Industry Outlook: Zahid Mahmood

Industry Outlook: Zahid Mahmood, Country Sales Manager, Pakistan for Acer Computers Middle East

The global financial crisis has had its impact on all industries, and hardware multinationals have certainly not been exempt. If anything, such companies can potentially be even more severely hit as they are viewed as a major cost investment during any solution. But the fact of the matter is this: any business that relies on a large network of channel partners and distributors can potentially be effective in enabling hundreds of job opportunities. And there’s more – you need hardware in order to be able to enable businesses to run. It wouldn’t be far from the mark claim that hardware has become part of the economic fabric that empowers people.

So when we spoke with Zahid Mahmood, Country Sales Manager of Acer in Pakistan, we were curious as to how the market conditions were influencing sales for such a strong brand. “Of course it is difficult, but these are tough times for everyone, everywhere. The frequently fluctuating dollar prices in the last quarter of 2008, followed by restricted IT budgets have made managing sales a serious challenge.”

But regardless of how unstable a market is, every company works through forecasts and market analysis based on past results. Pakistan’s buying trends have been on the rise in the past several years. The situation now, however, is extremely unpredictable. What can any company do with such unpredictable circumstances? “Well they will all sit down and analyze the results and indications, and then figure out how to shuffle things in order to get better results. In this scenario, of course we see where our resources are placed currently, how we can reshuffle them in order to get better results, and how we can ‘right-size’ the organizations in different territories to achieve the best outcome.”

Pakistan has been a very bullish market for technology growth over the course of the past 8 years. Zahid recalls that when he joined Acer, market trends in Pakistan were very positive. “Things were extremely encouraging,” he says. “Had they continued, I had every plan of bringing my management here by 2008 and having them open up a local entity. Pakistan makes a great hub for the region and setting up an assembly plant made sense.” Access into Afghanistan and Iran coupled with the low labor costs comparable to any other in the region made the country very attractive, but a bad 2008 created problems.

According to Zahid, challenges have to consistently be fought on ground and assurances need to be given to the international management consistently so to convince them that the potential in the Pakistani markets is great because other markets have already reached to the saturation. “You need to keep selling in the US or Europe but the potential to make a bigger impact is different here,” he says. Like a lot of the other company heads, Zahid shares the opinion that the dismal political and unstable security situation is the only two elements creating problems.

The Supply Chain
The exact areas where hardware solutions create the biggest impact can be pointed out by tracking sales and through analysis of newly created jobs. “When I joined Acer, there was no robust supply chain in place to facilitate customers, which impacted prices,” recalls Zahid. “I installed that supply chain in place for Acer and we brought down laptop prices to below the Rs.100,000 mark.” Using the regional expertise and supply chain management experience that Acer had, Zahid was able to ensure that the right products would be available at the right time to the customers. “We had a strategy of quick ordering and quick selling and we were able to bring the best products which made the dealers very happy to sell our quality at good prices.”

Affordability is a major issue identified by hardware distributors. If the consumer’s need can be matched with the price, he/she will become loyal to the brand.

Zahid was also able to bring in other changes within the Acer distributor network he set up. “There is a lot of competition and profit margins are usually the first thing that is cut by a store in order to make the sale,” he points out. “We helped our channel to grow by bringing in special incentive programs,” he goes on. The stock program for dealers throughout Pakistan was established from 2004, and this allowed Acer to rise in Pakistan. “Before that the buyers use to go to Dubai or Singapore to import a good product at reasonable prices,” Zahid says. But like everyone else, the recent 16% add-on GST on computer imports has put one more hindrance in a task which should have produced even more benefit for the local economy. “It hasn’t helped at all. And it isn’t about lesser sales,” he laments. “It’s about our local dealers. These are Pakistani businesses that are partnering with us. It is their sale and well being that is more at risk than ours.”

According to Zahid, the middle-man is very important in terms of keeping the channels healthy. “In Acer, we work very closely with both our distributors, and secondary channels,” he says. This results in ensuring stocks availability, and also ensuring that the prices remain inline with the regional costing and the cash flows. “A dealer wants a product that he can sell easily, and this is something that we need to arrange,” he says. “Also, in the second tier channel, we need people who can explain the features of our product and sell it at a premium price,” he adds.

In addition to making sure that stocks are available and making sure that pricing is available other in-sales and after sales support is something that the brand needs to supply to its channel partners in order to assure benefits for all stakeholders.

According to Zahid, brand exclusivity should not be something to be strived towards. “I shouldn’t tell the dealer to only sell Acer,” he says. “Customers should have all the brands available for them to choose and decide.” Quality of a product can not be judged unless it can be compared to other available brands.

Many in the industry would contend that Online Buying has not seriously taken off in Pakistan, and consumers in the country would be reluctant to use their credit cards for purchasing through the internet. One reason could be the lack of conviction that consumers have for their credit card information’s security. But according to Zahid, this is not the only reason, and Pakistan is not the only country facing it. “This has also has not taken off in Dubai, where there is no issue of credit card,” says Zahid. “I believe the reason to be more about the hardware consumer’s psyche, which dictates the consumers to not buy anything until that products can be seen, felt and touched,” he adds.

But on the other hand, the Online channel is something that can be aggressively pursued because the overheads are reduced for both the partner and dealers, as well as added simplicity for transactions to take place.

Facilitating to Learn and Teach
Zahid is greatly saddened by the state of the education sector in the country. He contends that despite the fact that a lot of money has gone into the improvement of the IT Education sector, not much of it is visible. “We saw organizations like the EGD and ITD spending money in 2006 in Lahore and Islamabad, but there has not really been much visionary activity,” he says. “ITD in few provinces has spent but they have only spent on locally branded computers, and as a result, the school labs are of no use after two years,” he adds. Without after sales service and support, Zahid contends, money is simply wasted.

Zahid gives the example of an order made out for schools in Peshawar. “I have come to know that there were 40 schools and half of them did not even have computer labs. The computers bought were still wrapped up in their storage, and needless to say, the PCs are now obsolete,” he says. He is more positive about the current decision makers in the government though. However, he still maintains that basic facilities and infrastructure needs to be brought to schools before they can make use of computers. “In the list of 4283 schools that we have in Punjab, there are few locations where electricity has not been provided for,” he points out. Along with the infrastructure, Zahid advocates an improvement of the education syllabi in the institutions.

“Once the basics have been provided for,” he says, “the computers will become increasingly beneficial.” Although the contribution towards improving education needs to come from all stakeholders, the government needs to play the biggest part. “There needs to be consistent monitoring mechanisms and evaluations, so we can be certain we are on the right path,” he says. “Accountability and transparency need to be the order of the day,” he adds.

Zahid maintains that if as Pakistanis we can move towards the achievement of these objectives, we will have done something great. “We can then safely say that we have done some thing for our future generations,” he says. “There has to be an end benefit to all deals made, and that has to be the key to business,” he adds.

Regionally, Acer has made many deals aimed towards improving infrastructure. “There has been work done in Jordon, UAE, Africa and Oman towards helping students,” he says. “As a manufacturer we can go to the cost level and even below cost level for such a beneficial initiative, but the government needs to be onboard,” he adds.

Economic Uncertainty
In the global economic uncertainty, there is definitely some hesitance in going for a project, but according to Zahid, it does not mean that a mutually fruitful venture can not materialize. He maintains though, that the key for a successful outcome needs to be to involve international brands.

An unstable environment though, means that costs need to be monitored. “Yes, when I talk about my cost I will consider the situation of the dollar,” he says. “What makes it interesting is that stakeholders expect that one quotation will stay the same in this environment, and that just can not be so, since the dollar is fluctuating everyday,” he goes on.

The uncertainty has affected the local companies more than their international counterparts. “Indeed, mostly our local companies have suffered. The GST is an added suffering for them,” he says. “They have no support from government. Yet, they are still working in the market and struggling, and that is admirable,” he lauds.

Despite the ongoing recession, Zahid remains hopeful that things will look start to pick up. “We believe that the first quarter of 2009 will certainly see an improvement,” he says. “But we are most hopeful about the final half of the year,” he adds. Let’s hope that Zahid’s positive outlook will indeed turn into reality.