Securing Growth and Improved Profitability From FY 2004

 In fiscal 2003, production commenced at three new production sites (i.e. production of steering columns at NSK Steering Systems Dongguan Co., Ltd., tapered roller bearings at Timken-NSK Bearings (Suzhou) Co., Ltd., a joint venture with The Timken Company of the U.S., and preprocessed bearing components at Zhangjiagang NSK Precision Machinery Co., Ltd.) We consider it very important to launch production at these sites smoothly.
 We are currently constructing a third factory building at Kunshan NSK Co., Ltd. The new building, scheduled for completion in June, will specialize in the production of automotive bearings, and will symbolize the start of our full fledged effort to increase our presence in the Chinese automotive market.
 We will also consider local production of needle bearings, automatic transmission components, and precision machinery in an endeavor to expand our portfolio of locally produced products.
 Our long history in the Chinese market has given us an advantage over other bearing manufacturers, and together with the strength of the “NSK Brand” in the global market, we believe we will be able to stay ahead of our competitors as well as foresee changes in the Chinese market. In addition to our strong sales to the electrical appliance industry, mainly of Kunshan NSK products, we will utilize our Chinese holding company to establish our own sales, marketing and logistics network. We will try to increase sales, not only to the electrical appliance industry but also to the general industrial sector and aftermarket, by using this network.
 Last December, we opened a new R&D building at the China Technology Center. By reinforcing our local designing and technological development capabilities, we hope not only to be able to respond to local customers’ need, but to develop new demand based on our technological expertise.
 We are also strengthening our local management system through the appointment of local management staff.
 As result of these activities, we hope to further expand our presence in the Chinese market.