Legal market vs gray market electronics

Hello.

Starting from 2005, a legal market for electronics and other goods began to be built in Russia. bright

an example of this was that smuggling becameconsidered unacceptable, all possible schemes were gradually cleaned out. One of the highlights of that time can be considered the history of Euroset, when the company was the first to pay all taxes, which immediately resulted in problems with a number of high-ranking officials of the Ministry of Internal Affairs. A batch of Motorola phones was recognized as counterfeit (!), then they were allegedly destroyed and, as usual, they did it in a hurry, and then these devices began to emerge on the market. Euroset was punished for agreeing to play by the rules of the state; not all people in power had the same understanding of what was good and what was bad. Many shared the private and the public.

Euroset and its founding fathers paid in fullfor believing that times are changing, they have made very serious enemies. To understand the problem, it is enough to say that the amount of funds that went past the state treasury in the form of taxes amounted to hundreds of millions of dollars annually. A tidbit that couldn't be ignored. For many years, the state has consistently built a structure and taught everyone that it is necessary to pay taxes. Step by step, gray schemes disappeared, import optimization rested on insignificant and semi-legal schemes, which were turned a blind eye. We can safely say that the gray market as such ceased to exist, reduced to a minimum, which resulted in the gradual dying of Gorbushka, it lost to ordinary stores. During the pandemic, “Gorbushka” completely switched to official deliveries en masse, since it was impossible to get gray devices. But now everything has changed again, and what the state has been building for many years has suddenly become completely different. Before we go any further, we need to dwell on a few terms to make it clear what we are talking about.

I constantly stumble upon the fact that journalists andordinary people get confused in simple terms and mix everything together. Suddenly, parallel imports turn into smuggling, and even counterfeit. Let's try to clarify this issue.

Smuggling is goods that are brought intocountry without paying taxes (the same gray market). For example, you need to pay 20% VAT, but you hide your smartphones in your suitcase and don't pay it. Or carry out customs clearance of green peas, and inside those same smartphones. Savings are evident, at least in the amount of VAT. This is smuggling. And so you can import any goods, there is no difference. This is saving on taxes and deception of the state. Parallel imports are not smuggling, distributors pay taxes and import goods officially.

Counterfeit is another complex term thatsomehow confused with others. Counterfeit is fake! That is, you see Apple AirPods, but in fact it is a fake for them. Moreover, a fake can be of any quality, including without the Apple inscription on the case, but this is exactly what a fake is. In Russia, counterfeit, read - fake, is exactly the same prohibited as before, it is impossible to import and sell them. Nothing has changed here. And when they tell you about the fight against counterfeiting, they mean fakes that are sold under the guise of an original product. Counterfeits are especially common in shoes and clothing, sporting goods and nutritional supplements, including vitamins. There are fewer of them in electronics. I hope that such a short educational program will allow you not to get confused in these simple words.

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For example, here in the picture you see a fake,which is sold on Ozone. Marketplaces signed a memorandum on the fight against counterfeiting, but no real steps are being taken here, this is the age-old story of “bees against honey”. The state will fight against counterfeit goods, it is not at all interested in it, and here it is important to protect consumers, since these can be goods that directly harm buyers.

On the same "Ozone" fakes are sold for a long time andsuccessfully, this story drags on for years, and no one pays much attention to it, especially in the current situation. These are sales and money, and the last one in this situation, of course, is the buyer. Like, he is to blame and overlooked.

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Unfortunately, we are in a situation wherethe gray market reared its head and became a real force again. We built a civilized trade, but for companies that stopped deliveries, it became impossible. Like mushrooms springing up in Apple and Samsung stores after rain, copyright holders are now unable (or unwilling) to fight those who use their brands.

Parallel import is legal, the state receivestaxes. But from the point of view of the consumer, the level of service is exactly the same, there is no official guarantee for both the gray iPhone and the one brought by parallel import. Apple has been in a hurry and is trying to restore the service in order to secure sales in Russia, because if you have a working guarantee, it will turn out that you can buy such a product and not worry about what will happen to it next. The main thing is to choose the right model. He wrote about this in "Spikers".

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The difference in prices for Apple equipment with parallel imports and gray supplies is huge.

Let's take a look at the Galaxy A53 model, graydevices cost about 25 thousand rubles, for comparison, in DNS the exact same phone costs 33 thousand rubles (there is no service either there or there). The difference of 8 thousand rubles is huge.

I think that there is not the slightest doubt where exactly most people will buy new smartphones, in the gray market or in the official retail that uses parallel imports.

The problem is also that fewis aware of the size of the unexpected gray market. For example, in the reports of GFK Rus there are no small players, there is no gray market at all. I talked to one of the dealers seryakom. For the whole of January 2022, about 120 Samsung smartphones were sold. In July, the sales volume was 3750 pieces. A person has caught a bird-luck by the tail and is enjoying the moment, and there are not just one or two such players, there are not even dozens of them, but hundreds all over the country. They do not pay any taxes, de facto they have contraband, which is dragged into the country in various ways, the tracks have already been established. Budget losses are palpable.

The main thing is that there is pressure on the usualretail, she is simply forced to refuse goods that are on the gray market, to reduce their share to a minimum. This explains why sales of all brands that officially supply their goods have grown so much, it is more profitable to sell them. The same Apple or Samsung will suffer from the loss of market share, user loyalty, their share will decrease (at the moment it has not fallen as much as calculations show us - the gray market is simply not taken into account). What is the size of the gray market? No one knows for sure, but we tried to estimate it for July.

Sales statistics of major players, whichtaken into account in the reports of various research companies, shows about 9% of the market in pieces. A little, right? We look at the activation of smartphones on networks in Russia, the percentage of new Samsung from all smartphones is about 21%. The situation that was once characteristic of Xiaomi is repeated, when the gray market accounted for half of all company sales in Russia, but research companies simply did not see it.

The market is becoming fragmented, moreover,circumstances force all companies, without exception, to seek optimization, in particular, to find products from the gray market. And this means that hundreds of individual entrepreneurs will start deliveries to large retailers, in fact, this is the revival of the gray market. On the part of the state, sooner or later, the search for individual entrepreneurs will begin, checking through VAT and understanding that it does not exist. Which will automatically lead to the fact that the idea of creating a single IMEI database and activating devices on them will arise again. I do not like this idea, and I have stated the reasons for this more than once.

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But from the point of view of the state, it may look likeas a real solution to the problem of shortfall in VAT revenues for electronics. And it's not just smartphones, but a huge number of different products. And in the new conditions, the state will gradually learn to see sales, the main thing is that they are caught within the country at the expense of both user payments and settlements of legal entities. The only question is when and how everyone will be counted.

For business, this means a simple thing - to playthe gray market is possible, but for the time being. It is impossible to completely rebuild your sales for such goods, this can turn into a disaster after some time. But the fact that everyone will look for an intermediate solution, a mix of sales, is beyond doubt. In a matter of months, the civilized market for a number of brands collapsed in our country, and now a gray market bacchanalia has blossomed with huge volumes and very big money. This market automatically becomes criminal in one way or another (smuggling on a large scale is already a crime, for a second). In a word, it turns out that we are moving to a new reality, and it is completely incomprehensible when and how it will end. I think that in 2023 the state will begin to more actively regulate sales on the market, remove the opportunity to trade gray goods just as freely. But now is the time of the gray market, and it gives super profits to those who know how to drag goods into the country.

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