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Parallel Trade : the pros and the cons within the context of the European market

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Parallel Trade : the pros and the cons within the context of the European market

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Samenvatting

Parallel trade is 'the legal importation of genuine goods into a country by intermediaries other than authorised distributors' (Albaum, Duerr, Strandskov, 2005, p. 313). It has been concluded that parallel import is a result of price differences across European countries, which in turn, is the result of different price settings in adjacent markets by the manufacturer or fluctuating currencies. The aim of this research was to investigate parallel trade within the European Union with, on the one hand, the preferences of the manufacturer of branded goods and, on the other hand, the
European law.
Research has shown that the authorised intermediaries and the
manufacturer itself are most concerned with the grey market as parallel importing affects their revenues; damages the reputation of the product and brand; leads to the official intermediaries losing motivation; whereby there is no control over the manufacturer's products. Nevertheless, this research shows that the manufacturer itself may find it beneficial to engage in parallel trade. Moreover, in the personal care market especially larger players such as L'Oréal, Unilever and Procter & Gamble can be found that do all prefer global strategies for their main products. However, this
research proves that these products are most likely to be found in the grey market as the global strategy is most beneficial to the grey marketeer as products are standardized and prices adapted to local circumstances.
If measures are to be found to help manufacturers prevent finding
their products in the grey market; sacrificing markets is probably the most effective measure, as the manufacturer will not accept any price reduction.
After all, one can conclude that the role of the manufacturer in encouraging parallel trade can be described as active and effective. The role of the manufacturer in preventing parallel trade, on the contrary, whilst it can also be described as very active, it is not at all effective.The European Union does not assist the manufacturer in preventing parallel imports, as the European Commission believes that branded goods are sufficiently protected by EU law against the threat of parallel imports by means of the regional/community exhaustion rule. Parallel importing is a result of the free trade between all member states, which is, in general, very beneficial to all international businesses. Moreover, the European Union believes that the European consumer benefits from parallel trade as their favourite brands can now be found against lower prices.
Finally, it has been concluded that the manufacturer, in order to be
successful, needs a change in EU law, stating that the manufacturer cannot be held responsible for products when the manufacturer's intermediary trades with the grey marketeer. This change would be the ideal situation for the manufacturer and could result in a win-win situation for both the manufacturer and the European consumer.

Toon meer
OrganisatieDe Haagse Hogeschool
AfdelingESC Hogere Europeses Beroepen Opleiding
Jaar2009
TypeBachelor
TaalEngels

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