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Barium Technologies LLC exits local IT channel

DCG vows to take action to recover member’ funds as IT trader reportedly closes leaving over $10m debt

Barium Technologies LLC exits local IT channel
Rughwani says although Barium Technologies was not a member of DCG, some of the association's members have been affected by its exit from the market.

Barium Technologies LLC, an IT reseller and trading company that operated from Dubai's Bur Dubai business district has exited the channel barely three years after it was established following the company's failure to meet its debt obligations, Channel Middle East has been informed.

The Dubai IT channel doesn't lack for reseller businesses exiting the market, but Barium Technologies' demise from the local channel will bring more uncertainty and pressure to a market that experienced sluggish channel sales for most of 2015.

Founded in 2011 in Dubai, Barium Technologies was until its demise a specialist reseller and IT hardware exporter to the Middle East, South East Asia, Africa, Central Asia and Europe. In addition, the company was a partner of several top tier one IT multinational brands.

Sources familiar with the matter have told Channel Middle East that the owner of the company fled to India last month after his company couldn't meet its debt obligations, which are estimated at over $10m. Barium Technologies is alleged to have owed several Dubai-based top IT distributors, IT traders, banks and financial lending institutions millions of dollars.

"We have come to know there are lot of affected parties and some of them are members of the Dubai Computer Group (DCG)," said Shailendra Rughwani, president at DCG. "Unconfirmed reports indicate that the amount is above $10m, which the companies [IT distributors, IT traders and banks] might have lost due to the latest runaway."

Rughwani added that although Barium Technologies was not a member of DCG, some of the association's members have lost funds in the latest runaway."DCG had arranged a meeting for all affected parties on 22nd December 2015 at Grand Excelsior Hotel in Dubai which was attended by about 35 people including those directly affected by Barium's demise and other reseller runaways in the market," he said.

Rughwani pointed out that it was decided to form a smaller group specific to the defaulter and pursue the matter further with the help from the Indian embassy and other legal channels.

Industry pundits say the latest round of reseller runaways that the local channel is experiencing highlight a much bigger challenge not just for the IT sector but most SMEs in the country.

Hesham Tantawi, vice president at Asbis META and an Advisory Panel member at DCG, said Barium Technologies demise is sad from the local channel but not unexpected. "The latest exit has just put the spotlight back on the local IT from banks, credit insurance firms and other financial lending institutions," he noted. "This will put more pressure on local resellers that are in the market as the cost of financing certain project-based deals will go up making it extremely difficult for them to survive in an already precarious business climate."

Tantawi said it's not just IT-focused SMEs that have been affected by access to credit facilities as the food industry is going through a similar scenario as credit facilities have been cut drastically or completely withdrawn. "Our own research has found that financial lending institutions provide less than 4% financial support to SMEs in the UAE," he observed. "We need to do more about this and engage the relevant stakeholders to bring up change that helps small businesses to grow and flourish."

Tantawi added that while the latest development is sad for the Dubai channel, it highlights the need for greater cooperation between all stakeholders in the channel and most importantly to lobby relevant organisations so that solutions can be found to the current problems in the Dubai channel.

Rughwani concurred and said the DCG has been in continuous discussions with credit insurance companies and distributors and have been advising its members to be very cautious in extending credit in these volatile market conditions. "We expect and hope banks to be more considerate towards the IT Industry," he said. "Also, the DCG has come up with a new initiative to arrange bi-monthly business networking events starting from January 2016, which will allow members to exchange information that helps to make doing business more secure and transparently."

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