Parallel Import Auto

Based on the U.S. Intellectual Property Rights (IPRs), distribution rights are exhausted upon the first sale anywhere in the country. Essentially, once IPR's are exhausted, it becomes absolutely legal for anyone to sell their purchased goods within the country. After all, it is their rightfully owned property. For example, if company "X" has a patent for a product in the U.S., and sells its product to a consumer in the U.S., "X's" IPR rights are exhausted within the U.S., The consumer or buyer has the right to resell the product anywhere within the U.S. to anyone they wish.

When the U.S. dollar was strong, during the 1981-1986 period, the number of cars purchased in Europe by U.S. tourists grew 2,000%. In 1986 the total value of products distributed through unauthorized channels in the U.S. reached a peak of $10 billion (Palia and Keown 1991).

Based on the Chinese intellectual property rights (IPRs), IPR owners lose the exclusive privilege after the first sale of the product anywhere in the world, and parallel imported goods become legal. For example, if company "X" has a patent in the U.S. and sells its product to a consumer in Japan, "X's" rights are exhausted anywhere in the world. The buyer in Japan can freely resell the product anywhere in the world.

A Chinese government pilot allowing unauthorized car dealers to sell imported cars was extended to Tianjin in 2015. The result was an increase of 14.1% in what are known as 'parallel imports' to 79,000 units in 2015.