Distributors appeal for calm as credit crisis worsens

Major Dubai-based distributors have confirmed that resellers Micron Computer and MST Computers both defaulted on credit payments during the last week. Coming so soon after serious credit problems with MID-Fortex, distributors have appealed for calm and emphasised the need for open communication and transparency in the market.

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By  Stuart Wilson Published  June 1, 2006

Major Dubai-based distributors have confirmed that resellers Micron Computer and MST Computer defaulted on credit payments during the last week. Coming so soon after serious credit problems with MID-Fortex, distributors have appealed for calm and emphasised the need for open communication and transparency in the market. Tech Data and Empa both confirmed that Micron and MST have defaulted on credit payments. Several other major distributors also have outstanding credit lines with the two resellers. Savas Yucedag, VP at distributor Empa, said: “The message that we have to get across to all the distributors and creditors in the market is not to panic. The more we panic the more we lose.” “Empa has been communicating closely with other distributors in the last week and it is clear that we are all in the same boat. If we all panic then that boat will become the Titanic,” he added. Empa has spoken to multiple distributors including Mindware, Tech Data, Logicom and eSys to share information relating to the overall credit exposure in the market and ensure that a constructive approach to dealing with the issues is taken. Distributors are also keen to emphasise the need for resellers to open an honest dialogue with creditors to talk through any potential payment problems. “They need to share information and be totally transparent with any creditors,” continued Yucedag. “Some of them are unaware of the precarious nature of their financial situation.” “Now that problems have occurred with Fortex-MID, MST and Micron, there will be an impact on other resellers that were trading with them. Many resellers in the market are fully dependent on credit and have highly leveraged capital.” The total amount of credit owed to authorised distributors by Fortex-MID, MST and Micron easily runs into ‘tens of millions of dollars’ according to the managing director of one of the largest IT distributors operating in the Middle East. “The vendors also need to start getting involved more between the distributors and the channel,” added Yucedag. “They are part of this issue and need to be more active in helping the channel work through these issues.” To share your views on the current credit crisis gripping the Dubai-based IT channel, please e-mail stuart.wilson@itp.com or telephone +971 4 391 0882. Updates to follow.

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