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Nov 8, 2022
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Return of the Prodigal Brand

Return of the Prodigal Brand

Photo: Alexander Ryumin / TASS

Trademarks Yves Saint Laurent, Giorgio Armani, as well as other Lankom, Redken and Kerastas are ready to resume direct deliveries to Russia. That is why the Ministry of Industry and Trade intends to end the parallel import of their perfumery and cosmetic products. In short, everything will soon be as it was before the start of the special operation. There should be no parallel, and even more so gray or black imports, that is, smuggling with counterfeit goods for the right brands. Only legal import, white and fluffy.

Of course, this is if the companies are ready to resume deliveries of their products to Russia. Then welcome, in the sense of Welcome. Although the new old rules for them will come into force only in three months, so those who have already purchased branded products under the cunning scheme of parallel imports (somewhere in the Chinese market) will have time to still import what they have purchased into the country , RIA Novosti reported, referring to the Ministry of Industry and Trade.

General Director of the National Consumer Protection Fund Alexander Kalinin believes that those large companies that left Russia under the influence of momentary political factors will definitely return:

— Let’s imagine ourselves in the place of any Western businessman. You have to be a stupid person, not have an ounce of common sense, to refuse the huge Russian market. With many Western entrepreneurs, and this is more than two hundred companies, some strange “convulsions” have occurred. But they will come back – some sooner, some later. Someone through new legal entities that allegedly are no longer “the same as before”, but the return process is inevitable.

SP: Let them return, but what price should they pay for their departure? Recall that back in March, the West proclaimed a ban on the import of luxury goods into Russia.

– If we accept all those who have left with open arms, with an orchestra and a red carpet – this is not entirely correct. Times have changed, attitudes must also change. “Entrance ticket” to the Russian market should now cost more. We need to look closely at their behavior.

For example, PepsiCo has been working with us since Soviet times. This is not only a huge international corporation, but now a Russian system enterprise that has bought plants and factories in our country. However, from time to time, her leader Indra Nooyiappeals to American presidents – then to Donald Trumpthen to Joseph Biden – with a request to “increase pressure on Russia.” She signs such anti-Russian letters, and continues to earn billions from us.

It is necessary to carefully go through such entrepreneurs, not only in the USA, but also in Germany, and in France, and in other countries, such as the noisy Czech Republic, which is trying to play the first violin in the ensemble of Russophobia. In the same Baltic countries. Do we have Lithuanian or Estonian products? Can we adjust our policy towards her?

“SP”: – Re-export was and is being done by everyone. Previously, Belarus was remembered, with its “seafood” and apples, the harvest of which is five times more than grows in this republic itself.

– And I would remember Cuba of the Soviet times. She consumed three and a half million tons of oil, and we sent her fourteen million. Then the Cubans re-exported Soviet oil products to Mexico, Nicaragua, Brazil, Argentina and even Canada. But then the Americans also imposed an embargo on Cuba.

All is well: the cost of oil was then 27 rubles, and the USSR sold it for 506 rubles. Operations of this kind went through the Central Committee of the CPSU and I personally had to deal with this, since it was part of my duties. When the communists are scolded, one can remember that they sold their product for more than twenty times more than its cost price.

Now there are very stormy and serious processes in our exports with imports. In six European countries, there has been an increase in imports from Russia. On the one hand, they announce sanctions to us, being on the dance floor of the United States and the NATO bloc, on the other hand, they conclude contracts with us for the stands of our various goods. Mutual trade continues.

As far as perfumery and cosmetic companies are concerned, I am sure that our competent authorities will consider their proposal. That is, the government of the Russian Federation is working for the authoritative Deputy Prime Minister Denis Manturov with his deputies and assistants. I hope they have enough understanding of how to do it in the best way. After all, they have been working for many years and know the market well.

The main thing is to treat all this from the point of view of the interests of the whole country. See how this or the company works: does it invest in the development of enterprises, does it train staff, or does it export all profits abroad? After all, some of our Russian entrepreneurs sometimes “get tired of Russia”, sell their business in order to buy somewhere a football club or another yacht.

Yes, the mechanism of export and import is very complicated. Yes, the situation has changed, but the management principles, forms and methods have remained the same, as it was during the time of the Minister of Foreign Trade of the USSR Nikolai Patolichev and Chairman of the USSR State Committee for Foreign Economic Relations, Minister of Foreign Economic Relations of the USSR Konstantin Katushev. Yes – and then some managed to take bribes, but the party control system worked, the guilty were found and severely punished. Their current heirs are doing about the same. The main thing is to take into account the interests of the whole country, and not just specific business entities and individuals.

When the Russian government legalized parallel imports to meet the demand for foreign goods, it was emphasized that it was not about legalizing counterfeit goods, but only about importing original goods through “alternative supply channels”. It was necessary to meet the demand for products containing “the results of intellectual activity.” Prime Minister Mikhail Mishustin then he said something else about a certain “international principle of exhaustion of rights to a trademark”, if the product is sold by the owner around the world. But we usually do not delve into such tricky terms.

And parallel imports are just the importation of goods into the country without the consent of the copyright holder. That is, there is an “official” import of goods through suppliers authorized by the copyright holder, and there are “parallel” supplies, which were previously called “gray imports”. I remember that then, apart from this gray import, we didn’t have any special worries.

The main thing is that not only our country, but also many other states apply the “first sale” principle to trademarks. And after it begins the free circulation of products with trademarks. But for this they must first be sold for the first time at the voluntary request of the copyright holder. But that is where his exclusive right ends.

After the first sale of the goods in any country of the world or in one or another integration association, for example, in the CIS, the EAEU or BRICS, the goods can be resold without asking for permission. This is what parallel imports are, by the way, allowed by the WTO itself, the World Trade Organization – we did not come up with all this ourselves. International laws guarantee the supply of goods to Russia, despite the “unfriendly actions of foreign politicians.”

Yes, not everything is properly controlled. I would especially like to control the activities of Ukrainian business in the Russian Federation. After all, they successfully earn money from us, and send the money to fight against Russia. But nothing, we keep quiet.

Copyright holders cry that parallel imports take away their ability to control product quality and safety compliance, which can damage a brand’s reputation. This, of course, is important, but what is more important for the right holder is that he loses the levers of financial control over the products. After all, having placed his order at some Chinese or any other factory in huge Southeast Asia, he essentially says goodbye to the brand. It is very difficult to control the volume and quality of what is produced. How many packages were made, one hundred or ten thousand – one Buddha knows.

After all, the copyright holder, the “brand holder”, usually lives in Europe or America. And the factories that produce his branded goods are in Asia. For example, the Yves Saint Laurent brand and various other brands of cosmetics and lipstick are owned by the Pinot family of French billionaires with the help of their Kering Group corporation.

When brands were added to the list of parallel imports at the end of last summer, negotiations immediately began to resume supplies of cosmetic products from “leading manufacturers”. Most likely by “manufacturers” he meant Francois-Henri Pinault, better known in wide circles as the husband of a Hollywood star of Mexican origin Salma Hayek. After all, in this case we are talking about goods for women. Brands are different, and many of them are owned by the same person – very convenient.

It is of course difficult to guarantee the origin of a product to the end user. But it is not easy for the brand owner to find out about the fate of his product. Our Constitutional Court met everyone halfway, pointing out that the withdrawal from circulation and destruction of goods imported in parallel is permissible only in case of inadequate quality – if they threaten the safety of people, nature and our cultural values. And also – if the copyright holder is subject to the regime of sanctions against Russia, which can also be considered as incorrect behavior. Everything is legal.

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