Original equipment manufacturers (OEMs) have a major headache and that is grey market which has eroded from them both price and brand image through unofficial, unauthorized, unintended distribution channels and left them with losses estimated at $640 billion.
Nigeria CommunicationsWeek investigations revealed that worldwide market for original equipment manufacturers was estimated at some $1.8 trillion last year but they are currently controlling only about 58 per cent of the market.
Nigeria and some Asian countries have been fingered as havens where dealers seek to maximize price reductions by distorting marketing channels with new, secondhand or refurbished products that avoided import tariffs or local tax.
Activities of grey market dealers are evident in volume product such as Laptops, desktops, low range servers and not in mid and high range servers that are solution based.
Only recently, some 7,000 laptops counterfeits of the original came into the country from unapproved channels, causing in its wake serious market disequilibrium.
Nigeria CommunicationsWeek gathered that grey market has been encouraged by companies’ lack of effective monitoring of their channels for adherence to provisions as well as reluctance to take strong actions to preserve the integrity of their channels.
Operators of grey market obtain products from a variety of sources normally at a discounted price by price arbitrage, abuse of incentive programmes or because they counterfeit.
Piqued by the unchecked activities of the grey market, Hewlett Packard, leader in the computer market in the country launched an enlightenment campaign aimed at discouraging Nigerians from patronizing the illegal market for the company’s products.
Mr. Ime Umoh, managing director, Hewlett Packard Nigeria, described the grey market phenomenon as worrisome.
"Development of HP business in Nigeria will lead to enlargement of the office that will provide job opportunities as well increase investment in corporate social responsibility," he said.
He cited an instance with the Otigba market in Ikeja-Lagos, saying that most of those trading at the market are just interested in low priced personal computers (PCs), most of which he claimed are counterfeits.
"Grey market is a major challenge for us and we are not encouraging anybody to do grey and I am sorry for anybody who bought from grey market, because HP cannot help you at our service centres, except if the person is ready to pay for such services," Umoh said.
Government, customers and all end users are advised to shun gray market because support for items from the market is even more expensive than the equipments themselves.