April 18, 2006
In other trivialities, on business practices
Well, nausea does tend to keep one awake, and I was just reading the North African - I mean Maghreb - business press to keep up on new developments there (as an aside, I want to note how astoundingly seperate the business press and communities tend to be, between the Maghreb and the Machreq -when I say Machreq mind you I mean everyone from Egypt East (like most Maghrebines IMO). It's astounding how little the two world's interact, despite the "Arabness" - look at MENAFN (MENAFN.com), it's really MachreqFN, and that's typical.).
I came across a thoroughly irritating item (well in rereading it's not so irritating, but it quotes some people I know and loathe) on payment delays and problems in an ordinarily fairly strong publication that includes this comment: «Pourquoi Marjane ou Acima, par exemple, qui vendent cash, imposent-elles à leurs fournisseurs des délais de 90 jours ?» et il ajoute : «Comment refuser, sous peine de ne plus être référencé chez la grande distribution?».
[loose trans: Why do Marjane or Acima [NDLR: supermarket chains], for example, which sell on a cash basis, impose on their suppliers a 90 day delay? And he added, "How can one refuse, under penaly of no longer doing business with the major distributors?"]
What's irritating in the article and this particular quote is confusing non-payment and elastic payment practices - i.e. you're supposed to settle in 90 days and you do so in 120 - and big firms squeezing small supplies on freely agreed on terms. Market terms. Sure, 90 days sucks - but the question is not are the supermarkets imposing 90 days in the contract - which is entirely legal as recall - but rather are they paying according to contract?
The problem is not so much the contracted term of payment (again, yeah, 90 days sucks, but if it's legal then ... well either negotiate better or lump it) but whether the firms are paying according to contract.
The real problem is not the big firms squeezing - although there are certainly competition issues in Morocco and Tunisia, and.... well the whole Arab world, but let's leave market liberalisation and faux liberalisation aside for a moment - but when the firms, big or small, consistently pay no attention to contract and pay whenever the fuck they want to.
So you get the elastic payment schedule, rolling delays and a lot of inefficiences that lock up working capital. You also undermine contracts, create endless logjams of distrust, etc.
Now, getting to the fucking of the little supplier, well, of course faux liberalisation and the rather nasty effect of monopolies or oligopolies in cahoots [odd word, but I like it] with the regime on hand has a nasty effect on competition and all the benefits it is supposed to bring.
Which is to say, it rather undermines what the free market is supposed to be doing for the economy.
But, on the other hand, what can one expect in a region where every damned article contains the phrase En France, il y a as a key point of reference.
Posted by The Lounsbury at April 18, 2006 06:30 AM
Filed Under: Biz - Private in MENA
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Prompt payment discounts not extended, or not enticing, or "domino effect" make such not feasible?
Posted by: blown cue at April 19, 2006 11:39 PM
Why do Marjane or Acima [NDLR: supermarket chains], for example, which sell on a cash basis, impose on their suppliers a 90 day delay?
Stupid question. Because they can. Does wonders for the balance sheet.
I believe the 90+ day payment thing is endemic throught the Mediterranean. That's how business is typically done in Italy, for example, even in the north. Once something like that gets entrenched in the business culture, it's pretty hard to get rid of it.
Posted by: Anonymous at April 20, 2006 01:47 AM
Excactely, the question really irritated me. 90 days if they are paying on time is not entirely terrible. 90 days with rubber deadlines it 360, well that's another matter.
Posted by: The Lounsbury at April 20, 2006 04:19 AM
Forgot to answer blown cue, short version. No. Other incentives rather larger.
Posted by: The Lounsbury at April 21, 2006 05:21 AM