A hidden market

Iran may not have the most glowing international reputation in the region. But, whatever is you think about its rulers, for its citizens life must go on, and with it business. Chris Fitzsimmons spoke to Cimatech’s Amir Kord about professional AV in Iran.

Amir Kord is the owner and managing director of Cimatech, a distribution and integration company based in Iran. The company is the exclusive distributor for DIS interpretation and conference solutions in the country, as well as being an authorised distributor for Panasonic professional business products.
Prior to starting Cimatech, Kord worked for 18 years for a domestic Iranian manufacturer of conference systems, before setting up his own business in the conference room market. Cimatech operates as both a distributor of its own brands, but also as a systems integrator.
“Originally we operated across all the main AV sectors,” he remarks. “I mean CCTV, TV Studio installations, conference centres and auditoriums. Gradually we narrowed that down to conference halls, auditoriums and CCTV and finally we moved totally into the conference room market because that’s where we did the most business.
“These installations are still involving the whole suite of AV products however. Everything from interpretation to video projection and video conference solutions are required.”
As is traditional for these this articles I asked Mr Kord what his strongest market sectors are.
“Well, I would say that most of the business belongs to the government. We do have some private universities here in Iran, but they also have a some kind of relationship with the government. The state is certainly our biggest client.”
What one needs to realise however is that the state controls most institutions, including the lucrative oil industry. This means that a lot of what would normally be corporate business, is also state business.
“All of its organisations, from hospitals and universities to the state ministries (oil and gas is a huge one) have lots and lots of conference halls.”
By his own admission, statistics are a little unreliable in Iran, but Kord believes that perhaps 500 conference centres nation-wide are completed each year. According to some other estimates, this number could even be as high as 1000, but it’s impossible to say with any certainty. All that he does know, is that every government building has a conference room of some description in it.
But what about the general levels of technology adoption?
“Well generally the basic stuff sells more, of course it does, but we do manage to sell a lot of the DIS high end system, the 6990. This is one of the most advanced solutions in the world right now.
“We do have a variety of customers, with a range of different ideas and budgets, but there is a general desire for high-end equipment. We do run into budget problems,  and sometimes they worry it can be too complex for users, but they are also image conscious and it looks very good for them.”
There’s no point in pretending that there aren’t a lot of preconceptions about Iran, and a lot of stigma attached to the country. With this in mind, I asked if Kord had difficulties securing imports.
“Basically, it’s not very difficult. It depends on the economic situation in the country, sometimes customs charge us more than the regular rate, but in general there are no limitations.
“Occasionally the government will say that we should support local manufacturers, so they push the state agencies to purchase from local manufacturers. In that case we have some problems, but even then there are ways around that we can use. Often in terms of features that are available on a product.”
One area where there are definitely some issues is with American-made products.
“When America begun its sanctions many years ago, the government passed a law banning the import of American products so of course that made it difficult. In general, we cannot use high end American manufactured products like complex microprocessors, but with something like a sound system there is less of an issue.”
And when there is an issue, there are plenty of other countries willing to fill the void. Interestingly neither Crestron nor AMX features in his staple product lists, however when there’s a need for automation or control he can turn to brands such as Taiden or Creator, from China.
However, China isn’t always that useful. Chinese imports of unbranded grey goods cause a problem for the whole market:
“They affect our business a lot. These no name companies are a problem. They put  the names or logos of famous brands on their products, or sometimes their importers add the logo themselves.
“Then they sell it a terrible prices. Some of the local manufacturers can compete, but these guys import Chinese components anyway to make their products. For distributors of European products it’s incredibly hard to compete.”
The Iranian government itself doesn’t seem to do much to combat these imports, although their have been noises made about increased inspections and a requirement for some certification.
However despite these obvious difficulties, Cimatech seems to do very nicely out of its decision to deal in more expensive equipment.
“We exhibited growth in 2009 in our DIS business, and I think I hit my 2010 target by April of this year. I actually believe that distributors of other European brands have been lacking in courage to come and sell in Iran, although that is slowly changing.”
And what about that international recession? Interestingly isolated as it is, Iran is also insulated against the storms of the wider world economy.
“If you don’t export you can’t be affected,” jokes Kord. “Also, our banks are tightly controlled and less indebted than the big international ones.”
It’s not all plan sailing however. In recent weeks another problem has arisen.
“In the past two weeks the exchange rate of the Iranian currency with the US Dollar and the Euro have been fluctuating a lot. The Rial has suddenly dipped by about 22%. Our market has been very, very unstable and most of our suppliers and other distributors chose to stop product shipments until it has calmed down.”
A quick glance at the currency exchange graphs confirms that from 21st of September the value of the Iranian Rial literally dropped through the floor vs the Euro, the Dollar and third key currency the Japanese Yen.
“Most of our professional video equipment comes from Japan, from Panasonic and Sony.”
Kord though, remains optimistic. He sees the present problem as a temporary set back, and expects his partners and customers to resume business as usual within a couple of weeks, once the currency markets settle again.
“Our main problem with this is the change in prices. Once we have agreed a contract with a government department at one price, it’s very hard to argue for an increase due to currency issues.”
Longer-term though, he’s not blind to the problems his country faces. Whilst Kord is resigned to international sanctions, and has dealt with them for many years, he believes that his government needs to invest to support local manufacturing. There is, he says, no shortage of qualified graduates and engineers. What Iran lacks is the infrastructure to build goods worthy of export.

Article Categories

Most Viewed