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Foxconn’s channel focus called into question

Sales chief claims he left because of differences over partner investment

Najib Nesrini claims he left Foxconn because it did not show enough commitment to the channel – an accusation that the company’s regional management denies.
Najib Nesrini claims he left Foxconn because it did not show enough commitment to the channel – an accusation that the company’s regional management denies.

Foxconn's commitment to the Middle East channel has been called into question by its former regional sales manager, who claims that a failure to send positive signals to partners during the market crisis prompted his recent resignation from the company.

Najib Nesrini, a well-known face in the components sector having previously led Foxconn's channel sales activities for the past six years, says he quit after calls for greater investment in the channel business went unheard by the company's HQ.  

"Their reaction to the credit crisis and slow demand was not positive, and instead of supporting the channel they withdrew all the support," he claimed. "My argument with them was that it was a great time to show our commitment to the channel because competitors were withdrawing from the business."

Nesrini accuses Foxconn of failing to provide the resources and marketing funds that he believes were necessary to reinforce the good work that the company has carried out to develop its region channel base over recent years.

"If you cannot deliver any value for the company and for the customer you cannot justify your position, it is as straightforward as that," he said of his departure. "I have seen some competitors react positively, such as Gigabyte, which has conducted training and seminars, and they have grabbed market share because they showed more commitment to the channel."

The decision to pull out of the branded graphics card business also hurt local sales, alleges Nesrini, who insists there was still sufficient demand for that product range in the Middle East.

"We put a lot of effort [into developing the graphics card business] and the customers were demanding it, and then suddenly the head office decided to cut it. Why? Because in Europe they could not sell, even though we told them that we have a good market for it in the Middle East and we showed them the numbers. This is the problem - they are not listening to the local sales [team]."

Foxconn employs around a dozen people in the Middle East and works through a number of distributors, including Gulf Shadows, MTC Saudi Arabia and SCS.

One partner contacted by Channel Middle East claimed the most important area that it looked for support on was price. It said, however, that it had not noticed any major changes in Foxconn's approach, pointing out that it was difficult for any components vendor to throw money at the channel in the present climate.   

"If a components manufacturer doesn't have enough OEM orders then it will not remain in the market, it is the same for all of them," said the partner. "Foxconn is one of the big OEM manufacturers for the likes of Dell and HP, and these accounts are what makes them survive, not the distribution business. The most important thing for the channel is the support on price because without it you will definitely lose market share."

Foxconn's managing director for the Middle East, India and Africa, David Shih, strongly denied the company had reduced investment in the channel and insisted its focus on partners remained unchanged.

"We will continue with our strategy because we believe we are doing very well," he said. "We have two main businesses. One is for channel and one is for local systems integration or ODM, and they are both around 50% of the business. US$2.5m per month is from the SI business and the other US$2.5m to US$3m per month is contributed by the channel. So the channel is very important for us and we will maintain the same strategy that was in place before Najib left."

Shih also rubbished suggestions that Foxconn could reduce dependence on the distribution channel by seeking direct relationships with some second-tier partners in future.

"We have very good distribution customers that we will continue to support by providing faster solutions and lower costs," he said. "We will not go [directly] to the reseller; we are supporting the distributor because it is better to allow the distributor to support the reseller. We respect the role of distribution very much."

Shih added that Foxconn's exit from the own-brand graphics card market, meanwhile, was part of a company-wide strategy to focus on more profitable product lines, including motherboards, barebone systems and notebooks.