Creative feels channel pressure

Johannesburg, 08 May 2001

A falling out between local distributor Rectron and Creative Technology, proprietor of the Soundblaster brand, is apparently rooted in a change in global economic conditions and a perceived slow-down in demand for PCs.

Rectron yesterday said it had abandoned the Creative range of products, which it had been distributing locally for little more than a year, citing "poor quality and outdated technology".

"Many of the Creative products are not manufactured by Creative," says Rectron CEO Mark Lu. "Their optical storage, graphics cards and modems are all manufactured in Taiwan and just branded Creative."

However, local representatives for Creative, which is based in Singapore, say the company decided to maintain only one distributor in SA, as a global slow-down in demand and the size of the South African market made two distributors unviable.

Sales manager Gordon Buitendach says there were also other reasons for the decision, but refused to give further details.

Lu says he contacted Creative management in January to raise concerns about the state of the local market, "stingy" recent marketing and product quality. But pricing is what it comes down to, he says.

"The end-users wouldn`t mind paying the brand premium if the quality was still there, but it is not." In the area of sound equipment, he says, buyers prefer motherboards with onboard audio chipsets, often supplied by Creative itself, to the more expensive soundcard option. "That is the trend."

Memtek-MMW, which has handled Creative products since 1989, agrees that multiple local distributors are probably not viable.

"We didn`t feel the market was sufficient for two distributors, and would have had to re-evaluate our position if there were more than one," says Memtek product sales director Greg Mommsen. "It would probably not have been worthwhile for anyone to continue without sole distributorship, not for us or for Rectron."

Mommsen says MMW is excited about the prospects for Creative in South Africa and that the product quality is "fantastic", but describes Creative as "a tough company to deal with, with tough targets".

In March, Creative Technology announced that it would retrench 10% of its workforce and close its US manufacturing plant due to poor economic conditions.