No room for parallel importers of electronics

Dubai: The right notes are being heard all over again in the local consumer electronics marketplace, helped by improving buyer sentiment and stability returning with supplies from Japan after the tsunami.

Retailers can add another factor for good cheer — the virtual absence of parallel imports in electronic goods — particularly of Japanese makes — in recent weeks.

Ironically, they should be thanking the tsunami for that.

"It is only by the second half of July or so that Japanese manufacturers were able to get a firm handle on ensuring a smooth flow of supplies to the Gulf markets," said a senior official with a leading local electronics distributor. "This meant whatever is produced is reaching the official distributors and there's hardly any surplus available.

"This means there is very little — even nothing — is available for parallel importers to trade and flood the Gulf markets."

Osamu Miura, managing director of Sony Gulf, is another who believes strongly that parallel imports offer no concerns in the present.

"Every Japanese manufacturer is trying to get supplies back to where they were before the March tragedy," said Miura.

"Sony Gulf buys from Sony Japan all of the requirements that are needed for the region. So we have as much of a stake in ensuring regular supplies as our distributor partners in these markets.

"There is no way we will let parallel importers any room to do their stuff. Whatever we can get from Sony, we will and no one else."

Wishful thinking

Parallel imports have been the bane of the official consumer electronics trade in Dubai for decades. Working on the narrowest of margins, grey market operators push products that are in high demand and at much lower prices than with the official distributors.

No one believes that parallel imports will now disappear forever. "That would be wishful thinking; once Japanese production and supplies are fully on track, there will be a return of grey market goods," the senior official with a leading local electronics distributor added.

"But at this moment when consumer demand in the local and GCC markets is still on the mend, the absence of parallel imports is to the office trade's advantage. It gives us breathing space."

Other distributors echo the view. "We saw some minor hiccups during April but that was also due to the fact that most shipping lines out of Japan were severely affected," said to Ashish Panjabi, chief operating officer at Jacky's Electronics. "In May, June and July we've seen most supplies move back to normal levels.

"The shortages have been seen worldwide, not necessarily in the Middle East only."

What of demand going forward? It is still too early to say whether the upswing recorded during the recent Summer Surprises will hold.

"Locally, we've seen more tourists this year from the Indian subcontinent and the GCC which has helped us, said Panjabi. "There may be fewer tourists coming from some of other countries but, overall, I think the UAE has seen a net increase."

The re-export market is still shaky and not helped by the fresh concerns over the global economy and the political situation in some of the key regional markets.

"The re-export market has no doubt taken a hit in certain territories which are huge trading spots for Dubai," said Niranjan Gidwani, deputy CEO at the Eros Group.

"However as normalcy returns we have seen [in the past] that the business moves quickly into a regular mode. We are quite confident that it will bounce back as always."

Panjabi believes a recovery is already being scripted vis-à-vis re-exports.

"Those dealing with Kuwait and Saudi Arabia have said they've seen stronger demand due to incentives given by the governments.

"The first six months were indeed turbulent, but it depends on which markets you're dealing with. When one market closes, opportunities often arise in others."