Consumer electronics manufacturer TOUCHMATE is poised to launch a new range of mobile phones, PCs, IT peripherals and consumer electronics products, expanding its already extensive portfolio to over 650 products.
According to the company’s managing director, Vasant Menghani, the new products represent the cornerstone of Touchmate’s strategy to establish itself as a one-stop shop for resellers in the UAE’s burgeoning consumer electronics channel.
The company plans to expand its portfolio of consumer electronics products to more than 200, while its new range of mobile handsets will boast impressive features such as mp3 players and digital cameras, despite being competitively priced at the lower end of the market.
“We will launch our mobile products in the market next month,” Menghani says. “I’m not focusing on gaining the biggest market share or taking on the major players. Instead we are aiming to increase the brand equity of TOUCHMATE in the Middle East.”
Founded in 1988, the TOUCHMATE brand is owned by Quality Gulf, a UAE-based company with head offices in Dubai and a distribution base in Jebel Ali Free Zone (Jafza).
Since the launch of the TOUCHMATE brand, the company has enjoyed rapid expansion across the region, forging strong partnerships with major retailers as well as through distribution partners and the resale channel, where it has performed particularly well.
Menghani explains that the TOUCHMATE brand appeals to channel players who are looking for a complete solution to their supply problems. By dealing with TOUCHMATE, resellers and distributors can source a diverse range of products under a single contract thus avoiding the issues of dealing with multiple suppliers.
“The diversity of our product portfolio is a massive bonus to resellers coming from other Middle Eastern and African markets. Many of these companies come to the UAE in search of supply deals through the resale market, often in the free zones, and find a host of specialised technology vendors offering different products either on an OEM-basis or through maintaining a specific brand,” Menghani says.
“These companies are looking to build a certain product portfolio and may be looking for a range of IT, peripheral and consumer electronics items. They come to the UAE and find that dealing with multiple suppliers complicates their supply chain, as they have to draw up numerous contracts and negotiate multiple integrated deals.
“TOUCHMATE bypasses all of this. We are a single vendor with a product portfolio broad enough to deal with whatever needs they have. One contract, one supplier – it’s much more simple and conducive to business.”
Partners in China, Singapore and Taiwan manufacture TOUCHMATE products, with the former being the major hub for these operations.
TOUCHMATE iPod speaker system.
OEM deals
The company has an office in China that acts as a conduit between the head office in Dubai and the factories; a relationship that Menghani describes as mutual in its aim of reducing manufacturing costs while providing an avenue for developing new and diverse products.
“We work with the factories at every level of the production process – reducing costs, changing packaging to suit buyer demands and modifying the basic features of different products. The latter is essential given our strategy of providing buyers with a high degree of customisation,” says Menghani.
TOUCHMATE MD explains that the company has built a strong relationship with its manufacturing partners, particularly in China, and that this enables it not only to modify the products but manipulate pricing in order to protect channel margins and cater for short-term price drops such as those associated with retail promotions.
“We have a very good rapport with our manufacturing partners since we provide so much business to them. Sometimes I will ask them for an exceptionally low price on an order relating to a particular promotion or to satisfy the short-term needs of an important channel partner. Deals like this may not be beneficial to the factories in terms of their margins but they will normally agree to the rate because they recognise the nature of the business and the long-term benefits associated with working with us,” Menghani claims.
TOUCHMATE also invests in its own research and development initiatives as well as being involved in a number of joint ventures in China, helping to finance factories that produce its products.
“We are not only an OEM brand,” explains Menghani. “We have our own design department here in the UAE that specialises in TOUCHMATE-branded products and liases with our Chinese manufacturing partners who look into the feasibility and associated costs of manufacturing these products. We then negotiate on the price and exclusivity and work out packaging and aesthetic options. This process is very flexible.”
TOUCHMATE products can be found in Carrefour, Geant and Union Co-op hypermarkets across the UAE in addition to 18 dedicated TOUCHMATE showrooms.
Carrefour recently approached TOUCHMATE with a request for cheap LCD monitors in a bid to ‘crash’ the market, Menghani says, adding that the company was more than happy to oblige.
“The market at the moment bottoms out at around US$190 for a 13-inch screen,” he explains. “Dealers are working on US$2.00 to US$4.00 margins for these kind of units but we can offer discounts of up to US$25 thanks to our ties with the manufacturers in China.”
TOUCHMATE boasts a presence in 54 countries worldwide, covering the entire Middle East and five countries in Europe, serviced directly through its distribution hub in Dubai’s Jafza. It also has plans to enter the Indian market, although no timeline has been set.
“ Saudi Arabia is our biggest market in the Middle East while we are also dominant in Syria, Lebanon and Jordan,” Menghani explains.
“We have managed to be successful in markets that boast high levels of price sensitivity. We can compete on this level in any market – even Egypt with the high import tariffs.”
TOUCHMATE UAE operation includes a PC assembly plant in Aweer and six warehouses.
The company is currently building another assembly plant for its notebook line based in Jafza, which is expected to come online in October or November with an initial capacity of 1,000 to 2,000 units per month.
TOUCHMATE product portfolio includes digital cameras.
Exclusive distributors
At present, Touchmate works with exclusive distributors on a country-by-country basis in the Middle East.
However, with the expansion of its product portfolio, highlighted by the launch of its mobile phone range, it will be seeking to expand these channels on a country specific basis depending on the nature of its existing partners.
“We have individual distributors in each market but now we feel that our range is becoming too diverse for sole distributors to cope with in a lot of cases, especially with the launch of our mobile phone range,” Menghani says.
“Many of our distributors are IT-focused and the mobile market is very competitive so it requires a lot of commitment in terms of time and marketing. We are reviewing our current network of distributors; we will keep working exclusively with those that can manage our entire product portfolio.
“However some do not have the experience or the resources to deal with our less IT-focused products so we will negotiate with them to establish channels for these products with new partners.”
Menghani does however stress that Touchmate will cooperate with its current partners to ensure that there is no “unhealthy” competition in the channel.
“We take care of our distributors since they are our key link to the market,” he says. “There will be a clear distinction between the product portfolios of any multi-distributor set up.”
Menghani says that the company will focus on its notebook and consumer electronics ranges as the key areas for growth in the coming year. He adds that expanded connectivity will be a key feature of the new products. Its entire audio range, for example, including in-car stereos, will feature USB and flash memory connection ports.
“We are targeting major growth over the next five years,” says Menghani. “In the last two years, we have increased our profits by 35% and turnover by 40%. We have succeeded in creating brand awareness in the market both among consumers and channel players. This awareness will help us launch our mobile phone range.
“Our point of difference in the handset market will be low prices combined with highly specified feature sets. We are aiming to enter the market in the US$80 to US$100 price range for a handset equipped with MP3 player, digital camera and FM radio.
“Low-end mobile handset vendors don’t have our technology. I’m targeting high-end mobiles at a low price – that is the key to our strategy,” he adds.
This strategy of superior price positioning combined with high-end features should help Touchmate successfully carve a niche for its mobile range, particularly in emerging markets.
However it will struggle to establish high-end brand equity and therefore will not compete directly with major, multi-national vendors such as Sony and Motorola, for the premium mobile market.
Yet, with the latter recently trumpeting the success of its own entry-level range, there is a chance that Touchmate could attract consumers keen on gaining additional features at low prices.
The key to Touchmate’s strategy could lie in the capabilities of its channel network; if it succeeds in gaining a strong retail presence in appropriate outlets then it should gain the attention of less brand-conscious consumers. The review and expansion of some of its distribution networks is the first step in this process.
Meanwhile, the expansion of its consumer electronics portfolio with a strong focus on convergence technology should prove a boon to channel partners looking to source competitively priced products and develop customised technology packages for the retail market.