ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) announced today that it has concluded a Memorandum of Agreement on a Comprehensive Strategic Alliance with major Chinese government-run conglomerate CITIC Group (headquartered in Beijing, China; Chang Zhenming, Chairman; hereinafter “CITIC”), with the aim of exploring alliances across a wide range of business fields. At the same time, ITOCHU has agreed to participate in investment in CITIC International Assets Management (Headquartered in Hong Kong; Lo Wing Yat Kelvin, CEO; hereinafter “CIAM”), a financial business firm under the CITIC Group, as the first project of the strategic alliance.

1. Memorandum of Agreement on a Comprehensive Strategic Alliance

CITIC is a state-owned company in which the Chinese government holds a 100% stake that was established in 1979 under a proposal by Deng Xiaoping to assume the role of China’s international point of contact with the world. In the thirty-plus years since its founding, it has expanded and developed into China’s largest government-run conglomerate.
The current business activities of the CITIC Group are far-reaching, including finance, real estate and infrastructure, construction-related (design and construction work), resource and energy-related, manufacturing, IT, trade and service industry operations.
At the end of fiscal 2009, the consolidated total assets of the CITIC Group stood at 2.1538 trillion yuan, with consolidated net assets of 135.2 billion yuan and consolidated net profit of 18.9 billion yuan.
In its financial business, CITIC controls highly influential financial institutions such as China CITIC Bank Corporation Ltd. (one of China’s leading commercial banks listed on both the Shanghai Stock Exchange and Hong Kong’s HKEx), CITIC Securities Co., Ltd. (No. 1 in fiscal 2010 in terms of Chinese stocks, debt underwriting amounts and size of entrusted assets) and CITIC Trust Co., Ltd. (No. 1 in fiscal 2010 in terms of assets under management). In addition, by expanding its financial business into diverse areas including insurance, mutual funds, asset management and futures trading, CITIC delivers sophisticated and comprehensive financial services that leverage the brand power of CITIC.

Especially in Asia, ITOCHU Corporation regards China as the most important market, and has actively pursued expansion into China by expanding trading, investing in local businesses through alliances with powerful Chinese companies, and other efforts.

While both companies are conglomerates engaged in a wide range of businesses spanning diverse fields, it is believed that a fusion of CITIC’s strengths in the finance-oriented approach based around China CITIC Bank and ITOCHU’s strengths in the product-oriented approach based on industrial knowledge will achieve a high degree of synergy and enable the provision of more competitive services. On this basis, the two companies have decided to undertake a comprehensive strategic alliance.

Based on the strategic alliance, the two companies will seek to further expand their existing businesses and create new businesses by combining CITIC’s extensive group of subsidiaries, diverse customer networks and brand power in China with the business expertise and networks that ITOCHU has cultivated in China to date.

While prospects for collaborative ventures are not limited to within China or the financial business field and there are plans for cooperation across all regions and in various fields, at the present time the companies expect to explore the following kinds of initiatives.

• Joint efforts in the field of retail finance with a view to expanding the middle income group in China
• Advisory services for cross-border M&A activities between Japan and China as well as support for Japanese companies making forays into China
• Operations to jointly develop, operate and fund real estate such as residences, office buildings, commercial facilities and distribution facilities
• Joint efforts in auto-related enterprises such as new car sales businesses
• Joint efforts in resource development overseas and in the field of new energy
• Joint efforts in lifestyle consumption-related fields with a view to expanding the consumer market in China

2. Participation in Investment in CIAM

As the first project in ITOCHU’s comprehensive strategic alliance with the CITIC Group, ITOCHU has agreed to participate in investment in CIAM, a Hong Kong-based financial business firm under the CITIC Group, and today concluded an agreement associated with the investment participation.

Through its Hong Kong-based finance business subsidiary ITOCHU Finance (Asia) Ltd. and its local affiliate ITOCHU Hong Kong Ltd., ITOCHU plans to establish a special purpose vehicle (SPV) through which it will acquire a 25% stake in CIAM and undertake investment participation totaling approximately US$100 million. In doing so, ITOCHU will become the second largest single shareholder in CIAM, behind leading shareholder CITIC International Financial Holdings Limited (CIFH), the CITIC Group’s financial holding company in Hong Kong. This will make CIAM an equity-method associated company of ITOCHU, with plans for the dispatch of a Deputy CEO from ITOCHU Corporation.

CIAM is a financial business firm under the CITIC Group established in Hong Kong in 2002. It operates an investment and loan business for growth companies and businesses in China that utilizes its own funds, and an asset management business where it is entrusted with third-party funds. CIAM utilizes the management resources of the CITIC Group, and as a strategic financial business firm established in Hong Kong, the window to international finance in China, CITIC chairman Chang Zhenming has assumed the post of Chairman, with CITIC Executive Director and Vice President Dou Jianzhong filling the post of Director.

ITOCHU plans to harness the financial business expertise, human resources, and networks that CIAM possesses to expand profits in the Chinese financial market, which is expected to continue to grow into the future.

In addition, Mizuho Corporate Bank plans to participate in investment in the SPV that ITOCHU will set up as part of its efforts to participate in investment in CIAM (with an investment ratio of 6% in the SPV).

CITIC Profile

Company Name	CITIC Group
Representatives	Chang Zhenming, Chairman Tian Guoli, President
Headquarters	Beijing, China
Founded	October 1979
Capital	55.3 billion yuan (as of December 31, 2009)
No. of Employees	79,591 (as of December 31, 2009)
Website	http://www.citic.com./wps/portal/

CIAM Profile

Company Name	CITIC International Assets Management Limited
Representatives	Chang Zhenming, Chairman  Lo Wing Yat Kelvin, CEO
Other Shareholders	CITIC International Financial Holdings Limited (40%) Ithmaar Bank B.S.C (20%) Ichigo Group Holdings, Co., Ltd. (15%)
Headquarters	23/F, Bank of America Tower, 12 Harcourt Road Central, Hong Kong
Founded	November 2002
Capital	HK$2.217 billion (as of December 31, 2010)
No. of Employees	62 (as of December 31, 2010)
Website	http://www.citiciam.com/