Clare French - Hitachi Europe www.exportcompliancemanagement.com

1. How to Overcome Issues &
Complexities in Global Trade
Management by Having an Effective
Internal Compliance Programe
Clare French
Export Control Manager
Hitachi Europe Ltd
Copyright © 2006, Hitachi, Ltd., All rights reserved. 1

2. About Hitachi
• Hitachi, Ltd., headquartered in Tokyo, Japan, is a leading global electronics
company with approximately 323,000 employees worldwide. Fiscal 2011
(ended March 31st 2012) consolidated revenues totalled 9,665.8 billion yen
($117.8 billion)
• The Hitachi Group offers a wide range of systems, products and services in the
following market sectors
- information & telecommunication systems
- power systems
- social infrastructure and industrial systems
- electronic systems and equipment
- construction machinery
- high functional materials and components
- automotive systems
- components and devices
- digital media & consumer products
- and financial services.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 2

3. Hitachi’s Global Operations
Fiscal Year 2011
.
Europe
Sales -
761 billion yen North America
Japan Sales -
Sales - 869 billion yen
Hitachi Europe Ltd. 5,534 billion yen
U.K.
Hitachi (China), Ltd. Hitachi America, Ltd.
Hitachi, Ltd.
Hitachi Asia Ltd. Asia (incl. China)
Singapore Sales -
2,000 billion yen
Other Areas
Sales -
500 billion yen
Total
Sales –
9,666 billion yen
Copyright © 2006, Hitachi, Ltd., All rights reserved. 3

4. Hitachi Europe Ltd (HEU)
• Headquarters based in the U.K.
• 6 Business Groups located in the U.K.
and Germany
• 2 subsidiaries located in the U.K. and
France
• Various sales offices throughout Europe
Copyright © 2006, Hitachi, Ltd., All rights reserved. 4

5. HEU Export Control Organisation
Shimizu
(MD)
PDD Neil Markham
Export Administration
Committee ERD/HDCE Joyce Healy
Shimizu (Chair)
Minesaki (Vice Chair) ICEG Bernd Spielmanns
Nomura
IFG Diane Burling
DMG Clare French
Fujii (Co-ordinator)
EPSG Sabine Birr
French (Co-ordinator)
European Export
Control Meeting (EECM)
Advisor (Tolan)
In addition, Hitachi Ltd, Japan have a Corporate Export Regulation Department (CERD)
Within CERD there is a division who supervise all of the overseas subsidiaries.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 5

6. HEU Corporate Policy
• The HEU Export Administration Regulations policy has first priority
among all HEU policies.
• It forms part of the terms and conditions of employment and ensures
that employees.
• Section 16 of the policy states:
‘An employee who has violated any provision of these regulations on export
administration or on re-export administration may be subjected to disciplinary
action which may include dismissal.’
HITACHI EUROPE COMPANY POLICY
Subject: Export Administration Regulations
Policy No: Effective: Supersedes:
HEU-050-001-1 15/05/11 REV 009
11/01/89 08/07/09
Revision No: Approved By: Prepared By:
010 (S) (CF)
Copyright © 2006, Hitachi, Ltd., All rights reserved. 6

7. HEU Export Control Procedures Manual
• High level overview including EU, US
and Japanese export controls.
• All relevant export control forms
available for down load.
• Links to relevant websites such as
BIS (UK), BIS (US), BAFA and FCO.
• Available to all employees on the HEU
intranet.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 7

8. Product Control
• Each business group must classify all of their products against the
relevant control lists to determine whether or not they are dual use
list controlled.
• This has to be done with the assistance of the Product/Technical
managers and the factories/suppliers.
Product Product Description Date EU Subject Comments
Number Created ECCN to US
on SAP EAR
CPxxxxx LCD Projector 25.01.07 None No
CPxxxxx LCD Projector 10.01.06 None 5A992 Import licence for France
CPXxxxx LCD Projector 25.01.07 None No
CPXxxxx LCD Projector 25.01.07 None No Includes CD Rom
DTxxxx Lamp 22.04.04 None No
HDxxxxx Digital Still Camera 05.08.09 None No Shipped directly from supplier to customer
Lxxxxxxx LCD TV 24.07.08 None No Shipped directly from supplier to customer
PLxxx Power Cord Set 22.04.04 None No Manufactured in U.K.
VAxxxxx Wireless Card 04.09.07 None 5A992
Copyright © 2006, Hitachi, Ltd., All rights reserved. 8

9. Customer Screening
• The HEU Sales Manager must complete a New Account Application form for all new customers.
• All new customers must sign a Note of Confirmation (NOC), which is a letter of commitment to confirm
that they will comply with all relevant national and international export control regulations.
• All customers must be screened for export control by the export control administrator before the account
can be opened by the Business.
• All existing customers and ship to accounts are check on a monthly basis against the Data Denied Parties
List.
• If a company is found on this list, then approval must be obtained from the Managing Director and all
relevant authorisations be obtained before an export can be made.
• Every year, the export control administrator for each business group must conduct an annual non
proliferation review of all customers. This involves the Sales Managers confirming for each customer
whether or not they have any concerns that the customer is involved in WMD proliferation activities.
• The general terms and conditions of sale, which can be found on the back of the sales invoice also
contain a detailed section on export control and the requirement that the customer complies with all
relevant national and international regulations.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 9

10. Supplier Screening
• All suppliers, subcontractors and business partners should be
screened before HEU enters into a contract with them. The
company/individuals name should be checked against the MK Data
Denial List.
• If any of these suppliers, subcontractors or business partners are to
receive any Hitachi confidential and/or technical and/or list controlled
information from any Hitachi group companies then the following
needs to be completed:
- a ‘Red Flag Indicator’ form must be completed.
- the supplier must sign a letter of confirmation that none of the information
will be used in any connection with the proliferation of weapon of mass
destruction or the missiles capable of their delivery.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 10

11. Sanctions & Embargoes
• Some destinations are more likely to be involved in WMD
programs than others and it is important that you know, Iran
where possible, the final destination of your item.
• In August 2011, Hitachi Ltd, Japan stipulated that no exports
can be made either directly or indirectly to Iran. Cuba
• Cuba, Iraq, North Korea, Sudan and Syria are deemed the
most sensitive destinations and the following steps must be
taken before any export can be made:
Iraq
– Authorisation must be obtained from the relevant licensing
authorities to allow the export. If an export licence is not
required, then this should be confirmed in writing by the
licensing authority. North
– Written confirmation must be obtained from the supplier that Korea
all required national export permits and licences have been
obtained, and copies should be forwarded to HEU.
– A signed end use certificate must be obtained from the final Sudan
customer to confirm that the goods are not for use in any way
related to the proliferation of weapons of mass destruction or
the missiles capable of delivering them.
– Approval from the Japanese Head Office of the relevant
business group must be obtained, and any special Syria
requirements that may be stipulated must be adhered to.
– Written approval that the export can take place must be
signed off by the HEU managing director.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 11

12. End Use Controls
• Applies to ALL products and technology, regardless of whether the product is a list controlled
product or not
• Hitachi, treat all items as dual use and to identify those on the EU control lists, they are
referred to as list controlled dual use
• Any enquires received that seem in any way unusual or irregular must be considered very
carefully by the business group and the export control administrator
• Red Flag Indicators (RFIs) are questions that can trigger ‘Catch-All’
• Need to have made reasonable checks and applied due diligence
• If an employee has any doubts about the legality of an export they must contact their export
control administrator before proceeding with any export.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 12

13. Technology Transfer Controls
• There are two internal policies relating to the
transfer of technology:
– Treatment of Confidential Information.
– Treatment of Technical Information Shared
via Networks.
• The European R&D Centre (ERD) of Hitachi
Europe Ltd. was established in April 1989,
leading the research and development
activities in Europe.
• A system of ‘Judgement’ forms is used.
• It is the responsibility of the author of the
technology to complete this form and show
whether it is basic scientific research, in the
public domain or whether or not it has an
ECCN.
• Each form must be signed off by the General
Manager.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 13

14. Foreign Trade Module on SAP
• SAP is the sales order processing system for
HEU. The Export Control Administrators are
responsible for the management of the export
control master data on SAP.
• The system monitors all materials, customers,
sales orders and deliveries in such a way as
to ensure that they all conform to export
control procedures as set by HEU business
policy and legal requirements imposed by
government agencies.
• Automatic export control checks are made
when an:
– order is created or amended;
– delivery is created or amended;
– order is invoiced.
• A traffic light system is used to indicate any
export control blocks. If an order is blocked
for export control with a red traffic light, then a
delivery cannot be created.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 14

15. Training
• Export control handouts in the starter
pack for all new employees as well as
awareness training during induction
days.
• E-Learning Slides in five languages with
a Q&A section.
• Regular e-mail updates on regulation
changes including the newly introduced
‘Hitachi in Europe Export Control
Newsletter’
• Export control awareness training given
periodically during sales meetings.
• The Export Control Administrators
receive regular training from the
Corporate Export Control Manager and
external training companies.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 15

16. Audits
• In addition to audits made by BIS or other national
licensing authorities, the following audits are conducted:
– Internal audits between each business group are completed
annually and findings forwarded to the Managing Director.
– An ‘Export Inquiry Form’ is completed by each business group and
sent to Head Office once a year.
– All business groups audited every 3 - 4 years by Head Office.
Copyright © 2006, Hitachi, Ltd., All rights reserved. 16

17. Key Points to Remember
• Keep it simple
• Clearly defined export control organisation
• Company policy and procedures
• Regular awareness training
• Training tailored to match the needs of the
employees
• Provide fast and clear decisions so compliance is
not a roadblock
• Make compliance a competitive advantage
• Ensure that if an employee has any doubts about the
legality of an export or inquiry they know who to
contact before proceeding any further
Copyright © 2006, Hitachi, Ltd., All rights reserved. 17

18. Copyright © 2006, Hitachi, Ltd., All rights reserved. 18