Channel urged to unite against grey imports

IT vendors urged to create uniform pricing models to help curb the scourge

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Channel urged to unite against grey imports Korath is urging the regional channel to unite in finding a lasting solution against grey imports.
By  Manda Banda Published  November 27, 2013

At the Channel Middle East magazine's Channel Conference held this morning at the Oberoi Centre, Dubai delegates heard from supply-chain pundits on why vendors need to play a leading role in curbing grey importation of IT products in the region.

During a panel discussion on ‘Over coming GreyImports, the Gap of Supply and Demand, and Evaluating its Effects on Business', John Maliakal, head, Channel Business, Computer Systems Division at Toshiba Gulf, said that when it comes to grey imports, vendors in the region need to address three key issues namely, product pricing, timely launch of products to market and meeting the demand of products with enough supply in any given market.

Maliakal said grey importation of products has thrived in the Middle East because vendors have failed to meet the three most important aspects that lead channel players to grey import products from other regions. "All too often, multinational vendors launch their products quite late in this region by which time,  partners have already sourced these goods from other markets," he said. 

Maliakal cited Apple's policy of launching new products in selected markets and regions as a recipe that aids the grey market in the Middle East region.

"Certainly from a Toshiba perspective, we have addressed this by working closely with all the authorised reseller and retail channels, educating our partners through the various campaigns and incentive programmes on the importance of supporting legitimate channels of distribution," he said.

Jaison Korath, CEO at specialist supplies distributor Despec MERA, added that grey importation of IT goods is not just a vendor or OEM issue, it compromises the brand value that is being brought in from parallel channels and affects players that source products from authorised channels. "As a distributor of consumables, our sector and business is the most affected when it comes to grey market activities in the Middle East. A huge contributor to grey imports is the huge price disparities that vendors have for the same product across different regions and markets," he noted. "About 30% of the supplies business in the Middle East region is fulfilled through the grey channel and that is the reality that we have had to deal with and it will only get worse unless a coalition of vendors and distributors come together to address ways of curbing or eradicating it."

Korath said although grey imports are not illegal, from an industry compliance and market perspective, the Middle East It channel is tarnishing its own image and will soon become less attractive to new IT companies that want to set-up here. "If we all believe that grey imports distort the true picture of our market, then it's in our own interest to comply and stick to the authorised channels of distribution," he said. "Vendors, distributors and resellers all have a role to play. End-user customers also need to be enlightened about the pitfalls of grey imports."

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