Impact of Grey Marketing on Indian Economy Essay Example for Free

Impact of Grey merchandise on Indian Economy EssayAn unofficial trade in which goods argon bought and sold at outlays lour than the official expenditure set by a regulatory agencyGrey food merchandiseing (also sometimes kn decl ar as gray grocery store) involves the trade of legal goods through with(predicate) unauthorized, unofficial, and unintended carry of distribution. Hence, trademarked products atomic rate 18 very much exported from one(a) country to a nonher and sold by unauthorized individuals or ho employs. This practice is also often k straight offn as double importing, product diverting, and in time arbitrage, and typically flourishes when a product is in short sum up, when counterbalancers resort to skimming strategies in specific grocerys. A good typesetters case is the profession of crude oil by an individual.The colourize market includes function that be typically unregistered to evade taxes. Perfectly legitimate occupations, much( prenominal)(prenominal) as domestic help, babysitters, part time beauticians and freelancers, whitethorn non be registered. Not single when is it difficult to detect such(prenominal) defaulters, the punishment is usually mild. For example, even as apple, Inc., rolled out its latest third-generation iPhone on July 11, two hundred8, several sell stores throughout the world, including those in China and Thailand, proceed to take orders even though this product was non being sold in those markets. Their computer codes were unlocked, so that the phones could be used with assorted prompt service providers. regular(a) in India, one of the fastest-growing markets for cell phones, Apple delayed the release of the original iPhone until mid-2008, a year after the release in the United States and 6 months after its release in atomic number 63, because of the fear of gray market deals. A wide range of goods and services substantiate been sold through grizzly markets, including auto smooths, broadcasting inducey, college textbooks, pharmaceuticals, photographic equipment, video games, and even fuddle-coloureds. Research has present that every one of the worlds eight major export regions has experienced colourise marketing activity damaging to their job operations. Parallel market is further encouraged by periods of war or both other crisis. During harsh political conditions or natural disasters, scarce goods are rationed by the g every localisenment. community own the tendency to scandalize re unforgivingions or rationing laws to secure the products they desire.In the United States, colour in market goods are prohibited according to Section 526 of the Tariff Act of 1930, which expressly forbids importation of goods of foreign manufacture without permission of the trademark owner. However, the implementation of regulation by the U.S. Customs Service and the courts interpretation of the law mature not been in line with each other. In a repenny stu dy, about 13 per centum of the firms in North America go reported some form of grey marketing. A imperative outcome of grey markets is that they provide brand-name goods at turn down scathes to the customer. They toilette create incremental sales in markets not in direct competition with sanctioned mussers, and sometimes help companies overcome distribution bottlenecks because of topical anaesthetic government regulations. Occasionally, it is less expensive to tolerate grey marketing than to shut down the operations all in all because of the time and resources call for to monitor the violations.Finally, eradicating grey marketing activities can provide a firm with grueling marketing intelligence regarding customers in these markets and their depraveing behavior. On the other hand, the phenomenon obviously also has several drawbacks for companies. It at the same time at a lower placemines the manufacturers distribution arrangements and their ability to control quality it creates the dilution of exclusivity and damages existing channel relationships. functionary dealers may not choose to spin significant services in order to compete with the grey market price for the product. on that point is desirely to be an erosion of the brands global image, and the firm is unlikely to dedicate the ability to use traditional pricing strategies, thus having less control over their overall marketing strategies.2.According To World Health Organization2.1.Parallel ImportsParallel imports are imports of a distincted or trademarked product from a country where it is already marketed. For example, in Mozambique 100 units of Bayers ciprofloxacin (500mg) costs US$740, but in India Bayer sells the same drug for US$15 (owing to local generic competition). Mozambique can import the product from India without Bayers consent. According to the theory of exhaustion of smart property rights, the exclusive right of the patent causeer to import the protected product is e xhausted, and thus ends, when the product is first launched on the market. When a state or group of states applies this principle of exhaustion of intellectual property rights in a given territory, parallel importation is authorized to all residents in the state in question. In a state that does not recognize this principle, however, only the patent holder who has been registered has the right to import the protected product.Sometimes referred to as grey market imports, parallel imports often takes place when there is differential pricing of the same product each brand-name or generic drugs in different markets (usually owing to local manufacturing costs or market conditions). The Trade-Related Aspects of talented Property Rights (TRIPS) agreement explicitly states that this practice cannot be challenged under the World Trade Organization (WTO) hostility settlement system and so is effectively a matter of national discretion. Parallel imports can drop the price of health prod ucts and pharmaceuticals by introducing competition. However, they can also affect the negotiation of tiered pricing regimes with pharmaceutical companies. If a private pharmaceutical company agrees to sell a product at a lower price in poor countries, it go out need some assurance that the cheaper product testament not be imported back into its rich country markets, undercutting its profits (product diversion).3.Grey merchandise by assiduity3.1. initial prevalent asseverateing Grey Marketing in IndiaCities like Ahmedabad, Kolkata and Rajkot are the most active centers for the initial public offering (initial public offerings) grey market. Trades done in the grey market are settled on the sidereal day of listing. one time the deal is done at a stipulated price, the seller must deliver the shares after he has been allotted the shares by the company. If the seller falls short in receiving the exact number of shares that he has sold in anticipation, so he must buy the shares on the market (once the share is listed) to honor his commitment.Most of the recently-concluded initial public offerings are quoting at a significant indemnity in the grey market, compared to their issue prices this means that the issues are perceived to have been underpriced. Many traders short sell in the grey market if they feel that the premium on offer is unwarranted and that the billet may list at a price lower than what most market players expect it to. Though grey-market operators say that there is a constant change in the grey-market premium, it braggart(a)ly depends on the subscription on the last day and the market conditions, post issue closing.3.1.1. In the stock market, what is the concept of grey marketing?Grey marketing is a trade of some involvement legal but through unofficial and unauthorized distribution take. In contrast, black marketing is a trade of illegal goods or services through illegal channels. The grey market of goods is to import and sell products through market channels which are not authorized by the manufacturers. It occurs when the prices of a product differ significantly in different countries. The grey market of securities markets and initial public offering (Initial Public Offer) is to buy and sell the shares to be allotted in the future. Once the trading is done in the grey market at a stipulated price, the seller must deliver the sold number of shares to the buyer on the day of listing to honor the commitment.3.1.2.Effect of Grey Market trade on Indian Economy3.1.2.1Grey Market Rs. 1L in Reliance Power IPO will puddle 9% in 20 dayspicAHMEDABAD Reliance Power (REPL) seems to have electrified grey market operations in Ahmedabad with operators willing to shell out as much as Rs. 9,000 for every application of Rs. 1 lakh. In the bustling grey market in Gujarat, such extravagantly rates are unheard of. The last benchmark for hectic activity was the Mundra Port and SEZ IPO in November when the grey market started buyi ng applications for Rs. 7,500 in the last stages of the issue. With the REPL offer ready to earn the market on January 15, the grey market is trading the shares and the applications.It basically means that if you have Rs. 1 lakh to invest when the IPO opens, you have a secured 9% return within 20 days of closing of the issue when the stock would be listed. After SEBI vindicated REPLs IPO, grey markets had resumed trading in the stock with premium saudas (trades) at Rs. 340-350 and application buying rate at Rs. 7,500. While the premium has zoomed to Rs. 390-400, the applications rate touched Rs. 9,000 and could break the Rs. 10,000 mark by the time the IPO hits the market, sources said. The uplift on the counter in the grey market has come on the heels of recents that REPL will offer 5% discount to retail investors, who will also direct an option to pay only 25% of IPO amount at the time of application.3.1.2.2.Reliance Power IPO Grey market sees Rs. 2000 crore losspicAHMEDABAD The moody debut of Reliance Power on the bourses may ending in losses to the tune of Rs. 2,000 crore in the grey market. Operators also fear a payment crisis as many investors are threatening to hold back payments. Grey market players both operators and investors who were expecting the stock to list in the range of Rs. 550-Rs 600 per share, were in saccade as Reliance Power opened at Rs. 430 and closed at Rs. 372.50 on its first day on the exchanges. This could also adversely impact the premium transactions in forthcoming IPOs (initial public offers). eer since the grey market began trading in this IPO, the premium on Reliance Power shares had peaked at Rs. 450 over and above IPO price of Rs. 450 per share. Majority of trading in R-Power IPO in the grey market was done at an average premium of Rs. 300 per share. As the issue closed at Rs. 372.50, most market operators, who had interpreted huge exposures, have lost Rs. 377 per share. It is estimated the grey market has already t aken an exposure of five crore equity shares, leading to losses expenditure Rs. 1,900 crore. It is also l pisst that many investors in Jaipur have refused to honor their payment commitment to grey market operators in Ahmedabad, as the IPO plunged after listing. This could salutary result in operators losing out on large sums of money and have a cascading effect in the market.3.1.2.3.Grey market bets big time on DLF IPOpicAHMEDABAD Only time can tell whether you could draw off the elusive pit of gold at the end of the DLF IPO rainbow. But, street circumnavigate investors in Gujarat have already started earning a secured 4% return on their investiture in the initial public offer of the countrys biggest realty developers, much before the offer hits the market on June 11. Large numbers of investors, who want to earn secured interest earning up to 4%, are selling their IPO applications to grey market operators in Ahmedabad. Although the DLF IPO is opening from May 11, IPO applicatio ns are being sold anywhere between Rs. 3,800 and Rs 4,000 for a individual(a) application worth Rs. 1 lakh. Activities in the Ahmedabads grey market, popularly known as Sakar Bazar, has gradually been rise as the market enters the final week before a deluge of public offering hit the primary markets. Led by DLF IPO, the next dickens months could see close to Rs. 50,000 crore being raised from the market.On one hand, the grey market is witnessing huge trading in IPOs, which are yet to be listed on the bourse. On another hand, people are selling their IPO applications to the grey market operators for a secured interest. Even as DLF shares are yet to be listed on the bourse, operators in Ahmedabads grey market are trading DLF shares at a premium of Rs 37 to Rs 38 on its issue price of Rs 500-Rs 550. Similarly, Meghmani Organic is transfer a premium of Rs 5 over its issue price. And, its not only in the case of these two IPOs. All IPOs are traded in the Ahmedabad grey market, which seems to have a handle on the pricing of IPO listings. It has been found by most market participant of the capital market that majority of the IPOs listing prices are normally close to the last trading price of the IPO in the Ahmedabads grey market.4.WINEThe grey market in vino flourishes, particularly in the case of champagne. Many large champagne producers do their own importing, and desire to maintain independent price points in different markets. Thus a bottle of bubbly great power cost US$35 in the United States while the same bottle might be only 15 Euros in France. It is often profitable to buy the wine-coloured in Europe from an authorized distributor, and resell it in the US. In the case of enormous pricing disparity, it is not uncommon to denudation a grey-marketed wine selling for less at retail than the wholesale price of the authorized distributor. In the case of a large availability disparity between the US and Europe, the grey market price may be the same or hi gher than the authorized price. 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.4.1.India imports 72,000 cases of wine a yearPUNE The Indian wine market is growing at 30-40% annually and this rate will hide for the next 5-6 years in keeping with global trends. However, the current per person per year consumption of wine in the country is as low as 9-10 ml. The Maharashtra Industrial Development Corporation has mentioned this in its abide by on the grape wine intentness of Maharashtra, based on a report prepared by Rabo International Bank. The highest wine consuming countries such as France and Italy has per person wine consumption as high as 60 to 70 liters annually. Those in China consume four liters, the report stated. Domestically, 80 % of wine consumption is confined to major cities like Mumbai (39 %), Del hi (23 %), Bangalore (9 %) and Goa (9 %) whereas rest of India has only 20 % consumption.The MIDC report further stated that India currently imports 72,000 wine cases (nine liters to a case) a year. About 32,000 of this are bottled at origin and the other 40,000 cases are imported in bulk flexi bags, which are subsequently bottled by Indian wineries. Besides this, about 12,000-15,000 wine cases are sold through the grey market. In 2009-2010, some seven lakh liters of wine worth Rs. 5.92 crore was exported to France, Italy, Germany, US, UK, Singapore and Belgium from Maharashtra. The state had announced its Maharashtra Grape Processing Industrial Policy 2001 on September 19, 2001 with wine as an important part of it. According to a report by MIDC, four components are required to make good wine. Those are soil, climate, vines and human factor that is the people who brew wine.A lot depends on finding the ideal balance between the characteristic of soil, the microclimate and the grape varieties. At present wine grapes are grown on a 7,000 acre area in the state. In 2010 there were a total of 74 wines making units (36 in Nashik, 13 in Sangli, 12 in Pune, 5 in Solapur, 4 in Osmanabad, 3 in Buldana and 1 in Latur district) that had started production in the state. At present, total production of wine in the country is 1.45 crore litres from 90 wineries in the country. Of that, 1.32 crore litres wine is produced by 75 wineries in Maharashtra. The total investment in wineries was Rs 431.71 crore in 2009 which rose to Rs 452.10 crore in 2012. France, Italy, Spain, Germany are the main grape wine producing countries in the world. nigh 32,000 gazillion litres wine is produced per annum.5.AUTOMOBILESAuto alert manufacturers segment world markets by territory and price, thus creating a take aim for grey import vehicles. In the United Kingdom the term applies to vehicles imported either new-fashioned from cheaper European countries or from Japanese domestic models impor ted ill-used from Japan or Singapore, which both have strict laws against older cars. This importation of secondhand models from Japan/Singapore tends to involve sports models that were never released in the UK or models that bewilder a high price in the UK due to their performance or status.Although some grey imports are a bargain, some buyers have discovered that their vehicles do not meet British regulations or that split and service are hard to come by because these cars are different from the versions sold new in the UK. In New Zealand, grey market vehicles comprise a majority of cars in the national fleet. These secondhand imports have achieved normal status and are used and serviced without comment throughout society. A huge industry servicing and supplying parts for these vehicles has developed. After years of trying to stop grey imports the car companies themselves have become involved, importing in competition with their own new models.6.MOBILE HANDSET iphone Launch re crudesces hit by Grey Marketing6.1.Low-cost handsets to get impacted, says industryNearly 75 per cent of the currently available active handset models in the market could get defunct or redesigned with the Government deciding to bring in new radiation norms for the telecom sector. The Department of Telecom has accepted a proposal by an inter-ministerial delegation to lower the permitted radiation in mobile phones by 50 per cent. The move will impact much or less all the handset makers, especially those who ensure in the low-end segment.6.2.Handset priceAccording to the Indian Cellular Association, the new radiation norm will jack up handset price by 5-30 per cent as handset makers will have to make additional investments to meet the new rules. According to the new guidelines, handsets should not have Specific Absorption Rate (SAR) of more than than 1.6 watt/kg taken over a volume containing as mass of 1 gram of human issue. This is the same levels allowed in the US. India till now followed the European standards wherein handset makers are allowed to have SAR levels of 2 watt/kg on a 10 gram human issue. Globally, about 1,500 million mobile phones are sold per year out of which more than 80 per cent is sold in countries where European guidelines are followed.In India, there about 10 global brands, another 15-20 Indian brands and more than 4,000 importers who trade in unbrand Chinese phones. Most of the handsets under Rs 11,999 which are approximately 645 or so would have to be redesigned. Effectively, this would disrupt the entire operation of more than 88 per cent of the legal handsets sold in the market (the legal market is approximately 70-75 per cent of Indias total volume market). All global brands and domestic brands will get seriously impacted by this, Mr. Pankaj Mohindroo, President, Indian Cellular Association.6.3.Chinese handsetsThe industry is worried that the new guidelines will have no impact on the Chinese unbranded grey market phones, which is handled by over 4,000 importers with volumes between 3 and 4 million a month. The handset makers fear that the grey market will get a window of hazard of approximately 6-9 months to rapidly expand their volumes before the branded companies start bringing redesigned phones. If the Government is bringing new laws to address concerns of health and security then it should also set up good monitoring.While the branded phones will have to bear the costs to redesign phones, grey market devices will continue to be available without any check, said Mr. S.N. Rai, Co-founder Director, Lava International one of the Indian handset Company. According to ICA, the industry would be able to redesign approximately 100 models in about 6-9 months and 200 in 24 months. There are about 850 handset models available in the market at present. The legal industry will never be able to redesign all the models and the availability would constrict to at best 150- 200 models within 18-24 months of implemen tation of such norms, Mr. Mohindroo said6.4.Ultra low-cast modelsICA said that in the case of ultra low-cost handsets, it may not be possible to redesign these handsets and all the models in the ultra low-cost handsets less than Rs 1,500 could get knocked out of the market. Apart from lowering the permitted radiation levels, the new guidelines also make it mandatory for handset makers to queer the SAR level on the handset. The DoT is expected to notify the new norms shortly. Keywords mobile radiation norms, low-cost handsets to get impacted, Specific Absorption Rate (SAR)6.5.Dark days for mobile grey marketThe import duty on mobile phones has been reduced from about 16 per cent to around 4 per cent.Industry participants also believe that the substitution from grey market to the legal market is by and large on the account of growing number of mobile retail stores. The mobile stores provide accessibility to the consumers. Our mobile stores are at all the panoptic locations, so cons umers can walk in anywhere and get the best deals possible, said Subhiksha marketing vice-president Mohit Khattar. Industry analysts say that a huge grey market exists because of the differential of around 10 per cent to 25 per cent between legal and grey handset prices.With growing competition in the organized mobile retail market, players are offering products at lower prices. This, in turn, helps counter the grey market and bolsters footfalls in these stores. Consumers can buy high-end, genuine branded handsets with guarantee of replacement or repair through the mobile retail stores.Trust is the predominant factor that consumers are turning towards the branded retail stores, said hotspot CEO Sanjeev Mahajan. Consumers are opting for accessibility and do not mind paying extra for it. The grey markets hightail it from a few areas in a city. On the other hand, mobile stores are more well accessible as they are located in all prominent markets. The growing brand brain among the p eople, analysts say is also propelling the consumers to approach branded mobile retail stores. Mobile phone retail chains like Mobile Store, Mobi Retail, RPG Cellucom, currently account for just 7 percent of the overall mobile handset market, which has a market share of Rs 15,000 crore.Currently, the impact of mobile retail stores on the grey market is minimal. However, considering the rapid growth rate of organized mobile retail, its contribution is set to increase in the next 3-4 years, said retail consultancy Technopak Advisors chairman Arvind Singhal. Though the grey market in mobile phones has reduced, a large (75%) grey market still exists in mobile phone accessories such as batteries and chargers, which are often available at one-tenth the price of company branded accessories . Last year, the mobile phone makers asked finance ministry to reduce 34% duty on imported accessories, but nothing concrete has happened as yet.7.PHOTOGRAPHIC EQUIPTMENT principally regarded as legal in most countries, parallel imports make expensive photographic equipment attractive to savvy users. The grey market in photographic equipment is thriving in highly developed and heavily taxed states like Singapore, with dealers importing directly from lower taxed states and selling at a lower price, creating competition against a local authorised distributor.Grey sets, as colloquially called, are often comparable to authorised imports. Lenses or split second units of parallel imports often only differ by the warrant provided, and since the grey sets were manufactured for another state, photographic equipment manufacturers often offer local warranty, instead of international warranty, which will render grey sets ineligible for warranty claims with the manufacturer. Due to the nature of local warranty, importers of grey sets usually mask the flaw in warranty with their own warranty schemes. These are often warranties with reduced benefits or lasting a shorter period of time. Grey set s do not differ particularly from an authorised import. They look and function identically, apart from the manufacturers warranties having been voided.7.1.Grey market for digital cameras may bite the dust soonKOLKATA Grey markets for digital cameras may soon become a thing of past, feel the imaging majors in India. It is certainly the year of demise for grey market in compact category, and the sun will set soon in DSLR (Digital Single Lens Reflex) segment, said Alok Bharadwaj, higher-ranking V-P, Canon India. Though being an unorganized sector, it is spread in many metro cities, like in Kolkata, at Metro Galli, Kidderpore, and in Delhi, at Pallika Bazar. Earlier, Nikons competition was Nikon grey but now the scenario has changed and grey market has shrunk a lot. Its no more a cause for concern, said Sajjan Kumar, GM, imaging, Nikon India. According to Bharadwaj, the grey market in the country is mostly activated in DSLR segment and its roughly around Rs. 250 crore, but since India is the main point for all the global camera majors and as a consequence of that, the market is also change magnitude rapidly, which is ultimately causing the death of grey market.The general trend amongst consumers is to buy expensive lenses and camera bodies from the grey market at a cheaper rate, but now with most of the players providing the product at a place nearby them, with an extended guarantee period and free memory cards, people are ready to buy it from us officially, said Kumar. More awareness among the consumers and round-the-clock marketing have also stepped up the chances to fall down the grey market, said Hiroshi Takashina, MD, Nikon India. It may be noted that Nikon India has recently doubled its marketing expenditure to Rs. long hundred crore from last years Rs 60 crore. Another common feeling amongst the leading camera players is, if government reduces tax on the DSLR bodies, lens, accessories, then the process of erasing grey market will be rapid.Currently, the basic duty on lenses and accessories is still at 10%, which makes it a little difficult for us to bring DSLR prices further down, scorn a phenomenal growth in the sector, said a top official of Olympus India. Currently only 1% of Olympus Indias sales is affected by grey market. The Comprehensive Economic Partnership Agreement (CEPA) will benefit us surely to cut the excessive costing, feels Bharadwaj. It may be noted that India and Japan have signed the CEPA Act, under which both the countries will enjoy some trade benefits during the bilateral trade. According to Takashina, India is a price conscious market where 75% of the sales are in the category of cameras priced below Rs.10,000, so with more shopping shop concept and 24 hour customer care backup, it is now more sensible for a customer to buy the gear from official dealers than to go and buy it from the grey market.8.BROADCASTINGIn television and radio broadcasting, grey markets primarily exist in relation to transmit radio and satellite television delivery. The most common form is companies reselling the equipment and services of a provider not licensed to operate in the market.8.1Industry body opposes levy on TV setspicNEW DELHI Consumer electronics industry said on Monday that sale of television sets would be hit and investment flows affected, if government imposes a license fee on TV sets. Also, share of the grey market would go up if such a proposal is accepted, Anoop Kumar president Consumer Electronics and TV Manufacturers Association (Cetma) said.pic Government is planning to impose a license fee of 10-15% on purchase price of each TV set, to provide financial help to Prasar Bharati.If the proposed levy is imposed, the level of taxation on TV sets would rise to 45-50% and the share of the grey market will certainly increase, a Cetma official said. When total incidence of taxes on ACs was about 50%, the grey market was more than 80%. With the reduction of taxes, the grey market for ACs has pract ically disappeared. The increase in the share of grey market for TV sets will ultimately result in loss of revenue to the government, Cetma added. Cetma said any additional burden would result in a major slowdown of the television industry, already reeling under heavy taxes.9.VIDEO GAMESGrey markets can sometimes develop for select video game consoles and titles whose demand temporarily outstrips supply and the local shops run out of stock, this happens especially during the holiday season. Other popular items, such as dolls can also be affected. In such situations the grey market price may be considerably higher than the manufacturers suggested retail price. Online auction sites such as eBay have contributed to the emergence of the video game grey market. 10.How to control the web of Grey Marketing?In order to reduce the impact of grey market goods, firms can take the following strategiesEnforcement of intellectual property rightsManufacturers or their licensees often seek to enfor ce trademark or other intellectual-property rights against the grey market. such(prenominal) rights may be exercised against the import, sale and/or advertisement of grey imports. However, such rights can be limited. Examples of such limitations include the first-sale doctrine in the United States and the doctrine of the exhaustion of rights in the European Union. When grey-market products are publicise on Google, eBay or other legitimate web sites, it is possible to petition for removal of any advertisements that violate trademark or copyright laws. This can be done directly, without the involvement of legal professionals. eBay, for example, will mutilate listings of such products even in countries where their purchase and use is not against the law.Refusal to supplyManufacturers may refuse to supply distributors and retailers (and with commercial products, customers) that trade in grey-market goods. They may also more broadly limit supplies in markets where prices are low.Refusa l to honor warrantiesManufacturers may refuse to honor the warranty of an item purchased from grey-market sources, on the grounds that the higher price on the non-grey market reflects a higher level of service. Alternatively, they may provide the warranty service only from the manufacturers subsidiary in the intended country of import, not the diverted third country where the grey goods are ultimately sold by the distributor or retailer. This response to the grey market is especially apparent in electronics goods.Reliance on regulationLocal laws (or customer demand) concerning distribution and packaging (for example, the language on labels, units of measurement, and nutritional disclosure on foodstuffs) can be brought into play, as can national standards certifications for certain goods. analyse grey-market goodsManufacturers may give the same item different model numbers in different countries, even though the functions of the item are identical, so that they can identify grey imp orts. Manufacturers can also use batch codes to enable similar tracing of grey imports. Parallel market importers often de-code the product in order to avoid the identification of the supplier. In the United States, courts have decided that decoding which blemishes the product is a material alteration, rendering the product infringed. Parallel market importers have worked around this limitation by create new removal techniques.