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. Last Updated: 07/27/2016

Yevroset Tainted by Gray Imports

VedomostiPolice officers found gray import at Yevroset's outlet in the Mitino electronics market.
Even official cellphone dealers sell gray imports.

Following a raid on the Mitino electronics market last week, police officers seized an undisclosed number of illegally imported Motorola cellphones at the local branch of Yevroset, one of the biggest dealers in the country, with 114 outlets in Moscow

Law enforcement officials say this is the first time Yevroset has been caught with illegal imports. But it is not the first time for the local market. Dealers themselves estimate that the gray market accounts for 50 percent to 70 percent of cellphone sales.

"Gray imports touch everyone. The temptation is too great -- they are imported for $20 and sold for $100," said a manager at the Moscow office of one of the biggest mobile phone producers.

Cellphone operators often subsidize the price of handsets sold at their outlets in anticipation of income from new subscribers. But distributors sell them to other dealers in violation of contracts with the operators.

'"According to our statistics, 95 percent of gray imports are subsidized handsets," said Andrei Bychenko, product support manager for Motorola's personal communications sector.

The cellphones confiscated from the Yevroset store were intended to be sold to subscribers of Turkish operator Turkcell. But the menus had been converted into Cyrillic and the telephones were packed in boxes marked in Russian.

"We were amazed at the quality of the Russian-language instructions that had been made for the 'gray' telephones. The quality of the print was no worse than the real ones," said police officer Dmitry Ivanov.

Yevroset could receive a fine for illegally importing goods and deceiving consumers, Ivanov said, adding that the amount of the fine will depend on the number of illegally imported telephones.

Yevroset became the official distributor of Motorola two weeks ago, but there have been no deliveries so far, Yevroset chief Yevgeny Chichvarkin said. The company previously purchased Motorola handsets from local suppliers without paying any particular attention to where they came from, he said.

Motorola officials do not want to risk their relations with the retailer, which sells millions of dollars worth of phones each month. If Yevroset can show that the handsets were bought before the distribution agreement was concluded, then no sanctions will be applied on Motorola's part, they said.

Yevroset's competitors agreed that the company is clean.

"They are trying to become a 'white' company -- this is an exception," said Vladimir Bogdanov, marketing director at Tekhmarket. Tekhmarket and fellow retailer Dixis also signed distribution deals with Motorola two weeks ago.

In December 2000, Motorola, Ericsson, Siemens, Samsung and Philips appealed to the Communications Ministry, the State Customs Committee and the Trade Ministry, requesting that stricter controls be slapped on handset sales. The federal budget loses about $50 million annually due to gray imports, according to manufacturers.