Dubai dealers urged to shun market sharks

Resellers warned that buying below cost is damaging to channel business

Tags: Dubai Computer Traders GroupUnited Arab Emirates
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Dubai dealers urged to shun market sharks The Dubai Computer Group has urged traders to exercise diligence in who they deal with and make the market a safer place to do business.
By  Andrew Seymour Published  January 17, 2010

Dubai Computer Group (DCG) has issued a circular advising its members to turn their backs on suppliers that are deliberately undercutting the market. The proposal is one of several steps suggested by the DCG to create a financially safer environment for local dealers.

The group, which represents a wide range of IT traders and distribution companies, urges members to resist buying products at below market prices, even if they are on a company invoice.

"By buying such products we are encouraging people who undercut, and most importantly understand that buying lower than cost price products means somebody somewhere is losing and it could be you or your neighbour," warned the group in an e-mail to its members this week. "Most importantly in such cases, buying undercut goods is illegal and could create problems for the company directly or indirectly."

The DCG is keen to foster greater stability and transparency in the market after a turbulent period that has seen the Dubai channel suffer a record number of defaults.

Sha Mohamed, owner of Sha Computers, agreed with the advice but said it was important to make a distinction between the freedom that traders have to set their own prices and products that are sold cheaply because they are stolen, obtained illegitimately or priced in such a way that it damages the market.

"People come to the Dubai market for price and credit," he said. "Other countries are also providing credit, so it is the price and combination of product that counts. If you are taking one container from Dubai you will have everything in it. If you buy a container from China or the US you'll see four or five items in one container, maximum. If you want to give a good price you have to buy at a good price."

One HP printer and peripherals dealer, which asked not to be named, said it was unlikely that resellers would decline offers of low-priced goods when market conditions remained so difficult.

"The advice is right, but who will follow it?" questioned the source. "Sales of Malboro cigarettes go up every year and they come with a warning on the packet! The market is facing cut-throat competition and sales are down, so people will buy and sell. I fear that this kind of practice will only get worse because of the finance crunch."

The DCG's call to arms appears designed to reinforce the message that maintaining healthy margins is vital to the future of the local channel.

Its circular also instructed dealers to ensure security cheques are stamped ‘non negotiable' to prevent misuse and advised them that products should only be supplied against local purchase orders (LPOs) if providing credit.

Sha insists such information is a timely reminder of the basic financial housekeeping that dealers must carry out to safeguard their businesses. "Something like an LPO offers protection," he said. "It provides written authority from the buying company to the supplier."

2343 days ago


3005 days ago
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