Channel ready to fight Samsung's initiative on parallel imports

Resellers feel they have the right to import products on which they pay
appropriate duties to the government, on the other hand Samsung is engaging
itself into a campaign in order to put a blemish on parallel import markets. As
the Korean electronics major Samsung Electronics moves ahead with its initiative
to put tabs on parallel imports of toners, LCDs, HDDs and printers, the channel
community is bracing up to fight for their right to import. With an aim to
counter the growing menace of 'grey market goods' also known as 'parallel
imports' in the Indian market, Samsung India Electronics Pvt Ltd along with
its parent company Samsung Electronics Company Ltd has initiated legal action
under the trademark law against distributors and sellers of 'grey market'
versions of its toner ink cartridges before the Delhi High Court in August 2006.

As part of this initiative, the company has identified and taken legal action
against certain dealers within the Indian region, which were found to be engaged
in pushing grey market goods.

According to official spokesperson from Samsung, Justice Vikramjit Sen of the
Delhi High Court, inter alia, granted exparte interim injunctions against seven
dealers across Delhi, Indore, Kolkata and Bangalore which includes Metro
Techno­logies from Bangalore and Saboo Computers from Kolkata restraining them
from importing, exporting, distributing, selling, advertising, directly or
indirectly dealing in grey market ink cartridges/toners or any other products of
the plaintiffs under the trademark 'Samsung' or under any other mark as may
be deceptively similar to the plaintiffs' amounting to infringement of the
plaintiffs' registered trademarks.

“The judge was presented with the evidence that the Samsung toner ink
cartridges were being illegally imported into India and that they were not
authorized to be marketed and sold in the Indian market; that the said grey
market toners did not conform to Indian labeling laws and regulations (which is
an offence under Standard of Weights & Measures Act, 1976); and that the
grey market toners were not supported by company warranties and replacement
policies, thus creating deception and huge losses to the unsuspecting consumers,”
the spokesperson from Samsung added.

It is interesting to note that Samsung had initiated legal proceedings in
August because of customer complaints with faulty toner cartridges, that were
clearly grey market imports.

“This judgment is historic in the fact that it is the first judgment
acknowledging the menace of parallel imports. For us, this judgement gives us a
tool to ensure that the toners our customers get from dealers carry the
appropriate warranties, being issued by SIEL. We will continue with our system
of checks to ensure that this menace of grey market imports is countered as far
as possible” states Sanjay Sharma, VP-IT Business, Samsung India. Moving
forward, the company is planning to carry out similar initiatives for its
checking parallel import for its printers, LCD, OMS and HDD categories as well.

What channel feel!

While Samsung has gone ahead with its drive for putting an end to parallel
imports, the channel community is not particularly amused by this move.
Resellers engaged in import business feel that it is perfectly legal to import
goods and global companies like Samsung should understand the market dynamics
well before going all out against it.

“We know that Samsung has named us but, we have nothing to do with imports.
We are resellers in the Kolkata region. More so, when Samsung's team came up
to our office, they didn't find anything. Even the High Court commissioner
came for checking and gave us his certificate after finding absolutely nothing.
Samsung is just trying to mislead everyone here. They want to create panic in
the market so that it becomes a difficult situation for importers,” informs,
Rajesh Saboo, CEO, Kolkata-based Saboo Computers.

“We will certainly not sit idle on this issue. We will be taking this up
with our association here. See, Samsung as a company will need to understand
that anyone can import anything in India, its all legal and you pay duties to
the government for importing products. So the whole issue is baseless as far as
legalities are concerned,” he added.

Speaking about the market of products being imported from other countries,
Manoj Gupta, CEO, Delhi-based Fortune Marketing said that there are a lot of
companies who work towards diminishing the parallel imports market. “Some
companies do tend to work towards reducing the parallel imports market, but this
does not mean that importing goods is illegal. Since importing a genuine product
is absolutely legal, I don't think that there is any issue about this,” he
added.

Expressing his concern for the channel community, KVR Menon, CEO,
Hyderabad-based Orient Business Services said that it is absolutely legal to
import products and goods and big MNCs will never be able to abolish the
parallel channel.

“If I am importing products and goods, I am doing it by paying duty at the
customs. It is legal. But yes the products should be genuine and not counterfeit
ones. So even if a big vendor like Samsung decides to do something about this
situation, they should block the service of any imported products. They just
cannot stand against the reselling of imported or grey market products,” he
added.

India has witnessed an increasing influx of grey market goods, which pose
serious threat to brand owners, such as Samsung. Grey-market goods usually enter
the Indian market from China, Thailand, Singapore and the Middle East. This form
of unauthorized parallel trading not only undermines the legitimate differential
pricing structures of companies, but also compromises their established
distribution standards with vendors and, of course, their reputation among
customers.

ZIA ASKARI