Re­tail agents tap into huge po­ten­tial

Chi­nese cus­tomers will­ing to pay a pre­mium for au­then­tic lux­ury goods from in UK

China Daily (USA) - - BUSINESS - ByWANG MINGJIE in Lon­don wang­mingjie@ mail.chi­nadai­lyuk.com

Laden with shop­ping from Har­rods and clutch­ing her fash­ion­able Chanel bag, Julie Li is glued to her smart­phone WeChat-ing clients back home in China. A 30-year-old fi­nance grad­u­ate from Bei­jing, she is a full­time free­lance re­tail agent, known in Chi­nese as daigou.

“I worked as a daigou along­side my day job for about three years. Then six months ago I de­cided to quit my job to fully con­cen­trate on the busi­ness,” said Li — not her real name.

She reck­ons it earns her 20,000 pounds ($25,000) in a good month.

She has just left Lon­don’s up­mar­ket Har­rods depart­ment store with a con­sign­ment of cos­met­ics. Clients in China are will­ing to pay a pre­mium for au­then­tic lux­ury goods that are cheaper and more read­ily avail­able in the UK than at home.

Hav­ing de­vel­oped three ma­jor whole­sale clients, who have their own net­works of more than 300 cus­tomers, Li buys 10,000 pounds’ worth of top-end lip­sticks ev­ery day. “The weak pound af­ter Brexit is also giv­ing a boost to my busi­ness and sales have dou­bled in re­cent months,” Li added. She charges a pre­mium of per­cent above the re­tail 5

Julie Li,

a 30-year-old free­lance re­tail agent, known as daigou price and buy­ers are usu­ally mid­dle-in­com­ers in China with a strong ap­petite for high qual­ity prod­ucts. “I be­lieve the qual­ity stan­dards, the prod­uct ranges and the cheaper prices are the main fac­tors that Chi­nese con­sumers look West for,” she said.

Re­tail ex­perts said cus­tomers must be con­vinced the goods they re­ceive are gen­uine and that the sup­plier is reli­able.

“An im­por­tant is­sue is the un­cer­tainty faced by con­sumers about whether these prod­ucts are gen­uine or not. The higher the de­mand for a prod­uct, the more the chances of fakes or adul­ter­ated prod­ucts,” said Pervez Ghauri, pro­fes­sor of In­ter­na­tional Busi­ness at Birm­ing­ham Busi­ness School.

Daigou are al­most ex­clu­sively from the Chi­nese main­land and the pur­chases they of­fer range from lux­ury bags to top brand cos­met­ics, from health sup­ple­ments to baby milk for­mula. The busi­ness has boomed in re­cent years, ac­count­ing for 34 bil­lion yuan ($5.02 bil­lion) to 50 bil­lion yuan in global sales last year, ac­cord­ing to a report from con­sul­tancy firm Bain & Co.

In 2008, the China baby milk scan­dal, which in­volved milk and in­fant for­mula be­ing adul­ter­ated with melamine, led many Chi­nese par­ents to shop for milk for­mula abroad through daigou.

Geoffrey Wood, dean of Es­sex Busi­ness School, said Chi­nese con­sumers pre­fer West­ern brands as they be­lieve key West­ern coun­tries not only have more rig­or­ous pro­duc­tion stan­dards, but also have the will to en­force them con­sis­tently.

Seiz­ing the op­por­tu­nity of the milk scan­dal in China, 29-year-old Jimmy Zhen — also not his real name — be­gan buy­ing milk pow­der while also hold­ing down a full-time job.

“In the be­gin­ning, I only shopped for my fam­ily and friends. Through word of mouth, I was able to de­velop a large cus­tomer base, and build trust with my clients,” Zhen said.

The UK govern­ment capped sales of milk for­mula at two cans per cus­tomer in 2013, so he pays stu­dents 50 pence above re­tail price to buy them and is now ship­ping more than 8,000 cans a month.

Li said: “I do not plan to do this for­ever. But right now as long as the de­mand is there, I am happy to con­tinue.”

The weak pound af­ter Brexit is also giv­ing a boost to my busi­ness ...”

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