Emitac forms partnership with Lebanese distributor

Dubai-based Emitac will supply products to Distinet, which in turn will act as its sales arm to the Lebanese reseller channel

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By  Andrew Seymour Published  May 19, 2009

Emitac Distribution has inked a memorandum of understanding with Lebanese IT outfit Distinet, signalling the start of a ‘strategic business alliance’ between the pair in Lebanon.

Dubai-based Emitac will supply products to Distinet, which in turn will act as its sales arm to the Lebanese reseller channel. Distinet belongs to the established Teletrade Holding Group, which also operates systems integration, power retail and security distribution businesses.

The tie-up gives Emitac immediate entry to the Lebanese market through a local partner with in-country capabilities, while Distinet will benefit from greater economies of scale and access to international brands.

Emitac has already struck agreements to sell HP supplies, Logitech and Netgear products to Distinet and is currently in talks with other vendors in its portfolio about similar arrangements.

Amer Khreino, CEO at Emitac Distribution, says the partnership with Distinet offers it exposure to the Lebanese market without the drawbacks of setting up operations in the country.

“Lebanon is a well-structured and very crowded market with at least four local distribution groups. For Emitac to go and compete there might not result in a good value proposition for the customers because it would be difficult to do an equal job to the local groups,” explained Khreino.

“This agreement provides Distinet with access to vendors and the critical volume that Emitac is doing today because those economies of scale are definitely not attainable for a local partner in Lebanon. At the same time, the financing capabilities, distribution management, credit management and product know-how that Emitac is putting into this partnership is a big plus,” continued Khreino. “With the final local touch, value add and fleet of professionals that Distinet has, customers will have a new go-to-market with differentiating elements from other local distribution channels there.”

Emitac, which made sales of more than US$400m last year, is also hoping the agreement will make it easier to extend contracts with existing suppliers to Lebanon as the lack of a local presence was previously a barrier to this happening.

“Today we have a selection of products that we will do only through Distinet in Lebanon, but the ultimate goal is to channel all product distribution through them,” explained Khreino. “The terms of the MoU also allow us to think about additional directions and improve the relationship further.”

The nature of the Emitac-Distinet partnership appears to resemble the kind of distribution model pioneered by vendors such as HP, which have distinguished between logistics partners and channel development partners.

“This is not very far away from having an LSP and CDP arrangement,” agreed Khreino. “But instead of waiting for the vendor to come and assign it, we are driving it on synergies we see in the local market because we don’t want it to be a short-term thing that is determined by the vendor. I think the LSP-CDP idea has to be an initiative driven by distributors upon seeing an opportunity for success with another in-country distribution house and where there is a complete understanding between the management.”

Jean Haddad, chairman and general manager at Distinet, stated: “The high synergy between our two companies will enable us to focus on the areas that are most demanded by our customers who continue to be our most valuable asset.”

The move into Lebanon is part of a wider geographic expansion plan that Emitac is embarking on as it looks to target markets outside of the UAE, Jordan and Qatar.

It is currently finalising the commercial registration of Emitac Kuwait and has held discussions with potential joint venture partners in Saudi Arabia and undisclosed African markets, although any JV agreements are unlikely to be concluded until market conditions have stabilised.

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