Grey imports are a problem worldwide, not least in the automation industry in South Africa. The Supplier Advisory Council (SAC) operates under the umbrella of SAIMC, and is tackling this problem head-on. To find out more, SA Instrumentation & Control’s editor chatted to outgoing SAC chairman, Chad Andrews, MD of Lapp Southern Africa, and incumbent chairman, Brad Maher, MD of Elonics.
What is meant by grey imports?
Also known as parallel imports, the concept of grey imports has changed over the years. Today the talk is not specifically about copies − counterfeit or fake goods − but is concerned rather with the importing and trading of genuine goods that are sold without the knowledge or consent of the original manufacturer or local representative.
These grey goods are associated with a number of problems. Andrews says that apart from the loss of revenue for certified importers, the company is expected to then support the product and carry warranties, guarantees, and certifications at its own cost when it never benefited from the sale. Certification is a problem when approved suppliers lose a tender because they’re quoting against something that isn’t certified for the required specification. There is also the possibility of the product failing because it’s substandard, and the approved supplier is then subject to the consequences. There can also be legal issues associated with a brand locally, and you then have to respond when you weren’t the actual supplier. Safety issues are also important. For example, when working in intrinsically safe areas, it’s important to know on what authority you are working. Another danger is that if you haven’t been through the proper channels, maybe you are not getting supplied the proper version of the equipment, or the right device, unit or model.
It could happen that an expensive machine is brought in from offshore as a grey import and then breaks down. The local authorised supplier is approached for help, but is not willing because it was not bought here. Then it’s the problem of the financial officer who signed off the capital expenditure. This also makes the brand look bad, which is a problem for the authorised supplier.
SAC’s journey
Maher explains how the SAC provides a collective voice for automation companies to address industry issues, having evolved from the Industrial Instrumentation Group (IIG). It’s important to belong to an institution like the SAIMC in order to have a voice in government and industry on matters such as grey imports. He describes how, after taking legal advice, it was apparent to the SAC that this issue could not be tackled on an individual company basis, it needed to be done collectively. The SAIMC was the perfect fit for suppliers to come together, having a solid structure at the top backed up by a strong end user community. One outcome was that a letter was issued under the auspices of the SAIMC notifying companies of the legal issues regarding grey imports and the requirement to label them.
It’s not a problem if its labelled
Section 8 of the Regulations (No. 34180 in the Government Gazette of 1 April 2011) to the Consumer Protection Act states that grey market goods and advertising material must be clearly marked as such in plain language, stating clearly whether the goods bear a trade mark, that they have been imported without the approval or licence of the registered owner of that trade mark, and that no guarantee or warranty in respect of such goods will be honoured or fulfilled by any official or licensed importer of such goods.
“It’s not a problem if it’s labelled, but the purchaser must realise that there is no official backup or service support,” says Andrews. “You can buy the product but may not get any service or backup from the official importer.” He adds that the regulations further require that all written and electronic marketing, promotions and sales quotations show the same notification so that consumers are made aware that such goods are not supported by the official importer/distributor before they consider using or purchasing the goods.
The pressures
The engineer signing off and commissioning a job carries the responsibility, and can get caught between the pressure of keeping the plant running and keeping costs down. The same applies to the buyer, whose KPR is to save the company money but the cheapest product might not be the right one. “That’s why we are having this campaign, as its important for them to understand this,” adds Maher. “We want to market ourselves and raise the awareness level across the board − supply chain managers in utilities, consulting engineers specifying products, industries using the products, wholesalers, distributors and end users. Being associated with the SAIMC is important because you can say “I’m in an institution that’s got my back”. As a member of the SAC, you can rest assured that we are looking out for you in terms of parallel imports, because we are connected with the vendors who are selling the original quality product.”
SAC’s message
“We are concerned about products being brought into the country without certification, as either branded products or copies (fakes and counterfeits). These should be labelled as such. Our message is to be aware of grey imported products and the implications of buying them because there is no guarantee and no follow up. We are not going to support branded products that we did not supply or that didn’t follow approved local supply channels,” concludes Andrews.
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