The grey market crosses national borders and is particularly vigorous where pricing differences in national markets encourage importers to move low-priced products into high-priced markets - against the wishes and plans of the brand owner.
And grey market activity can be a 'cloak and dagger' affair involving the secret movement of goods across borders and the surreptitious breach of their distribution and partner agreements with the brand owner, including the abuse of incentive and discount programs, according to the KPMG study.
In addition to the financial losses, which are expected to continue to grow year over year, the study shows that electronics products sold on the grey market may pose a risk to consumers as well.
Products that travel through the grey market may be sold to unwitting consumers who find out, only after they have made the purchase, that the product is obsolete or without warranty or support.
A refusal to help a customer caught in the grey market crossfire can hurt a manufacturer's reputation, create negative publicity and damage relations with investors as well as markets becoming aware the manufacturer has a grey market problem.
'If they want to gain control over grey market activities and improve profits they need to improve relationships at all levels of the distribution channel.
The survey found that distributors and brokers may often violate distribution agreements, some by using deceit, including misrepresenting end users' identities in special discount programs, or using fraudulent documentation to acquire goods from authorised sources to sell to the grey market.
Consumers don't benefit from the grey market. Survey respondents estimated that 60 per cent of end users pay equally for products originating from the grey market versus products that originate from the legitimate market.
That's because grey market activities are a global problem.
If some manufacturers, such as Estee Lauder, Chanel and L'Oreal, take extra measures to battle the grey market phenomenon, many others have adopted a passive attitude.
Back in 1998, when the Supreme Court ruled in favor of Quality King against Lanza, a manufacturer of professional hair care products, it seemed to have struck a fatal blow to those seeking to use the copyright laws to prevent the importation of so-called grey market goods.
Maintaining a strong legal department is often critical in the fight against grey market activities.