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. Last Updated: 07/27/2016

Apple Splits With Local Distributor

Apple Computer Inc. has split from its official Moscow representatives in a business dispute that the local office attributed in part to competition from gray-market imports

Jean-Jacques Maucuer, general manager of CIS Ltd. in Moscow, said Friday he ended his contract earlier this month to distribute hardware and software for the American computer maker because of Apple's lack of financial support for marketing in Russia and because of rising competition from gray sales.

"We were the 'supposedly' exclusive distributors of Apple computers in Russia and invested heavily in their marketing without any financial support from Apple," Maucuer said. "As a result others profited from it and could sell the same computers at lower prices."

Gray-market dealers could buy equipment in the United States at prices 14 percent to 17 percent lower than stipulated in CIS Ltd.'s contract with Apple, allowing them to siphon off sales, he said.

Apple's chief financial officer for Eastern Europe, Stephen Manus, told a different version, saying in a telephone interview from Germany that Apple had canceled the contract with CIS Ltd. because of "problems with the handling of business there." He refused to divulge what the "internal issues" were.

He added that the company is looking for another permanent liaison and said computers will still be sent to Russia in the interim through other distributors.

Apple's sales in Russia have steadily increased, with the January-June period this year 30 percent ahead of the equivalent period in 1995, said Maucuer. But its market share is still less than 2 percent in a country dominated by Hewlett-Packard, Compaq and other makers.

The Silicon Valley giant has lost hundreds of millions of dollars in recent quarters and its very survival has been called into question, although its latest performance under a new top executive showed improvement.

Theresa Wermelskirchen, an Apple spokeswoman in Munich, said it was "not true that CIS did not receive extra money from Apple" for the marketing of its computers.

But Maucuer said the conditions under which his company was working for Apple were "not satisfactory."

"Why would people buy from us if they can buy cheaper directly from the U.S. distributors?" he said, adding that in the last 12 months, gray sales equaled about 50 percent of his official sales.

But Wermelskirchen said the gray market could not explain why Apple annulled its contract, emphasizing that "in any country, you have problems with gray imports."

CIS Ltd. now will sell licensed Apple clones, Maucuer said.

Robert Farish, editor of the trade magazine Computer Business Russia, said he was not surprised to hear that Apple had disputes with its Russian partners, because it had already happened several times in the past.

"The fundamental problem with Apple is their business model," he said. "The function of exclusive distributor, which their Moscow representatives fulfill, was not compatible with their other function of doing the marketing for the computers. One's function is to make profit, the other is to invest."

But Manus said the new Russian partners will have to fulfill the same responsibilities as the previous ones.