Sometimes you may have concerns about the quality and the legitimacy of your products? Well, I would say perhaps all the time. No matter as a seller or buyer, these two are determinants to have the products.
According to McKinsey & Company's latest report, small and medium-sized enterprises(SME) have been the European economy's backbone, accounting for more than two-thirds of workforce. While after COVID-19's hit, they've been in their own crisis as well.
As for the international trade industries, to survive would be depending on the certainty of the highlighted determinants in the first line. That's also one of the reasons that we've organized and summarized the journey for you.
We hope you enjoy and get useful insights.
What are parallel import goods?
By definition, it refers to a product that is sold directly in an area without a proper sales agent in that area. Therefore, parallel imports are not illegitimate products. However, since there is no official sales agent, the after-sales service is often not guaranteed, and the product drivers, manuals and language versions of the operating system, and even the construction of the power plug and operating voltage is often different from the sales region. Sometimes, in order to survive, the agents of licensed goods will take to combat parallel imports, such as the parallel goods do not provide warranty and after-sales service, which is the most common trick.
While in that case, it doesn't mean that it's not AUTHENTIC. Parallel import products have the same quality, manufacturing process and origin. The only difference is that it's coming from no sales representatives, and this fact means much lower costs.
There're five common misconceptions as the followings:
- [Myth #1]
Parallel goods can include anything from appliances, cell phones, computers, cars, clothing, toys, watches, cigarettes, milk powder, etc. Some people think that parallel goods only refer to mobile phones, which is also incorrect. - [Myth #2]
From legal considerations, parallel imports are not allowed to be sold in the country, as they are still essentially smuggled products. In fact, whether it is parallel imports or licensed goods, are produced by regular manufacturers. Parallel goods are not counterfeit products. - [Myth #3]
The earliest concept of parallel goods, which originally referred to smuggled goods transported by waterway, used to also refer in general to goods sold in foreign trade by irregular and improper means. However, this obsolete concept is outdated and incorrect. Parallel goods are not smuggled goods, but that the product in a country or region without the original manufacturer of the designated sales agent. - [Myth #4]
There is no warranty for parallel goods is the wrong concept, taking phones in China, some domestic mobile phones are coming through Hong Kong to provide regular machine playing invoices, then the phone can enjoy the same warranty service in mainland China, but the price difference between such goods and domestic licensed goods is not huge, depending on where you buy. - [Myth #5]
Many people think that parallel imports are fake and cottage goods, but it is wrong, parallel imports are just imported without paying tax, but still authentic.
Parallel imports are often referred to as grey products, so that's exactly why we're showing you a journey in the grey market as the title says.
- Parallel imports are goods designed to be sold somewhere in the world that have been purchased by a third party and imported against the intent of the brand.
- The legality of parallel imports is often ambiguous and can depend on smaller details.
- Parallel imports can be a headache for brands and can be very time-consuming to track down.
This can happen with electronics, books, magazines, software, accessories, cars, etc. In most cases, this is not illegal, unless the local court decides otherwise.
For example, a reseller located in the EU may find that they can buy newly released Nike shoes abroad at a cheaper price. Therefore, they go to an authorized overseas distributor to purchase the shoes. Since Nike already offers licensed products for the EU, selling these shoes in Europe would be a parallel affair. It is important to know that the parallel is not counterfeit. Nike shoes are authentic and the distributor buys them from an authorized dealer. It simply comes from another region and is no longer under Nike's control.
The brand may sell the same product in the U.S. market and in China, but the price will be different. Parallel importation occurs when a company buys the brand in China and sells it in the United States.
What are counterfeit or fake products?
On the contrary, Licensed goods are approved by the manufacturer, by a merchant to obtain the agency or directly by the manufacturer's branches in a designated area to sell the product. Due to licensed goods need to allow agents and their branches to obtain reasonable or even windfall profits, and must pay in line with the regional government requirements of customs duties and taxes, so the price of licensed goods is often higher, but because of the official local agent manufacturers, product after-sales service is often more secure, the product's original drivers, manuals and operating systems will often be the same language and sales region.
So counterfeit or fake products are violating the quality, licenses, labels, manufacturing process, relative test reports of authentic and licensed products, or violating any factors of them. In that case, it's much easier to recognize by a lot of means. We'll talk about the approaches later in details.
After we've helped you tell the difference of parallel import goods and fake or counterfeit products. The appeal of low cost is deadly for sellers, any stakeholder in business would know exactly how essential it would be if you are able to downsize the initial investment in your products, the margin is much greater without any doubt.
In that case, sure, we‘ve summarized some sources for you to build your low-cost product empire.
Where can I find fake or parallel products?
For fake products, usually it means those products violated the original brands and trademarks. It's sensitive and dangerous especially when you import those fake products into your country. While yes, there're options.
Online platforms
A large amount of online shopping websites will have the fake products, some are avoiding, some are chasing.
You must hear about the news in 2007, New York City police had found nearly 300,000 pairs of fake Nike's shoes from two warehouses in Brooklyn, and the market value was over $31 million. For this massive amount, even though from miles away, the journalists from New York Times came to China to look into the truth. And the truth is the manufacturer in Putian, the city at the heart of China, they have the complete production chain of making the knock-off branded shoes like Adidas, Jordan, Nike, New Balance, etc..
For example, there're three modes of production:
- Original end list. That means when the original orders have been finished in the authentic manufacturers, there would be some extra materials have left, and those materials would be used for the production of know-off sneakers.
- Original copies. The original manufacturer finds its own materials and makes them on the same production line.
- High imitation of authentic products. Imitation by other manufacturers.
Putian has been nicknamed as "China's Fake Sneaker Capital", so it's not hard to find them since they're everywhere.
Go to Alibaba and its branches, AliExpress, Tmall or Taobao, search for keywords, you will tell them by the origin and the price. The same rule for other products, the price is everything.
Brand protection technology company Red Points surveyed 315 consumers who bought sneakers online in the past six months and found that 20 percent of respondents said they had bought fake shoes online. Of these, the majority started looking for the real thing, or a similar style at a lower price. So, you're not short of customers.
Offline
Normally, the fake manufacturers would be distributed in areas with low-cost labors, or with adequate raw materials for particular products. In Asian countries, as we mentioned, China, Malaysia, Thailand and Colombo, the local manufacturing markets would be more economical on the production process, but it's hard for the local enterprises to get the given great reputation as an international big name on a new original brand from them, and they're lack of network and capability to get the authorized license, so here comes the fake product manufacturing.
In that case, some basic researches would be enough to get in touch with the local factories. Like the journalists from the US, get a flight ticket and you'll get your surprises.
