TEIN, INC.

The Group concentrates its business in a single segment for automotive suspensions targeting the car aftermarket, so changes in user needs, which are influenced by hobbies, preferences, and economic conditions, directly affect business performance. If competition intensifies or product sales weaken, it would be difficult to compensate through alternative businesses, resulting in a significant adverse impact on business performance and financial condition. Although the Group is focusing management resources on enhancing the product lineup and reducing costs, the risk of sudden changes in the market environment remains.

The Group conducts business across a wide range of regions worldwide, mainly Japan and Asia, and is exposed to various latent risks including changes in user needs, the presence of competitors, differences in business practices, changes in laws and regulations, unfavorable political and economic factors, and social disruptions such as terrorism and war. Due to these uncertain factors, there is a possibility that overseas investments may not be recovered as planned. Although the Group conducts sufficient research and planning when expanding overseas, the risk of unforeseen events occurring cannot be eliminated.

Since items denominated in local currencies such as sales, expenses, and assets of overseas consolidated subsidiaries are translated into yen, even if the value in local currency remains unchanged, fluctuations in exchange rates may change the value after translation into yen, potentially adversely affecting business performance and financial condition. In particular, for the Group, which has Japan and China as its main bases and sells products worldwide, foreign exchange risk exists across multiple currencies. The securities report does not mention specific hedging measures.

Although ISO9001:2015 certification has been obtained at all domestic business sites and the China factory (Tianyu Damper Manufacturing (Jiangsu) Co., Ltd.), there is no guarantee that defects will be completely eliminated across all products. If voluntary recalls or product liability compensation claims occur, substantial costs would be incurred along with a decline in brand credibility, potentially adversely affecting business performance and financial condition. Although the Group has product liability insurance, there is no guarantee that it will sufficiently cover the final amount of compensation.

Although the Company holds intellectual property rights related to research and development, there is a possibility of infringing on third-party intellectual property rights beyond its awareness. Although the Company has not currently been sued for infringement of intellectual property rights, if a dispute were to arise, it could adversely affect business performance and financial condition. For the Company, which relies on technological capabilities as a source of competitive advantage, managing intellectual property risk is an important issue for business continuity.

Production bases are concentrated at two locations: the head office factory in Yokohama City and the China factory in Suqian City, China. If equipment is damaged or the supply of electricity or water becomes difficult due to natural disasters such as earthquakes or typhoons or other sudden events, there is a risk that it would become difficult to continue production activities. Although attention is paid to safety management at both factories, the limited alternative production capacity due to the concentration of bases could amplify the adverse impact on business performance and financial condition.

Global business expansion requires securing excellent personnel and quality labor both domestically and internationally. Although the Company strives to recruit and develop personnel, mainly new graduates, if this does not proceed as planned, it could hinder business expansion. Delays in securing and developing personnel and labor pose a risk of directly affecting business growth and operating results.

If a pandemic such as a viral infectious disease occurs, normal business operations could become difficult due to delays in procuring materials and consumables from suppliers, impacts on production activities from employees staying home, changes in purchasing behavior, travel restrictions, and voluntary restraint of sales activities. For the Group, which has production bases in Japan and China and conducts business activities across a wide range of regions worldwide, a global spread of infection poses a risk of significantly impacting financial condition and operating results.

If materials, energy costs, and other costs surge, the Company revises selling prices as necessary; however, if cost increases cannot be fully passed on to selling prices, the revenue structure could deteriorate, significantly impacting financial condition and operating results. In the price-competitive environment for products aimed at the car aftermarket, price increases also carry the risk of decreased demand, which could limit the extent to which costs can be absorbed.