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Ryoyo Electro Corporation: a clear vision towards a bright future
Mr. Moritaka Nakamura, President of RYOYO Electro
Mr. Moritaka Nakamura
President of RYOYO Electro
Since its establishment almost six decades ago as a trader of semiconductors, RYOYO has evolved with the times and is now at the forefront of the latest technologies such as IoT, smart devices and cloud services.
Ryoyo Electro was established in 1961 as a distributor primarily focusing on semiconductors. Could you share with us your history and key milestones?
As you mentioned we are always keen on creating value in tune with the times. Hence, in order to understand our recent reforms, I believe it is important to understand the context of the role of traders throughout the history of Japan.
After WWII, Japan undertook a rapid economic growth. Semiconductors became a great business opportunity and Mitsubishi Semiconductor became one of the leading companies worldwide. As their trader, and specifically during the Keiretsu model, it meant great success, and a very profitable business model for us. However, during the 80’s Japan started to lose its competitive advantage, leading to a shrink in their market share worldwide. At the time, Japan did not have the best conditions to bring up corporate entrepreneurs and leaders and had little hunger to continue their R&D activities, which led other countries to become extremely competitive in the international market.
It is interesting to mention Japanese companies were rich in cash but had very low price-earnings ratio. Hence, when international companies intended to engage in M&A activities at the time, they were not successful, but not due to its lack of potential, but because of a lack of structure.
Meanwhile, with the market fragmented, trader companies also lost its’ share of the pie due to cost cuts. Ryoyo unfortunately felt into the trap, were sales and revenue saw a sharp decline, there was a lack of structure, and our competitive advantage/strategy was vague. In addition, and not very long ago, we lost a very big license which made us realize change was needed urgently.
Ryoyo Electro Company has a long history always "Creating value in tune with the times", and in 2017 you started to pursue reforms, thereby writing a new chapter in your history. Could you please share with us your three-year business plan?
Hence, when I assumed presidency, I established a new vision for the company. I come from a department store background, and although I might not have the technical expertise, my objective in Ryoyo is to create value in tune with the times. Nowadays, with e-commerce and other technologies, it is essential to always put the customer first. Putting the end-user as the priority allows suppliers, traders, and the distributors to succeed, becoming an opportunity for the entire chain.
Following a deep, and objective reorganization of the company, we initiated our three-year business plan, which now allows us to have a clear competitive advantage, and a clear strategy to assure the best plausible outcome for the company.
Strategy No.1:
We realized it was essential to take advantage of our long-lasting relationships with our clients, locally and internationally mainly due to our history, and the Keiretsu model which enabled us to share common objectives with several companies that now hold a big share of the international market.
This allows us to firstly assure our presence as a semiconductor trader, but also focus our attention on other activities which will create value to these companies and will increase our competitive advantages. For example, increasing the efficiency of and providing solutions to the factory automation (FA), retail and medical segments.
Today, companies such as Microsoft are no longer discussing OS and simple devices, but the cloud, HP Enterprises focuses on not only server and storage, but intelligent edge. Hence, it is through our solid working relationships with these important players and our expertise in M2M, IoT and other technologies that will lead to significant profits.
In order to do so, we look forward to creating new technologies, which will entail a solid mechanism behind IT, human resources, employee commitment, and the training of future leaders to ensure we do not repeat any past tragic missteps.
Strategy No.2:
Secondly, ONLY RYOYO is the strategy which allows Ryoyo to engage in other activities in which we can assure the end-user is taking advantage of our services.
We have started to be able to display and exhibit our own sense of originality and uniqueness through our own R&D. This includes exercising our creativity and imagination as well as creating and providing the ideal environment for our engineers and technicians to feel fulfilled and satisfied in the workplace. For example, Ryoyo had not previously registered for a patent, however, since I became president our patent registration has reached double digits and three patents have been successfully approved in the past two years.
You are supporting manufacturing with technology and ideas, and you have become a bridge aiming to become a driving force that creates new value and excitement. Could you share with us your current co-creation projects and future plans to engage in M&A activities?
In addition, we have also done a collaboration with a company called Iris Ohyama Inc. which has enabled us to develop Iris Ohyama. This device introduces a smart technology that utilizes LED ceiling light with speech recognition. Ryoyo developed the prototype of speech evaluation kit which operates without internet connection and support Iris Ohyama’s development.
Hence, the difference between Iris Ohyama and Amazon Echo for example, is that we no longer need Wifi or any other internet connection, therefore, allowing certain demographics to use LED ceiling light with speech recognition. Furthermore, Iris Ohyama Inc. has been focusing on adopting high levels of technology and price competitiveness, allowing us to tackle several markets.
We are aware that it is quite rare as a trading company to work with a company such as Iris Ohyama Inc. given their efforts to add customer value. Until now, it was more common to have a trading department in a large company, but for a trader to collaboratively work together to create a product with a client is quite rare. Nonetheless, it is quite a valuable collaboration in the history of our company and a great milestone for us to be able to work with a company that is exceedingly respected in Japan and to have been praised and favorably evaluated by executive director of Iris Ohyama.
In addition, in order to strengthen Ryoyo’s potential, we require certain partnerships, alliances and M&A opportunities. My vision is to be an investment/consulting company under a unique brand which will allow provide solution in niche market which will support customer’s business challenge, and ultimately have an impact in the end-user.
Throughout the years, your company has expanded beyond the Japanese border. Ryoyo Electro Corporation is now present in China, Singapore and Munich among other countries. What is your future objectives for the company?
In the past two years, the new strategies that have been in place have been fairly visionary. This is largely due to the fact that we have been able to create a strategy called "Only RYOYO" along with the right environment. At the end of the day it is our employees that have made this happen. Within this very old fashioned and classic model of a Japanese trading company, employees had gradually begun to lose the passion they used to have and perhaps were not necessarily feeling the customers’ joy as their own. In addition, they were not deriving the value of working in a team. Therefore, it can be argued that the greatest struggle of the past two years has been to bring a breath of fresh air into the company. However, I am proud to say, our employees are more motivated and excited about the future than ever.
Based on what I have discussed today, within our midterm strategy of three years, having cleared the first year, we aim to make considerable achievement. In order to achieve this, we need a new strategy and to gather new resources, including human resources.
My objective is to have these functions and be able to, a small scale, have engineers that are able to devote themselves to R&D.
You have discussed the company history and the difficulties it faced before your entry into the company. Given these hardships and complicated circumstances the company was in, what attracted you about this challenge?
There are two main reasons why I was attracted to the challenge: firstly, I had a personal bond with the chairman of the company, and during a personal turmoil situation, the chairman gave me the possibility to work as an advisor hand-in-hand with them to develop a new strategy for Ryoyo. Years later, they gave me the opportunity to be the President of the company, and after many years of having a great commitment to the company and the employees, I decided it was a good chance for me to keep learning! Secondly, and as mentioned previously, I do not have any technical expertise in the field, but I believe my unique personality, and strong desire to serve the people around me, will allow me to serve the people who warmed me in my toughest years. I am truly committed to the company, extremely excited and I hope we succeed in the next couple of years!
We also only have this one life to live so it is a waste of time to feel like someone wronged you and hold grudges against people. And I felt that the kind of man I could become as a result of this job would definitely attract more women to my side! (laughing).
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