After starting Egypt-based Mantrac’s IT distribution business more than a decade ago, business development director Ismail Abdel Aziz is now in charge of building up the company’s three-year-old Middle East operation, Unatrac. We sat down with him to find out more about the Dell distributor’s regional plans.Tell us about Unatrac — you’re mainly known for being an authorised Dell distributor.
Yes, we have had a partnership with Dell for five years and we are the biggest distributor for Dell in Egypt. Last year we decided to go regionally with Dell and we are now their biggest distributor in the Middle East for the commercial business.
So how big is that business?
We do almost US$7m of Dell commercial business per quarter, but we plan to reach US$40m per year. You can then add US$12m a year from Egypt to that number.
How does your UAE-based operation compare with your distribution business in Egypt?
We decided to go regionally by opening a branch in Jebel Ali in 2005 and since then we have added Dell, Microsoft and 3Com. The Egyptian operation is definitely bigger, but we are still building our branches in the Gulf. The Egyptian branch is our HQ and it carries 12 brands so we hope to build a company like that here in the Middle East. At the moment we have around 180 active resellers in the GCC and we are trying to develop that further.
How many people do you have working for the Gulf operation?
We have 20 here, including logistics and finance, and three in Kuwait where we have a small branch. We are now on our way to opening a branch in Saudi Arabia because it is a market that we are trying to focus on. We will open in Riyadh and then we will expand our sales force and the second phase will involve Jeddah and Dammam. At the moment we are serving the Saudi market remotely from Jebel Ali so this will give us an in-country existence that is much faster and more dynamic. We will use our resources to open new branches, but we will always make our decision based on whether we think the business is safe.
Your contracts with Microsoft and 3Com cover the Iraq market, which has opened up considerably in the last year. Is it now viable for distributors to begin building an in-country presence in Iraq?
It is still too early for that. Most of the Iraqi people and the IT companies are based in the UAE and they bring the products in from the UAE, so there is no need to open a branch. We have almost 20 Iraqi resellers that are based in Dubai and do their full operation from here. The Iraqi market definitely has potential but it is not secure. The government doesn’t have a clear vision about the IT infrastructure that needs to be developed in Iraq.
Does the fact that Unatrac is known as a very Dell-focused brand go against you when talking with prospective vendor partners?
I’ll tell you something very important, vendors are seeking stable and financially-powerful distributors regardless of whether they are doing a business in Dell or another brand name. If Dell is a focus product then we will try to get market share through being a focused Dell distributor, but we will do that fairly. As we build Dell, we build all the other vendors.
What is your perception of the Middle East distribution channel at the moment? The market still seems to be very competitive.
The competition has become more aggressive, but it will come down to whoever remains stable, has the necessary financial power and keeps their market share. My belief is that this is the right time to increase market share because other people are trying to freeze or slow down their businesses. We are not providing credit for everyone, but we are insuring our credit so we are securing our business in that way. Is the Middle East distribution landscape likely to change?
The number of distributors will shrink very soon because of the way some have been doing business. They have been working for a very small profit and so they will have to focus on another business because they won’t be able to remain stable.
What does that scenario mean for Unatrac if it happens?
It will not harm our vision because we are not looking at big quantities and fast-moving items — we are providing a solution and targeting specific segments. We have succeeded in Egypt for 12 years and our focus for the future is to become one of the biggest distributors operating in the Middle East.
Do you expect more Gulf-based distributors to try and target the Egyptian market in future?
Maybe, but distributors there are stronger and more powerful so the competition will be very aggressive. They will have to think carefully before taking such a step.
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