United States manufacturers often find themselves in the unlikely
position of competing against their own goods imported from abroad.
These competing products are called grey-market goods. Grey-market
goods are products sold in the United States that were lawfully produced
here or elsewhere, which the manufacturer did not intend for sale in
the U.S. market. Three distinct scenarios are the most common sources
of parallel imports.
- A manufacturer may manufacturer goods in the U.S. for export sale
and find that the merchandise has been diverted back to the United
States market either before or after export the planned exportation.
- Goods made abroad by a foreign licensee may be imported into the
United States without the authorization of the U.S. licensor.
- Goods made abroad either by the manufacturer or a licensee may
be imported into the U.S. market to compete with goods offered by
In many cases, the disadvantages of buying grey market goods may outweigh
the cost savings. For example, grey market goods may not be covered
by the manufacture's warranty. If the product does come with a warranty,
it may not be valid in the U.S. If such a product breaks or is defective,
the manufacturer may choose not be honor the warranty.
In some instances, the product may not comply with U.S. safety laws and may
require costly adjustments prior to being used legally within the U.S. - not
to mention the fact that the labels, operating manuals and other instructions
are usually in a foreign language.
The primary distinguishing features of a grey market sale are low price combined
with the fact that the seller is not authorized to sell the merchandise in
question in the U.S. Health and safety problems are additional areas of concerns.