Building the brand

Al Faisaliah Group’s Zai PC brand, now in its second year, is expanding outside of Saudi Arabia and beyond just desktops.

  • E-Mail
By  Mark Sutton Published  April 8, 2002

Introduction|~||~||~|Although there are many global PC brands present in the Middle East, it is still the locally assembled machines that take the lion’s share of the regional market. But while many retailers and resellers have launched their own range of white box PCs alongside their other operations, few have really invested in factory facilities that could compare to South East Asia, or marketing of a brand to match US companies. At most, the leaders signed OEM agreements to get their own brands assembled elsewhere; many companies simply rely on a handful of staff in a backroom. So why did the Al Faisaliah Group, with no previous experience of hardware manufacturing, decide to build a PC brand for the region?

The company had a long history in the PC business, as a distributor for Hewlett-Packard hardware, although it did not have any assembly business of its own. It was not until the Saudi market began to open up that Al Faisaliah decided it wanted to get into systems integration. Bassam Abu Baker, factory manager of Zai, explained: “We used to be sole distributor for HP, and we invested a lot [in the brand], then 3-4 years ago they started to open up their distribution, and we started to have some issues with them. We said we will keep selling HP, because everyone knows that we are HP distributors, but we will also have our own brand, that we control, that we own.”

The decision was made to create an Al Faisaliah PC brand, and the group began looking into the assembly market. The company already had the distribution business covered by its AIME arm, which still handles distribution, but it was important to get it right. “We did a lot of studying of the market before we went ahead with the Zai venture—we spent two years researching it,” said Mohammed Ali Alsegaih, managing director of Consumer Electronics & Technology, Al Faisaliah Group (AFG). “We have been in the PC business since the early 1970’s, so we have a lot of experience and knowledge, plus we have the goodwill and the Al Faisaliah reputation for supporting our products.”

||**||Making a name for Zai|~||~||~|The group did not just want to go into the assembly business, like some of its Saudi competitors, but wanted to build a world-class brand. This meant visiting PC factories in Europe and Asia to see how other large companies handled things, and a serious level of investment in infrastructure, staff, and marketing the brand. One of the key elements in distinguishing Zai is quality, Alsegaih said. “The quality control manager was the first person we hired, even before the factory was built—quality is that important.”

The Zai name was chosen, not because it means anything, but because it is short and easy to spell in Arabic and English, and the company built its Riyadh factory and started to establish the brand with a serious marketing push. The initial investment was 12 million riyals ($3.2 million), and the first Zai brand PCs rolled off the production line last year. Since then, a further 10 million riyals have been invested.

The strategy has been to beat locally assembled PCs on quality, while matching brand names on quality and beating them on price; and providing a level of after sales service that neither could match. The branded PCs are the greatest challenge, Alsegaih explained: “We face the toughest competition from the branded PCs, especially last year, because the vendors had large inventories that they had to get rid of, so they slashed prices—but our target is always to be 10-15% lower in price than the brands, while maintaining the same quality.”

In order to maintain quality, Zai only buys components that are Microsoft-approved. The factory itself has Microsoft’s seal of approval, from the US Windows Hardware Quality Lab (WHQL), the only PC factory in the Middle East so approved. It is also ISO 9001 and 9002 certified.

Components are sourced from a range of vendors, said Abubakr, with purchasing decisions based on Microsoft-approval first, then on availability, best price and after sales service. By not tying the company to a particular vendor, the factory is able to get competitively priced components; economies of scale also allow Zai to beat the branded PCs on price.

The only component that Zai doesn’t shop around for is the processor. “We only use Intel, I am not planning in the near future to use any other brand than Intel,” Abu Baker said. “We are an Intel Premier Provider, that gives us the latest technology in good time. We had the 2.2GHz Pentium 4 weeks ago, we were the first to get the 2.4GHz P4. So if a customer wants [the latest CPU], we can do it, whereas Compaq or HP have such long supply chains that it can take them months to get updated machines on the market.”

||**||Future plans|~||~||~|Because the production process is faster, Zai can provide custom specification PCs, another advantage over brand name PCs, said Abu Baker. The company offers a number of generic configurations, which satisfy 90% of customers, but it is able to offer customisation right down to the case or keyboard if the customer requires it.

In order to meet the service requirements of end users, Zai again leverages on its parent group. All of its PCs are supplied with a three-year warranty, either onsite for corporate customers, or through a network of sixteen service centres for SOHO users. The network was expanded from nine IT service centres, following a restructure of the group, which brought together AFG’s consumer electronics and technology divisions. “Within the group we have Sony Electronics, Zai PC and AIME, because they are all consumer orientated,” Alsegiah explained. “The idea is to focus on the consumer business. The people who deal with Sony are more used to dealing with customers, and the centres have been established for nearly twenty years, so we are keeping the same staff except where there is a need for specific IT knowledge.”

So far, the business has proven a success. Last year Zai shipped 8,300 units—this year the target is set at 15,000. In part, these numbers will be made up outside of the Kingdom. Interest from resellers outside of Saudi Arabia has led the company to step up plans in other Middle East territories. “Resellers have approached us, we have not approached anyone, they read about us, and saw the website,” said Alsegiah. “We now have resellers in Kuwait, Bahrain and Qatar, and we will start in Jordan, Syria and Iran in the coming months. We are assigning resellers, once we have checked them out—they must offer the necessary support, or we will not let them sell Zai.”

The company is also expanding its range, with the launch of the first Zai servers. The first server offerings, which have been rolled out at the end of March, are dual-processor Intel Pentium III or Xeon based machines, with processor speeds of up to 2GHz, and a number of server management functions. Zai has again worked closely with Intel and Microsoft to ensure standards. “Because our customers’ entire business depends on these servers, we need to provide them with the highest quality building blocks. We have tested the products to ensure they work with a broad range of third party hardware and software, and we have worked very closely with Microsoft to provide a full software platform,” Abu Baker said.

The next product range for Zai is notebooks, although this may take some time, Abu Baker said, as competitive pressure from branded manufacturers was again an issue. “We are planning for September. I am negotiating on component supplies at the moment, because the brands have dropped their prices, so there has been some delay, but it will be the next step.”||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code