The Oyaide Caper: All's Well that Ends Well

As reported on this website on December 9, Joseph Cohen of the Lotus Group, exclusive distributor of Oyaide products in North America, discovered that Chris Johnson of Parts ConneXion was selling counterfeit Oyaide AC plugs at regular Oyaide prices. Given that Johnson had previously signed a contract with the Lotus Group to distribute genuine Oyaide plugs, Cohen immediately attempted to reach Johnson to resolve the matter.

Unfortunately, Johnson was unreachable, home in bed with a wicked cold. Concerned that the counterfeit AC devices might harm purchasers, Cohen then posted a strong warning about the counterfeits on AudioAsylum.com, and alerted his mailing list. In a subsequent, heat-of-the-moment interview for this publication, he accused Johnson of negotiating in bad faith.

The two parties have since reached an amicable agreement that safeguards the interests of both manufacturers and consumers. Soon after the incident, Johnson posted the following announcement (reprinted here verbatim) on his Web newsletter.

"It was brought to pcX's attention late last week, that an item we had for sale, was not legitimate—the 60 pcs. of OYAIDE connectors we had purchased from an overseas vendor were determined to be counterfeit. These were purchased (from a Japanese supplier) approximately one month ago, as part of a larger buy of NOS parts (resistors, caps, tubes, etc.). As we had not bought OYAIDE parts previously, we had no legitimate sample to compare these items to. Nonetheless, we truly regret that this happened, and have taken immediate steps to remedy the situation (refunded all affected buyers, removed the product from our shelves, and de-listed them from both our website and newsletter). Moreover, we have extended our apologies to The North American importer—The Lotus Group. While we advertised the items in accordance to their policy of full market retail (with no advertised discounting), they were not legitimate parts, nor were they purchased thru the—the authorized distributor—which contravened terms within their distribution agreement.

"UPDATE: Dec. 16th, 2008—pcX is pleased to announce that we have settled this matter in its entirety, and have accelerated our product introduction plans for OYAIDE. We have now agreed to come on board as an authorized retailer for the OYAIDE product line immediately. Joe Cohen of the LOTUS group (the authorized North American distributor for OYAIDE) and Chris Johnson of Parts ConneXion are finalizing details this week. It is pcX's hope to have OYAIDE product, in stock, just prior to Christmas. Stay tuned for more details in upcoming newsletters. "As a result, pcX has decided to make the following 'written' commitment to all its loyal customers.

"Parts ConneXion will sell only brand new, 'A'-stock (unless otherwise described), merchandise, purchased directly from the original manufacturer, or [its] authorized local distribution—period! In the case of NOS merchandise (eg. Telefunken tubes, Allen-Bradley resistors, Black-gate caps, etc.—items from defunct companies or parts which are no longer in production), pcX will do everything in [its] power to prove the 'provenance' of all such merchandise—by comparing this product to known 'legitimate' samples.

"At any time, if a pcX customer questions the legitimacy of the product they buy from us, pcX will provide supporting documentation or comparison samples, to remove any doubt regarding its authenticity. If it cannot, the customer will receive a full and complete refund of his or her purchase.

"While this was an isolated case, and [there] was certainly no intent in our actions, we do regret this unfortunate turn of events....and will work diligently to ensure that our valued customers can have complete confidence in the purchases they make from pcX...now, and in the future."

In response, Joseph Cohen of the Lotus Group issued the following statement:

"By now word has gone round that Partsconnexion.com has issued a statement in which they take full responsibility for the acquisition and sale of counterfeit Oyaide products obtained through unauthorized channels. In that statement they have issued an apology to The Lotus Group and have issued a new policy statement guaranteeing their customers that all of the products they sell will be sourced 100% through authorized channels.

"We thank Chris Johnson for his statement and for the apology. This storm that we have weathered will make everyone a winner except those who continue to engage in grey market and counterfeit activities—both buyers and sellers. We have had an object lesson in the perils of engaging in such activity. This can only be good for the industry as a whole.

"First and foremost, the customer is the winner: Zero tolerance for grey market and counterfeit goods should always be the gold standard. That standard has now been reinforced. Thus, customers can buy with assurance from authorized sellers that the parts they are acquiring are 100% genuine.

"Secondly, industry professionals who abide by this standard stand to benefit both by increased customer confidence and the assurance that the products they resell and the products they build will be of the highest quality. Given Partsconnexion's new policy statement, and their assurances, The Lotus Group will be shipping Oyaide products to them for resale.

"The problem of grey market activity and counterfeit products is not going to go away, but by staying vigilant and having zero tolerance, we can mitigate their impact and free ourselves to get on with the pursuit of making the best sound possible."

In response to questions concerning his pricing policy, Cohen explained, "The reason we require retailers to only advertise our products at full retail is to avoid the kind of price war that would ensue if we took a laissez faire attitude toward pricing. In the scenario where low price rules the street, small dealers are at a definite disadvantage. Products that are regularly discounted become commodities that are purchased based on price alone. We hope that the dealer who spends a lot of time discussing the merits of a product with a customer does not then lose the sale to someone who has spent no time with the customer but has a better-advertised price.

"We do not dictate that there can be no discounting whatsoever. Rather, we are trying to encourage good relations between dealer and customer and to balance both of their needs."

Cohen has since asked Oyaide not to post Parts ConneXion as an "unprincipled dealer" of their cooperation. "My aim was never to punish Partsconnexion, but to find a way out of the situation that could work for all concerned," Cohen told Stereophile. "For his part, Chris offered up his apology and promised to adhere to a higher standard. That is plenty good for me. I will always opt for working with people rather than trying to tear them down. I feel very good about the end result, and think we are both better and stronger because of it. I look forward to working with Chris Johnson and Partsconnexion."

The final word belongs to Chris Johnson. Refusing to lose sight of the big picture, he spent the pre-Christmas weekend with family and friends, celebrating his engagement to his longtime girlfriend. He has since come down to earth long enough to wrap up the Oyaide mess.

"It was never pcX's intention to sell counterfeit goods....we in fact, were defrauded," Chris says. "Nevertheless, we came to realize that Joe had a broader point to make. All resellers should be purchasing their merchandise from exclusive authorized local distributors.

"Given that pcX has followed that doctrine with every one of its distributed product lines, save and except this one small purchase, we didn't want to leave our customers with the impression this was how we normally conducted business. As a result, we decided to accelerate our official introduction of Oyaide into our product line-up by 4 to 6 weeks (proving in the process, that we had a legitimate interest in the line—no bad faith negotiations). We will be placing our order with Joe by the end of the calendar year.

"We appreciate how constructive Joe has been on this matter after the initial incident. We are pleased to have Oyaide and The Lotus Group join our stable of premium audiophile parts lines."

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