Gift Group Inc., an importing organization in New York, buys perfume from a company in France for $13 a unit. Unknown to the French company, Gift Group sells this product in the United States for $19 a unit. This leads to a loss of revenue for the French company as it also sells its perfume in the United States but for a higher price of $22. What concept does this demonstrate??

Question

Quizplus · Accepted Answer

Parallel importing refers to the practice of importing goods through channels that, while legal, are unofficial or unauthorized by the original manufacturer. In this scenario, Gift Group Inc. is buying perfume at a lower price in France and selling it in the U.S. at a price lower than what the French company sells it for in the U.S., without the French company's authorization. This is a classic example of parallel importing, where products are sold outside of the manufacturers' authorized distribution channels, often leading to price discrepancies in different markets.