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Dubai channel suffers losses as IT trader collapses

IT Plus said to be one of at least seven dealers to have exited market in recent months

Dubai channel suffers losses as IT trader collapses
Dealers on Computer Street in Dubai continue to find trading and credit conditions difficult.

The Dubai IT channel is counting the cost of the latest failed computer dealer after senior market officials said IT Plus ceased trading earlier this week and management at the company could not be reached.

Although IT Plus was a relatively small reseller dealing in components and notebook PCs from vendors such as Dell, HP and Toshiba, it is alleged to owe around US$1.5m to the market. The company had been operating for more than a decade.

It is understood that several regional, authorised distributors have been left out of pocket from its disappearance, as well as many smaller traders and sub-distributors that supplied it goods on credit terms.

One prominent Dubai distributor contacted by Channel Middle East, which requested not to be named, said it was owed US$70,000.

Sources in the market claim the warning signs had been there for several weeks, with IT Plus said to be selling products below cost price and credit insurers withdrawing cover.

IT Plus' exit has compounded fears that the Dubai channel is encountering the same troubles it faced this time last year when a number of dealers collapsed and their owners fled the market leaving behind a string of debts and bounced cheques.

Shailendra Rughwani, president of the Dubai Computer Group (DCG), said at least seven traders had disappeared from the market in the last three months alone, and named companies such as New Infosys Computers, Roots Computers and Paradise Computers as those which have encountered difficulties.

He estimated that collectively the trade debts of companies which had left the market during that period totalled in excess of US$10m. Although that figure is not huge in the context of the overall market size, the amount of smaller traders and sub-distributors thought to be exposed has increased fears that more companies could run into financial difficulties.

"We have strongly advised our members to be very vigilant and not carry on supplying goods to anybody on credit," said Rughwani. "They need to be careful who they are supplying to and avoid any forced sales, especially for the next two weeks as the end of the year is always a dicey time."

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