Expansion of the E-Commerce Business and Japan IP Business in Mainland China

「As a result, revenue in Other for the three-month period ended 30 June was ¥1 million, down 6.4% year on year, and the operating loss was ¥1 million, compared with an operating loss of ¥3 million in the same period of the previous year.」

「Revenue from transactions and other activities related to these exited businesses during the nine-month period ended 31 December was classified and reported collectively under the Other segment. As a result, revenue in Other for the nine-month period ended 31 December was ¥3 million, down 46.6% year on year, and the operating loss was ¥6 million, compared with an operating loss of ¥39 million in the same period of the previous year.」

「Although we withdrew from the inbound and outbound businesses centred on cross-border e-commerce and medical tourism in the fiscal year ending August 2021, we recognised sales from certain merchandise in the fiscal year ending August 2022.」

「Amid the difficulty of forecasting an end to the COVID-19 pandemic, we determined that business growth in the near term would be challenging for the inbound and outbound businesses centred on cross-border e-commerce and medical tourism, and decided to withdraw from them at the end of the current consolidated accounting year.」

「With respect to the inbound and outbound businesses, centred on cross-border e-commerce and medical tourism, we will consider both resuming and withdrawing from these businesses depending on the recovery of the business environment.」

「During the current second-quarter cumulative consolidated period, our new businesses mainly consisted of domestic sales of supplements, as no signs of recovery were visible in the inbound and outbound business environment due to the spread of COVID-19. In addition to B2B sales, we also sell through cross-border e-commerce via partnerships, but as we are still in the process of acquiring sales channels, the businesses had not yet contributed to revenue.」

「Our company-operated cross-border e-commerce business has been temporarily suspended due to the spread of COVID-19, but we will consider resuming it in response to changes in the situation.」

「For medical tourism, we expect it to be difficult to build a customer base until measures taken by countries in response to COVID-19, such as travel restrictions, are lifted. Even after they are lifted, we expect inbound tourism to recover only gradually for the time being.」

「In the medical tourism and cross-border e-commerce businesses built around China, the global COVID-19 pandemic had a significant impact, particularly on customer acquisition. However, the Group worked to concentrate its management resources and improve management efficiency by consolidating its local entities in Hong Kong and liquidating its Shanghai entity.」

「In the medical tourism and cross-border e-commerce businesses, which use China as their base for development, the global COVID-19 pandemic affected progress to some extent. However, anticipating growing interest in medical care, hygiene and health, the Company actively sought to develop customers and partners.」

「We forecast a certain contribution to sales from the new businesses in the fiscal year ending August 2020, but plan to continue making upfront investments in areas such as system development and the expansion of sales channels. We expect a contribution to profit from the fiscal year ending August 2021 onward.」

「During the first three-quarter cumulative consolidated accounting period, the delayed establishment of the Hong Kong joint venture and partial revisions to the MR technology development plan increased upfront development investment and delayed monetisation, resulting in a larger operating loss year on year.」

「In our new businesses, we focused on promoting medical tourism and cross-border e-commerce, centred on the Chinese subsidiary 魅仕坊（上海）互聯网科技有限公司, the subsidiary メディトラ and the Hong Kong joint venture 日本和心醫藥有限公司 established with Chinese individual investors. Although the operating loss increased year on year, part of the business plan was delayed due to the delay in establishing the Hong Kong joint venture. We nevertheless continue to expect these businesses to be monetised from the third-quarter consolidated accounting period onward.」

「In particular, during the current first-quarter cumulative consolidated period, we accelerated the promotion of the cross-border e-commerce and various inbound businesses, focusing on business alliances with companies in Japan and overseas and the development of supply chains.」

「We are currently planning various inbound businesses, including cross-border e-commerce, in response to the recent increase in inbound tourism, in addition to the global expansion of our AR- and VR-related and existing businesses.」

「In our new overseas businesses, we continued to promote the VR business (Note) with our Chinese partner companies, including the sale of VR devices, primarily on a B2B basis, and the acquisition of content for distribution on VR content platforms. We also focused on developing the e-commerce business and the Japan IP business in mainland China.」