‘Return to sender’ policy an ominous sign

News that some Dubai traders have told distributors to reclaim stock because they lack the facilities to meet payments is an indication of just how fragile certain parts of the market remain at the moment

Tags: ComplaintHewlett-Packard CompanyRedington GulfUnited Arab Emirates
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By  Andrew Seymour Published  February 1, 2009

News that some Dubai traders have told distributors to reclaim stock because they lack the facilities to meet payments is an indication of just how fragile certain parts of the market remain at the moment.

Without even going into the fact that such unusual measures contradict the very essence of what buying and selling is all about, this behaviour merely compounds the growing level of anxiety felt among the channel. Distributors and resellers will be desperately hoping that it only proves to be a temporary action caused by the current unprecedented financial climate.

Whichever way you look at it though, such developments do not bode well for the immediate health of the market. All they do is serve to illustrate the lengths that companies are having to go to in an attempt to cope with diminished credit availability, softening demand and pressure to absorb inventory.

The present situation is particularly painful for distributors supplying to dealers that have served them this ultimatum. The last thing they want is capital tied up in aging inventory that takes valuable space in their warehouse.

But given the nature of the customers involved they are faced with no real alternative but to retrieve the stock they have supplied and endeavour to sell it on elsewhere. Pursuing legal action or threatening any other measure is pointless because of the cost involved and the likelihood of reimbursement.

There are some who believe vendors have contributed to this predicament by enforcing aggressive sales-in policies that are now proving burdensome to the channel.

It is not the time for dishing out blame, however. Vendors, distributors and dealers must work closer to prevent further escalation and build a clearer understanding of what is happening at both ends of the spectrum. Choosing to ignore the situation won’t benefit anybody.

HP dodges the question

The days of HP printing equipment finding its way to Iran - at least officially - appear to be well and truly over after the vendor confirmed last week that it would “explicitly prohibit” the sale of all its products to the country.

The decision follows a re-examination of contracts with Middle East distributors in the wake of global media reports citing Redington Gulf as a vehicle for the sale of printers in Iran.

Redington remains upset by suggestions it has been acting improperly, insisting all it has ever done is keep to the terms of Iran contracts set out by HP. In an interview with Channel Middle East, the company said it was one of several disties authorised to sell certain IPG products to approved Iranian customers in the UAE.

The response from HP’s PR team in the US - which is handling all communications on the matter - has been to reiterate the vendor’s complete compliance with US export laws, a not wholly unexpected step given the notoriously sensitive subject of trade embargos.

Yet the vendor continues to evade one question, which is this: Why has it always been articulated, by authorised HP distributors and even local management, that certain IPG products can be sold by distributors to approved customers from Iran?

In an e-mail response sent to us, HP chose not to address the question directly, preferring instead to trot out the previous line about its compliance with export controls.

If HP possessed a special license exempting certain printer lines from the sanctions — as some have suggested might be the case — then it would have been the perfect opportunity to come out and explain that.

The fact that it hasn’t only leaves us to speculate that at some point in time a serious misunderstanding occurred between its subsidiaries and distribution partners — a point HP seems to hint at in an earlier answer to whether Redington was permitted to sell in Iran. “To the extent Redington believed they were authorised under the terms of our contract to sell HP products in Iran, those sales were in compliance with US export laws,” stated a spokesperson at the vendor.

Of course, Redington’s testimony disputes any suggestions of contractual ambiguity, and simply reinforces what has always been interpreted locally — that certain printing products are allowed to be sold to Iran, but PC systems, networking kit and other equipment most definitely are not.

It seems the true reasons why HP has been operating all of these years on the apparently false assumption that certain IPG lines were allowed to be sold to Iran will remain a mystery for now. In the meantime, there is a pretty large installed base of HP printer customers in Iran that are going to have to search that little bit harder for new ink cartridges in future.

It’s February, and that means…

…the deadline for entering the Channel Middle East Awards is less than three weeks away!

Nominations must be submitted by Thursday 19th February 2009 to be eligible for this year’s awards so make sure you get started on your entry if you haven’t already done so. Full guidelines and a nomination form can be accessed from the official awards website: www.itp.net/events/channelmeawards

There are categories to account for all tiers of channel — including vendors, distributors, resellers and retailers — with a total of 16 accolades set to be presented on the night.

Don’t forget that if you are a vendor or distributor then you can also enter the ‘Readers’ Best’ awards, which as the title suggests are voted for by the readers of Channel Middle East in an online poll.

The two reader-voted categories include ‘Best Vendor Channel Programme of the Year’ and ‘Best Growth Initiative by a Distributor’.

Last year’s awards saw HP fend off competition from the likes of AMD, Intel and Fujitsu to collect a prize for its Preferred Partner Programme, while Aptec’s e-supply chain was deemed by resellers to be the top initiative by a distributor.

Channel programmes and initiatives are vital to fostering reseller development and growth.

If you are a vendor or distributor that has operated programmes to the benefit of the reseller community during the past year then get the details down on the nomination form and send it to us now…and we’ll let our readers have their say.

If you have any questions about the Channel Middle East Awards don’t hesitate to contact me on +971 5 44 392 719 or e-mail andrew.seymour@itp.com

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