Well-known brands have long had a love-hate relationship with gray-market goods.

These products—which resellers purchase on the gray market, or basically outside channels authorized by the brands—can erode companies’ pricing power and hurt the image that they’ve spent years cultivating.

Still, gray-market goods generate revenue for the brands wherever they’re sold. They can also help build awareness and drive demand in countries where brands don’t have a significant presence. That’s why many brands, despite making a fuss about the unauthorized sales, have little appetite to crack down on the problem.

“It’s one of the worst-kept secrets that brands look the other way on gray-market goods,” said Scott Galloway, CEO of L2 Inc., a New York-based research firm. “A lot of brands will let their country managers flush out products through the gray market.”

The problem is that “the store manager in New York will not want to have their sales revenue drop by 5%, so somehow they are incentivized to keep this going,” said Alex Misseri, e-commerce manager at Razorfish, a digital consulting firm. “At the end of day, top management of the brand says that any way it sells, it’s money in my pocket.”

Yet in places like China, where online shopping is fueling demand for gray-market goods, well-known brands are realizing they have to clamp down on their distribution network or risk hurting their own sales in this key market, said Yujun Qiu, an analyst at Planet Retail.

On popular online shopping platforms such as Tmall and Taobao, owned by Internet giant Alibaba Group Holding Ltd., gray-market goods are common and often sold at steep discounts to the retail price. Concerns raised by brands ranging from luxury retailer Burberry BRBY.LN +1.19% PLC to athletic-shoe seller New Balance have led Alibaba to start removing some gray-market listings from its sites.

Brands are also realizing that there can be a fine line between gray-market and counterfeit goods, a problem that brands have thrown money and investigators at for years.

“If the product is genuine, that’s one thing,” said Dan Plane, director at Simone IP Services, a consultancy on intellectual property issues. “But very often, the parallel importers mix in fakes. There’s nothing to stop them from doing this.”