Compared with the authorized distribution importer’s commodities, the grey market has the abnormal advantage of pricing to attract the consumers to purchase, even through the products are not including the warranty and any certification. In the perfect market, the consumers should achieve the same price wherever they are around world. However, with emerge of exchange rate, tax rate, and other factors, the enormous pricing disparity can be created by the grey market in different industries. To illustrate the grey market issues, some products and companies will be listed below.
1. Win industry
Many large Win-manufacturers prefer to target different markets with the independent pricing around world, especially for champagne. The exactly same bottle of champagne has the huge difference in price between different countries. Thus, grey market importer may purchase the cheaper win in one country, and then resell this win with the higher price in another country. Typically the importer of a wine is the one most concerned about grey market sources. The winemaker may or may not care what happens to the wine after it is sold, although he or she might complain to appease an importer.
2. Automobile
Nokia is the largest mobile phone manufacturer in the world. Nokia designs the mobile phones in Mother Company, and then sent to overseas factories to assemble the products. Due to the different cost (labor, material, transport, and tax) consideration, the price of same mobile phone is different between Chinese market and Indonesia market. The grey market importer will purchase lots of the mobile phones without warranty certification; consequently the mobile phones will be sold in another country with the same or lower price than the authorized importer’s mobile phones.
3. Piano
Piano manufacturers claim that pianos brought overseas are likely to under-perform expectations for the brand and may develop serious problems as a result of the wood in the pianos not being properly seasoned for the climate to which they are exported. The wood of piano is very sensitive to the climate. Most grey market importers do not take into account the climate factors to choose proper wood to assemble the piano. Yamaha Corporation claim that their piano assembly plant in Hamamatsu, Japan contains large rooms where pianos are seasoned for different climates worldwide under strict guidelines. Yamaha tries to discourage the sale of grey market pianos by suggesting they are unsafe on their website
4. Pharmaceutical
Some prescription medications, most notably popular and branded drugs, can have very high prices in comparison to their cost of transport. In addition, pharmaceutical prices can vary significantly between countries, particularly as a result of government intervention in prices. As a consequence, the grey market for pharmaceuticals flourishes, particularly in Europe and along the US-Canadian border where Canadians often pay significantly lower prices for US made pharmaceuticals than Americans do.
5. Securities
In securities markets, grey market refers to the buying and selling of securities to be issued in the future, and therefore not yet circulating. This typically occurs some days before an auction of government bonds or bills and that trading is subject to the effective issue of those securities. Sometimes this is taken as a forecast of the prices that markets expect for future issues.
According to above examples, grey market is a common phenomenon in the global marketing. It is the globalization that leads the grey market has the more opportunities to exist in many industries. To avoid the grey market, not only the manufacturers raise the awareness of protecting its products by improving the distribution channels, also consumers should support for the authorized products to protect their own benefits, after all, the grey market products can not have the same quality as the normal one.