Decrease in contract manufacturing by Chinese subsidiaries, stagnation of the China business, and decline in real estate value
First written in FY2021. 2 of 4 entries say "Mitigated", first in FY2022. Latest entry: FY2026-H1.
No other company in this theme has enough history to compare yet.
- FY2026-H1MitigatedAnnual report
「At a meeting of its Board of Directors held on 13 May 2025, the company resolved to transfer all of its equity interest in its consolidated subsidiary 栄研生物科技（中国）有限公司, hereinafter referred to as 栄研中国. It entered into an equity transfer agreement dated 31 July 2025 and, pursuant to the agreement, excluded 栄研中国 from its consolidated subsidiaries effective 30 September 2025.」
In response to the decline in profitability and country risks associated with the Chinese subsidiary, its entire equity interest was transferred, eliminating our exposure to the business previously conducted through the Chinese subsidiary. - FY2025MaterialisedAnnual report
「However, in recent years, personnel costs and raw-material transportation costs, particularly in Shanghai, have risen sharply, reducing profitability. In addition, given concerns over various country risks, we reviewed our future product portfolio and determined that transferring our equity interest in Eiken China would enhance our corporate value. This is because consolidating processing using customer-supplied materials conducted by Eiken China at our Nogi Plant would improve production efficiency, while shifting sales of our products previously handled through Eiken China to direct sales by our company would improve management efficiency.」
The decline in profitability and country risks associated with the Chinese subsidiary led to an actual review of its business structure and the decision to transfer our equity interest. We also recorded ¥250 million in costs for improving the Chinese subsidiary's business structure. - FY2022MitigatedAnnual report
「栄研生物科技（中国）有限公司 has been working to expand domestic sales in China, with support from the company’s China Business Office, as it assumes a central role in the company’s China business.」
In response to the investment recovery risk arising from lower contract manufacturing by the Chinese subsidiary and underperformance of its proprietary business, support from the China Business Office and expansion of domestic sales in China were cited as countermeasures. - FY2021First statedAnnual report
「However, if contract manufacturing commissioned by the Company declines due to changes in market conditions, if the subsidiary's independent business expansion in China fails to progress as planned, or if the subsidiary's real estate value declines significantly, it may become difficult for the Company to recover its investment in the subsidiary.」
For the Chinese subsidiary, the Company separately described the risk that its investment may become difficult to recover due to a decline in contract manufacturing, poor progress in its China-specific business and a decline in real estate value.