Asia Pac resellers seek to protect profits

Asia Pac resellers seek to protect profits

PC resellers across Asia-Pacific are looking to vendors to provide end-user support and better product availability, along with price protection due to the regional economic crisis and related currency fluctuations, according to a recent survey of vendors conducted by Dataquest.

However, the picture in Hong Kong is quite different. While most resellers throughout the region have specific demands and improvements they want from vendors, the motive in Hong Kong is primarily related to maintaining the profit margin.

"The channel in Hong Kong is mercenary," said Lane Leskela, senior industry analyst at GartnerGroup/Dataquest in Hong Kong and co-author of the survey. "In Hong Kong, to the exclusion of almost everything else, they just want profit."

For example, the top concern among the nearly 700 PC dealers and retail outlets surveyed by Dataquest in 10 countries throughout the region was end-user support, with 65 per cent of resellers citing support as more important than profit margin. Yet Hong Kong was the sole exception, with end-user support accounting for only about 40 per cent importance when compared against profit margin, according to the survey.

For the most part, resellers do not want to deal with end-user support issues, especially in view of increasingly slim hardware margins. And in Asia-Pacific, where a number of SMEs are first-time buyers with high support requirements and expectations, resellers would prefer to hand over the job to the vendor, Dataquest said.

Product availability and fast delivery constituted the No. 2 demand for channels in the survey this year. This factor was relatively more important than profit margins in all the countries, again with the exception of Hong Kong. Dataquest attributes this deviation to the geographic size and presence of a number of large distributors in the SAR, making product availability less of a problem here.

With the economic crisis creating havoc with regional currencies and causing price erosion, resellers are looking to vendors for price protection to help reduce the risk of value erosion of stock and to protect margins, Dataquest said. With the exceptions of Australia and Thailand, resellers in the countries surveyed gave high importance to price protection: Taiwan, China, India and Singapore cited it as being of key importance, Dataquest noted.

In addition, the dealer channel is asking vendors for better credit terms, joint-selling support, and product/brand advertising. Yet some common vendor strategies and incentives were seen as insignificant by the channel, including sales incentives, rebates and co-op marketing programs. Leasing and financing were also considered relatively unimportant, as was the stock returns policy, since most resellers are targeting zero or near-zero inventory, according to Dataquest.

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