We take a look at parallel importing and whether it's a good thing for Australian consumers.
Parallel importation can help level the playing field for Australian consumers who are routinely slugged with higher prices for goods produced by multinational companies.
But despite injecting much-needed competition into the local market, parallel importation should also comply with Australian safety and labelling and requires a strong regulatory framework so that it can work in the best interest of consumers.
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What are parallel imports?
How can some products look, taste and function the same, yet vary so markedly in price from their mainstream, retail counterparts?
Parallel imports are shipped in from abroad without the permission of the local trademark or intellectual property owner. Essentially, they’re legitimate products that dodge standard distribution channels and, as a result, can arrive in our shopping basket for a fraction of the local recommended retail price (RRP).
For years, multinational companies have set different retail prices for the same product in different countries. That was, at least, until the boom in online shopping. For the consumer, this has meant one thing: markets have merged, and this sort of price discrimination – on everything from Mars Bars to digital cameras and even French champagne – is being put to the test.
Tips for buying parallel imports
- Watch out for incompatible plugs with electrical products purchased overseas. While it is illegal to sell a product in Australia without an appropriate electrical plug, this often happens when individuals decide to purchase the product alone, rather than through an importer, such as Kogan or JB Hi-Fi.
- Be sure you have access to an English language manual for electronic parallel products – not all include one.
- Check the ingredients lists and keep an eye out for any allergens with food products.
- Avoid food and grocery products with non-English language labels if you don’t understand them.
Is it legal?
The 2011 Productivity Commission's retail inquiry found the arguments made by multinationals in defending price discrimination were not persuasive.
Intellectual property legislation allows most parallel importers to bring products freely into Australia. The 2011 Productivity Commission’s retail inquiry found the arguments made by multinationals in defending price discrimination were not persuasive.
Treating consumers in one region as willing or able to tolerate significantly higher prices than those in other countries was a key reason listed by the Productivity Commission for growth in parallel imports, and formed a basis of their recommendation to government to reconsider the restrictions relating to the parallel importation of clothing.
Governments and consumers are eager to talk about parallel importation, but CHOICE found companies involved on both sides of the fence were less so.
Mars Incorporated told us it was unable to provide a list of its RRPs around the world, despite the fact an Australian Mars Bar costs almost double that of the same product in the UK. JB Hi-Fi also declined to comment.
Australian Consumer Law provides welcome protection for buyers, as local manufacturers can be hesitant to uphold warranties for imported products. All consumers are entitled to a guarantee of acceptable quality, fitness for purpose andright to repair on all products purchased from an Australian retailer. Kogan and JB Hi-Fi’s Direct Import both also offer in-house warranties.
The world’s biggest companies are some of the worst offenders when it comes to price discrimination. Amazon sells its Kindle e-reader for US$79 in the US, but Australians must pay $109 for the same product. In the US iTunes store, the Beatles No. 1 album sells for US$12.99, yet Australians fork out almost 60% more to buy this album from an Australian IP address. The latest Apple iPad 32GB Wi-Fi model retails for $649 in Australian stores, but sells for US$599 in the US.
The experts we spoke with all agree on one thing – the online world is moving fast, and large companies will need to minimise price discrimination and become more competitive sooner rather than later in order to stay afloat.
Later this year, a parliamentary inquiry will question Apple, Microsoft and other multinational tech companies that participate in geographic price discrimination. Federal MP Ed Husic, who’s been lobbying in this area for more than a year, hopes the inquiry will bring an end to the unfair pricing burden placed on Australians.