Definition of the concept
Parallel import is the import of original products from abroad without the official authorization of the trademark owner. In other words, this is a legal import of goods, carried out not through authorized distributors, but through alternative ways.
The difference from official deliveries is that goods are purchased from unauthorized sellers, often in regions with lower prices. Then these products are imported and sold on the domestic market. Prices are often more profitable than those of official representatives.
The origins of this practice go back to the middle of the last century during the globalization of trade. The difference in the cost of identical goods in different countries has created opportunities for enterprising businessmen.
Legal aspects
Legislative regulation in this area depends significantly on the country. In some States, this practice is fully permitted, in others it is prohibited or limited by certain conditions.
Until recently, the principle of national exhaustion of rights was in force in Russia, which actually prohibited this type of import. However, in 2022, due to economic sanctions, the Russian government legalized it for a wide range of goods.
International agreements such as TRIPS also affect the regulation of this area.
The mechanism of operation
The parallel import process includes several steps:
- Identification of price differences in value in different countries.
- Purchase of products from unauthorized dealers or wholesale markets in countries with low prices.
- Transportation to the destination country.
- Customs clearance: passing the necessary procedures.
- Sale of goods on the domestic market at favorable prices.
Key participants in the process:
- Importing companies that directly import goods.
- Suppliers in the source countries: wholesalers or unauthorized dealers.
- Customs authorities that control the legality of importation.
- Потребители – конечные покупатели импортируемой продукции.
Examples of goods often imported in this way include electronics, automobiles and spare parts, cosmetics, perfumes, and medicines.
Advantages
The main advantage is lower prices for consumers. Competition with official suppliers forces us to set lower prices, which is beneficial for end customers.
In addition, this practice contributes to the expansion of the assortment. Some products that official distributors consider unprofitable for import may become available through alternative channels.
It also encourages competition. Authorized suppliers are forced to review pricing strategies and improve service in order to remain competitive.
Disadvantages and risks
However, there is a downside to this practice. One of the main problems is difficulties with warranty service. Manufacturers may refuse to service goods imported unofficially.
There is also a danger of acquiring counterfeit goods. Although parallel import implies the import of original products, unscrupulous market participants can use this scheme to sell fakes.
The widespread use of such practices can reduce the investment attractiveness of the market for manufacturers. If companies cannot control the distribution of their goods, they may lose interest in developing official sales channels and investing in the local economy.
Economic impact
The impact on the economy is ambiguous. On the one hand, this can have a negative impact on local manufacturers and official distributors, reducing their profits and market share. Lead to job cuts in these sectors.
On the other hand, this practice has a positive effect on the state budget. An increase in import volumes leads to an increase in customs duties and tax revenues.
Long-term effects may include:
- Changing the structure of the market and supply chains.
- Improving trade efficiency by removing artificial barriers.
- Stimulating innovation and improving the quality of service from official suppliers.
Parallel imports are a complex and multifaceted phenomenon in international trade. It has the potential to reduce prices and expand choice, but also carries risks for manufacturers and official suppliers.
Understanding its mechanisms is critically important for both consumers and businesses. Buyers should be aware of the possible risks and benefits of such products. Companies need to adapt strategies to this phenomenon in order to have a competitive advantage in a changing environment.
As a result, the impact on the economy and society will depend on the response of governments, businesses and consumers to the challenges and opportunities created.
