'Parallel imports' raises the bar in market

Antitrust probe

Parallel imports have been arriving in China for more than 10 years. The topic was recently in the spotlight after antitrust probes in the auto industry and wide media exposure of high prices for imported cars.

High prices for imported cars is closely associated with the business model of foreign brands in China, most of which authorize only one official importer.

It is usually their wholly owned or majority-owned sales company.

Experts said such business model is legal and normal but it sets the conditions for possible vertical monopoly.

Deng Zhisong, lawyer at the Beijing Dacheng Law Firm, told China Daily that a common example of vertical monopoly is resale price maintenance.

In the case of imported vehicles, it refers to the practice that carmakers require dealerships to sell cars at prices no less than a bottom line that they set, he said.

It seems that dealerships can offer discounts as they like but many carmakers use hidden measures to maintain the bottom price, Deng said.

For example, they may punish the dealerships that violate the bottom line by increasing prices, reducing supplies or supplying more unpopular models, he said.