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Chairman Naozumi Furukawa, newly appointed in July 2013 and President Kimiaki Tanaka explain initiatives to realize sustainable growth and future prospects in Q&A format.

Q1 What is the SZ-20 Mid-Term Management Plan you are implementing in order to realize your Enterprise Blueprint for 2020?

A1 In order to realize our Enterprise Blueprint for 2020, “ZEON creates the future today through the power of chemistry.” Our Mid-Term Management Plan through to fiscal 2013, which is aimed at achieving our Enterprise Blueprint for 2020, is called “SZ-20.” Its fundamental strategies are as follows.
(1) Company-wide business strategy
We will further strengthen our Elastomer Materials and Specialty Materials businesses to expand our operations globally.
(2) Promoting the corporate culture
We will promote the achievement of our Enterprise Blueprint for 2020 based upon visualization of the corporate culture.
Major changes in the business environment are forecast in the future, however there is no change in our company's commitment “To contribute to the realization of customer dreams and a prosperous society” based upon our CSR Policy. We believe it is possible to achieve our mission by implementing projects based on the key sense of values (speed, dialogue, and social contribution) and qualities of ZEON we admire (mutual trust and fellowship).

*IT components (optical, packaging and electronic), energy components and medical devices

Q2 Describe the progress of the SZ-20 Mid-Term Management Plan and the issues faced.

A2 We are deploying measures to realize the long-term targets of 500 billion yen in consolidated net sales and an overseas production ratio of 50% in fiscal 2020 established in the business strategy for the SZ-20 Mid-Term Management Plan. With the results in fiscal 2012 of approximately 250 billion yen, we will need to increase sales by roughly double in order to achieve the target for fiscal 2020. To this end, we will successively establish bases, mainly overseas. Against the initial planned sales target of 320 billion yen for fiscal 2013, the final year of the SZ-20 plan, the outlook at the start of fiscal 2013 was 290 billion yen, which I believe indicates we are drawing slightly nearer to our goal.
However, in the automotive industry, with which ZEON has strong ties, the growth of the tire materials market, which continued up to 2011, has stopped and the market is on a downward trend, including that for natural rubber. ZEON produces a large number of goods which require a high usage of C4 and C5 fractions, however the weak yen has caused a jump in the cost of naphtha, and it is possible that their procurement will become more difficult with the spreading use of shale gas. In the future, we will require wisdom and initiative to know what kind of resources to use to secure stable supply sources for production.
In view of this, overall, we are polishing our various strengths in the Elastomer Business (synthetic rubbers, synthetic latexes and chemicals) and our three key fields in the Specialty Material Business (IT components (optical, packaging and electronic), energy components and medical devices), and accelerating our global business with these two business segments working in close concert.
In the Elastomer Business segment, we are further strengthening our already strong business by meeting demands of a growing market from a global perspective. Development of new applications is anticipated for our new Zetpol®, and we are increasing our competitiveness with new products such as medical gloves being developed using synthetic latex.
In the Specialty Material Business segment, we are giving full attention to our competitiveness in medical devices, optical lenses, optical films, battery materials and other products. We intend to accelerate our R&D further and expand our business focused on our three key fields.

Q3 How are you advancing global development efforts?

A3 Regarding the Elastomer Business segment, in June 2013 we completed a new petroleum resin plant in Thailand. We are also constructing a new S-SBR plant in Singapore which will start operations in September. These investments will top 20 billion yen.
Regarding the Specialty Material Business segment, we are seeing user companies in the fields of optical lenses and lithium ion batteries transfer their production overseas, so overseas transference of our own production bases as well is a possibility. Also, from the viewpoint of developing markets and ensuring access to C5 fraction materials, we are considering establishment of Asian production bases.

Q4 What are your thoughts on R&D strategy?

A4 Through innovative original technology that “do not imitate and cannot be imitated,” ZEON has developed products that are competitive and contribute to society. Our original technology and products that support us currently were born from research and development. Therefore, for us, research activities are our life and the origin of all of our business.
It will be important to continue creating innovation and persist in R&D non-stop in the future. We have made a variety of efforts, not merely for structural enhancement, but also involving joint development in several areas, to further enhance our R&D and achieve quicker results. The Specialty Material Business, in particular, is our new president, Kimiaki Tanaka's area of expertise, so we want to be particular and more particular and keep on being particular to the end. For that reason, our policy on future R&D investments will be to maintain them steadily at about 12 billion yen annually and not have them contingent upon immediate business results.

Q5 What initiatives are you implementing to promote a corporate culture in order to realize your Enterprise Blueprint for 2020?

A5 Our SZ-20 Mid-Term Management Plan contains the fundamental policies of the above-mentioned expansion of our business with our two business segments of Elastomer Business and Specialty Material Business working closely together with the achievement of our Enterprise Blueprint for 2020 based upon visualization of the corporate culture which will realize this.
It is “people” that conduct business activities, in other words, “human resources.” If we fail to foster human resources, we will be unable either to design plants or operate them. In order to be able to conduct business activities in all countries of the world including Japan, it is necessary to foster human talent. We are promoting “production innovation*” on the basis of what we have “envisioned,” and are getting clear results at our Mizushima Plant. In the future, we want to expand this success to all of our plants. Also, for our overseas development, it will be important to foster talent among local human resources. We have already initiated a system for encouraging talent by inviting technicians employed in various regions to Japan.
We are also achieving great results with our ZΣ Campaign, involving continuous cost-cutting efforts by our employees through their own initiative, and this is contributing to our business results.

* Production Innovations the Daicel Way

The Integrated Production Center at the Mizushima Plant, which is taking the lead in promoting production innovation

Q6 What efforts are you making to deal with societal issues that ZEON is aware of?

A6 First, there is the issue of “safety,” which is a precondition for all chemical companies. In recent years, there have been frequent accidents at chemical companies, so we must focus more attention on this. The aim of “production innovation” is to make production more efficient, but it also has the effect of increasing the safety of operations through the sharing of our accumulated knowledge and technical skills. We must build plants so as to provide the region and society assurance of their safety, in which “all of our employees can work all day again today with no accidents.”
Additionally, “meeting society's expectations” is important. There is a need always to perform research on new technology to ensure we are providing society useful products. Then, by using the profits earned from those products to build plants that produce goods steadily and safely with high quality and no waste, we would like to become a company that continues to earn the trust of society as a “good corporation.”

Q7 Regarding the CSR Core Projects and CSR promotion plans that were advanced from 2012, what are your thoughts about future efforts, including aid for recovery from the Great East Japan Earthquake?

A7 On the basis of our CSR Basic Policy and CSR promotion plans, ZEON is launching CSR Core Projects as an effort to lay the foundation for CSR activities. The CSR Core Projects are business operations symbolizing CSR fundamentals or activities that contribute to society, and with regard to the latter, we think that aiming for a long-term, sustained effort is what society demands and what a corporation ought to do.
Regarding the recovery from the Great East Japan Earthquake, there is less being reported in the media about this than before, but we hear that in reality recovery assistance will get under way in the future. I think that while our contribution may be modest, we want to make sustained efforts.

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