ASBIS near you

Our network of 23 subsidiaries located all over the EMEA region supplies Information and Communications Technology products and solutions across the globe. Find ASBIS office in your country.

Other headlines

April 06, 2020
Prestigio Click&Touch multimedia keyboard with touchpad on keys won four Red ...
January 23, 2020
ASBIS Slovakia was named “ The largest HP distributor ” for the year 2019. HP ...
November 28, 2019
Dubai, UAE, November 28, 2019: TP-Link Technologies hosted 3rd edition of their ...
October 30, 2019
Seagate recognized ASBIS as Enterprise Distributor of the Year at the recently ...
October 17, 2019
More than 1000 attendees visited IT-conference organized by ASBIS Ukraine 10th ...
October 14, 2019
ASBIS Slovakia, a subsidiary of ASBISC Enterprises PLC (WSE: ASB), received ...
October 14, 2019
Dubai, UAE, October 6, 2019: The 13th VAR ICT Champion Awards was held on 06th ...
October 01, 2019
PRESS RELEASE - October 1, 2019; Dubai, UAE
July 11, 2019
ASBIS Slovakia, a subsidiary of ASBISC Enterprises PLC (WSE: ASB), has been ...
June 14, 2019
The largest IT community event full of inspiring innovative technology ...
<strong>IT Europa</strong>:Russian channel fears threats to distribution

November 17, 2006

IT Europa:Russian channel fears threats to distribution

Russia has long been a distinctive IT market, with a limited presence of international distributors and PC vendors. Last time we visited the expansive nation, there was a sense that this could change, but while PC assemblers remain strong, the distribution channel faces a number of threats. IT Europa assesses how the market has developed in the last 12 months…

Russia has long been a distinctive IT market, with a limited presence of international distributors and PC vendors. Last time we visited the expansive nation, there was a sense that this could change, but while PC assemblers remain strong, the distribution channel faces a number of threats. IT Europa assesses how the market has developed in the last 12 months…


The distribution market in Russia continues to be dominated by local goliaths MERLION, Kvazar-Micro, Formoza and OLDI, the market’s five largest distributors, the first of which has topped €1bn in estimated annual revenues. Other distributors include broadliner OCS and hardware rivals Rosco and Marvel, and regional components giants ELKO and ASBIS are also present, but the absence of Ingram Micro, Tech Data and Actebis stands out like a sore thumb on the landscape.


Many questions have been raised as to why the broadliners are not present in a market with such vast potential. Answers range from the strength of the local firms that prevents a simple entry into the market by foreign rivals, to the size of successful local broadliners that prevents an affordable acquisition. Questions are always abundant in Russia, but replies are sometimes scarce - the lack of transparency, combined with suspicion, means that sadly many businesses simply will not comment on-the-record.


The other issue that many overlook is corruption in the market, which, coupled with difficult import laws, wards off many foreign distributors. Last month, Ingram Micro’s CEO, Greg Spierkel, told us the company is not in Russia ‘because of businesses and the tax structure, particularly the playing of the system that happens around VAT’. Many of the locals also claim to be doubtful that new distributors will enter the market. Roxana Yanborisova, vice president at OCS, says she expects ‘nothing fundamental’ in terms of such companies moving into the Russian market.


The most notable changes in the distribution arena concern R&K and Millennium Distribution. The former, despite being a broadliner in our distribution table, is rumoured to have planned to leave the pure distribution arena, as predicted by commentators in our last Russian national survey. According to its website, its main work is PC assembly, though it could not be reached for comment. According to one source, the rumours have not yet upset the balance of the rest of the distributors in the market: ‘It’s creating a lot more space, but I really wouldn’t say that any single disti will win a larger share than another of the pure distribution business that could be left in the open.’ At the time of going to press, R&K had not responded to our calls.


Another distributor, components specialist Millennium Distribution , which has a large presence across the region, is also rumoured to be planning to leave the hardware channel. But its website states it is ‘one of the best IT distributors in the CIS’, so the rumours seem a stretch. While the firm has not yet commented to us, a source at a rival nevertheless claims: ‘The owner, who used to be a co-owner of R&K, is planning to get out of that area of business, because the return on investment is not so strong.’ He says that the firm is not planning to sell up, though: ‘In a mature market, it would be more normal to sell the business, but things just aren’t transparent in Russia so generally few players take the risk of getting involved.’


A number of commentators claim that many other distributors are diversifying, or have become part of holding companies with many different activities. OCS is one such example, being part of the National Computer Corporation (NCC), which claims to be Russia’s largest IT firm. NCC also owns distribution activity Landata, system builder Aquarius, software developer AND Project, and IT services and consultancy business Sistematica. While this model appears to be working for NCC, at least on revenue terms which are estimated at nearly €820m for 2005, a number of holding companies are said to be neglecting their distribution activities in favour of higher margin services.


Andrey Kostevich, VP Russia and Belarus region at components wholesaler ASBIS , is convinced the number of distributors in the market will decrease, as a result of the pressures. ‘Only the strongest will be able to survive, while the rest will have to merge or shift to other business areas,’ he believes. ‘The reason for this is more vendors are setting up representative offices in Russia, and some of them have begun working with [resellers] on their own.’

Copyright: IT Europa (17 November 2006)
www.iteuropa.com

download as PDF View article as PDF file

Disclaimer: The information contained in each press release posted on this site was factually accurate on the date it was issued. While these press releases and other materials remain on the Company's website, the Company assumes no duty to update the information to reflect subsequent developments. Consequently, readers of the press releases and other materials should not rely upon the information as current or accurate after their issuance dates.