Sound Blaster vendor Creative Technology is undertaking a massive channel revolution, abandoning its exclusive relationship with local partner Creative Pacific and launching a B2B site for its new distributors.
Forsaking its long-distance relationship with Australia from Singapore, the manufacturer has set up local subsidiary Creative Labs in Sydney.
In the process, Creative Technology's exclusive relationship with distributor Creative Pacific will be replaced by a number of local and national distributors, to be announced on February 8, according to Nick Angelucci, general duties manager for the new subsidiary.
'The expansion of Creative Technology's products and markets means no one distributor can handle all our distribution needs,' said Low Chee Seng, Creative Technology senior vice president. 'All my distributors around the world have been operating on a non-exclusive basis. This is a move to bring Australia in line with global trends.'
Angelucci attributed Creative Technology's new look to the desire to 'get closer to the local market and the customer.
'The situation is simple really. We've set up in Australia to be closer to our customers. We can react more quickly, follow trends more closely and keep up to date with prices better from a local office.'
The new distributors will be responsible for recruiting resellers but the channel will only play a box-moving role in this scenario.
'Creative Technology's strong point is its support and service. The channel will add value by special pricing and the like but basically they will just be selling boxes.'
Michael Wong, managing director of Creative Pacific, said he was disappointed with Creative Technology, not only for terminating the exclusive arrangement but also for how they did it.
'They fired us on August 6 by sending me a letter giving me six months notice. I made a lot of overtures to them and offered to go to Singapore to talk about it but they didn't even pick up the phone. After 10 years in this joint venture and owning a 40 per cent stake in my business they should have discussed it with me.'
Low Chee Seng said that there is no good way to announce news like that but believes there is still a place for Creative Pacific in the future of Creative Technology and he has invited the distributor to be included in the channel lineup. However, Creative Technology has as yet not received a response from the distributor.
Wong attributes his reticence to Creative Technology's unsatisfactory offer. 'They haven't told me any terms of the new arrangement and there has been nothing in writing. They wanted me to handle the retail channel, the most difficult part of the channel, but wouldn't give me any details on cross structure,' said Wong, who believes that without these specifics he is unable to decide whether the new arrangements are viable for his business.
With 80 per cent of products going through Creative Pacific being Creative Technology stock, Wong feels that he can not survive in this type of scenario.
'If you take away Creative Technology's support we'll fold. I've already lost more than three-quarters of my staff. We started this business to deal with them - that's why we're called Creative Pacific. And even though they own 40 per cent of the business, I feel that by their conduct they don't want to deal with us anymore,' said Wong, who does not believe the offer to be one of the distributors in the new program is sincere.
Low Chee Seng is adamant that it is, and that Creative Technology can deal with 'any section of the market and any product it wants'.
If Creative Pacific is still reluctant to deal with Creative Technology, Low Chee Seng said the 40 per cent stake the Singapore company owns in the distributor will have to be reviewed.
Parallel to its establishment of a multi-member channel, Creative Technology will launch a business-to-business e-commerce site, hopefully coinciding with the early February announcement of its distributors.
'We are working very hard to get it up by the 8th because we are very focused on getting closer to our partners. Distributors will be able to place orders on the site. Everything is fully integrated into our back-end ERP system,' explained Low Chee Seng.
He maintains that a business- to-consumer site will only comple-ment, rather than replace, Creative Technology's existing channel.