Grey market - risk or reward.

SEN’S longest ever online poll, which received almost 200 responses from installers and integrators over an 18-month period, found that while most installers were wary of grey market products, nearly 50 per cent would seriously consider using them.

In answer to the question: “Would You Ever Use Grey Market Products?” the SEN poll found that for 15 per cent of installers the savings are worth the risks – they voted yes. For 27 per cent of responders, the risks of grey market products are acceptable sometimes, depending on the product and the application. Meanwhile, 58 per cent of installers and integrators said they would never use grey market products, agreeing that the loss of warranty and support was simply not worth the risk.

According to James Layton of Bosch Security Systems, there are 4 fundamental risks for installation companies that choose to engage in what is essentially parallel importing.

“First, they accept full commercial responsibility for the product – there is no manufacturer support, no warranty, and potentially no certain availability of spare components,” Layton said. “Yet the integrator needs to commit to provide all of those things to their customer – potentially creating a risk of costs in excess of what they saved on the purchase.

“Second, many manufacturers have slight variances in the products they make available to different regions. This could be as simple as including a power lead for a different fitting, to something as complex as wireless frequencies or built-in languages. A current example would be Z-Wave home automation products which have different operating frequencies in each region.

“Third, the integrator really has no direct interaction with the product until it has already arrived in Australia. Especially when purchasing from locations in Asia Pacific, there is a risk that the product may in fact be a knock-off of a real product,” Layton said.

“Additionally, many products that make their way in to the grey market are components that failed factory testing but still had the appearance of full function. The integrator may find that they have paid for a low-quality product that is effectively unsellable.

“Finally, and most importantly, there’s the legal regulatory compliance of the products to take into account. ERAC and ACMA have guidelines on how an electrical product is tested and marked before it enters Australia. When a product enters the country from overseas, compliance with these guidelines falls on the company that first receives the goods in Australia.

“If the product is discovered to not comply with these guidelines, the integrator or distributor that imported them can face heavy fines – potentially tens of thousands of dollars per incident. When a product also includes telecommunications or wireless components, additional regulatory bodies and potential fines can become involved.”