Unscrupulous importers and re-sellers of grey market computer components and systems are having a negative impact on South Africa’s computer industry. These products are usually sold at prices well below the level that fully supported products can be retailed for.
Grey market computer components do not have the support of manufacturers’ agents in South Africa, meaning customers whose computer components fail during the limited guaranty period often get poor levels of support, or have to pay standard repair rates. Unlike the Audio sector where well established grey market specialist agencies have the financial backing (and sales volumes) to offer a full guaranty on hi-fi and similar audio systems, grey market IT sector importers seldom have the infrastructure to offer a manufacturer’s level warranty.
What are Grey Market Products:
Grey Market products are genuine brand name items imported independently of official manufacturer distributors. Grey Market Products are not illegal, unlike black market and counterfeit goods. The only practical difference is these grey imports are not supported by appointed agents, and cannot benefit from the technical expertise required by manufacturers, nor are they covered by official warrantees.
Buyers need to know the limitations of grey market products to make an informed decision. They need to balance the initial lower price against the risk of having nowhere to turn to should the product malfunction.
Buyers cannot be certain grey market computer components are in fact genuine items, and if they pay no heed to the issue of authenticity may find themselves disappointed with the performance and quality of the grey item.
Computer Manufacturers and Official Distributors set standards
Most official manufacturer’s agents set standards for re-sellers, requiring them to have a level of competence commensurate with the product line, and be responsible for the accuracy of the information given to customers, and for providing suitable product support and guarantees.
Grey Market Imports must be identified.
South Africa’s Consumer Protection Act requires retailers to label grey products, make it easier for shoppers to return faulty goods, and get their money back. In addition, retailers found flouting the law face a R1 million fine, or 10% of turnover, depending on which is the greater amount. (Grey market fades away – Iweb Channel).
There remains a large number of grey product re-sellers not complying with this requirement, and as we know from other aspects of life in SA, these regulations are seldom enforced.
Grey Products Anti-competitive
grey products not cheapGrey market products do not stimulate normal business competition, if anything these have the opposite effect. IT hardware re-sellers (and distributors) face a difficult choice – do they drop their own standards, providing reduced after sales support and pre-sales advice in order to cut prices, or do thy try to compete on quality of service and a genuine guaranteed after sales service and product backup.
Grey market products have created an extremely difficult trading environment for responsible retailers to stay in business. The past 5 years have seen many smaller IT industry hardware and service providers forced to close their doors. The industry does not need regulation by legislation, it needs consumers to become aware what they are buying, and support the official industry by choice. At the same time distributors and re-sellers need to offer realistic prices for merchandise, neither too low (in order to make a fast sale) resulting in limited product support, or too high in order to generate excessive profits.