A Guide to High-tech Electronic Component Distributors in Japan

Japan is a large producer and consumer of semiconductor and electronic components. In 2015, Japan’s semiconductor and electronic component exports amounted to JPY 7.89 trillion and imports JPY 5.0 trillion [1]. Domestic Japanese sales of semiconductors alone were JPY 3.11 trillion or 9.3 percent of global sales volume in 2015 [2].

This trade in semiconductors and electronic components is supported by a large number of Tier One distributors. M&A activity has increased in the past ten years. However, the top five distributors still only account for around 25 percent of the market. Online and catalog distribution account for approximately another 1 percent.

This healthy competition among distributors is good news for overseas companies looking to distribute their products in Japan. Distributors are eager to take on new products to expand their portfolio and there is significant latent demand for reasonably priced overseas products which can replace the higher priced offerings of well-established local brands.

Screening Criteria

Sales Revenue

Table 1 shows the 31 distributors identified by this research and their 2015 high-tech electronic component revenues.

Note: ● is 2013 data; ▲ is 2014 data

Market Coverage

These 31 Tier One distributors operate a total of 363 sales offices in Japan. Table 2 shows the number of offices in each prefecture. Sales offices are equally concentrated around Tokyo and Aichi. Aichi is the leading automobile production area in Japan. Ten prefectures have no sales offices.

Note: Ten prefectures are without offices (viz. Aomori, Akita, Yamagata, Gifu, Nara, Shimane, Yamaguchi, Saga, Miyazaki, Okinawa)

Table 3 shows sales offices maintained by each high-tech electronic component distributor in Japan. A Tier One distributor with a larger number of sales offices would be more attractive to a company seeking to promote a technically complex product, requiring significant education of sales persons. A well-established line of electronic components may be represented by up to 200 Tier Two distributors, whose behaviors are difficult to influence as their focus is on route sales and have little or no contact with Principals.

Sales Growth

Table 4 shows the sales increase achieved by distributors from 2013 to 2015, a period of economic recovery in Japan. This measure provides a rough indication of how hard a distributor works for its suppliers, its ability to close deals, and whether it has a customer base in growing markets.

Note: ▲ only two years of data; ● no data

Automotive Electronics

Many Tier One distributors are attempting to increase the weight of their automotive electronics business in anticipation of growth arising from ADAS [3] and other automotive applications. Automotive applications currently account for approximately 10 percent of the market, however, this is expected to double in the next five years.

Table 5 shows distributor dependency on automotive applications and Table 6 shows distributors who reported automotive application sales in excess of JPY 10 billion. Data is limited as most distributors do not report automotive sales as a separate segment. Three distributors derive almost 50 percent or more of their revenue from automotive electronics applications.

Note: Most distributors do not provide automotive segment data; ▲ incl. mechanical & materials automotive revenue; ● 2016 Q1 data

Note: ▲ incl. mechanical & materials automotive revenue

Number of Brands Represented

Table 7 shows the number of high-tech electronic component brands represented by the 31 distributors surveyed.

Note: ▲ no brands on web; ● JAMAS estimate; ■ no data

Representation of Products on Distributor Web Sites

The effort distributors make to promote on their web sites the brands they represent varies greatly. Four distributors surveyed make no mention of specific brands on their web sites, because they position themselves as solution providers. Most distributors place logos on their sites and links to web pages of Principals. Only a few distributors create specific content for brands represented on their web sites.

On the whole, Japanese high-tech electronic component vendors and distributors make only limited use of digital content for promotion. This provides an opportunity for new brands entering the Japanese market to increase their brand awareness relatively easily with a sound digital contents strategy.

Channel Management Recommendations

Prior to selecting a distributor you should determine which distribution functions are critical to the success of your business in Japan. If there are functions which are absolutely critical to performance, branding, or end-user relationships, then these roles should be performed in-house or by resources over which you have a high degree of control. In the field of electronic components and devices, you will most probably require a sales engineer in Japan to support telephone inquiries from distributors and customers in the same time zone and language.

Conclusion

Choosing, managing and supporting distributors in a foreign language market such as Japan is a difficult task. Jamas, a digital marketing agency in Japan can help you find distributors that have the necessary infrastructure and capabilities to represent your products. We can also support the relationship over time through promotion activity, localization of product information for distributors, and other channel marketing activity.

If you are interested in exploring this subject further, please contact Jamas, a digital marketing agency in Japan using the contact form on the web page.