News Release

Comments on recent inquiries

Q: Why is GNI’s financial results heavily influenced by FOREX

A: GNI’s revenue mainly come from US and China. Our operation is limited in Japan. Therefore, our financial numbers are heavily depending upon the exchange rate of RMB/JPY or USD/JPY. But currency exchange rate is very difficult to predict or hedged against at the size our company. Net profit is impacted more than the operating profit after taking gain or loss of foreign currency exchange rate changes from quarter to quarter. We believe the group company’s consolidated operating profit is a more consistent measurement of the group company’s financial health.

Q: Why does GNI adopt a group structure which reduces the profit/loss attributable to owners of parent company

A: GNI’s business spread across the Pacific, including R&D, manufacture, and sales. Employees are speaking 3 different languages and living in different cultures. It will be very difficult to manage everything from Tokyo. Therefore, during investment and acquisition, we intentionally keep the local management team in place and let them own a percentage of the company as incentives. We believe such kind of joint venture structures are the best for GNI Group to continue growing without the potential conflict of culture. Certainly, it also requires the Tokyo Head Office to master higher level of communication skills.

Q: Why do we continue to spend a lot of money on R&D instead of boosting profitability

A: Every drug or medical device has a life cycle. If we do not invest early, we will lose revenue and market share when our products become obsolete. GNI Group is already spending very carefully on selected R&D projects to reduce its impact on profitability. But GNI Group, as a whole group, must continue to investing into R&D for the future of the group company. Such investment can be at group level or at the subsidiary level.