Netxpress Oct Edition 2001
The advent of the e-revolution in Pakistan has brought with it many lucrative opportunities for Pakistan. Other than the various career opportunities it has also opened up, it has also sparked off numerous subsidiary industries. These include the IT educators, IT service providers and computer and accessory dealers.
Computer hardware shops have opened up at the nook and corner of every mohalla of the cities of Punjab. A year ago, the IT boom was large enough to justify such a large growth in the sector. However, with the prevailing market conditions, we wanted to get the point of views of the little shops to find out how they have managed to survive.
The following article is based on information and testimonials provided by various shopkeepers, interviewed and researched by the NetXpress team in the major markets of Lahore, Rawalpindi and Islamabad.
Over the last one year, the federal government has taken commendable steps to spread e-awareness throughout the country. On one hand it has increased the demand on the software front, i.e. developers, etc. and on the other it has also created a vibrant market for computer hardware. Thus, everywhere you look, you see a hardware shop, catering to Pakistanis, from all walks of life.
The computer is no longer an alien species, or even something meant only for the elite class. The Ministry of Science and Technology (MoST) has provided further impetus to IT by initiating schemes to give PCs on lease, distribution of second-hand PCs to educational institutions, etc. Their intention is to ensure that the people of Pakistan have no reason NOT to have access to a computer.
As it is, the government has effectively spread IT awareness throughout the country. With schemes ranging from affordable IT education, the implementation of the IT policy, hardware import exemptions, local industry tax exemption zones, etc. All this has enabled Pakistan to face the global IT commercial scenario in a more ‘battle’ ready mode than ever before.
All this IT euphoria has a positive effect on Pakistan. There has been a phenomenal increase in the number of students opting for IT education. However, it has been encouraging to see that the past 2 years have also seen a dramatic increase in the purchase of PCs by families.
This has not been a single-handed government campaign, the government owes a lot to the businessmen who gave a positive response to the government’s initiative, i.e. the people who invested their life’s earnings in setting up computer hardware and accessory stores, CD businesses, etc.
It was as a result of their full-fledged co-operation with the government, that the people finally found computers in the market that were both practical and cost-effective.
All these factors enabled dealers to come into direct contact with manufacturers, thus getting cheaper prices for computer technology, guarantees, technical know-how, etc. This led to a sharp increase in the number of dealers throughout the country; it became common to see students get hardware diplomas and set up small dealerships or repair shops in their localities.
This led to a more widespread computer market throughout the country, increasing parts and accessories availability and decidedly lowering prices and starting a price war of sorts throughout markets. Although beneficial to the public, the computer ‘Bazaars’ have become more vocal in demanding certain regulations. They claim that low-quality goods, used PC imports, have adversely affected business conditions, and many have already started going out of business.
The scenario is similar in each case; small businesses tend to open up in localities, offering services ranging from the sale of computer parts and accessories to service and repair. They manage to stay afloat for a year or so but soon lose out to larger businesses that have better contacts and goodwill in the market, thus enabling them to obtain larger amounts of credit.
Small businesses have just not been able to face the challenge imposed by these so-called ‘Big Fish’ and, in reply, have had to shut down bearing large losses and sometimes absconding without paying their creditors, thus causing even more disorder in the market.
Another significant reason for the closure of smaller businesses is the lack of technical expertise of the sellers. Most shops have been set up as a possible source of increased revenue by technically unqualified businessmen already having other businesses. It is rare to find someone who has a degree qualifying them to assemble computer units; most shopkeepers acquire the necessary knowledge from ‘on-the-job’ experience.
Although there are numerous shop owners who have acquired hardware diplomas, these are very rare. Larger businesses have an edge over smaller businesses as they get more prestige and better credit from manufacturers. This is because they have a large network of dealerships around the city and also branch out into other IT-related fields, thus ensuring them a steady revenue flow.
However, it is a whole new ball game when it comes to smaller businesses. Those that manage to secure contracts with schools, hospitals, etc., are able to manage on their own. Those who can’t either close up shop or follow in the footsteps of large businesses by branching out towards other sources of revenue.
Most start service and repair businesses, sell CDs, offer such services as photocopying, etc., while qualified shopkeepers offer services such as local area networking to their clients.
Used PCs… and Other Hard Luck Stories
The growing market for PCs has added to the headache of hardware dealers, with technology improving at the rate it is. Most PCs soon become obsolete for the purpose for which they were bought.
The import of used PCs from foreign countries has had a sharp increase over the last year or so. The market took a general downturn after the events in the Big Apple on September 11th, forcing people to cut down on unnecessary expenditure, further decreasing sales.
Fluctuating dollar rates confused importers on how to convert the prices of their goods into rupees, thus forcing them to start stockpiling goods. In the process, decreasing supplies and increasing prices. However, events since then have been more positive and have led to an uplift of the economy as a whole, promising better prospects for all traders, including computer dealers.
The recovery of the General Sales Tax (GST) has further decreased profits, as they have to make up for it from their profits. With the meager profit these dealers make, they can’t afford to give part of it away to the government.
Another issue is the constant power failure; the computer business literally runs on electricity. High prices per unit, numerous power shortages, and fluctuations are wreaking havoc on their sales and repair services.
So is security, which has become a major issue almost throughout the country. Finally, although IT exhibitions have been held on numerous occasions, most small dealers cannot come into direct contact with manufacturers and have to deal through middlemen, thus increasing costs.
The Final Testimony
However, shopkeepers do appreciate the efforts made by the government to make Pakistan IT-savvy. Had it not been for the efforts of the government, the inflow of technology into the country would have been very limited.
Today’s customer is more learned and comes with a ready list of requirements; this has a double advantage of making the seller’s job quicker and also takes the responsibility of complete compatibility and usefulness of the components off their shoulders.
But most of them still believe that the government is focusing more on the software industry rather than the hardware one, and a lot more has to be done for the industry.
The following are some suggestions put forward by a cross-section of Pakistan’s hardware dealers:
– First and foremost, peace will be the biggest possible boost to the economy since it restores the confidence to spend money within the people again.
– The government must take steps to ensure a more streamlined pricing policy throughout Pakistan. Most dealers lose out due to the heavy fluctuation of prices within their local markets.
– The government should assist in setting up unions or associations that represent the dealers of a certain market. This would give them a platform with which to approach the government with their problems and also enable them to confront unscrupulous dealers more effectively.
– Legislation must be put in place to enforce registration of dealerships to prevent unscrupulous ‘fly-by-night’ organizations.
– Finally, second-hand and low-grade products from countries of the Far East must be kept out of Pakistan as they are adversely affecting prices and reputations.
These are the problems and opinions of only a very small cross-section, perhaps representing that of the vast computer dealer network across Pakistan. We understand that we may have missed out on many crucial factors, but our objective was to give a voice to the unheard masses.
The fire has been kindled; the ball is now in your court. Our forum is an open one; please do not hesitate to send in your opinion.
