A la guerre comme à la guerre! - PART 1

SOME REVELATIONS ABOUT THE AFTERMARKET IN EUROPE AND ESPECIALLY IN EASTERN EUROPE:

PART 1:

INTRO

If you keep up with the contemporary business literature, you might be aware of the fact that there are so many resources that deal with hot business issues like competition, successful management, optimization, decision management. It is physically impossible to read all the books through and the only thing we do is we choose the books according to the title, references, cover, etc. For many of us the title should catch the eye so that we buy the book and plunge into it. The authors compete in choosing the “right” title: “Marketing Guru Guide”, “100 ways to sell better”, “Guerrilla War with Competitors” and a lot of others “eye-catchers”. What is really amazing is that there are a huge number of books that treat business like a war, a conflict of interests, a fight-or-die process. I grew extremely interested to find out whether it is true, whether the modern business limits itself to the old Latin proverb “Homo homi lupus est” (Man behaves like a wolf to a man). Probably, the updated version of the proverb would sound “a business is a wolf to competing businesses”.

What does this introduction serve for? It is a little example of showing how tough it is to be in business. Everyone doing business is convinced that it is a fight, a fight for customers, a fight for the market share, a fight for new technologies, a fight for any $, etc. and I agree that it is so if you want to succeed in business of nowadays. Our industry is not an exception. What is more, printing consumables market is a scene for outstanding events and unheard-of plots. But let us base our thought on concrete facts and solid analysis.

Not much time ago (actually, one-two years ago) a lot of internet news portals covered a hot issue: an OEM (I will not use names, as everyone concerned is quite aware of what the word goes about) won a court trial with a known recycler in Great Britain. The reason for filing a suit against the recycler was that the OEM found presumably that the recycler was importing empties from China, refilling them with high-quality toner, repairing certain parts and selling as absolutely compatible consumables to the OEM’s printers. The “evil” tongues said that the quality of these compatible cartridges was not in the least inferior to the quality of the OEM ones (around 95%). But the price was 30% lower. That was the main “hidden” reason why the OEM filed a suit, made the company close the importing channel of empties and stop selling compatible cartridges for their OEM printers. The trial went on under the main accusation: infringement upon the trade mark and deterioration of the product image on the market. This time the OEM won, the recycler had to surrender.

A couple of months ago another well known OEM initiated a suit against an American recycler for the same reason: sales of compatibles consumables at half the price of the OEM. I do not cite the reasons that were evocated as the principal ones, but they are similar to the case above. But in this situation, the American court did not recognize the OEM’s claims. The court just announced that the recycler and the OEM act on a market, which respects loyal competition. So, the recycler went on working “unscarred”.

The third case occurred 3-4 months ago now. You might have heard about the German office of a South Korean company that was brought to court by a well known vendor.

Such trials occur rather often lately. OEMs stand their ground and do their best to push recyclers off the market. There is no secret that OEMs follow their strategy: the equipment they sell is usually sold at 50-60% of their real cost, the main bulk of profit coming namely from consumables. Now any user without special knowledge in the sphere of printing equipment realizes that to buy a printing machine is one thing, but to supply it with necessary consumables is quite another much more expensive thing. Consumables are the profit for OEMs. At the beginning this strategy: “we sell cheap equipment and consumables will cover the loss” seemed unbeatable, OEMs were the kings of the hill. They only had to compete amongst themselves and, believe me, it is easier to compete on a market, where just 5-6 companies are really strong. Once you reduce the price and increase the quality of the products, you are ahead of the competitors for a period of time. Once you launch an aggressive advertisement campaign you grab another share of the market. But this paradise lasted until the moment recyclers “cockroached” on to the market. Yes, this is the word that OEMs use regarding this segment of companies: in their eyes recyclers are “cockroaches” that eat up quite a large piece of the pie called “market of consumables”. That was the beginning of the war that has been started a decade ago and turned out to be a real battle in present.