Reseller ME finds out how the retraction of Iran’s sanctions will impact the channel business in the Middle East.
Regional business players are waiting to learn the result of the much-anticipated withdrawal of Iran’s sanctions, which was formally agreed upon last month in Vienna. The severe sanctions put in place by the UN, US and European Union to ensure Iran curtails its nuclear programme, are now being lifted after two years of diplomacy talks and a clear directive for the country to comply with the strict verification and inspection process. Although the agreement is yet to be formally approved by the US and Iran governments, experts believe it will pass through without any setbacks. While it is going to be a long drawn out process before the agreement is put into action,
Iran is expected to benefit from opening its economy to the global markets. But what does this mean for the regional channel business?
According to Steve Lockie, Group Managing Director, Westcon Group, it will be a while before we see any tangible impact. He said, “The sanctions are still very much in place and we have to wait and see what may be relaxed or reviewed in the coming weeks and months.”
Shailendra Rughwani, CEO, DCG, said, “Also there needs to be a clear ruling on the country’s payment systems where banks will be allowed to use the SWIFT payment methods, which is crucial for doing business. Apart from that we need to get confirmations from vendors to be able to sell into Iran and all of these might take few months’ time.”
Iran is an important market for companies in Dubai but business has been at a standstill due to the restrictions imposed by the sanctions. Being one of the largest markets in the Middle East with a population of 80 million, primarily comprising of young and educated consumers, vendors will want to take advantage of this consumer base. By revoking the sanctions, it becomes much easier for global companies to do business in the country.
“Should they be relaxed of course there would be a significant boost in demand in the local market. And there is clearly a pent up demand in the Iranian IT sector and local businesses would be well positioned to support the needs of the Iranian market,” said Lockie.
Rughwani added, “Once the restrictions are lifted, we expect the market to open up and this will surely help the channel business in Dubai since there is a lot of focus on re-exports here.”
According to K.U Shankri, Founder and CEO, Lucky Star Computers, by repealing Iran’s sanctions, there can now be better interactions and relations with the Iran-based dealers.
“We can now deal with Iran-based companies through LCs and bank guarantee, which was not happening before. From my point of view, the business dealing will be better and safer after lifting the ban,” she said.
Dubai, as it is located closer to Iran compared to other countries in the region, will be the first point of contact for Iran-based companies who will be looking to develop their business.
“The disadvantage would be that the whole world would be looking at doing business with Iran once the sanctions are removed and this will create fierce competition, which could result in a compromise on pricing and other issues,” added Rughwani.
The industry need to adopt a ‘wait and watch’ strategy to discover the complete impact of an agreement of this magnitude. But in the meantime, regional partners must evaluate the current situations thoroughly and identify areas of opportunities, in order to be prepared for any kind of outcome.
Rughwani further added that channel partners need to identify the strengths and begin working on services and products that will be competitive when the markets open up.
“The Iranian market operates in a very different way to the UAE or indeed other markets and by best understanding those nuances, one is better able to see the relative advantages and disadvantages to the many approaches to the opportunity that Iran may offer,” added Lockie.
