For the shadowy way in which the grey market is portrayed, you would've thought that a deal to bring a shipment of iPads into the UAE would have been more discreet.
But there was Julien Pascual, an entrepreneur who runs an online shopping website called emiratesavenue.com, meeting with his dealer for an update on the next wave of inventory at a bustling coffee shop in Dubai Mall.
The goods that Mr Pascual and his supplier were discussing at the time can't be found in stores such as iStyle, one of the country's biggest sellers of Apple products, and Axiom Telecom, a major electronics retailer in the UAE.
Much to the delight of the country's shopaholic consumers, the products he sells, such as gadgets and home appliances, haven't yet found their way to the Emirates through official channels. Instead, they make their way here through Mr Pascual's suppliers.
"This is really just about trading and sourcing. It's the basics of business," says SK, who supplies a significant amount of emiratesavenues.com's stock and who did not want to be identified.
"It really has nothing to do with gadgets. I can sell anything."
But while what SK does is not illegal, the trade of distributing goods through the "grey market" is often condemned by authorised distributors and brands despite its openness and history in the UAE.
Defined by Investopedia as "a market where a product is bought and sold outside of the manufacturer's authorised trading channels", the grey market is in contrast to the black market, which usually involves the sale of illegal products such as stolen or counterfeit goods. Grey-market goods, however, are completely legal.
Locally, the market is driven by the basic premise of supply and demand. Gadget-loving consumers typically don't have the patience to wait months for the hottest mobile device to officially arrive in the UAE and don't mind paying a premium for the privilege of owning one long before their release here.
A survey released this week by YouGov Siraj and commissioned by Research In Motion (RIM), the maker of the BlackBerry, found that 67 per cent of respondents were aware they were purchasing grey-market products through an unauthorised dealer. Furthermore, 62 per cent of people admitted they wouldn't be able to tell the difference between a legitimate and an illegitimate product.
Some retailers say the grey market's growth can be blamed on companies such as Apple or RIM, which place stringent, protectionist policies on distribution, thus ramping up demand for their products.
A walk around any of the UAE's shopping malls demonstrates just how visible the grey market is. Electronics stores display Apple iPads, Samsung Galaxy Tabs and BlackBerry devices prominently once they arrive through unauthorised distributors.
In fact, if you bought an iPad in the UAE over the past year, there's a pretty good chance that it came from the grey market. Midis Group, the region's official authorised distributor of Apple products, only announced last month that it would be supplying the iPad to the Middle East after a one-year delay.
"You have certain brands and distributors who work with the principle of 'let me protect myself' instead of working with a local partner," says Ashish Panjabi, the chief operating officer for Jacky's Electronics.
"These tend to be the brands that are most inflexible in terms of support, marketing, service and logistics, things that a retailer needs. These are the brands that get targeted on the grey market the most."
Surprisingly, the life of a grey-market distributor is not as illicit or dangerous as one would believe. Many deals are conducted publicly during the day, although there is an element of risk associated with an unregulated business.
Mr Pascual says he knows SK through a mutual friend, who suggested they meet because they both operated similar businesses.
Emiratesavenue.com's business model relies on selling its goods on a high-volume basis, so once Mr Pascual found that SK could supply goods in large quantities with a fast turnaround, a partnership was formed.
"In Dubai, it's all who you know," Mr Pascual says. "We found out that we indeed had some good ventures, so we gave it a try. You first give it a shot and if it works, perfect."
For SK, getting involved in the grey market was just a continuation of his family's wholesale and export business. A few years ago, SK noticed that his father, who has a warehouse in Jebel Ali, was missing out on a burgeoning, yet crucial, part of the distribution market.
"I realised that everybody around us was making money, but we weren't," he says. "They were doing something that we haven't done because the business was being run very safely."
To educate himself on the ins and outs of the grey market, SK met some people involved in the trade who told him that electronic goods operated on the "free market" and his business could get involved as long as the shipments were not large enough to raise the attention of customs officials.
SK says he still pays customs duties and has nothing to hide. So far, there have been no knocks on his door to curtail his trading practice and he does not believe there will be any threat to shut his business down anytime soon.
"It's a beautiful market," he says. "Prices here are sometimes better than what you'd get in the US. It's purely driven by supply and demand. You get to see the beauty of how the free market operates."
Indeed, prices vary for goods that are sourced on the grey market. For high-profile items, such as the iPhone or iPad, the grey market here offered mark-ups of about 20 per cent once they were initially available in the US. Over time, however, prices will ease and eventually reach parity once the official distributors make the product locally available.
SK receives his shipments from other wholesale distributors around the world, although a significant amount comes from Singapore. Shipping goods from the US and the UK is harder to source because trade in those countries is more regulated.
"There are people in other countries who get their products straight from Apple, who do take risks. Sometimes the distributors here know who they are," SK says.
Other grey marketers are more direct, Mr Pascual says.
"I can't tell you how many times I've been contacted by guys saying that they have a sister in the US who can get me 10 iPads a day," he says.
But the majority of goods that are sold in the UAE are actually a fraction of the trade that grey-market suppliers in the country actually sell, SK says.
After arriving in Dubai from Singapore or the US, products are re-exported to Iran and Russia. Any excess inventory is distributed to retailers in the Emirates. Then, once the demand for UAE residents has been satisfied, inventory is shopped around the GCC.
"I sit on my computer, where I have a big spreadsheet, and I compare prices in Singapore and the US every single day," SK says. "Sometimes it's different in the morning and sometimes it's different in the evening. If I see that the pound gets weaker, it means that it's cheaper for us to sell back to Singapore."
Mr Panjabi says a small fraction - about 2 per cent to 5 per cent - of Jacky's Electronics' inventory comes from grey-market suppliers. "We try to work through the authorised channels where we can," he says. "They are a good level of support for us and we support them as well, whether it be through servicing, marketing support and advertising ... but they also need to work in a way to respond to the market."
However, the goods themselves have a certain amount of financial risk involved for wholesalers. Home appliances that aren't readily available here have margins of about Dh3, which means SK has to purchase between 1,000 to 2,000 units at a time to make a profit.
Mobile phones are trickier because they are generally "locked" or can only work if they have a specific operator's SIM card. Getting a shipment of phones that are locked typically results in a major loss because consumers can't operate them with a local SIM card.
With the proliferation of the internet, consumers are able to compare prices and decide if they want to shop online or if it is easier to buy it at a traditional bricks-and-mortar retailer.
Over the past few years, dozens of local online retailers have launched websites, including nahel.com, souq.com and aido.com, and e-commerce is slowly becoming big business here.
E-commerce in the UAE is expected to grow by 72 per cent to about US$33.7 million (Dh123.7m) by 2014, Euromonitor forecasts.
"With the grey market on the internet, you see how the competition operates. For example, the iPad was originally sold for Dh6,000. Then we put it for Dh3,500 and everyone did the same," Mr Pascual says.
"Everyone is comparing their price and you'd lower your price to be competitive. It's good to have good suppliers to make your margins." But retailers say consumers who shop on the grey market do it at the peril of buying products without a warranty. The consumer would be at a loss if the gadget stops working. As the Latin proverb goes, caveat emptor, or "let the buyer beware".
"Some places wouldn't look at you again once you left the store," Mr Panjabi says.
As a retailer, Mr Panjabi has to provide his customers with a proper warranty for the product, either through official or local manufacturers, or through the store itself.
"If you look at the consumer protection laws over here, if you buy [a product] locally, you need to be able to service it, return it or give a refund," he says.
Mike Al Mefleh, the product manager for RIM in the Middle East, says consumers looking for the latest smartphone device should educate themselves to ensure they are buying authentic products from reputable outlets.
"They should ask the retailer to explain the warranty that comes with the device - it should be 12 months - and if they can't, they should go elsewhere," Mr Al Mefleh says.
But despite the competition in the market, SK insists that grey-market distributors and their retail counterparts are on good terms with each other.
"We trade with each other. It's a whole network," SK says. "I need their support. Without it, I can't function. They're my toughest competition, but also my closest friends ... there's hundreds of them in Dubai."
To avoid getting ripped off by other suppliers that SK hasn't done much business with, parallel deals are often conducted. To avoid a bad deal, SK has his co-workers inspect the shipment at another location before he hands over the cash to buy it. If everything checks out, the co-workers call SK to give him the green light.
It all sounds like a scene out of an action movie, but so far SK has had no deals go bad.
"All these deals are done in hard cash. It's really interesting how some of these deals are done because sometimes we have to come up with innovative ways to protect ourselves," he says.
"I have to be very careful because sometimes the other guy could say they'll bring the cash or whatever in five minutes and never come back. My father's lost a lot of money in the past to this. A lot of money."
Despite the opposition that retailers and brands may have for the grey market to exist and thrive in the UAE, SK feels that it does not appear that this trade will end anytime soon.
"Ultimately, over here, the best thing for everybody, including the country itself, is if there is a free market," SK says. "The [authorities] realise that here and that's why they are not strict about enforcing [it]."
