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Shifting grades of gray

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I first learned about gray markets when I was a rookie cops reporter, a long time ago in a city far, far away.

One weekend shift, I covered an auto accident that killed a member of a rather wealthy local family. It was routine – if tragedy can ever be “routine” – except that I found out later his car was taken to a scrap yard and crushed within days of the crash.

“What’s up with that?” I asked an attorney friend who handled a lot of personal injury lawsuits. He was astonished that potential evidence, civil or criminal, could vanish so suddenly. The police investigation hadn’t even been closed. I poked around some, and that turned out to be my introduction into the world of gray goods.

Political corruption and organized crime thrived in this part of the world, to the point they were taken for granted; businesses burned down “mysteriously” on a regular basis, and there was one memorable stretch of time when pipe bombs were a favored method of choice for gaining a competitive market edge (a method also very hard on cars). So that explained why, if someone wanted that car to disappear, it did. Money and connections could make just about anything happen.

But what was the “why” in this situation? Looking back now, I’m sure there was far more to the fatal crash story, but this particular car, it turned out, had been brought into the U.S. illegally.

That’s what the gray market is all about – legitimate goods produced abroad but not legal for import. The reasons range from protecting U.S. dealers to consumer safety and environmental concerns. Back in the 1980s, when this crash happened, gray-market autos were hot, especially Mercedes, which the crushed car was. If you want to know more about the gray market for autos then, click here.

What brought this memory back was an article on Marketwatch last week about how the gray market is now working in reverse. Straw buyers employed by the wealthy in China and other countries purchase expensive cars here and ship them abroad, where they cost even more.

But it’s not just cars. According to Manufacturing News, there is a robust gray-market trade going on with all sorts of items, aided and abetted by the Internet. That great deal you just found on parts – can you be sure they are the authorized article? How about that fancy box of imported chocolates?

And why does it matter? We’re not talking about counterfeit stuff, just slightly different but very illegal stuff. But as the article points out, gray-market goods can open you up to liability and often can have counterfeits mixed in.

And in that murky world where “different” and “fake” intersect is where I will leave us today. Call them popular, call them “reproduction” or call them gray market, thanks to online auction sites such as eBay, it’s getting harder and harder to know whether your purchases are authentic when nostalgia is your bent. Search data for vintage items, from toys to apparel, are being used to spur the manufacture of new items to meet demand.

Now, eBay says it won’t knowingly sell fakes. But who knows where things end up eventually? It’s a resellers’ world online and a short trip from “must have” to “why did I buy this and what can I get for it now?”

The week ahead

Because the midstate is home to so many small and family-owned businesses, we write a lot of stories about succession planning and companies celebrating third- and fourth-generation success stories. Not all families are happy families, though, and this week’s issue features a story about one midstate succession that isn’t working out very well for the parties involved. Lessons to be learned, perhaps.

Also, last week, I promised you this story: “Jason Scott takes us inside a growing real estate broker that’s bucking the trend on agency consolidation.” It’s the nature of journalism that sometimes a story is postponed, and this was one of those times. It will be in this week’s issue, though, and we hope you will find it worth the wait.

The Inside Business focus is on trends in health care, with lists on health care insurers, dental and vision insurers, physical therapy and sports medicine clinics, and dental practices.

Find the week’s networking opportunities here.

The rewind

After reading this, you’re still intrigued with the idea of owning the cool car nobody else on the block has? Here’s how to do it legally. And reselling isn’t just an issue on eBay – used car dealers worry, too.

Meanwhile, Russian hackers made off with more than a billion user ID/password combinations, it was disclosed last week. (Here’s what you should do.) Your cellphone is actively disseminating information about you everywhere you go. Now you should take a closer look at your neighbor’s cat as it wanders through your backyard – because it could be spying on your network. What a world!

Hope Stephan

Hope Stephan

Hope Stephan is editor of the Central Penn Business Journal. A Pennsylvania native, she is a graduate of Penn State and Xavier University. Have a question or tip for her? Email her at hopes@cpbj.com. Follow her on Twitter, @hstephan. Circle Hope Stephan on .

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