Saudi distributor Advanced Integrated Media (AIM) has met with Fujitsu Siemens to discuss the possibility of rekindling an in-country distribution relationship that collapsed last year. AIM ceased ordering notebooks from FSC towards the end of the third quarter, citing grievances over the support it received during a period of heavy over-supply earlier in the year.
Following a five-month standoff, AIM insists it is willing to bury the hatchet with Fujitsu Siemens and reactivate the partnership in Saudi.
“We want to get back with them again, but it must be under certain conditions,” explained Bassam Abu Baker, group general manager at Riyadh-based AIM. “We know the market better than anyone. We were the ones who started FSC in Saudi and have invested a lot in that. But we have closed the file and now want to start a new chapter if we manage to have certain assurances. The ball is in their court and we are waiting for feedback.”
Fujitsu Siemens recently moved to bring its distribution network back to full strength in Saudi by appointing local heavyweight BDL. Sascha Haake, director SME and channel at Fujitsu Siemens Middle East, denied BDL was a straight replacement for AIM, but would not be drawn on whether it intends to resume its alliance with AIM.
“The situation is that we are working with BDL on the distribution side as well as Jarir,” he said. “We have a long-term business relationship with Jarir and that is the current status. As a company we know we can’t afford to say no forever so we are always looking at opportunities and what fits our strategy in different countries.”
It is understood that AIM still has an official contract with FSC, but the pair have not been working together since the distributor halted all orders of mobile PCs from FSC in September 2006.
AIM alleges it did not receive the support it required in terms of pricing, margin protection and stock rotation when the Saudi IT channel suffered a crisis last year following the stock market crash. At that time, AIM was managing a much higher level of inventory due to the build-up of stock ahead of Gitex Saudi coupled with ambitious projections based on the healthy performance of the IT market during the previous quarter.
Although a new country manager took over Fujitsu Siemens’ Saudi operation last July, Baker claims AIM’s losses had already become too great to take the relationship any further. “The new team tried and offered help,” he said. “But we suffered for being the sole distributor in the Kingdom, and this result affected their business as well, which is an expected conclusion if you don’t protect your channels.
He continued: “What is important is to be able to sell on the ground, since the brand was badly damaged in the local Saudi market. It is very important to take care of the channels that provide your products to the market. Those partners are the same who suffered first time, and they are not willing to deal with you again if you caused them losses before.”
Hakke maintains that FSC stands by its original expectations of the market’s capacity, adding that it was a “common understanding” between the two companies that the relationship could not continue.
He also stresses that the vendor is satisfied with the level of support it provides to the channel. “Our service manager is permanently monitoring what the service levels are and as soon as there is something we dig into it and try to put it out immediately. But that is currently not the case to my knowledge,” he said.
Fujitsu Siemens is a top-six notebook vendor in Saudi and Haake insists the company’s development in the Kingdom is progressing as planned. It recently completed a successful country tour of customers and resellers, and is currently in the process of hiring a named account manager to strengthen its internal set-up.
Omar Shihab, research manager PC and systems at IDC Middle East and Africa, says the disruption to FSC’s distribution channel last year did not have a noticeable impact on its unit figures, but insists there is plenty of scope for further development.
“You can’t say sales have dipped, but it has been missing out on the vast opportunities during the last year when Acer, Toshiba and HP were making huge gains,” he commented. “But it’s not too late because the Saudi market is going to show some tremendous growth in the coming year, especially in the notebook segment. There’s still a lot of room for expansion.”
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