HP reviews Kenya supply chain

February 22, 2010

, NAIROBI, Kenya, Feb 22 – Hewlett-Packard (HP) Imaging and Printing Group is reviewing its local distribution and supply chain which is says has been invaded by counterfeiters.

Addressing journalists on Monday, HP Imaging and Printing Sales Manager Florian Beiter revealed that the company was considering setting up a regional hub that would directly distribute its products in East Africa.

According to Mr Beiter, counterfeiters have eroded HP’s market share by up to 50 percent in the region.

“The ideal scenario for HP would be to bring our products into the country but that is dependent on the cost of air freight and how far you are from our two main warehouses in Dubai and Germany,” Mr Beiter said.

HP is currently conducting a feasibility study on the proposed move to establish its cost effectiveness. Mr Beiter said the biggest challenge for the company has been the rising demand for its products, which he admits, outstrips its capacity to respond effectively.

This has led to shrewd businesspersons taking advantage, offering substandard goods under the HP brand to unsuspecting customers.

To effect this, Mr Beiter said HP would employ a five-step strategy to enhance its capacity. The first step involves clustering its regional market base and selecting regional partners.

Establishment of local availability of products while broadening its reseller base will then follow, ultimately leading to future investments in East Africa in terms of rebates which attract more resellers who would actively push HP products.

“We see there is still a lot of growth opportunity we can explore given that the brand awareness of our products is right up there. However, we first need to fix how we bring our products in for them to be distributed locally,” Mr Beiter said.

He put growth projections for East Africa at be 25 and 30 percent in the next five years.
He added that HP was considering a single pricing model for clustered regions in the continent such as East Africa, to keep prices for its products level and discourage people from buying counterfeit printing products.

“What we don’t want is having different prices by country because if we had this then we would start a huge grey business going back and forth from one country to another,” he said.
The Organization for Economic Co-operation and Development (OECD) estimates the annual value of international trade in counterfeit goods at $200 billion.

The World Customs Organization (WCO) believes counterfeiting in general, drains an estimated €500 billion per year from the global economy, equivalent to the loss of about 5-8 percent of trade in brand-name goods worldwide.

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