Yes and No!

Many of us might have missed this. Delhi-based Computer Media Dealers
Association (CMDA), an association of local IT channel partners, has recently
filed a petition against Samsung in the Monopolistic and Restrictive Trade
Practices (MRTP) Commission. CMDA alleges that Samsung is trying to use pressure
tactics for monopolizing business.

The charge is that Samsung has been issuing email alerts to thousands of
channel members, discretely warning them against importing IT products. If the
members dont comply, legal action could be taken against them. According to
CMDA, this import is perfectly within the framework of law, and there is nothing
illegal about it. In fact, by importing, these channels make some more margins
in a business that is already working on wafer thin margins, and also offer
better rates than products procured here.

CMDA alleges that Samsung wants dealers not to import genuine Samsung
products from other countries, where they get better rates. The association
claims that since most of the channel members are small players, such emails
coming from large companies scare them.

While in this specific case, Samsung has not given any reaction, this is an
old story, and vendors like Samsung have their own reasons. The biggest reason
is that often these imports are made evading various taxes and duties, and are
illegal. And, because these are often done at informal levels and through
dubious channels, quality is also doubted. Finally what happens is that when a
consumer has a problem with the product, he or she does not care whether the
shop bought it from Samsung India or from some unknown source in Taiwan. He just
blames Samsung. And, when after sales service and support is difficult, the
customer is even more upset. Ultimately, it is the company and the brand that
lose goodwill.

More than that, vendors question the feasibility of making all the
investments in India in terms of building manufacturing capacity, sales and
service network, and spending crores in brand building if they loose business
because of illegal imports. They might as well start importing and selling here.

We have an impasse here. It is important that big players like Samsung or HP
or Acer or Dell, which face similar situations, sit down face-to-face with
channel players and sort this out. If it is done, mutually win-win solutions can
be worked out.

My advice to vendors, as they are the bigger (actually much bigger) party,
will be to try and be as accommodative as they can. More concessions and
adjustments should come from them. I can assure that if big vendors can ensure
that channel partners interests are not hurt, the battle is won, for all sides.