Contributing to the Local Community by Supporting Local Suppliers

Changzhou Toshiba Transformer Co., Ltd. (CTC), which manufactures and sells power transformers, occupies the No.1 share in terms of production volume of 500kV transformers since several years in China. The company has expanded production volumes in each successive year since its establishment in 1997. CTC is now poised for a new round of expansion in terms of its business scale and production capacity to satisfy soaring demand for electric power facilities^Note in China fueled by the country's rapid economic development. CTC enthusiastically engages in CSR activities, not only with respect to quality and the environment, but also in terms of local procurement and appointment of local employees. In 2002, CTC localized all of its divisional head positions. At present, all the managerial personnel with the sole exception of the president are local nationals.

From the outset, CTC has made a concerted effort to provide a wide range of educational opportunities to employees, while also focusing on employee welfare. As a result, employee satisfaction is on the rise.

Note:

Annual growth in demand for new power generation facilities averaged 100 million kilowatts in 2006 and 2007. 100 million kilowatts is equivalent to 1.5 times the total capacity of all the power generation facilities of Tokyo Electric Power Company.

With a view to raising production volumes and stimulating competition, CTC started procurement from multiple suppliers in 2000. CTC sought out prospective local suppliers and then provided guidance and support to the most promising ones.

For instance, CTC proposed that Jurong Union Copper Material Co., Ltd. shift to manufacture of continuous transposed cable and provided support for the transition. CTC also proposed that neighboring machine processing plant Yingzhong Electricity Factory expand its product lines and dispatch engineers to provide technical guidance. Both of these companies have developed to such an extent that they have been selected as preferred suppliers by transformer manufacturers in China and elsewhere. This localization drive has been so successful that almost all CTC's suppliers, comprising nearly 100 firms, are local enterprises. Local procurement is making a significant contribution to development of local industries in China.

CTC not only conducts thorough quality and environmental audits of suppliers based on ISO standards, but also rigorously performs multifaceted evaluation of occupational health and safety, etc. Depending upon the needs of each supplier, CTC also fosters CSR by dispatching its technical instructors for a period of one to few months to provide support and guidance on production technology, quality control standardization and ISO 9001 and ISO 14001 certification.

CTC is playing an active role in creating employment and contributing to the regional economy. This positive participation is underpinned by the breadth and depth of communication with local communities. For instance, CTC undertakes environmental communication with residents of neighboring communities through meetings and questionnaire surveys. The findings of a survey conducted in FY2007 show that 96% of local residents are satisfied with CTC's environmental activities. CTC engages in environmental activities comparable to its parent operation in Japan and provides information on its activities as a reference for other companies in Changzhou.

On the strength of these proactive CSR initiatives, CTC became the first company in China from Toshiba Group to receive the National Environmentally Excellent Company Award from the Chinese government.