The Changing Face of Distribution and Acquisition
Demand for entertainment technology grew significantly throughout the 1960s and 1970s, in parallel with the evolution of popular music, cinema, television and associated mediums of the time. In these two decades a substantial number of Australian organisations produced innovative, high quality entertainment technology, particularly in live entertainment presentation, resulting in a significant proportion of production equipment being sourced locally, aided by a high tariff protection regime. At the same time a considerable amount of engineering innovation was exported, but very little finished product made its way overseas. The management and marketing capability of our industry at the time did not match that of its creative potential, and we certainly weren’t assisted by our geographical position in the world. However, these skills would evolve but focused on incoming as opposed to outgoing trade.
Today technology is constantly converging, borders are few, unethical practices common, box shifting rampant and the world is but a few days away, with good and bad information at your fingertips anytime, anywhere. Therefore, based on fact, opinion and the consensus in feedback, let’s consider the current trading environment in generalized terms. We begin with off-shore acquisition realities, then conclude with a review of practices and attitudes that distributors may wish to consider in satisfying the expectations of acquirers.
The importer distributor, authorized to represent a manufacturer is deemed in law to be the agent and the manufacturer for accountability purposes in domestic litigation resolution. The agent’s responsibility is not limited to sales and supply but includes accountability for corporate and technology performance criteria such as warranty, compliance with Australian law including safety, electro-magnetic emissions, wireless spectrum parameters along with any other legislation relative to specific goods and services. In the event that technology represented and supplied by the authorized distributor causes death, injury, property damage or undermines a client’s business activity, they are usually deemed responsible in an Australian court of law. This is the reason a bona-fide distributor carries upwards of AUD10 million (usually AUD20 million) public and property liability insurance cover. The above can be viewed as the non-negotiables. However, a distributor is also responsible for the service, support, and general reputation of the technology and company they represent, the standard of which will inevitably be judged by the market place.
Those who choose to directly import through unauthorized off-shore sources should understand, they are deemed to be the factory in Australia. Therefore, the responsibilities and accountabilities mentioned above will fall to them, and reports of unsafe and non-conforming (illegal) technology are growing, that’s the first bit of jeopardy in unauthorized off-shore acquisition. The next is warranty and there are very few, if any effective international warranty arrangements. Reports from unsuspecting acquirers of unwarranted, unsupported and unserviced technology are growing. Next, the risk of acquiring forgeries is increasing, knock off product is no longer limited to microphones. Involvement in the receipt of technology subject to IP theft not only delivers sub-standard and dangerous technology but may attract the attention of the rightful owners and investigating authorities.
The pitfalls of unauthorized importing are clear; however, some acquirers feel compelled to do so citing unreasonably high local pricing compared to international markets, unacceptably long lead times (particularly critical parts), along with poor service, support and technical understanding. One could go on, but this in itself is quite a litany of concerns and are the common threads of dissatisfaction expressed by acquirers. There is a cost to service, support and the mandatory insurances and securities required to underpin and protect local trade, not borne by the off-shore supplier, but the tradeoff should be moderate, if any. One would suggest that distributors review pricing policies to reflect sustainability for all parties. It is a fair expectation that distributors understand and be willing and able to competently present the technology and philosophies of the producers they represent. All technology should be subject to a satisfactory local service capability in both quality and time lines, supported instantly be core spare parts and rapid turnaround of non-core componentry. The inaugural ACETA Convention highlighted an industry skills shortage, a lack of staff training and insufficient client education. ACETA have and will introduce programs to support the membership on this crucial subject, however, in preserving sustainability, all distributors would be well advised to give consideration to these developmental issues.
Our industry is demonstrably best served by acquisition through authorised local supply chains, for all the above-mentioned service, support, security and insurance reasons. However, the local supply industry has to meet the needs of the acquirer and earn their margin, most acquirers are happy for the supplier to make that margin providing they ‘value add’ and this seems to be the issue in some instances. As usual it is the few that give momentum to the preceding narrative, but it will serve us well to constantly examine and seek improvement. If you are truly invested in the industry, committed to development and aspire to high standards, ACETA is for you, because that’s what it is all about.
All the best