Keita Ishii, President & COO of ITOCHU Corporation, delivered the following 2025 New Year’s message to employees.

Happy new year to you all.

As we welcome the new year, I would like to address all of you in the ITOCHU Group who are active around the world.

Last year, I participated in an economic mission organized by the Japan Chamber of Commerce and Industry and visited Bangkok, Thailand for the first time in a long time. I was surprised by the ongoing depreciation of the yen and the decreasing presence of Japanese companies in the area. Ten years ago, when I worked in Thailand, 1 baht was about 2.8 yen. It has appreciated significantly to 4.5 yen. The price of soup, which was popular among Japanese expatriates, had remained at 1,000 baht. However, in yen terms, it increased from around 3,000 yen ten years ago to about 5,000 yen now. I thought it was overpriced and I was very disappointed. I visited the Amata City Industrial Estate, where I worked as an Outside Director. I found that the industrial park, which was once filled with Japanese manufacturers and construction companies, is now dominated by Chinese companies. The international status and competitiveness of Japanese companies has declined, which has caused me to feel that there is a crisis.
Japan's presence in ASEAN countries has primarily grown through the manufacturing sector. However, I have observed limitations to the product-out approach that we have adopted. The value of a currency is often seen as a reflection of a nation's strength. If the depreciation of the yen is not only due to differences in interest rates but also an indicator of a relative evaluation of national power, then this situation is quite frustrating. I have a renewed belief that, as a leading general trading company, we must work hard to revitalize Japan.

Now, I would like to discuss the current global situation. Last year was an election year in many parts of the world. In Japan, the Ishiba administration took office. In the United States, Donald Trump was elected president. The policies of the Trump administration, starting this year, will cause significant changes, particularly in trade and tariff policies, the strengthening of regulations regarding China, and immigration policies. These shifts are being reported in the media and on the Internet. Trump 2.0 policies advocate the America First principle. The United States is expected to strengthen its protectionist actions and protect domestic industries by increasing import tariffs. Cooperative tendencies are being replaced by conservative and protectionist tendencies around the world. China, Russia, and Turkey are under the strong leaders. In Europe, particularly in France and Germany, there is a rise in the power of right-wing parties.
In this situation, President-elect Trump is likely to prioritize bilateral negotiations and deals over multilateral cooperation and coordination. We need to first closely observe how individual countries and regions will respond to this and how the current supply chains for raw materials and products will change. However, President Trump will serve for only four years. It is necessary to maintain a calm perspective on medium- to long-term business and investments and not overreact to Trump 2.0 policies. I encourage you to elevate your awareness and sharpen your senses to better identify changes in customer behaviors and the industries you interact with.

I also want to emphasize that digital technologies, especially generative AI, are evolving at an accelerating pace, and their implementation in real businesses is progressing quickly. The individual usage rates of generative AI is 56% in China, 46% in the U.S., and 9% in Japan. The average global usage rate of generative AI in business is 43%, while in Japan the usage rate is 16％. AI utilization in Japan is currently comparable to that of a developing country. Generative AI is a significant movement worldwide that cannot be ignored, although it may not be fully recognized in Japan, a digitally backward country. There are even risks for products lacking digital technology and AI to fall out of the global market, not only in cutting-edge fields like space development, robotics, advanced medicine, and smart agriculture, but also in traditional sectors. It has been recently suggested that within the next two or three years, AI will reach a level of intelligence comparable to human intelligence, and that a super-intelligence that surpasses human intelligence by a factor of over 10,000 will emerge within ten years. It's evolution will never stop. I believe that if we do not quickly catch up with this trend, we may not even be able to seize new business opportunities.
In these circumstances, we are quickly developing an environment where generative AI can be utilized in everyday business operations. Last November, we provided generative AI training to all employees and officers. In December, we officially introduced Microsoft Copilot. Approximately 1,000 people are now using I-Colleague, our proprietary generative AI service. Do you believe that you can perform your job without using AI, or that using AI is a task suited for younger people? Your colleague next to you might be using generative AI to dramatically enhance their work efficiency. It is also said that AI will not take away your jobs, but the people utilizing AI will take away your jobs. I want you, as merchants, to always pay attention to global events, observe them, and have the ambition to absorb everything necessary. AI technology is becoming an essential tool for businesses, shortening the time and distance between people around the world and increasing productivity. I hope that all of you will be more interested in this new technology to enhance your work every day.

I would like to conclude my new year's message by wishing for the achievement of the consolidated net income target for FY2024, 880 billion yen, wishing the ITOCHU Group continued success and prosperity in business, and wishing the ITOCHU Group employees around the world and their families good health and happiness in the coming year.