Entering the Giant  Chinese Housing Market In conjunction with China’s dramatic economic growth, the number of houses built in  China has skyrocketed, reaching 4.94 million in 2008. This number greatly exceeded  the number of new housing starts in Japan, underscoring the tremendous size of  China’s housing market. Aiming to capture business in this market, in October 2009 the JS Group estab- lished a Global Business Headquarters and started full-scale business development  in China. With this move, we plan to increase sales in China by approximately 10  times to ¥50.0 billion in the year ending March 31, 2014, compared to ¥4.6 billion in  the year ended March 31, 2010. Number of New Houses Built in China  (Thousand units) 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008  (CY) 6,000 4,000 2,000 Source: National Bureau of Statistics of China The driver of business expansion in China will be the Asia-Pacific division of American  Standard (ASAP), which we brought into the JS Group in 2009. At the end of 2009,  ASAP had a total of 76 sales agencies in 73 cities throughout China. Our Group  companies, particularly Inax, will effectively utilize these sales bases to expand into  inland China where demand is growing rapidly. In Shanghai, Tostem opened its second showroom in China. The showroom pri- marily features entryway doors and wooden interior furnishing materials, to highlight  the advanced level of engineering and product strengths. By making a full-scale  entrance into the Chinese market, the JS Group will further enhance its framework for  capturing local demand as the number of newly built homes increases rapidly. Utilizing JS Group  Member American Standard About the Asia-Pacific division of American Standard ASAP Profile Presence in China As of  December  31, 2009 Target as of  December  31, 2010 ■ Number of  showrooms 167 227 ■ Agent stores 76 86 ■ Regional scope of activities 73 cities 90 cities No. of employees:  Approx. 3,800 Representative:  Kenneth Ng Factories:  9 in 5 countries Sales bases:  35 in 9 countries Countries where China, Thailand, active:   South Korea, Vietnam,  Indonesia, the Philippines,  Singapore, India, Australia South Korea 19% Thailand 24% VIP 13% Others 1% China 25% Exports 18% Net  sales ¥22.1  billion 2009 results (January 1 to December 31, 2009) JS Group Corporation Annual Report 2010 22 Sales by Country of American Standard’s Asia-Pacific division