On­line agents in US face hard times

China Daily (Canada) - - FRONT PAGE - In Shang­hai lix­ue­qing@chi­nadaily.com.cn

Groups of Chi­nese stu­dents and housewives have been cash­ing in on the tremen­dous de­mand for in­ter­na­tional brands in China by tak­ing up part-time jobs in the United States as agents fa­cil­i­tat­ing the over­seas pur­chase of goods on­line.

But they now face stronger com­pe­ti­tion as e-com­merce gi­ants like Tmall and JD.com in­creas­ingly switch their at­ten­tion to this lu­cra­tive mar­ket­place.

Zhang Qin (not her real name) started trad­ing goods on­line af­ter she moved to Cal­i­for­nia in 2012 and her friends and rel­a­tives kept pes­ter­ing her to buy prod­ucts for them.

“Amer­i­can brands are popular be­cause they are safe and au­then­tic,” said the 36-yearold house­wife, who lives in Los An­ge­les.

“My friends wanted to buy th­ese prod­ucts them­selves and mo­bile net­work­ing tools like WeChat.

Th­ese agents take or­ders on­line, shop at lo­cal su­per­mar­kets, stores and on Ama­zon, then mail the goods to China and charge a com­mis­sion.

They usu­ally rely on friends and ac­quain­tances be­cause of the dif­fi­culty in­volved in gain­ing a stranger’s trust. All of Zhang’s cus­tomers, for ex­am­ple, are ei­ther her WeChat con­tacts or friends of friends.

“Peo­ple know there are many fake goods sold on Taobao, China’s largest shop­ping web­site, and cus­tomers can’t ver­ify if the goods are au­then­tic or not un­til they re­ceive them. But on WeChat, my con­tacts trust me,” she said.

Wei Hong (an­other pseu­do­nym) also con­ducts busi­ness mainly within her cir­cle of ac­quain­tances. The post­doc­toral re­searcher in Seat­tle wanted to earn some pocket money af­ter her son was born last year.

She said

she

makes $ 400- 500 a month from work­ing as an on­line agent, or about one-fifth of her to­tal in­come. She charges 5 to 10 per­cent for each deal, far less than the 20 per­cent charged by pro­fes­sional agents.

“I charge my friends 5 per­cent at most,” said Wei. “Be­sides, the Wash­ing­ton State sales tax rate is 6.5 per­cent, higher than most other states. Pro­fes­sional agents will usu­ally make their pur­chases in other states.”

Both Wei and Zhang feel that com­pe­ti­tion is ris­ing. More peo­ple are en­ter­ing the busi­ness while more Amer­i­can sell­ers are post­ing their goods to China.

“I’ve heard of peo­ple who bought houses with the money they made work­ing as agents like us, but that would be in­con­ceiv­able now,” said Wei.

Big play­ers in the e-com­merce field are also jump­ing on the bandwagon.

JD.com signed a strate­gic co­op­er­a­tive agree­ment with the Ad­min­is­tra­tion Com­mit­tee of Hangzhou Air­port Eco­nomic Zone in Fe­bru­ary. Hangzhou, in Zhe­jiang prov­ince, is the third port JD has signed such a deal with, the other two be­ing Guangzhou in south China and Ningbo, which is just a few hours’ drive from Shang­hai and Hangzhou.

Ama­zon an­nounced in Au­gust its plan to set up a pres­ence in the China (Shang­hai) Free Trade Zone. Alibaba’s cross-bor­der e-com­merce plat­form Tmall Global, which was launched in Fe­bru­ary last year, has at­tracted more than 5,000 brands in­clud­ing Costco Whole­sale Corp.

Zhang has not felt threat­ened by the en­croach­ing gi­ants just yet, though.

“I don’t think they have af­fected me much. Costco’s Tmall store pro­vides limited choices. You still have to buy a lot of other things from other chan­nels,” said Zhang.

Liu Run, pres­i­dent

of Shang­hai Run2me Man­age­ment Con­sult­ing Co Ltd, takes a dif­fer­ent view. He thinks that the ef­forts of the e-com­merce gi­ants will make most of the in­di­vid­ual on­line agents like Zhang and Wei shut down their busi­nesses even­tu­ally.

The sell­ing mode of in­di­vid­ual on­line agents is quite sim­ple – they profit from the gap be­tween the buy­ing price and the sell­ing price, he said.

“Some Amer­i­can and Euro­pean prod­ucts, cos­met­ics and elec­tronic prod­ucts in par­tic­u­lar, are cheaper to buy from over­seas than in China,” said Liu, who spe­cial­izes in re­search­ing the econ­omy of the In­ter­net.

How­ever, stricter reg­u­la­tions are on the way to re­duce the gap. A new reg­u­la­tion from the Gen­eral Ad­min­is­tra­tion of Cus­toms of China that came into ef­fect on Aug 1 last year stip­u­lates that all en­ter­prises and in­di­vid­u­als en­gaged in cross-bor­der e-com­merce have to pro­vide a list of im­ported and ex­ported items to cus­toms au­thor­i­ties.

Wei de­clares ev­ery­thing be­fore mail­ing it and the tar­iff is pre­paid by her cus­tomers. She said many other agents re­frain from do­ing this as it eats into their prof­its. Some make a pact with their cus­tomers be­fore­hand that if the packages are ex­am­ined the cus­tomers will pay the tar­iff, she said.

One agent, who de­clined to be named, told China Daily that the new reg­u­la­tion is mak­ing it harder for her to earn a living.

“Once the big play­ers come up with bet­ter so­lu­tions in terms of lo­gis­tics and cus­toms clear­ance, goods sold on their plat­forms will be even cheaper. In­di­vid­ual agents will find it harder to sur­vive be­cause they can’t build cus­tomer trust. They are un­able to test and ver­ify their sell­ers, but Tmall and JD can,” said Liu.

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