Region restrictions on Epson inks?

[Peter Barnes]

A colleague tells me that a local supplier told him that if he buys genuine Epson inks from the US rather than from a local (Australian) supplier they won't work as there is a region restriction on US inks in Australia.  Can anyone confirm or refute that this happens?  We both use the R3000 printer, but my friend tells me that someone he knows with a wide format Epson inkjet printer cannot use US sourced ink. It is an issue for us (and for the local suppliers) because we can ship ink here for 30-40% less than it costs to pick it up from the local store.

[Mark D Segal]

I have no idea, but the surest way of finding out is to import one cartridge from the USA and try it.

If there is any truth to this statement it raises very, very interesting questions about international trade law. If there were any truly significant TECHNICAL reasons for this (e.g. and hypothetically - differences in printer specs by region of the world), then it would be a non-issue, apart from the annoying price differences; but if there were no technical justification for it, then it becomes a matter of international restrictive trade practices and whether there are any rules or procedures in the world of international trade law for dealing with it. Depending on the facts, there may potential for a really interesting case study here.

[Gary Brown]

I don't know if Epson does that, but FWIW HP does region-code their ink cartridges (see “Finding and Installing Cartridges after Moving to Another Country” from HP), so it is plausible.

[Farmer]

Check the SKUs.  If they're the same, they'll work.

Different models are released in different countries at times.  2200 versus the 2100, for example, going back a while.

The fact is that it costs different amounts to conduct business in different parts of the world, so a single "world price" for physical items might sound nice, but it doesn't take into consideration the myriad of differences in operating a business and providing support in different locations, things like different warranty requirements in different countries, for example.

If it cost the same to deliver products and support everywhere, then you could have a single price.

[Mark D Segal]

......................
The fact is that it costs different amounts to conduct business in different parts of the world, so a single "world price" for physical items might sound nice, but it doesn't take into consideration the myriad of differences in operating a business and providing support in different locations, things like different warranty requirements in different countries, for example.

Yes, we see this routinely in Canada, being so close to the USA, yet with higher prices for so many things on an exchange-rate adjusted basis. The whole Canadian market is roughly the size of the State of California. Probably similar situation in Australia, and scale economies matter. But I don't think that's the key issue here. Rather the key issue is restrictive trade practices: are things being done to force customers to buy essentially the same product from one source rather than another.

[Alan Goldhammer]

Yes, we see this routinely in Canada, being so close to the USA, yet with higher prices for so many things on an exchange-rate adjusted basis. The whole Canadian market is roughly the size of the State of California. Probably similar situation in Australia, and scale economies matter. But I don't think that's the key issue here. Rather the key issue is restrictive trade practices: are things being done to force customers to buy essentially the same product from one source rather than another.

But the cost of patented pharmaceuticals is much cheaper in Canada than in the United States and I believe Canadian lumber is also much cheaper as well.  Go figure.

[Mark D Segal]

But the cost of patented pharmaceuticals is much cheaper in Canada than in the United States and I believe Canadian lumber is also much cheaper as well.  Go figure.

Not to take this too far OT, what happens in those two industries is very heavily impacted by different regulatory environments in our two countries. There's no public interest specifically regulating printer ink, nor should there be - that would fall under the normal rules of trade regimes.

[Alan Goldhammer]

Not to take this too far OT, what happens in those two industries is very heavily impacted by different regulatory environments in our two countries. There's no public interest specifically regulating printer ink, nor should there be - that would fall under the normal rules of trade regimes.

No disagreement.  I think what happens is that regional product mangers have agreements with vendors in the region for a certain floor price support (which is apparently higher in Australia than elsewhere).  Buying outside the region undercuts the local vendors who really aren't in any position to do anything about it.  We have the same situation in the US with Nikon camera equipment.  You can buy "gray" market items but Nikon US will not honor the warranty or perform any service on them.  Price differential (at least at B&H is not terribly different) so I purchase the Nikon US items just to be on the safe side.  I'm not defending any of these practices and as you note, they probably run counter to some trade regime laws but of course it would require legal action to remedy the situation.

[Mark D Segal]

Alan, yes, but I have to say - I'm not convinced there is anything that necessarily needs to be "remedied". When I said it perhaps opens a very interesting case study I meant exactly that. I don't know whether there really are internationally applicable rules - say in an ITO context - against technological segmentation of markets in the manner that it is alleged to be happening. If there are none, the company is within its rights. If there are some, perhaps they could be challenged, but it would be hugely expensive with an uncertain outcome. And that said, I also believe there are distinctions between what private companies are not allowed to do, versus what governments are not allowed to do.

I do think it completely reasonable to expect that the costs of doing business in different markets are very different for all kinds of reasons, therefore companies doing business in many markets need many different pricing structures to recover their costs in each one of them, if that is their business model. For others, the business model could be to reduce international price differences by cross-subsidizing between markets in a manner that allows them to recover their costs on a broad corporate basis - but who knows - perhaps that could get them into legal trouble too. In the former model the company may need other measures (such as that alleged in this thread) to make those differentials stick, while in the latter much less so.

In the USA you have market size playing to your advantage - you get scale economies allowing comparatively low prices and full-blown service/support - a win-win. In countries like Canada and Australia we don't have that luxury. We are faced with the inevitable need to pay more if we want the company to sustain the kind of service infrastructure locally that you have in the USA. Between Canada and the USA, in an effort to maintain roughly comparable pricing on a landed, exchange-weighted basis, Epson has achieved a careful balance between what they support in Canada versus what is only supported to Canada from their US HQ. Maybe it's much harder for them do this vis a vis Australia which is a wee bit further afield.

[jnmoore]

I'd just like to find a supplier in Canada (or who ships to Canada) with a better price than $60. per Epson 3880 cart? I live in the Vancouver area, if you have a suggestion please let me know. (No I don't want re-filled carts with non-OEM ink).

Thanks,

John

[Mark D Segal]

http://www.ccbc-club.com/products.asp?man=31&cat=68 56.00 - prob. shipping extra.

[cats_five]

A colleague tells me that a local supplier told him that if he buys genuine Epson inks from the US rather than from a local (Australian) supplier they won't work as there is a region restriction on US inks in Australia. 
<snip>

So some how the printer knows which country it's in.  Are they selling very slightly different models?  Is it picking it up from the PC's region?

[Peter Barnes]

So some how the printer knows which country it's in.  Are they selling very slightly different models?  Is it picking it up from the PC's region?

Good questions! I now have some  imported ink carts.  The US carts have a different package and a different ink number on the package. For example,  yellow is T157420 on the US/Canada pack (it has French and English), and T1574 on the local package (marked 'For use in Asia and Pacific', and with several Asian languages in addition to English). The cartridges themselves are absolutely identical, marked T1574 and labelled in French and English only.  Both are marked 'Made in Indonesia'.   I have yet to try the outlaw ink in my printer - I'm waiting for a cart to run dry, don't like wasting this precious fluid.

So how does Epson justify a local retail price of $AU48 per cart when it is sold  by both B&H and Adorama for $US25?  The $AU has been trading above the $US for about 6 months now. And of course the distance from Indonesia to Australia is a small fraction of the distance to North America.  The Australian price does include a general tax of 10%, which means the retailer is actually taking $AU43.60 per cart, but that is still about 75% above the US price.

I am no economist, but I do understand the concept of economies of scale - I just fail to see how that can be used to justify this difference when the same product (K3 ink cartridges) is simply put into different packs.

[Mark D Segal]

I am no economist, but I do understand the concept of economies of scale - I just fail to see how that can be used to justify this difference when the same product (K3 ink cartridges) is simply put into different packs.

The ink is part of the total "sales model" for the printer. We are buying an integrated package. It's not all that different from the razor blade approach - the razor is cheap or free and then you pay (handsomely) for the blades designed for that model. The economies of scale are not just about selling ink. It's about financing the whole sales and support activity of the company in whatever region of the world. Marketing, service and support costs per printer are probably much higher in Australia because of the relatively small market size and the minimum service and support requirements the printer manufacturer needs to provide - unless they can find cheaper and equally acceptable ways of doing it. They can get the additional unit revenue they need from the price of ink, or the price of the printers or both; but to the extent those costs really are higher in Australia than in the USA, they need to be recovered somehow. I'm not about to second-guess whether the levels are justified or smart, because I don't and won't have the information needed for making that call - only suggesting that price differentials between markets are not surprising, they have a basis and it is a competitive industry. The only question on my mind was whether the technique of segmenting the markets would be considered acceptable by the standards of our international trade regimes - maybe yes, maybe not. Could be studied.

[Alan Goldhammer]

They can get the additional unit revenue they need from the price of ink, or the price of the printers or both; but to the extent those costs really are higher in Australia than in the USA, they need to be recovered somehow. I'm not about to second-guess whether the levels are justified or smart, because I don't and won't have the information needed for making that call - only suggesting that price differentials between markets are not surprising, they have a basis and it is a competitive industry. The only question on my mind was whether the technique of segmenting the markets would be considered acceptable by the standards of our international trade regimes - maybe yes, maybe not. Could be studied.

We've probably beaten this one into submission but I'll only add one more thing to the discussion.  Prior to retirement I worked in the pharmaceutical industry and we did a number of economic analyses of various markets and pricing.  The US does not have any price controls on medicines (and I'm not saying that this is in anyway justified) whereas the remainder of the world does control prices at the national level.  As a result, US sales which on a cost per unit basis are the highest in the world and the profit margins are as will are responsible for generating the majority of the profits for the pharma companies.  Of course this is a regulated industry unlike inkjet printers and the lessons are not generally applicable.  I suspect that what Mark says is valid in that the costs of servicing the Australian market are probably higher than the US.  The good case study if one can get sales figures (and I think they are available in that we discussed this whole thing about a year ago and I remember going to the Epson annual financials and finding the numbers), is to compare regional pricing for Epson, HP, and Canon to see what the differentials.  I wonder if the other two manufacturers do the same pricing in Australia vs. the US.

Alan

[Mark D Segal]

Alan,

The one thing about your pharma story that IS applicable - generically - is the fact that one way or another manufacturers will recover their costs and earn their target RoEs. So in big pharma, US consumers are essentially paying for price control in the rest of the world.

[Alan Goldhammer]

Alan,

The one thing about your pharma story that IS applicable - generically - is the fact that one way or another manufacturers will recover their costs and earn their target RoEs. So in big pharma, US consumers are essentially paying for price control in the rest of the world.

That was the conclusion of the work that we did and not only that, but it also supports the ongoing R&D pipeline as well which is why the majority of research is done in the US (even by foreign-based pharma companies).

[enduser]

There's a formal Free Trade Agrement between the US and Australia, made in about 2008.  Australia gave up several less restrictive copyright rules to get this agreement.  The FTA was specifically designed to allow products from either country free and unfettered access to each other's markets.

Report Epson to the ACCC and see if they can help - otherwise,  Occupy!

[Mark D Segal]

There's a formal Free Trade Agrement between the US and Australia, made in about 2008.  Australia gave up several less restrictive copyright rules to get this agreement.  The FTA was specifically designed to allow products from either country free and unfettered access to each other's markets.

Report Epson to the ACCC and see if they can help - otherwise,  Occupy!

Yeah, we've had a Free Trade Agreement between Canada and the USA for a long time - in fact I was involved in some of the work informing its negotiation back in the early 1980s. There is a host of trading and commercial practices that simply doesn't come under the purview of such agreements, and without knowing any of the details of the US-Australia agreement, I would be surprised if it offered any protection to consumers on a matter like this.

[Farmer]

Before everyone runs off complaining, perhaps someone should actually TEST these claims?

Things like the FTA bind the governments with regard to tarrifs or other barriers that they may impose - they don't require a company to guarantee to sell every product into all markets within the agreement or, in fact, for a company to do much at all.  Which makes sense.  Why would a company be forced to sell a product into a market or forced to sell at a specific price?

Should photographers be forced to sell digital files at a greatly reduced price to people in overseas markets who don't want to pay for shipping or for the photographer's rate for printing and materials when they can get it done cheaper locally (or done themselves even cheaper)?  I wouldn't expect to find too many fine art photogs lining up to follow that model (and rightly so).