The demise of these IT dealers in such a short period highlights the difficulties resellers are facing in the Dubai channel. In fact, most dealers from Dubai’s Computer Street have increased their export focus and are turning to Greenfield markets to offset sluggish sales in the region.
Shailendra Rughwani, president at DCG, says that although IT Plus was a relatively small operator dealing mostly with distributors and some resellers, looking at the past three months where about eight IT dealers have exited the market with a total outstanding debt of approximately US$15 million has affected the market.
Rughwani, says although IT Plus was a smaller dealer the direct effect from its demise would not be much but will trigger uncertainty and the withdrawal of credit insurance for the IT sector. This, says Rughwani, means even “good” companies operating in Dubai will get affected with distributors and vendors reducing their credit limits.
Rughwani points out that aside from the credit insurance and credit terms, this collapse puts more strain on turnovers and excess stock in the channel. “While this will help companies to become more careful when giving credit, it will affect pricing and compel vendors to put more pressure on distributors to make forced sales,” he remarks. “With a spate of bankruptcies in the market in such a short time, the computer dealers in Dubai are on the ‘credit radar’ of credit insurance companies and international vendors, which is going to directly affect their operations in Dubai.”
Rughwani says although the business climate in not stable, it’s vital for now to have a common platform, where all dealers get united and come together to discusses business issues affecting them in the market. “We as DCG have started monthly meetings to discuss issues and conditions prevailing in the market. We would like to extend our invitation to all those connected (members and non-members) to come to these meetings where we address issues which impact the market,” he says.
Rughwani explains that as DCG is part of the Dubai Chamber of Commerce and Dubai Government, it is an important medium of getting everybody involved in the channel to unite and make this market “clean”. “We urge all the concerned companies, doing IT business in Dubai to become members of DCG and to coordinate with us in working towards making this market clean, ethical and to uphold the ‘correct’ image of IT dealers operating in the Dubai channel,” he says.
Rughwani bemoans the lack of interest from the distributor and vendor community in embracing the DCG. “Until now, we have got only one major distributor who has joined DCG while others have not taken the group seriously,” he notes. “We would like to invite all the vendors and distributors to come and join us and utilise the success the DCG is having in uniting IT companies and bringing them under one unbrella.”
Rughwani, believes that by having a common platform such as the DCG where IT companies can discuss issues, vendors and distributors will be in a better position to understand and address the challenges that resellers face on a daily basis in the channel.
He says that by joining and supporting the group, IT businesses are not only getting to know their fellow members but will be supporting the initiative taken by the Dubai Chamber in forming DCG.
The Dubai Computer Group (DCG) has expressed concern over the Dubai IT channel?s stability after IT Plus and eight other IT companies collapsed in the last three months.