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.