Grey or Parallel Importing – It hurts us all!

Posted by Adrian on August 19th, 2010

What are grey or parallel imports?

This is when an importer finds the same product over seas from a supplier and imports it directly bypassing legitimate local distribution channels. Dodgy sellers will do this as a means to pay less tax, get lower priced goods, or if they are unable to get access to normal distribution channels because they do not meet the requirements as an authorised reseller.  Parallel imports can quite often lead to sellers ending up with copies of the original product often without their knowledge.

Have you tried saving money buy purchasing a Cisco product on eBay from Hong Kong?  Have you asked yourself why it is so cheap?  One of the most commonly copied products is the Linksys PAP2T which is also imported and sold in Australia as a genuine product!

Here are some general rules to follow when purchasing your network/computer equipment to ensure you are purchasing legitimate equipment

1 – ask if the seller purchases from an Australian distributor

2 – ensure the product is brand new with Australian warranty

3 – make sure the product is delivered in brand new packaging with all Australian accessories

4 – after receiving your product if you aren’t sure simply contact the manufacturer within Australia as they can check any serial number for you

In Australia all computer parts and hardware prices are controlled to the point that if you are paying well under the odds, chances are pretty good you are purchasing a product not meant to be sold in our market place.  At Warcom we hear horror story after horror story… just the other day someone came to us because a SNOM M3 they bought from the competition which was sold as brand new but delivered in a brown box and with a UK power adapter!  When they confronted the company about issues with connecting to their legitimate Australian hardware they were told the problem is with them and they weren’t interested in offering too much assistance.

A company I previously worked for was trying to save money and purchased some PAP2T’s on eBay – 3 of them.  Of the 3 only 2 worked and we had to send them back to Hong Kong for a refund.  After all the time and money wasted on buying dodgy products to save money we ended up losing out and purchased directly from Warcom.

So yes, you might save a few bucks but in the long run you could end up spending quite a bit more – especially if something goes wrong.  As always, everything we sell is sourced from local hard working suppliers with full Australian warranties and brand new. No used yumcha here folks!

  • http://sdickinson.com Sam

    I think in many cases grey importing is justified. For example camera lenses. I picked up one recently for $2400 fully delivered (and genuine), whereas the local price is $3000. Why is there such a large markup. I could understand a couple of hundred dollars, but often the local companies price themselves out of the market.

  • Adrian

    I can’t comment on camera equipment as that is not my field of expertise. The amount of savings you are getting on your product works out like this *my best guess as a professional importer for my other business*

    $2400 AUD + GST + Import Taxes + ATO Taxes + Logistics / Import Fees = $3000.

    That is where the money is going – global ecommerce is growing and why wouldn’t you want to save $600. I would! Any registered business in Hong Kong pays $0 tax for all sales that result in the goods being shipped outside of the country. You however should have paid tax on the inbound as your sale was more than $1K. Did you pay your taxes/duty fees? If you did you would have seen that price go up a fair bit.

    This problem was resolved in Canada years ago to ensure the government gets their cut – anything that is over $100CDN is subject to every tax imaginable.

    My problem with grey imports is when Australian companies bring the product in and sell it as an legit gear when it isn’t. I’m all for saving a few bucks but only if it is a legit product.

  • http://sdickinson.com Sam

    Yes, admittedly, the company I bought from did a dodgy and labelled it as less than $1k. That would have added around $240 to the price. Import fees really shouldn’t add to the price as I’m already paying courier prices for delivery, and bulk import price should be much cheaper (per unit).

    But yes, it would be much closer to the $3000, but I still can’t imagine it would be quite that high. Even with sub $1000 items we often get screwed over by companies (look at the various companies that charge a premium for digital downloads just due to our location).

  • http://www.warcom.com.au Alex Hallett

    Its ok for camera Lenses, canon will honour warranty world wide on lenses. For body its a different story, Its only local warranty.
    Its not worth it on bodies, you can get them 2nd hand with local warranty fairly cheap!

  • http://www.warcom.com.au Paul Warren

    My problem with grey importing is that consumers expect retailers who sell ‘legit / locally sourced’ products to price match companies who grey import.

    For example.

    It’s next to impossible to compete with any of the guys who sell Logitech products online, because almost all of competitors, are not sourcing Logitech via local channels.

    Hence their buy price is cheaper, hence their sell price is also going to be cheaper.

    For consumers, this obviously isn’t an issue – unless of course there products dies, in which case you’re more than likely going to get the run around with warranty issues, whilst they send back your product, back to their overseas suppliers.

    - Paul.

  • Adrian

    There are heaps of duties and taxes importers have to pay to bring goods into Australia. Every product is a bit different. Anything textile adds 6%… the company pays 30% tax on profits…10% GST on grand total of sale.

    I don’t know about us getting ‘screwed’ by companies. Businesses don’t sit around thinking about how they can syphon more cash from the customer. They want to be able to offer the best prices and remain competitive. There are however many market forces at play that we don’t know about. For example – hourly wages for staff in USA/Canada are for lower than what they are in Australia. Say you pay a staff member $18/$19 hr.. plus super, plus 4 weeks annual leave in Australia you can get the same employee in Canada for $11/hr (even less I’m sure) plus two weeks annual leave. No superannuation… business tax rates may often be less.

    To put it simple – the cost of doing business in Australia is very expensive. Anyone who owns a business here can attest to that!

    As for digital downloads – I don’t get why the price varies so much. I can’t rationalise it as it is not a physical product. Just servers and bandwidth in the local country…

  • David

    It really comes down to economy of scale I suppose. For a retailer using locally sourced product, the option is always on the table to source product elsewhere – there’s always someone who will do bulk buys of a product cheaper. It’s probably worth the effort to source product overseas, particularly in cases where the manufacturer has a worldwide warranty.