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Mitsui and Sumitomo Forestry to Participate in Residential Interior Decoration Business in China

Sep. 15, 2015


Mitsui & Co., Ltd.
Sumitomo Forestry Co., Ltd.


Main Contents

Mitsui & Co., Ltd. ("Mitsui", Head Office: Chiyoda-ku, Tokyo, President & CEO:Tatsuo Yasunaga) and Sumitomo Forestry Co., Ltd. ("Sumitomo Forestry", Head Office: Chiyoda-ku, Tokyo, President & Representative Director: Akira Ichikawa,) have acquired an equity interest in Beijing BBMG Decoration Engineering Co., Ltd. ("Beijing BBMG Decoration"), a subsidiary of Beijing Building Materials Group Corporation ("BBMG"), by accepting a third party allocation of new shares. As a result of the share issue, Beijing BBMG Business and Trading Co., Ltd. now owns 51% of the company, Sumitomo Forestry 29% and Mitsui & Co. 20%.

Units in Chinese housing complexes are customarily delivered on a "bare shell" (*) basis, which means that the interior can be designed freely to suit each buyer's preferences. In recent years, however, rising real estate prices have been paralleled by a downward trend in area per unit, especially in urban areas. This has created a growing need for space-saving features, such as built-in storage furniture. In addition to government moves to encourage the development of housing complete with interior decoration, there is also increasing concern about environmental and health issues. These factors are reflected in growing interest in housing that has already undergone related countermeasures, such as formaldehyde removal.

For these reasons, the percentage of dwellings delivered with interior decoration already completed, as is the usual practice in Japan, is also rising in China. Mitsui and Sumitomo Forestry will provide Beijing BBMG Decoration with Japanese-style interior decoration design and implementation technology and expertise accumulated over many years, working to make comfortable, safe dwellings with space-saving features more widely available in China through this project.

As a general construction materials company, BBMG manufactures and sells a wide variety of products, including household equipment, furniture and cement. Its extensive business activities also include real estate development and management.

Beijing BBMG Decoration is involved primarily in the interior decoration of offices, commercial facilities and other properties. Now that Mitsui and Sumitomo Forestry have become shareholders, it plans to focus on the development of residential interior decoration as a core business area.

Sumitomo Forestry will work to improve Beijing BBMG Decoration's advantage and competitiveness in the Chinese market by providing technical guidance based on expertise developed through its involvement in the housing business in Japan.

Mitsui has around 20 years of experience in the Chinese timber and construction materials business. Drawing on this experience, it will monitor local housing needs directly through this interior decoration business and use the resulting information and knowledge to create new housing-related business in China.

(*) Bare shell delivery
In China, units in housing complexes are usually delivered to customers in a "bare shell" state, with exposed concrete floors and walls. The advantage of this system is that the buyer is free to design the interior finish. However, it also results in higher construction costs. Another disadvantage is the potential for safety issues due to the continuation of interior work after the occupation of the dwelling.

Shareholdings

Shareholdings

Profile of Beijing BBMG Decoration

Company name Beijing BBMG Decoration Engineering Co., Ltd.
Head office Beijing, People's Republic of China
Establishment November 1993
Representative Mr. Kou Ying Yao (Chairman)
Employees Approx. 50
Shareholders Beijing BBMG Business and Trading: 51%, Sumitomo Forestry: 29%, Mitsui: 20%
Business Activities Design and implementation of architectural interiors, facility installation, etc.

Profile of BBMG

Company name Beijing Building Materials Group Corporation, "BBMG"
Head office Beijing, People's Republic of China
Establishment December 2005
Representative Mr. Jiang Deyi (Chairman)
Employees Approx. 29,000
Equity 4,785 million RMB (approx. ¥94.7 billion)
Net sales
(in year ended December 2014)
Approx. 41.2 billion RMB (approx. ¥816.6 billion)
Principal shareholders
(as of December 31, 2014)
BBMG Group Co., Ltd. 47.92%
China National Materials Co., Ltd. 5.01%
Business Activities Manufacture and sale of cement and other construction materials, real estate development and management, etc.

Notice:
This announcement contains forward-looking statements. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest Annual Securities Report and Quarterly Securities Report, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.
This announcement is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.

Information

For inquiries on this matter, please contact

Mitsui & Co., Ltd.
Corporate Communications Division
Akihiro Tamo
Telephone: +81-3-3285-6645
Facsimile: +81-3-3285-9819
Sumitomo Forestry
Corporate Communications Dept.
Hiroki Onishi, Midori Sato
Telephone: +81-3-3214-2270