DOSHISHA CO.,LTD.

Changes in domestic and overseas economic conditions and consumer spending fluctuations due to unusual weather may significantly affect the performance of the Group, which mainly serves retailers as its customers. As a countermeasure, the Group minimizes risk by combining the manufacturer-function Development-type Business Model with the trading-company-function Wholesale-type Business Model to handle a wide variety of products.

The Group depends heavily on imports from overseas, mainly China and Europe, and incurs payments denominated in foreign currencies such as the US dollar. Sharp fluctuations in exchange rates may therefore have a significant impact on procurement costs. As a countermeasure, the Group utilizes forward exchange contracts to stabilize procurement costs.

Many of the products in the Development-type Business Model are manufactured overseas, mainly in China, and security, political, economic policy, natural disaster, or public health issues may significantly affect product manufacturing and procurement. As a countermeasure, the Group is considering diversifying production bases to countries other than China, and also diversifies risk by procuring from well-known domestic manufacturers under the Wholesale-type Business Model.

Due to the nature of its business, the Group holds a large amount of customer information, and an information leak resulting from unauthorized access from inside or outside the company could seriously damage the Group's credibility. As a countermeasure, the Group has established various regulations in compliance with the Personal Information Protection Act, implemented technical measures to prevent information leaks, and conducts internal training.

Many of the Group's head office, sales offices, and logistics centers are located in Japan, and a large-scale natural disaster could seriously affect business operations. As a countermeasure, the Group has dispersed its own logistics centers to two locations, Sennan City in Osaka Prefecture and Kisarazu City in Chiba Prefecture (East and West Japan), and has established a cash flow system that enables business continuity even in the event of a large-scale disaster such as a Nankai Trough earthquake.

There are concerns about rising logistics costs due to the declining domestic labor force and increasing labor costs, which could significantly affect the performance of the Group as a distribution service business. As a countermeasure, the Group has established its own logistics centers in Sennan City, Osaka Prefecture, and Kisarazu City, Chiba Prefecture, and is promoting logistics efficiency through this East and West Japan two-center system.