Iraqi Channel Feels The Pressure

Local sources raise fears for the health of the Iraqi IT channel as kidnapping incident in Baghdad’s Sina’a Street puts strain on a market already faced with huge challenges

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By  Published  October 31, 2006

Concerns are mounting for the health of the Iraqi IT reseller channel following a turbulent month that has seen business in Baghdad’s primary computer district severely disrupted.

While the Iraqi market has long been regarded as a risky place to conduct business, some sources believe events in the last month have made the situation even more unstable.

Members of Baghdad’s IT reseller community are still taking of a kidnapping incident that shook Sina’a Street in early October.

As many as 14 staff working at stores belonging to resellers Al Sira, Arazi and Raad were allegedly abducted by men dressed as members of the Ministry of Interior’s Special Forces, bringing trading on Sina’a Street — where more than 300 Iraqi resellers trade computer equipment — to a complete halt.

At the time, resellers suggested it could take a couple of weeks for business to return to normal, but sources in the market claim that verdict now appears to have been too optimistic.

“The market has come back, but most shops are only opening for two or three hours,” claimed Majed Shabo, CEO at Progress Computer System, an HP and Oracle partner with offices adjacent to Sina’a Street.

Fears that Sina'a Street will take longer than expected to recover from recent events comes at a time when some companies had already raised serious concerns about the increasing risks involved with doing business in the Baghdad region.

Delair Adib, business development manager at Iraqi IT company Iraqcom (pictured), said: “We have been concentrating our operations in the north of Iraq because of the nature of the security situation in Baghdad.

Many of the computer companies operating in Baghdad have to employ security guards for their business, which is obviously adding to their costs,” added Adib.

Shabo at Progress added: “It is quite a tense situation.

The problem now is that the city is much more restricted.

Two or three areas of it are closed completely so even though the reseller area of the market is open, people cannot reach the businesses easily.”

Mansour Ali Akbar Flamarz, general manager at Iraqi IT group Al-Naba’a — a Gigabyte distributor for Iraq and an HP partner — claims the disruptions to business in Sina’a Street have added even more uncertainty to a market already troubled by falling levels of demand.

“The volume of business in Baghdad has been declining during the last quarter.

Some customers that used to come from the north and south of the country to Baghdad are no longer visiting.

We have operations in Mosul and Basra that these customers are turning to instead.”

He says this trend is also being matched by a change in customer buying behaviour.

“Some customers, rather than visiting the showroom in person, are getting us to send them sample products and then ordering by e-mail and sending a driver to pick up the products,” said Flamarz.

Dubai-based IT and mobile handset distributor SourceIT has also been impacted by the ongoing instability.

SourceIT director Chris Rae says the company lost a “significant amount of stock” when its key retail partner's flagship store in Baghdad was recently destroyed by a car bomb.

Rae adds that the serious risks associated with trying to do business in Iraq outweigh any potential commercial benefits.

“It’s absolute chaos in Baghdad at the moment,” he said.

“In fact, the current situation makes it almost impossible to do business anywhere in the country.”

One reseller, however, believed recent incidents had not deterred vendors from trying to get their products into the Iraqi market: “A lot of them don’t understand the problems and still expect us to reach the usual numbers,” he said.

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