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In summary, parallel imports’ salient characteristic is that they are genuine products rather than counterfeits, produced by the trademark owners or distributors. That means they have the same quality as good as products imported through normal distribution channels and supervised exactly by the trademark owners or distributors. In addition, what should be noticed is that the parallel importers buy parallel imports in a legal manner. In other words, there doesn’t exist smuggling or other illegal trade transaction. However, the arguable issue that whether parallel importation is a legal or illegal behavior, results from the fact that before the parallel imports imported into the target country’s market, the trademark has been protected under the relevant laws of that country. And the parallel imports are sold by companies which may have no relationship with the producer of the goods, simultaneously without the authorization or consent from the trademark owners or users either.
B. Why does parallel importation happen?
Multiple complicated factors may explain the emergence and existence of parallel imports. Most importantly, parallel trade takes place due to significant price differential for the same product between two markets. Commercial profit is the catalyst to promote parallel trade. This is the fundamental reason for the grey-market to exist and the parallel imports to emerge continually. Put it in more detail, the relevant factors including consumers’ income, consumptive level, the demands of the market, fluctuation of exchange rate and so on, are essentially influencing a product’s price; Moreover, each country’s different development level in science and technology, labor cost etc, also results in the price differentiation.
There is a potential factor that provides an advantaged chance for parallel importation. That is the rise of transnational enterprises’ global marketing strategy. Because of this world-wide expanding strategy, multilateral enterprises make multifaceted decisions regarding the means by which they can serve foreign markets. It is not possible to register and maintain trademark registrations in all international classes in all jurisdictions. Thus it is a preferred choice for the multilateral enterprises to license or assign their trademark. In this sense, it unconsciously offers an available chance for the third party to conduct parallel importation.
C. Pros and Cons of Trademarked Goods’ Parallel Importation
The subject of parallel importation is a highly controversial issue in current academic debates both internationally and domestically. One of closely-related factors for the hot debate is in consideration of its influence which is brought to the country or region allowing parallel importation. As a general rule, parallel importation has two sides. It has positive effects, at the same time coupled with inevitable negative results. The positive side has been illustrated that it benefits consumers by lowering prices and widening the selection of products available in the market, provided that consumers retain equivalent legal protection to locally sourced products. It also prospers transnational trade and transaction. However, from a negative point of view, trademark owners, licensees and their authorized distributors may disagree these standpoints. The trademark owners argue that products produced in one country or region are made to comply with consumers’ taste of that particular country or region, these products may not be welcome by other places’ customers, even though the products are of the same quality, because the products may have tiny differences according to people’s special demands in that particular place. The local licensees maintain that they put a considerable of money and efforts to develop local product marketing, promotion, advertising, regulatory compliance, product liability and research, but the parallel importers “free ride” these good conditions and undermine the local licensees’ own interests. Parallel imports undermine normal distribution channels and frustrate the local distributors in terms of premiums paid to the trademark owner for genuine goods when competitors are underselling them. Another concern raised is about consumer protection. Consumers purchasing genuine products expect that those products are sold through authorized distribution channels overseen by the trademark owners or their licensees. However, if those parallel imported "genuine" products do not carry the warranties and service guarantees that accompany authorized sales, unwary consumers who bought Parallel imported goods probably may not enjoy the same after-sale service as other authorized products’ service.
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