Parallel importing
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Parallel importing is a way for companies to import and sell products in a country without the permission of the brand's owner. It is a way for companies to get around the restrictions put in place by the owner of the brand. This can be done by importing a product from another country where the brand owner has authorized its sale but at a lower price.
Parallel importing can be beneficial for consumers as it allows them access to products that they may not otherwise be able to purchase. It also provides competition in the market which can lead to lower prices and better quality products. Additionally, it provides entrepreneurs with an opportunity to enter the market and compete with established brands.
However, parallel importing can also be detrimental to the brand owner. It can lead to a loss of control over the price and quality of their products, as well as a decrease in profits. Additionally, it can lead to counterfeiting and other illegal activities. Furthermore, it can lead to confusion among consumers as the products may not be the same as those sold by the brand owner.
Example of Parallel importing
An example of parallel importing would be a company in the United States importing a product from China, where the brand owner has authorized its sale, to sell in the United States at a lower price. This could be beneficial for consumers as they would be able to purchase the product at a lower cost, while providing competition in the market. However, this could be detrimental to the brand owner as they would lose control over the price and quality of their product and could suffer a loss of profits.
When to use Parallel importing
Parallel importing may be a suitable option for companies that are looking to access and sell products in a country where the brand owner has not authorized its sale. It is also a good option for entrepreneurs who are looking to enter a market that is already dominated by established brands. Furthermore, it can be beneficial for consumers who are looking for access to products that may not be available in their own country.
In addition, parallel importing can be used when the brand owner has set restrictions on the sale of their products, such as minimum pricing or exclusive distribution agreements. By importing products from other countries, companies can access these products without having to adhere to the restrictions set by the brand owner.
Finally, parallel importing may be a good option for companies that are looking to lower their costs. By importing products from other countries, they can take advantage of lower prices, allowing them to reduce their own costs and improve their profit margins.
Types of Parallel importing
There are three main types of parallel importing:
- Direct Parallel Imports: Direct parallel imports involve a company buying a product from another country, without the permission of the brand’s owner, and then reselling it in the same country. This is the most common type of parallel import.
- Indirect Parallel Imports: Indirect parallel imports involve a company buying a product from another country, without the permission of the brand’s owner, and then selling it in a different country. This type of parallel import is less common, as it involves navigating different legal systems and regulations.
- Unauthorized Parallel Imports: Unauthorized parallel imports involve a company buying a product from another country, without the permission of the brand’s owner, and then selling it without the permission of the brand’s owner in the country of origin. This type of parallel import is illegal.
Steps of Parallel importing
Parallel importing involves a few steps:
- First, the importer must locate a source of the product from another country. This can be done by searching online or through contacts in the industry.
- Next, the importer must obtain the necessary documents, such as an import license, to ensure that the product is allowed to be imported into the country.
- After that, the importer must arrange for the product to be shipped to their country.
- Once the product has arrived, the importer must arrange for it to be distributed to retailers and consumers.
Advantages of Parallel importing
Parallel importing can provide several advantages for consumers and entrepreneurs. Firstly, it allows consumers access to products that they may not otherwise be able to purchase. Additionally, it can lead to lower prices and better quality products due to increased competition in the market. Furthermore, it provides entrepreneurs with an opportunity to enter the market and compete with established brands.
Disadvantages of Parallel importing
On the other hand, parallel importing can also have a detrimental effect on the brand owner. It can lead to a loss of control over the price and quality of their products, as well as a decrease in profits. Additionally, it can lead to counterfeiting and other illegal activities. Furthermore, it can lead to confusion among consumers as the products may not be the same as those sold by the brand owner.
Parallel importing comes with certain limitations that must be considered. These include:
- Unauthorized use of the brand owner’s intellectual property: Parallel importing can lead to the unauthorized use of the brand owner’s intellectual property, such as trademarks and copyrights, which can lead to legal action.
- Quality control: The quality of the product may not be the same as the one sold by the brand owner, as it has not been subject to the same quality control processes.
- Consumer confusion: The products imported may not be the same as those sold by the brand owner, leading to confusion among consumers.
- Loss of control: The brand owner may lose control over the price and quality of their products.
These are other approaches related to parallel importing:
- Gray marketing: This is the practice of reselling genuine products outside of the manufacturer’s authorized distribution channels.
- Arbitrage: This is the practice of taking advantage of price differences in different markets by buying a product in one market and then selling it in another market at a higher price.
- Parallel pricing: This is the practice of selling a product in different markets at different prices.
Overall, parallel importing is one approach related to the importation of products, but there are other related approaches such as gray marketing, arbitrage and parallel pricing. Gray marketing involves reselling genuine products outside of the manufacturer’s authorized distribution channels, arbitrage involves taking advantage of price differences in different markets and parallel pricing involves selling a product in different markets at different prices.
Suggested literature
- Bilijan, J., Trajkov, A. (2016). Customs Risk Management - Time of Declaration Processing by Control Cannels. „Economy & Market Communication Review / Casopis Za Ekonomiju i Trzisne Komunikacije”, 6(1), p. 93–108.
- Bowering, G. (2018). Does e-commerce and the growing availability of trade data mean that the customs declaration may no longer be required? „World Customs Journal”, 12(1), p. 3–16.
- Keretho, S., Naklada, S. (2011). Analysis of export and import processes of selected products in Thailand, „ARTNeT Working Paper Series”, 103, p. 16-24.
- Krotov, I. (2011). Customs Union between the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation within the framework of the Eurasian Economic Community. „World Customs Journal”, 5(2), p. 133.
- Rhyne, A. L., Tlusty, M. F., Schofield, P. J., Kaufman, L. E. S., Morris Jr, J. A., & Bruckner, A. W. (2012). Revealing the appetite of the marine aquarium fish trade: the volume and biodiversity of fish imported into the United States. „PLoS One”, 7(5), p. 3.
