RUI ap, the Moscow-based company with sole distribution rights for Apple Computer Inc in Russia, has been bought by Data Fox AG, a privately owned Swiss company. The sale follows pressure from Apple, which was dissatisfied with the level of investment RUI made in distribution and marketing. RUI is also the independent marketing consultant for Apple in Russia which means all dealers in the former Soviet Union must purchase from RUI, rather than from Apple Europe. An independent marketing consultant also takes the responsibility for all Apple marketing. RUI also has the same rights for the Czech Republic, operating there as TIS. Under sale marketing rights in Russia and the Czech Republic have been transferred to Data Fox. The size of the sale, which took place in July, was not disclosed. In 1993 RUI had a turnover of $11m, TIS $10m. Data Fox is owned by Albert and Rudolf De Herr and is the holding company for Mac Cash, an Apple retail chain with a turnover of $23m in 1993. RUI chief executive David Krauskopf says RUI never had enough money to satisfy Apple it was fulfilling its side of the contract.
‘We ran out of money’
After only six months of the company starting business here, Apple turned up the heat on RUI, demanding more investment. RUI did not have the money – they invested all they had. Krauskopf adds that marketing soaked up all the company’s capital such that it never operated at a profit. Apple began pushing RUI to sell its business in early 1993. Some of Europe’s largest distributors – CHS Electronics GmbH and CompUSA Inc entered negotiations but decided not to buy. According to a spokesman for Apple Europe it was primarily Data Fox’s financial strength that appealed to Apple. It’s obvious in Russia that you need to use a lot of capital to sustain growth. This was the main problem with both the management and the board of RUI and TIS, says Jean Paul Regal, business development manager at Apple Europe. Krauskopf says he is confident the new owners will retain the existing management. Regal says Apple supports this. Vladislav Ulendeyev, general director of Apple master retailer Lamport, says the sale is unlikely to change things for dealers. But the sale raises serious questions about Apple’s Russian strategy. It has appointed two independent marketing consultants and both relationships have been unsuccessful. In 1992, Intermicro was stripped of the independent marketing consultant mantle for selling direct. RUI was forced out of its position for under-investment. However, viewed from the outside it appears that Apple has simply been unable to focus its corporate mind on Russia and this has led to fundamental misunderstandings with its Russian marketeers. At the time of the break with Apple in 1992, the then technical director of Intermicro, Anatoly Karachinsky, said that Intermicro was under the impression Apple was itself committed to sharing some of the costs of developing the virgin market. He also said that the inability of Apple to communicate with Intermicro was the principle reason for choosing a US company to handle Russian distribution: For greater success, Apple must co-ordinate its strategy to take account of the specific factors of this market. If Apple had a long-term strategy it would not hide, ostrich-like, behind a team of American managers, an approach that enables it to continue to ignore the particular problems of the Russian market, he said. Karachinsky is now general director of IBS – the sole distributor of Dell Computer Corp computers in Russia. When RUI failed to improve the Apple market position sufficiently, Apple immediately began to threaten RUI with the removal of its independent marketing consultant status. Krauskopf says Apple considered buying part of RUI itself, but this is denied by Regal. Krauskopf says the Apple bureaucracy has been slow and sometimes difficult to deal with. He also admits RUI did have too many US staff at the outset, making it less likely the operation would be profitable or effective. However, he denies there was any flaw in the independent marke
ting consultant concept in Russia. In effect there is little difference with a wholly owned Apple representation – since these also have to reach sales goals, he says. However in Russia the view is that the independent marketing consultant concept is something of a no-win compromise. Either a company should set up a representative office here and provide distributors and dealers with the right kind of logistical and marketing support, or have enough faith in a local company to organise this as it thinks best. Appointing a third party company that must bend over backwards to satisfy the changing whims of Apple is not a solution.
