Saudi market provides relief for distribution

Rahb Hamidaddin, president of components and accessories distributor Empa, remains optimistic that the company can emerge from the downturn in rude health

Tags: EMPA Middle EastSaudi Arabia
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Saudi market provides relief for distribution
By  Julian Pletts Published  May 8, 2009 Channel Middle East Logo

Tell us about the recent restructuring in KSA?
Saudi Arabia has always been a focus for us. Everybody knows that it is one of the biggest markets. At the same time it is very difficult to do business inside Saudi Arabia. Being a Saudi myself gives me some advantages and I will be spending most of my time in Saudi. We are solidifying our team and have moved some people from Dubai into Saudi Arabia. We have employed another few people in senior positions inside KSA.

We have a new warehouse facility in Jeddah, which is going to be our main warehouse for Saudi and it is going to replenish fast-moving warehouses in Jeddah and Riyadh. We are moving to invoicing our main Saudi accounts in-country too.

Saudi is a market that certainly benefits from developing a local presence to boost the work of the channel. Are your competitors increasing their presence as well?
There are a few who have tried and left and are trying again. Even recently one competing distie said to me, ‘okay, I need to move into Saudi, what do I need to do?' It is in the minds of everybody. Saudi is one of the least affected by the crisis.

Does that mean vendors are still confident in the Saudi market and is that reflected in their targets?
They don't have an unrealistic approach. They are saying, ‘okay, Saudi Arabia seems to be the country that we need to focus on, and we need to maintain the numbers there at least, if not have reasonable growth.' People are not yet trying to cover weaknesses they have in other regions with business in Saudi or coming in with unrealistic numbers. We are optimistic that the region as a whole - well some of the countries - will not be as affected as the West.

What is your approach to the UAE market and how does it differ to the business in Saudi Arabia?
It is very different. Running away is something synonymous with Dubai. The reason being is that so many people come to Dubai seeking an opportunity or investment and when things do not work it is very easy to close shop and go home. That is not the case in Saudi. Most of the businesses are owned by and supported by locals. Even though they are not at their place of business everyday, they own it, and there is somebody there to hold responsibility if things go wrong.

Distributors are having to be more forensic in the way they work with customers. Is this damaging relationships in the market?
I don't think they are being damaged today. At one time it would damage relationships because it was not something they were used to. Two or three years ago there were some major runaways and distributors took certain measures with customers. The channel did not accept that very well. But later on they began to understand why we were doing this. With that being the case, there is now an understanding in the market that it is the right of the distributor to ask and the channel in general must be more transparent. This has to be so if the channel wants the distributors' help.

What sort of financial targets have you put in place for the first half of this year?
We are moving at the same pace as last year and have not changed our targets. We started planning 2009 from early Q4 2008 and that was before we really heard much about the crisis. The question of whether we should review our targets was raised a couple of times, but we did not see a reason to do that. We know we are not immune though and have to be vigilant and careful.

Are you looking at bringing in new vendors as a way to promote growth this year?
It is not a case of adding to the number of logos we have on our vendor list. We always look at vendors that can add value to our portfolio or if it is a new technology that we think the region will accept well. Some vendors have products that really complement what we already have in general.

Is value diminishing in the current climate or is it even more important for distribution companies such as Empa to be increasing the value that they offer right now?
I don't think it is diminishing. We try to add value to anything that we do because that is what matters. Even if people do not see it at the start, in the long run that is what distinguishes your business from others - how much value you're adding compared to others. There are many different shades. It comes in after-sales service, it comes in warranty and it also comes in having complementary items available.

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