Basics: A comprehensible guide to electronics trading companies

What do they do?

The mechanism of the electronics industry

What do electronics trading companies do?

The term "electronics" sounds hard to understand. Also many people aren't sure what it is exactly that trading companies do.

Roughly speaking, three kinds of companies are involved in the process of manufacturing the various electrical appliances that surround us.
One kind is the "electronics manufacturer," which should be familiar to all of you. Another kind of company is the "electronics" component manufacturer." And the third is the "electronics trading company" (electronic component trading company).

While electronics manufacturers develop, manufacture, and distribute electrical appliances, many of the electronic components used in their products are manufactured by "electronics component manufacturers." An "electronics trading company" like Ryosan serves as an intermediary between an "electronics manufacturer" and an "electronics" component manufacturer." Electronics trading companies have sometimes been called "semiconductor trading companies" in recent years because semiconductors make up a significant amount of electronic components.

Why have an intermediary?

One frequently asked question is, "Why use a trading company as an intermediary?"
Based on simple logic, it would seem to be better to buy components directly from the manufacturer, because it will cost you less than using a trading company as an intermediary.
In actuality, however, electronics manufacturers usually purchase their electronic components through an electronics trading company.

In Japan, there are about 30 listed electronics trading companies. This number is believed to exceed 1,000 if business operators such as secondary and tertiary trading companies are included.

Why are so many trading companies needed in the electronics industry?