Why revised sanctions will spark channel change

Growing talk that US sanctions on the export of ICT equipment to Syria will soon be eased promises to have major ramifications for the local market, not least when it comes to channel development.

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By  Andrew Seymour Published  August 2, 2009

Growing talk that US sanctions on the export of ICT equipment to Syria will soon be eased promises to have major ramifications for the local market, not least when it comes to channel development.

US trade laws have banned the likes of Microsoft and Cisco from operating in Syria for a number of years, starving local distributors and resellers of access to the kind of resources their counterparts in neighbouring countries take for granted.

Syrian channel players are now pondering what the prospect of such vendors receiving the green light to address the market might mean for them, although you are unlikely to see them getting over-excited for the time being.

As many will point out, the market has lived with trade embargoes for so long that they have almost become second nature. Sure, resellers face complexities when it comes to sourcing certain products, but the proximity of markets such as Turkey, Lebanon, Jordan and Saudi Arabia — not to mention Dubai — means the latest technology has always been readily sold through the Syrian channel.

I’m told that the showrooms of Syrian retailers are no different to those that you would see in Riyadh or Dubai, with the latest Apple iPods and HP laptops — and any other popular device — available for consumers to purchase.

Make no mistake about it though, any changes brought about by reduced US sanctions are far more than just about basic supply and demand economics, which at the end of the day are already solved by the fervent level of inter-region re-export activity that takes place.

Firstly, there is the issue of local resellers gaining access — in theory — to the official vendor programmes and systems that don’t presently apply in the Syrian market.

Syrian dealers might be able to move vast quantities of HP or Dell PCs procured from the re-export market, but they most definitely don’t benefit from the authorised rebate mechanisms, marketing tools and sales funds that would otherwise fatten their margins.

Neither can they pick up a phone and call their local account manager or refer customers to a vendor’s in-country or support infrastructure. Costs they are used to bearing at the moment could suddenly become savings if US suppliers are permitted to cultivate business in the country.

One reseller I spoke to admitted that dealing with vendors in a formal capacity was certainly something that had crossed its mind since talk of the embargo being lifted emerged. “It does open up the possibility of us working directly with the vendors and if there is a chance they are going to target companies for official agreements then we will try and prove that we are a strong option.”

There is also the enterprise market to consider. This is an area that would definitely be impacted by a change in US policy. Big projects in the government, telecoms and financial sectors are largely gobbled up by Asian and local brands, but US vendors would undoubtedly want a sniff of that business if the opportunity arose.

Let’s get one thing straight though. If US trade embargoes are eased then the structure of the Syrian IT sector isn’t going to change overnight because we are talking about a market with entrenched local channel dynamics. It is also a market that has managed to grow and flourish irrespective of the sanctions imposed on it.

Just as importantly, it is unlikely that vendors will go rushing in either. Look at what has happened in the Libyan market since it opened two years ago, for example. Vendors such as Sun and Oracle have been scaling their presence and appointing local partners, but their investments have been gradual and calculated.

Successful channel development happens over a period of years rather than months, as the Syrian channel could be about to find out.

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