succeed as a business," Energy Department Program Manager Patrick Davis said of the agency's decision to fund Toda. Only one in five proposals was granted funding.

Battle Creek Vice Mayor Chris Simmons said some city commissioners were concerned about relaxing wastewater regulations to accommodate Toda but said there was consensus in supporting the project.

"When your business is successful and prosperous, our community will be successful and prosperous," he said.

Among the dignitaries present was Tetsuo Ozaki, Toda's newly appointed president in Battle Creek. "I am newly elected -- just today -- this morning," said Ozaki, grinning. He said he looked forward to leading the Battle Creek operation and living here locally. He joins a large community of Japanese companies. Battle Creek has more people employed by Japanese companies than any other city in Michigan, Consulate General of Japan Kazuhide Ishikawa said. And that is significant considering about 500 Japanese companies employ more than 32,000 people in Michigan.

"Truly, truly, this is a great example of our strategy working," Granholm said.
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ITOCHU Featured in Barron's
ITOCHU Corporation CEO Kobayashi describes the company as one of Japan's "global" plays, with more offices abroad than Japan has embassies.
Grim Anniversary, by Leslie P. Norton 
Twenty years after its market peaked, Japan is stuck in a funk.
TWENTY YEARS AGO THIS MONTH, the Japanese stock market topped out. Last week, Tokyo enacted a new, 7.2 trillion yen ($81 billion) stimulus package to revive an economy mired in deflation. The package is equivalent to 1.5% of the economy. At the same time, it revised third-quarter gross-domestic-product growth sharply lower. Japanese investors have had a rough year -- Japan funds are the second worst category in Lipper's database, notching a 7.4% gain, a little more than a tenth of the return of Pacific ex-Japan funds, and less than a third of the gain enjoyed by the Standard & Poor's 500.
There's little reason to believe the stimulus will revive the economy. Seiji Shirashi, HSBC's chief economist in Tokyo, says, it "will probably work to limit the downside risk of the economy, but will not pick up demand."
Japanese government bond (JGB) yields fell modestly despite the package and the Dubai crisis -- even though tax revenues will lag behind government debt issuance for the first time in 60-plus years. Japan, with major foreign-exchange reserves, is seen as a haven. But deflation in Japan is "entrenched for the foreseeable future," says Michael Taylor of Lombard Street Research. That pushed the real yield on JGBs to an average 3.5% in October.
Despite increasingly compelling valuations, there's little reason to believe that equities will improve soon. "The implication is that the yen stays high, and therefore exporters struggle and hamper equity performance," says Taylor. Cyclicals are about twice as important in Japan's market as they are in other developed economies.
People are glum about economic conditions. In an interview, Chiaki Ito, vice chairman of Fujitsu (6702.Japan), said, "I don't think the economy has bottomed out. [Japan] will have a tough time this year, and also next year." In Fujitsu's own business lines, semiconductors have troughed, but in IT services, "the recession has just started...Lots of corporate customers are still not sure about what to do next. We are in a very tough period."
The locomotive for global growth is Asia, where Fujitsu is rushing to expand sales from their current 10% of revenues. (Asian sales have fallen, in fact, because Fujitsu divested its hard-drive business.) Demand for services in Asia and China is jumping, and at home, eventually, there will be opportunities as energy security and other new industries arise. But for now, times are tough for exporters as well as those focused on the domestic economy.
ALL THIS UNDERSCORES THE RELATIVE attractions of the trading companies -- Japan's conglomerates, and some of the companies most exposed to global growth. One is Itochu (8001.Japan), which has businesses ranging from metals to energy to textiles and food. The year hasn't been easy. Eizo Kobayashi, Itochu's CEO, observes that every ¥1 increase against the U.S. dollar hurts Itochu's trading profit by ¥1 billion. First- half net profit fell 60% to ¥55.3 billion, and Itochu cut its outlook for operating profit for the fiscal year ending March to ¥150 billion, though it kept its full-year net profit forecast at ¥130 billion. Itochu also sliced its dividend. The years before the financial crisis were "too good" to Itochu, acknowledges Kobayashi. Japan needs to develop new businesses to revive its economy, and to expand immigration, Kobayashi says.
Like Fujitsu's Ito, Kobayashi sees opportunities in emerging markets; Itochu is building a big grain export terminal in Washington state, aimed at Asia. China now generates about 7% of net income; 60% of Itochu's total net comes from abroad. Meanwhile, Itochu has invested in Brazilian iron ore. In the U.S., it owns a large building-materials distributor, and has invested heavily in alternative energy, including biomass-fueled power-generation facilities, and in the publicly-traded electric-car battery maker Ener1 (HEV).
The global economy will continue to struggle but the long-term prospects are bright: "At this moment, there are 6.7 billion people in the world; that expands to nine billion people in mid-century. I'm sure the economy will grow," Kobayashi snaps. He describes Itochu as one of Japan's "global" plays. It has more offices abroad than Japanese has embassies, he notes, and provides trade finance to partners and clients that can't get funding from risk-averse Japanese banks. Eventually, he believes, Japan will develop important new industries like agriculture (Japan produces just 40% of its food) and solar power. (Itochu also retrofits houses with photovoltaic systems.)
This year Itochu's stock is up 45%. The biggest catalyst for increased gains, writes Credit Suisse, would be stabilization in earnings, or increased contribution from its China business. The broker sees the stock climbing to ¥800, or book value -- about 25% above last week's price of ¥642.
Barron’s: December 14, 2009
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Here Come the Sogo Shosha
Japan's trading companies are buying startup technology businesses in the U.S., hoping to catch the new wave of American economic growth. William J. Holstein takes a close look at ITOCHU's strategy in the March 2009 issue of strategy+business magazine.

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