Why international gadgets don’t have local warranty

I often get these types of questions from readers — why are gadgets bought in other countries (HK, SG, US) not supported for warranty repairs and replacement in the Philippines? Well, it turns out this is all about the economics of the distribution system.

There’s a supply chain that is normally followed when a product is introduced in the country. Normally, brands would not bring their products in the a region if they do not have a local distributor.

Distributors play a huge role as they are basically the ones that somewhat bank-roll the introduction of the products to the country. Oftentimes, there’s only one distributor for an entire brand. Sometimes, if it’s a huge brand or large volume, there could be two or more distributors (Nokia has two huge distributors in the country).

Remember the time when only Dell laptops are available in the Philippines but not the Dell smartphones? It’s because the distributor was only carrying the laptops. Dell had to look for another distributor for the phones before they can introduce them (ended up with MSI-ECS) locally.

Once the distributor orders in bulk and imports them from the manufacturing countries (normally it’s in Taiwan, China, South Korea or Japan), it will distribute the products to its network of dealers or resellers. Popular dealers like VillMan, PC Express, Octagon, Asianic, Complink are the ones that you see often in the malls but there are actually more in the provinces that we haven’t heard of.

Sometimes, one of the dealers will also be asked by the brands to put up a concept store. So the next time you see a concept store by Asus, Samsung, Western Digital or Sony, try to figure out who’s the dealer behind the store.

Normally, dealers that run the concept stores also get some support for their marketing budget. Some would also get 50-50 share in the construction cost of the store itself.

For warranty, the dealers also serve as the de facto service center. This is the reason why if your device has a defect, you just need to bring it to the store you bought it (along with the receipt) for warranty repairs or replacement.

The least a store can do is receive your item and then refer it to the distributor. This is the reason why sometimes it takes weeks before your product is inspected, repaired, serviced, replaced and returned. Depending on the capacity of the distributor, pick-ups and delivery to that store may only happen once or twice a week.

If the product line is already strong and the volume of units sold can justify it, the distributor will also put up its own stand-alone service center and this is where all dealers will refer customers for warranty claims.

As such, to protect the business of the distributor and dealers, they will only receive items you actually bought from them. These are the units which are eligible for local warranty. Otherwise, they might also accept grey units but you’ll have to pay for the service since it’s not covered by warranty.

The reason is now pretty clear:

* The distributor is only responsible for specific products that it actually imported and sold to dealers. This is why serial numbers, warranty cards or ORs are used to track them.

* Distributors will incur cost for warranty claims. It could be from cost of manpower for repairs, cost of shipments for returns and replacements or cost of defective parts.

* Products bought elsewhere are considered loss of sales opportunity for the distributor so not only do they not want to provide warranty for it, they also consider it competition. The brands themselves cannot also track the sales volume outside of the distributorship so it may seem that sales are slow but in fact it is very strong in the gray market. Those numbers are not considered by the regional/global office as originating from the country.

* This is the reason why gray market units or parallel imports are way cheaper than the mall prices of the devices — the prices do not account for replacement warranty and they did not invest in infrastructure for repairs and services. The only time gray market units are more expensive that the SRP is because of high demand and low supply of the units.

* So, even if your unit is still covered by international warranty, the local service center will eventually charge for repairs. This is the only way the local distributor can recoup and maintain operation of their business.

How about international warranty?

Most brands or manufacturers will offer international warranty if local warranty is not available. This means that wherever you bought your gadgets, it will be serviced, repaired or fixed by the international service center.

The international service center is usually stationed in regional hubs like Singapore, the United States or Japan.

So yes, you can have your BlackBerry Bold 9900 handset which you bought in the US or that Canon S100 camera you bought in HongKong repaired from the factory defects. Thing is, you have to send it back to the originating country to do so (the distributor there will honor it). That’s how the ball rolls.

There’s economics at play in this distribution ecosystem. Some may have a different system but based on numerous conversations we’ve had with dealers, distributors and manufacturers, this is normally how it goes (the only exception I know of is Apple). Hope this simple explanation helps.