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Partner Spotlight

Setting The Ground For Common Minimum Trade Terms

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DQC News Bureau
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Confed ITA's second annual conference titled 'Get Together To Grow Together'
(GT2GT) had a theme which was reminiscent of the current industry scenario. The
objective of the event was to discuss the pressing issues plaguing the channel
community. Member associations from across Tamil Nadu participated to share
thoughts and arrive at a common decision.

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Wish list

During the event, the Confed-ITA executive committee meeting prepared a
memo­randum listing Common Minimum Trader Terms (CMTT). All associa­tions
unanimously agreed to the CMTT, which listed issues including service tax and
VAT on back-ends, VAT on cartridges, service tax on software, warranty issues,
territorial viola­tions, and price differen­tials, etc.

PN Prasad, President, Confed-ITA discussed all the key CMTT with the present
vendors and asked them to reply by Aug 31, 2009. The conference saw
represen­tation from companies like Acer, Canon, HP, Dell, Fuji, Microsoft,
Numeric and Epson.

Preferred vendor

Confed-ITA has decided to communicate the list of vendors who have accepted and
implemented the CMTT to all its member associations. These vendors will be
labeled as 'preferred vendor' and the association would encourage its members to
increase their trade from the preferred vendors. However, the dealers are free
to trade products of vendors, who do not implement CMTT, at their own risk; the
problems resulting from such trade relationships will not be taken up by
Confed-ITA.

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Training programs

In his speech, Prasad lauded the training program conducted by Microsoft for
about 250 channel partners across Tamil Nadu in May 2009 on products of various
categories with different licensing. They also elaborated on market positioning
of those products. Many other vendors expressed interest in conducting such
training programs.

CMTT submitted to
vendors
  • There should be legal agreement between principals and dealers that
    clearly defines roles and responsibilities
  • The vendors should set realistic sales targets and watch supply/demand
    in each territory to ensure that no material flows from one area to other
    based purely on price differential
  • All orders to a non-partner must be routed through the local partners,
    maintaining uniform prices
  • When a product is available in the market at a price less than DTP, a
    credit note must be issued by the vendor for the price differential after
    investigating the source of price cutting
  • All trade rebates are to be processed and paid through the distributor
    who billed the material, with proper documentation to the fact that such
    payouts are based on purchases and volumes/targets achieved in order to
    avoid service tax on such rebates
  • Payment of all trade rebates to be made within 30 days from the last
    date of scheme period; no need for dealers to submit claims
  • Vendors/distributors will be responsible for any demand from tax
    authorities owing to billing with wrong rate of tax
  • To avoid price cuttings, vendors should avoid supplying to other
    dealers/resellers who are not their authorized partners
  • Vendors should impart product training to dealers and resellers on
    product duty cycles, cost of ownership and training on handling the
    products
  • The warranty terms must be mentioned in distributor invoices for each
    product
  • Vendors should maintain internationally competitive product prices to
    eliminate grey and parallel imports
  • Maintaining department-based e-mail ids, rather than individuals, to
    ensure continuity of communication when personnel leave the job
  • Authorized service providers of vendors should not sell the products
    to avoid clashes with other dealers
  • Vendors should restrain distributors from giving month-end deep
    discounts which brings MOP below the DTP; the best performing dealers may
    be given recognition in large gatherings of channel community
  • Vendors should avoid advertising prices and models with vague and
    confusing terms such as conditions apply, HFF, carry case extra, street
    price etc

On customer-related issues, the memorandum included:

  • User manual and proper driver CDs should be supplied with all products
    in the boxes
  • Warranty rejections on flimsy grounds should be avoided
  • Practice of free do's to be stopped as it is not used by anyone
  • Supply of PCs and notebooks only with fully working GUI operating
    system to avoid piracy
  • The memorandum also included a point that calls for vendors to
    participate in the SOUL project of Confed-ITA and contribute 0.001 percent
    of total turnover in each area to fund the dealers welfare. This amount
    has to be charged to product price by increasing the MOP by 0.001 percent

The conference was concluded by S Karthikeyan, ex-President, Confed-ITA, who
insisted that vendors should take up the issues seriously and reply by Aug 31,
2009. In his speech, he asked them to clearly let the confederation know their
stance on all the pressing issues and avoid apathy. He added that Confed-ITA was
planning to submit a memorandum to Central Board of Excise-Delhi, Ministry of IT
and Ministry of Finance, elaborating on the concerns of channel community on tax
issues.

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Later, Confed-ITA released its first bi-lingual bulletin titled 'Clariyon'.
The bulletin is meant for circulation among the channel partners and will be
posted to each and every member of the association. The event ended with an
entertainment session, where a group of trained professionals performed a fire
show, which was followed by cocktail dinner.

'SOUL' project

All the partners approved of Confed-ITA's SOUL (Stand On Your Own Leg) project
unanimously. The project is aimed at generating funds for the welfare of the
dealers. According to the terms of the project, the vendor will increase the MOP
by 0.001 percent; vendors would credit the amount directly to Confed-ITA's SOUL
account, within 30 days for the month completed. For instance, the price of a
printer that costs Rs 4,000 will be increased by Rs 4 (0.001 percent of 4,000)
and the amount will be transfered to Confed-ITA's SOUL account. The amount thus
collected will be used for the welfare of the dealers.

N Vasudevan

(vasudevann@cybermedia.co.in)