The phrase “grey market” is about to get a word-of-the-day workout, with tech retailer JB Hi-Fi becoming the latest company to eye parallel importation as a survival strategy in the face of online competition from overseas. As The Register noted back in January, local bricks-and-mortar retailers are squeezed by manufacturers …
free trade agreements?
i thought we'd signed away a whole bunch of protectionism to get into a global marketplace. I know we've had this price gap problem for a long time, why is it this is still happening after we signed these agreements and became part of the 'global economy'?
I don't particularly get it, maybe someone who is a lawyer or economic expert could accurately explain what it is we are part of and the pro's and con's. I was under the impression one of the pro's for it was getting rid of regional market price fixing, obviously not.
I don't even know what we lost to sign up. Some seem to be spinning it as doom and gloom though, foreign interests buying assets from farms to roads over here, I don't know if its really a problem but I do wonder if we're getting the shaft, we've been the lucky country for a while so being the shafted country seems to be next, karma wise. ho hum
I Am Not An Economist
Free trade agreements are about governments not imposing tarriffs on imported goods as a method of protecting the local industry.
If you add 25% to the price of imported cars then the locally made ones will be cheaper and therefore sell more.
In theory, anyway.
What we are talking about here is international corporations hiking up their prices when selling to Australians *because*they*can*.
Then you have middleman importers who have the sole importation rights to a product range. They buy from the overseas manufacturer at already inflated prices, add a 30-40% markup of their own and then on-sell to retailers.
The retailers add their own markup and voila, your TV now costs double what they are sold for overseas.
It worked in the past because Australians had no choice but to pay the extra but these days the Internet has changed all that.
The problem is not a free-trade issue i.e. Australia loading unnecessary tariffs onto imports that make them expensive, it is an issue of distributors taking the piss. For example, global companies like Pioneer and Canon have local subsidiaries. These companies generally have the sole import rights for the Australian market as they are the warranty provider. Try fronting up to them, even Pioneer with an issue on a hugely expensive plasma screen, and you'll get told to shove your warranty issue up your arse (politely maybe). They didn't get a cut of the sale so you don't get the support. Right or wrong, who cares, it means they can hardly complain if I choose to forgo their warranty and opt for a cheaper price. Photographic equipment, and I guess any other niche area, is a similar story with local companies getting the import rights and charging such a high price that I can import from the UK cheaper.
All I can say is good on them. They'll have to supply a local warranty and if it means I can get offshore pricing plus a touch then I'm in. However if it ends up as offshore pricing plus a touch-up so they can fatten their profits then they're in for a rude awakening.
Liberating the supply chain
If the importer honours warranty requirements; meets laws regarding product safety, standards compliance and merchantability, then the "grey imports" will only damage the profits of the 200%-ers in the supply-chain who've grown fat on imports.
It means that the customer can get a better deal and the retailer gets a bigger slice.
"I know we've had this price gap problem for a long time, why is it this is still happening after we signed these agreements and became part of the 'global economy'?"
Because free trade agreements have nothing to do with what an importer charges for a product, free trade agreements have only to do with what the Government charges the importers for importing stuff. So obviously what we have here is that the government import tariffs get reduced, so the importer and/or retatailer increase thier take so the price stays substantially the same, driving people offshore to purchase goods at a reasonable price. It has a marked impact on a country like Australia where there are relatively few importers of goods so they can collude to keep prices high. And of course when the retailers try to go around these "official" importers they get accused of grey marketing.
The accusations of "Grey Market" here are just a slur form of what is really meant by "Global Free Market". Amazing how many self-claimed 'capatilists' creaming the current system get upset when the true concept of a free market is threatening to take away their un-earned gains.
Indeed it has been widely reported that nearly all of the currency benefits of the strengthening Aussie dollar were sucked up by the importers/distributors and never made it anywhere near the customer end of the chain. Anything that removes this fat from the system is welcome. Australians have been getting shafted in retail for far too long.
Software sellers (e.g. VMWare & Adobe) are even worse.
There is often a premium for licenses of software that can downloaded when you buy it in Australia. The premium is such that even for a single package it is cheaper to buy a VPS or VPN in the USA and purchase the software than purchasing it in Australia.
No excuse for shipment costs.
This week I received a camera that was bought in Australia by an insurance company. The supplying company retails said camera for $599. The price to the insurance comapany was $510. A grey import company that I have previously bought camera's from sells the exact same model for $333 and that includes tracked/priority delivery. Last time I bought from them it was 4 days from Hong Kong. Sure I can't send it to the manufacturers agents in Aus. for warranty service. But nonetheless I can still send them to an Aus. agent for service. I can't afford the Aussie price at that rate.
Does the Reg permit you to reveal the name in the way of performing a public service?
Having looked at cameras recently, it would be reasonably easy to find examples for Canon, Sony, Nikon, Panasonic, <pick another brand>, ...
My opinion is for a $500 camera if it dies in 18 months, the warranty will have expired anyway and for the 50% I've saved I could buy a new one.
Here I was thinking this was going to be an article telling us that JB had decided to grey-import the Galaxy Tab. Now that would have been cool - a retailer standing up to Apple and saying they're going to sell both products anyway. After all, the retailers are being hurt by this injunction too!