300b lovers

Hi there, Pindac!

The decision to export out of North America is largely up to Spatial Audio. Don and I are the technical advisors and consultants, but exporting is a business decision. We can suggest and advise, but we do not make the final decision.

As Don has mentioned, exports to Europe would have to meet rigorous EU safety standards, and an EU servicing center would be wise. The EU is a big place with many technical and legal requirements that are quite different from the North American market, which has one dominant language, safety standards, and electrical power. If you can sell it in Los Angeles, you can sell it in Toronto, and everywhere in between.

Sure, there are small audiophile manufacturers who import on a "grey market" basis into the EU and the UK. That’s fine until you get caught. Don, myself, and the team at Spatial intend to be on the straight and narrow when it comes to regulations ... we are not Tesla, Apple, or Microsoft, with armies of lawyers to smooth the path into new markets.

Back when I was at Audionics in the Seventies, we eventually surmounted the many EU technical regulations and sold our products into the European market. But it took several years, and we didn’t attempt it until we had significant sales volume in the domestic market. Sure, it’s easy to order a Monolith power transformer with multiple input voltages. That doesn’t make the finished product legal to sell in the UK or the EU.

The unusual thing about the US market is that it is really easy to sell into ... tariff rates are some of the lowest in the world, technical safety requirements are not too severe, and the market is huge and easy to serve. Markets everywhere else are different ... more fragmented, higher tariff barriers, multiple languages, many different technical standards, and other obstacles.

Pindac, I should mention when a private party flies into the USA, buys a product here, and returns with it to the UK or EU, that is technically a "grey market" sale. There is usually no legal problem with the new toy, assuming the local duties and VAT are paid ... but usually it is not legal to re-sell in that country. EU countries take a dim view of grey market sales ... while I have no idea how aggressive UK enforcement is. (In the US, the Federal government doesn’t care about grey market sales, but overseas warranties will not be honored by repair shops.)

And warranty support ceases once it is taken out of the North American market. The primary purpose of an overseas servicing center is to provide continuing warranty support, at a quality standard that matches the original manufacturing quality, with the same parts, service manuals, employee training, etc.

(A "black market" sale, of course, is something that is completely illegal to import into the host country, like an AR-15 into the UK, or something like that. Many laws are broken and arrest warrants are issued. "Grey market" means the product has not been tested by the relevant safety agencies, and is not certified for sale in that country. The most common outcome is that it is seized by Customs and is not returned.)

@lynn_olson

The unusual thing about the US market is that it is really easy to sell into ... tariff rates are some of the lowest in the world, technical safety requirements are not too severe, and the market is huge and easy to serve. Markets everywhere else are different ... more fragmented, higher tariff barriers, multiple languages, many different technical standards, and other obstacles

What a very good synopsis of what manufacturers face if deciding to officially enter international markets. Good grief!! This is not a cavalier undertaking by any stretch of the imagination. A  multitude of serious issues  to contend with.

Charles

My father was a US diplomat and head of the Economic Section of the U.S. Consulate in Hong Kong, and held a similar position at the US Consulate in Osaka, Japan. His primary function was smoothing the way for US business overseas, and making sure they didn’t break local law and get arrested (not joking about this). It’s the job of the nearest US Consulate (or Embassy) to fish Americans out of jail when they unwittingly break local law. Most Americans are unaware they are subject to local law when they travel, with the only exception being US diplomats and members of the Armed Forces. They have separate passports ... I myself held a diplomatic passport until I was 18 and returned to the States.

Hong Kong was very unusual being a Free Port, with zero import duty on goods from anywhere in the world. Back then in the Sixties, the only prohibited goods were guns (of any kind), illegal drugs, and gold. Anything else got a perfunctory inspection and went into Hong Kong warehouses for re-shipment to anywhere else in the world.

Thanks to decades of trade agreements with most countries in the world, the USA is very nearly a duty-free zone, with only the lightest restrictions into our markets. The Chinese government greases the wheels even more by providing free shipping for Chinese manufacturers into the US market (yes, really). But shipping back to China is definitely not free, as anyone with a defective Chinese product will discover. That’s why you should always confirm there is a functioning, and fully staffed, repair agency in North America when buying a Chinese product.

Americans cheerfully assume the rest of the world is this way ... LOL, ha ha, no, not at all. Not even slightly. There’s free trade within the EU, but there’s a maze of mind-numbingly complex safety and technical regulations to gain entry into that market. The big Japanese firms have the resources, but they have full-time staffs doing just that. The EU is a beautiful place and delightful to live in, but in terms of trade, it is a walled garden. Entry is possible but the requirements are daunting ... and are designed that way.

Gaining entry into Japan is nearly impossible. It can take decades. Even Wal-Mart has barely cracked it, and think of the massive resources they can bring to bear. Tourists are always welcome, but good luck immigrating to Japan, or cracking the local market.

Every country in the world is different, with different sets of legal hoops to jump through. Some, like Japan, are essentially closed. China is nearly closed, with complex and difficult currency restrictions. Hong Kong and the USA are very much the exceptions, not the norm.

The USA took the political decision after World War II that it wanted to sponsor worldwide free trade, backed up and protected by the US Navy. (The US Navy has 13 nuclear-powered Carrier Battle Groups. Any other country has just one carrier, and they are not nuclear-powered. Think about that for a while.) The US wanted to dissolve the squabbling European empires that had caused two World Wars, and had the economic muscle to do so. This is still US policy.

@lynn_olson 

Gaining entry into Japan is nearly impossible. It can take decades. Even Wal-Mart has barely cracked it, and think of the massive resources they can bring to bear. Tourists are always welcome, but good luck immigrating to Japan, or cracking the local market

Some could arguably  accuse Japan as being a closed homogeneous society but out of control illegal immigration will never be a concern for them. Absolutely no way they’d allow such a debacle.

As always good insight Lynn.

Charles