A legal battle is brewing between Singapore-based PC manufacturer IPC and Maple Leaf Personal Computers, a Melbourne PC reseller, over a cancelled advertising campaign. The stand-off sheds light on the issue of cooperative advertising and promotions - and what manufacturers and resellers expect of each other.
IPC is threatening to sue Maple Leaf and its owner, David Dubchak, who is based in the Melbourne regional centre of Dandenong, for the non-payment of PCs supplied earlier this year. In turn, Dubchak threatens to counter sue IPC, alleging loss of revenue due to lack of marketing support and broken promises.
Dubchak says that when he established the Maple Leaf store early this year, an IPC representative enticed him to promote IPC products as its primary PC brand, promising strong marketing and advertising support, as well as additional incentives such as free travel. The central issue, according to Dubchak, hinges on a print advertising campaign that IPC promised to run in The Green Guide supplement of The Age newspaper in late January of this year.
"I was told that IPC would run a half-page ad in The Green Guide listing Victorian IPC dealers, including myself, on January 25," said Dubchak. "I was even given a mock-up of the ad which listed my Dandenong store, an unnamed Bentleigh dealer and a number of unnamed regional stores as the dealers that would be part of the promotion. However, on January 22, I was informed by IPC that the ad had been pulled and rescheduled for the following week, on February 1. That ad was also pulled and this kept going on for about three weeks.
"Eventually I was told that IPC had cancelled The Green Guide advertising campaign because of a lack of support from participating dealers and that a new campaign would run later in the year. On the basis of that promised ad, I geared up my business for a back-to-school special promotion which is one of the major times of the year when a store like mine can make some real sales." Dubchak also alleges that IPC had delivered below-standard goods to his store and failed, in spite of alleged repeated requests, to provide promotional material such as signage and brochures.
"I ordered IPC Family Magic, MyGenie and Notebook PCs for a grand opening of my store on 18 January," he said. "In one instance, we received a Family Magic PC which came in damaged packaging, badly assembled casing and with scratch marks and glue marks on both the case and monitor," he said. "I also discovered that the CPU was completely dislodged, had some bent pins and was hanging by a fan wire. In order to provide information to customers, I had to design and desktop publish my own brochures because I couldn't get any from IPC."
IPC account manager for Maple Leaf Personal Computers Zac Jacobs says that Dubchak will be sued for non-payment of goods received and that IPC is not the only supplier in dispute with Maple Leaf. "I have recently been informed that Mr Dubchak has gone out of business twice before and he is the type who likes to stir up a hornet's nest," Jacobs said. "It's true that we had planned The Green Guide advertising campaign, but it would have been foolhardy to run with it when we were at that stage undergoing a major restructuring of our operations in Australia. Since then, we have established a new manufacturing facility in Sydney and there will be a major dealer launch next month."
"Things are really coming together for IPC in Australia now and the fact that we're still here today after all we've been through recently proves we're here to stay," said David Mallia, a supervisor in IPC's new Botany Bay manufacturing plant, which was completed last month. Mallia says IPC is producing between 1000 and 1500 PCs a month at the plant, including the Family Magic, MyGenie and Helios lines. He says that about 75 per cent of the PCs produced at the plant are built on demand for corporate clients and dealers. "The PCs are assembled using bare bones production, the quality control and checking procedures have improved significantly and we're now building considerable warehouse stock," he said.