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Download Polyphonic Ringtone: Instrumental Bahut
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BenQ Mobile UK Collapses As Owner Withdraws Financial Support
The total collapse of BenQ Mobile UK seems certain now, after Administrator PricewaterhouseCoopers began to lay off staff on the back of a bleak trading outlook. Unless there is a dramatic change in fortune, the remaining staff at the UK subsidiary look likely to out of employment by Christmas.
With Major Backers, What Went Wrong?
The UK Mobile Company was formerly part of the massive Siemens conglomerate, but was recently sold to Taiwanese electronic company BenQ, in what many hoped would signal an up turn in the company’s fortunes. While the Group had struggled under the ownership of Siemans, the much hoped for recovery in sales did not materialise under the new owner. A few market observers were surprised that Siemans was able to sell the loss making subsidiary, and detach itself from any liabilities.
BenQ were involved in the Research and Development of mobile phones, together with the Manufacturer, Marketing and Sales side. This is perhaps where the problems lie, as the group was too diverse and unable to stamp its authority on any particular area of the market. This is a little surprising bearing in mind they were a subsidiary of Siemens for many years.
The collapse of the UK division was a direct result of BenQ withdrawing financial support for the German Division, which was used to supply the UK division with products. This had a knock on effect, and BenQ soon realised that the UK side was now untenable. While
support has been withdrawn, the UK division still have a number of orders and contracts to fulfil, they have been ordered to fill these by buying stock direct from BenQ Taiwan.
Initially there had been hopes that the BenQ Mobile UK division could have sourced merchandise and services form the Taiwan owner direct, and continued to trade as normal, but for some reason this option never materialised. There has been some mummers of discontent in the UK subsidiary, as they appear to have been kept in
the dark for some time, with little assistance or guidance from the Group Head Office.
What Next?
The news of redundancies is really the final nail in the coffin of the UK Subsidiary, and any hopes of a recovery in business have been quashed. The Company only have a small amount of handsets on site, and while more were expected to be supplied from Taiwan, this has not happened.
This whole saga has taken a surprising turn over the last few days, after Siemens announced plans to issue 25 Million Euros to support the retraining and re-education for workers from the BenQ German Division. This despite that the fact that they have no legal obligation.
There has been a furious reaction to this in the UK where Siemans have announced no such support for victims of the demise of the UK business. They have repeated their Legal position, which means that they have no obligations or liabilities in relation to BenQ Mobile UK. However, Siemans have offered to consider Ex-BenQ employees for positions at UK Siemans.
Conclusion
To many in the market, this is the perfect example of a smaller player being squeezed out of the market, and cast aside as a non-core asset Prior to the announcement of financial support being withdrawn in Germany, there were no indications that business was so bad in the UK. The resulting confusion obviously had an impact on the Company’s business partners and customers, which would not have helped business in the run-up to the vital Christmas period.
The UK market is undergoing a major shift in power, with the recent Vodafone decision to move from CarPhone Warehouse to Phones 4U set to change the landscape of the UK mobile phone industry. With the larger companies suffering from margin pressure (predominately because of Regulator interference) it seems only a matter of time before we see more of the niche / smaller players disappear.
Many of the larger operators are looking to pass some of their margin pressure on to the supply market, and for many smaller / niche players the Christmas sales period will be vital. Unfortunately for some, this Christmas may be their last...........