Ryosan Company, Limited
11th Medium-Term Business Plan
May 14, 2021

11th Medium-Term

Positioning of This Plan

Business Plan The 11th Medium-Term Business Plan shifts Ryosan’s management stance from the rigid defensivemode for improving profitability established two years ago, to an offensive (active) mode focused ontransforming its business. Ryosan is actively pursuing the investments it needs for growth whilestrengthening its management of resources further than ever (people, equipment and funds).

Environmental
changes• Changes insuppliers’policies• Burden of endof life (EOL)and business
continuity planinventories• Response tothe COVID-19
crisisRigiddefensive
posture• Freezing of theMedium-TermBusiness Plan• Countermeasures forprofitability
enhancement• Management
reorganization

Examination ofstrategy• Long-termvision• 11th MediumTerm Business
Plan

Switch to an“offensive”(active)postureInventory and operating
income (fiscal half-years)

Inventory

Operating income

80,0004,000
Inventory

Operating income

60,0003,000

40,0002,000

20,0001,000

Unit: ¥Mil

0

FY2015FY2016FY2017FY2018FY2019FY202002

Summary of Previous Medium-term Business Plans

11th Medium-TermBusiness Plan In previous medium-term business plans, Ryosan made themes such as diversification of products,
overseas expansion and new businesses the pillars of its plans. The Company’s basic business model
as a trading business remains the same.
 Now that changes in the business environment are unusually drastic, Ryosan is moving with unwaveringconviction to transform its operating constitution.

8th (FY2011–2013)

9th (FY2014–2017)

10th (FY2018–2020)

Emerging markets

Shift to multi-vendor sales

Solution business

Global Japanese-affiliatedcustomers

Overseas businessCore suppliers

Strengthening automotive andinfrastructure operations

New business models

Overseas local businesses

Investing for growth

New business models

Governance
Ability to respond to risks
Overhaul of IT systems
Effective use of personnel

Next-generation ITsystems
Organization
Personnel system
Raising efficiency ofclerical/administrative work

Business infrastructure
Strengthening the qualityof management
Financial strategy3Macroenvironmental Analysis

Overseas

11th Medium-TermBusiness Plan

Improvement from the economic slump caused by the COVID-19 pandemic
Permanent friction between US and China, continuous and strengthened
sanctions on major traded products

Domestic

Business restructuring in the wake of the pandemic (digitalization,workstyles)
Continued deflation, zero interest rate policy unchanged

Spread of AI technology and 5G
Technology Revolution in zero-carbon technology and reduced cost ofimplementation

Industry

Customers

Trend toward aggregation of dealerships by suppliers
Rise to prominence of suppliers in Asia

Business reorganization (expansion of scope of use in electronics)
Spread of business without face-to-face contact (sales, purchasing)

4Main Points of Measures (1/2)

11th Medium-TermBusiness Plan

Portfolio diversification• Thorough review of business opportunities foracquired commercial rights; diversification of current
business portfolio relying on automotive sector• Enabling of efficient sales activities throughestablishment of direct sales promotion; aiming toactivate the medium-sized-enterprise zone

Strengthening of local
business in China andHong Kong• Deepening cooperation with local partners;
expansion of solution business aimed at localcompanies• Reciprocal use of the Ryosan and Edal brands;
strengthening of general-purpose-product businessin each zone of existing networks

Harvesting of priorinvestment products
and making newinvestments• Harvesting of key businesses from preceding
investments to new products expected to bear fruit
during the 11th Medium-Term Business Plan
• Discovery of new products and launch of businesses
based on those products; decentralization of device
composition, which was hitherto focused onRenesas
5Main Points of Measures (2/2)

11th Medium-TermBusiness Plan

Investments totransform Ryosan’s lineof business: Turning
front-line strength andvital-point strength intoproducts• Ryosan is establishing specialist teams tasked with planning
new businesses using customer needs as their starting point.
Investment is focused on resources to transform Ryosan’senterprise constitution.
• Ryosan is pursuing partnerships with other industries,
including not only manufacturing functions but also strategic
secondment of personnel.

Raising the efficiency of
existing businesses• Ryosan is boosting efficiency by reducing paperwork andshifting procedures to electronic systems.
• Practical knowledge is being digitalized using chat bots, AI,
etc. Measures such as automation of order-receiving
processes through concerted use of robotic process
automation (RPA) technology are being implemented.

Reinforcing thefoundations• In addition to overhauling basic sales information,
Ryosan is bolstering internal management
infrastructure such as education systems, risk
management and governance frameworks.

611th Medium-Term

Financial Plan

Business Plan

FY2020(Results)

FY2023(Managementtargets)

Net Sales

219,884

263,000

Gross Profit

19,031

21,300Operating Income

4,628

6,900

Consolidated ROE

5.3%

5.0%

Unit: ¥Mil

USD interest rate

2.0%

JPY interest rate

1.0%

Exchange rate

¥100

Transformationof enterpriseconstitution

Creation ofbusinesses anddramatic
improvement ofearningcapability

Shift from rigid
defensive mode
to offensivemode7

11th Medium-Term

Growth Strategies: Portfolio Diversification

Business Plan Ryosan is diving into its newly added non-automotive portfolio.
 To discover opportunities in the SME and long-tail-zone categories, where its involvement
has been relatively light, Ryosan is launching dedicated teams, expanding its product line
and preparing direct sales channels, among other measures.
Sales-promotion measures
Majorcustomers•

Small andmedium-sizedcustomers•

Long tailDuring theexpansion ofcommercial rights,
Ryosan invested
less in thesezones.
This is a market inwhich suppliers
asked Ryosan tostrengthen its
presence.

Diving into its nonautomotive portfolio, which
was added as a result ofchanges in suppliers’
policies
Streamlining current
operation

 Launch of sales
promotion teams
specializing in middlemarkets
 Introduction ofstrategic products
 Effective use of direct
sales channels

811th Medium-Term

Growth Strategies: Channel Strategy

Business Plan Ryosan plans to develop marketing materials that enable sales promotion without face-toface meetings, as well as system infrastructure for collecting customer information. To
develop infrastructure that enables efficient sales promotion, Ryosan also plans to invest in
inside sales as well as e-commerce websites.
On-sitediscussions
Telephone
E-mailWeb

Live chatSocial media

Staffed retail
outlets

MA, CRM,SFA, online
conferencing
Online andmobile
infrastructure
Tools for use withsocial media

New-channel infrastructure

Centralized management of diverse
customer channels and information

Proposal ofsolutions

Next
phase

Long tail and newcustomers

Order
receiving

Areas for developmentin the 11th MediumTerm Business Plan

EstimatesCurrent
statusExisting
customers

Technical
information

Customerdatabase
Productdatabase
FAQ andsupport
information
Responselogs
Web logs
Transaction
history

Databases
9

Growth Strategies: Expand Local Business in China
and Hong Kong (1)11th Medium-TermBusiness Plan In southern China, Ryosan and Edal are moving to full-fledged cooperation in the field of sales promotion,achieving synergies in sales.
 In northeastern China, Ryosan plans to expand local business by 1) expanding sales of general-purpose
products in Ryosan channels and 2) deploying value-added products into promising market areas and by
expanding cooperation with investment targets (Qingdao Sanyuan Taike Electronics Technology (China).

Solution businessNortheastern
China

Expansion ofsales tostrategic
customers

General-purpose-products business

Expansion of cooperative
business with Qingdao
Sanyuan TaikeElectronics Technology(China)

Expansion in white goods

Southern China• Use of design
houses tostrengthen
technical support• Sales of kits ofsemiconductors
and electronic
components

Strengthening ofbases’ sales
capabilities• Focus on analog products• Measures to improve productknowledge

Pursuit ofsynergies between
Ryosan and Edal

• Deployment of Edal products toRyosan customers• Deployment of Ryosan products
to Edal customers

RyosanEdal
10Growth Strategies: Expand Local Business in China andHong Kong (2)(Expansion of Sales to Strategic Customers)

11th Medium-TermBusiness Plan Leveraging its strengths (sales capabilities, sales channels, technical capabilities, financialresources), Ryosan is expanding its business by expanding sales of module products, aswell as sales in its existing device businesses.
Targets

Parts suppliers

 White-goods market(Air conditioners,refrigerators andperipheral devices)

Supply of parts
Supply of modules

EMS
Specificationof parts

Supply of parts

 Automotive market FA market (new)Partners, solution vendors
Supplyof parts

Supply of modules
Headoffice

Supply of modules

Supply of modules

Customers(in Japan)
Specification of parts

Customers (manufacturers in China)

11

Growth Strategies: Turn Front-line Strength andVital-point Strength into Products
Shift in development model from technologydriven to customer-needs-driven

Business Plan

Product-development framework leveraging Ryosan’s
network of outstanding corporate customers in Japan andoverseas

DX

Request for
streamlining ofwork processes

11th Medium-Term

Ryosanecosystem

Burden ofresponse to EOL

AutomotiveFA

Information&Communication

Analytical/
judgement
capabilities

Semiconductor
manufacturersIPvendors

Needs
White
goods

Support forelectrification

Platform
Consumer
devicesIndustrial
machinery

EMS

Front-line strengthand vital-point
strengthServicevendors

Softwarevendors
Parts
manufacturers

Trading-company functions
Manufacturing anddevelopment functions
Information-provision functions

12Growth Strategies: Raise the Efficiency of Businesses
operation As a result of finely textured responses tocustomer needs, operating efficiency has
declined.
 By putting to use a wide range of DX
technologies, Ryosan expects to achieve
efficient business operation without
sacrificing quality of service.

AI

11th Medium-TermBusiness Plan

RPA
Chatbots

Digitalization of operations

13

Growth Strategies: Reinforce the Foundations

11th Medium-TermBusiness Plan Ryosan is strengthening its management systems (governance and risk management)
to enable a wide variety of risk-taking.
 Ryosan is enhancing its personnel and education systems to enable sustainable
enterprise growth.
• Enhancementof management
information• Revising thescope anddepth ofmonitoring• Revisingsystem design• Efforts todiversify
workstyles• Introduction ofrisk KPI• Strengthening
overseas
compliance

GovernanceRisk
management

Personnel
systems

Education• Revising
educational
programs• Strengthening
management
capabilities

1411th Medium-Term

Financial Strategy

Business Plan

Measures to improve capital efficiency

Policy on return of capital•••

Ryosan is improving profitability through measures such as
diversification of its business portfolio and investing forgrowth.
Ryosan is advancing rigorous cash and inventory
management as well as use of leverage, aiming once again
for ROE of 5% in FY2023.

Improvingprofitability• Diversification of the business portfolio• Strengthening of growth investment• Streamlining operations through DX, etc.

••

Japanese yen160
140• Rigorous inventory management• Enhancement of cash management
Improving • Response to new settlement schemes

asset
efficiency

Ryosan places priority on investing in capital andbusiness for growth.
Ryosan is targeting a consolidated dividend payout ratioaround 50%.
Ryosan might consider the acquisition of treasury
shares depending upon the market environment.

Ordinary
Special
普通配当
特別配当
dividend
dividend
配当性向payout ratio
Dividend%
300.0

120
200.0

10080
60

100.040

Use ofleverage• Appropriate return of capital• Diversification of purchasing methods

200FY2011
2011 FY2012
2012 FY2013
2013 FY2014
2014 FY2015
2015 FY2016
2016 FY2017
2017 FY2018
2018 FY2019
2019 FY2020
2020

0.0

Improvement of ROE15