Review - Parallel Importing

I have been meaning to write about Parallel Importing for a while now. For those of you unfamiliar with the term "parallel importing" essentially it means to purchase a product from one country and import it directly yourself bypassing any local distributors.

Why is parallel importing good? In short it means cheaper prices for in-demand products. Lets take a famous product for example, Levis. Levis has their head office in USA and in each country around the world they will have either a local office or local distributors for Levis jeans. The head company usually has an agreement to only supply the products to the distributor in each country. This means that if you want to sell this product in your shop (or whatever) you must purchase it from the local distributor.

Where this is bad is that effectively the local distributor has the monopoly over the product: ie if you want Levis in your shop you have to order it from the local distributor. And we all know monopolies are not good for prices. The local distributor will charge as high a price as they can because local shops cannot buy the products from elsewhere.

In New Zealand we are a long way away from the major business markets like the USA so we end up with very expensive prices (higher than they need to be) because there is simply no competition. Where parallel importing is good is that if you notice a product is a lot cheaper overseas (they usually are due to a bigger market) then you can import this product and sell it cheaper in NZ. This measn shops can charge a lower price.

Parallel imports (or grey market goods) were illegal in NZ until a new law was passed in 1998 removing the ban. New Zealand was one of the first countries to do so and I believe Malaysia, Japan and a few other small asian countries are the only ones that have lifted the ban. Most other countries still prohibit parallel imports. NZ is so far away from everythinmg at the bottom of the world that we often get looked over. We are so reliant on imports that prices were so high. I am glad the govt removed the ban as it has broken a lot of the monopolies and high prices.

Paraplle importing means you can import goods from any other country into New Zealand and sell them here without involving the NZ distributors or copyright holders.

Parallel imports are often confused with counterfeit or fake items but this is not the case. Counterfeit items have been made illegally without the consent of the trademark owner. Ie a China factory makes bags that say Louis Vuitton on them when the factory has not been contracted by the LV company and has nothing to do with the real Louis Vuitton company.

Parallel Imports are goods made by the actual company. The head company then sells their products into the marketplace ie to shops and wholesalers. These products can then be bought and shipped to another country. The Head company has made the products, they are the real genuine item - they have just been moved around.

The end benefit of parallel importing means that a shop can purchase the Levis overseas at a cheaper price than they can from the NZ distributor, this means they can sell to the public at a cheaper price thus forcing the local distributors to drop their prices. This is good for consumers because it means they are getting a fair market price and avoiding the monopolistic distributors.

Later I will elaborate more on parallel importing and spotlight a NZ company that has been very successful with parallel importing.