ONE dominant distributor’s stranglehold, combined with the pressure of parallel importing, is being blamed for the demise of Bluechip Infotech’s New Zealand subsidiary.
While the distributor’s Austra-lian partner company continues to expand, the local operation, which has not shown a profit since it was founded in 1998, will shut shop at the end of this month.
The company started life in Auckland as a subsidiary of Australian distributor BBF Components and Peripherals, which merged with Bluechip Infotech in 2003.
Brett Bradley, the company’s Sydney-based operations director, says over the last two years a number of different strategies were employed to trigger growth in the faltering local operation.
This included a capital injection last year, but when that failed to deliver the desired results, the company’s board decided it could no longer shore up the New Zealand branch.
“We have invested a considerable amount of money in New Zealand over a period of time, but we were not seeing a return on investment,” says Bradley.
“We never reached critical mass and could not break through. The board decided it would rather invest money in expanding our branches in Perth and Brisbane. In business, you have to know when to go forward and when to call it a day.”
Bradley says a combination of factors led to Bluechip Infotech’s failure in New Zealand, including the number of players operating in such a small market.
“The market is not huge, but has huge players,” he says.
“There are pretty well-established players in both the North and South Islands. Tech Pacific also has such a stranglehold on the market.”
The merger between Tech Pacific and Ingram Micro did not offer any relief either, says Bradley, because of Tech Pacific’s dominance.
“Ingram Micro was not even number two in New Zealand. Tech Pacific was so far ahead the daylight was second place — you couldn’t even see the second horse in the photo.”
Meanwhile, unlike in Australia, parallel importing creates additional pressure in New Zealand.
“The parallel importing laws hurt in New Zealand. It was very difficult to compete,” he says.
The dominance of major PC brands also reduced Bluechip Infotech’s sales of components to system builders.
“The major brands play a big part and their pricing is very competitive. They are taking business away from the white box market,” says Bradley.
Bradley is in the country this week to wrap up the New Zealand company and says the process will be tidy.
“All debts will be paid. The only loser will be the Australian entity. We will pay everyone else first.”
This should be good news for Bluechip Infotech’s registered creditors, which include Monaco, Sony New Zealand and Kodak New Zealand.
The company is negotiating with Zcom Computer Wholesale to take over warranty support for products already supplied and to act as a sub-distributor for some of Bluechip Infotech’s brands.
Of the company’s six local staff, two face redundancy, but Bradley says the company is working to find placements for them. He hopes to keep one employee based at Zcom to assist with warranty support.