Imported Samsung is a pain for Indian Samsung

It’s Samsung vs Samsung and Sony vs Sony in the local flat panel television market.

Parallel imports, or grey market imports, from neighbouring countries are giving consumer electronics makers the worry beads — Samsung, LG, Sony, Panasonic and Toshiba included.

The way it works, small-time importers get these consignments, evade customs duty and sell them in India without the requisite taxes.

About 800,000 units of flat panel televisions are being imported for grey market sales in India every year, say industry officials.

The problem has aggravated recently owing to the growing popularity of flat panel TVs, comprising LCD and LED, said R Zutshi, past president of industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA) and deputy managing director, Samsung India.

“We would estimate that parallel imports of flat panel TVs would be accounting anywhere between 10% and 15% of the category’s market in India,” he said.

The flat panel TV market was pegged at 3.7 million units last year and is estimated to grow to around 5-5.2 million units this year as consumers upgrade to high-end models, said Zutshi.
However, growing parallel imports of flat panel televisions from countries like Thailand, Malaysia, and Singapore are impacting domestic revenues.

CEAMA is likely to take up the issue with Union IT ministry.
Pranab Mohanty, business head, consumer products division, Toshiba India, said it was tricky to evaluate the impact or cause of parallel imports in the category as television manufacturers in India offer the same technology and high-end features and simultaneously launch products in India as internationally.

LG Electronics India said it did not want to comment as parallel imports did not have a significant impact on its revenues.

However, for fellow Korean peer Samsung, grey market sales continue to impact business at a time when it is facing a challenge in negotiating margins with its trade channel.

As per media reports, Samsung has cut margins of big electronics retailers by 3-8%. The company, however, did not comment on this specific question.

Samsung recently got a court injunction against retailers selling its printers imported from various countries without authorisation. In its suit against three defendants, it argued that parallel imports created the likelihood of consumer confusion, posed risk of dilution of Samsung’s trademark and of loss of goodwill and reputation of its authorised distribution channel.

In the past, too, grey market distributors have picked up Samsung discounted goods from some markets and shipped them to other markets where legitimate established channel distribution agreements exist.