Leading Russian Companies Source At Computex
As a member of the BRIC (Brazil, Russia, India and China) group of most promising markets worldwide, Russia is catching the eyes of many Taiwan-based IT vendors.
May 31, 2005
As a member of the BRIC (Brazil, Russia, India and China) group of most promising markets worldwide, Russia is catching the eyes of many Taiwan-based IT vendors. Computex is undoubtedly a good opportunity for meetings, but both sides still need to learn more about each other. Here's a bit about a key group from Russia.
Distributors represent a large group of the Russian visitors at Computex, and it is a significant part of the IT industry in Russia, too. Browsing the list of the 100 biggest Russian IT companies issued by CNews Analytics in March, there are nine distributors of hardware and telecom equipment. Five of them, including Merlion, the holder of the top position for the last two years, are members of the top thirty. In addition, many of the leading companies are groups that have their own distribution subsidiaries or departments. For example, OCS and Landata are part of second-placed National Computer Corporation (NCC) and together they contribute 63% of the group's revenues, according to NCC; Dealine is a member of the third-placed IBS group; RSI is a part of the fourth-placed R-Style group; and Verysell Distribution is a member of the eigth-placed Verysell group and accounts for more than 40% of the group's business, according to the company.
"Working with Taiwan since our company was established, we now cooperate with around 50 Taiwan-based IT vendors. In 2004, their products contributed about 30% of our turnover," said Merlion president Alexey Sonk. He mentioned Gigabyte, Epox and Asustek as key partners. Another big Russian distributor, OCS, also included Asustek and Gigabyte in its list of main suppliers, along with Acer and Asrock.
"In the past, the IT industry in Russia was more focused on western countries and Taiwan was an exception. However, the Taiwan strategic partnership has grown over the last almost twenty years and, I think, will grow further," said Alexander Gookkin, president of Pirit, Asustek’s number one distributor in Russia by turnover over the last two years. East Asia is becoming a main priority for the Russian IT industry, and this guarantees stable cooperation between Taiwan and Russia in the future, he added.
What does Computex mean for Russian distributors? Primarily it is just one more annual opportunity – like CeBIT in Hannover, Germany – to talk with many key IT-industry players collected together in the same place. "Since Asia is the IT supply center, Computex, as the largest IT trade fair in the region, displays technology and pricing trends for the IT market. It is also a good place to sign contracts," noted Dmitry Kleshnin, director of the component and monitor department at OCS.
"Nowadays, it is not like in the 1990s when many Russians visited Taiwan for the first time – my first attendance of Computex was in 1998. At that time, almost everything seemed interesting to me," remembered Mikhail Lukinov, vice president of Alliance Marketing Group. He mentioned Asustek, Gigabyte and A-Data as good examples of Taiwan-based companies realizing the needs of Russian customers, but criticized some others for the lack of differentiated products and pricing policies that vary massively between customers.
Merlion's Sonk noted that Taiwan-based IT vendors not always follow through on their commitments, but did not mention any company names. "Giving promises, but taking them back later is not very unique for Taiwan-based companies. We have experienced this type of case several times," he said.
Most of the distributors agreed that branding and marketing strategies are now becoming more important for the Russian IT market. "To sell no-name or weak-brand products is actually too difficult, since the prices are at the same level with top brands," said Lukinov, with reference to Taiwan-sourced second-tier digital cameras falling behind in a competition with Japanese first-tier branded products.
Without wishing to be named, sources at some Russian companies cited other problems, such as too short pre-market cycles, poor logistics, insufficient technical support and underdeveloped channel management. However, all of them said that the situation has been improving steadily.
Apart from distributors, another big group of Russian Computex visitors are manufacturers, mainly PC assemblers. Cooperating with Taiwan-based suppliers, the Russian assemblers are currently dominating the PC market in Russia. In the fourth quarter of 2004, only 5% of the Russian PC market (in units) was supplied by international brands such as Hewlett-Packard, Dell and IBM. The remaining 95% was shared between Russian and Taiwan-based suppliers, according to IDC.
"Generally we have some developer tasks to be solved at Computex," said Renat Yusupov, vice president of Kraftway, the highest-ranked manufacturer in the top 100 list. He did not talk in detail about the tasks for this year, but noted that another goal for visiting Computex is to study the roadmaps of key partners. Those partners for Kraftway are currently Gigabyte, Foxconn, Info-Tek, Nexcom and Enlight, Yusupov stated.
Not yet fully transparent, the IT market in Russia is on its way to becoming more civilized, according to analysts. IT and telecommunications spending in Russia grew by more than 20% in 2004, according to CNews Analytics. Last year in August, the Ministry for Information Technologies and Communications estimated the contribution from the IT and telecommunications industries to the gross domestic product was 3% and forecast it would increase to 3.4% in 2005, CNews Analytics reported. Officials subsequently raised their forecast to 4.9% for this year.
Top 30 Russian IT companies
Distributors represent a large group of the Russian visitors at Computex, and it is a significant part of the IT industry in Russia, too. Browsing the list of the 100 biggest Russian IT companies issued by CNews Analytics in March, there are nine distributors of hardware and telecom equipment. Five of them, including Merlion, the holder of the top position for the last two years, are members of the top thirty. In addition, many of the leading companies are groups that have their own distribution subsidiaries or departments. For example, OCS and Landata are part of second-placed National Computer Corporation (NCC) and together they contribute 63% of the group's revenues, according to NCC; Dealine is a member of the third-placed IBS group; RSI is a part of the fourth-placed R-Style group; and Verysell Distribution is a member of the eigth-placed Verysell group and accounts for more than 40% of the group's business, according to the company.
"Working with Taiwan since our company was established, we now cooperate with around 50 Taiwan-based IT vendors. In 2004, their products contributed about 30% of our turnover," said Merlion president Alexey Sonk. He mentioned Gigabyte, Epox and Asustek as key partners. Another big Russian distributor, OCS, also included Asustek and Gigabyte in its list of main suppliers, along with Acer and Asrock.
"In the past, the IT industry in Russia was more focused on western countries and Taiwan was an exception. However, the Taiwan strategic partnership has grown over the last almost twenty years and, I think, will grow further," said Alexander Gookkin, president of Pirit, Asustek’s number one distributor in Russia by turnover over the last two years. East Asia is becoming a main priority for the Russian IT industry, and this guarantees stable cooperation between Taiwan and Russia in the future, he added.
What does Computex mean for Russian distributors? Primarily it is just one more annual opportunity – like CeBIT in Hannover, Germany – to talk with many key IT-industry players collected together in the same place. "Since Asia is the IT supply center, Computex, as the largest IT trade fair in the region, displays technology and pricing trends for the IT market. It is also a good place to sign contracts," noted Dmitry Kleshnin, director of the component and monitor department at OCS.
"Nowadays, it is not like in the 1990s when many Russians visited Taiwan for the first time – my first attendance of Computex was in 1998. At that time, almost everything seemed interesting to me," remembered Mikhail Lukinov, vice president of Alliance Marketing Group. He mentioned Asustek, Gigabyte and A-Data as good examples of Taiwan-based companies realizing the needs of Russian customers, but criticized some others for the lack of differentiated products and pricing policies that vary massively between customers.
Merlion's Sonk noted that Taiwan-based IT vendors not always follow through on their commitments, but did not mention any company names. "Giving promises, but taking them back later is not very unique for Taiwan-based companies. We have experienced this type of case several times," he said.
Most of the distributors agreed that branding and marketing strategies are now becoming more important for the Russian IT market. "To sell no-name or weak-brand products is actually too difficult, since the prices are at the same level with top brands," said Lukinov, with reference to Taiwan-sourced second-tier digital cameras falling behind in a competition with Japanese first-tier branded products.
Without wishing to be named, sources at some Russian companies cited other problems, such as too short pre-market cycles, poor logistics, insufficient technical support and underdeveloped channel management. However, all of them said that the situation has been improving steadily.
Apart from distributors, another big group of Russian Computex visitors are manufacturers, mainly PC assemblers. Cooperating with Taiwan-based suppliers, the Russian assemblers are currently dominating the PC market in Russia. In the fourth quarter of 2004, only 5% of the Russian PC market (in units) was supplied by international brands such as Hewlett-Packard, Dell and IBM. The remaining 95% was shared between Russian and Taiwan-based suppliers, according to IDC.
"Generally we have some developer tasks to be solved at Computex," said Renat Yusupov, vice president of Kraftway, the highest-ranked manufacturer in the top 100 list. He did not talk in detail about the tasks for this year, but noted that another goal for visiting Computex is to study the roadmaps of key partners. Those partners for Kraftway are currently Gigabyte, Foxconn, Info-Tek, Nexcom and Enlight, Yusupov stated.
Not yet fully transparent, the IT market in Russia is on its way to becoming more civilized, according to analysts. IT and telecommunications spending in Russia grew by more than 20% in 2004, according to CNews Analytics. Last year in August, the Ministry for Information Technologies and Communications estimated the contribution from the IT and telecommunications industries to the gross domestic product was 3% and forecast it would increase to 3.4% in 2005, CNews Analytics reported. Officials subsequently raised their forecast to 4.9% for this year.
Top 30 Russian IT companies