Adapt or daigou
Iwant to be a daigou when I grow up. Pardon, a what? A daigou or selling agent makes luxury purchases on another’s behalf — facilitated largely via Tencent-owned messaging and mobile payment app Wechat. It’s just one of many occupations that, until 20 years ago, didn’t exist.
Imagine, if you will, a conversation in the 1990s with your parents about a career path: “I mean . . . the end-game is to be a driverless car engineer, but if I have to I’ll put in a year as a cloud computing specialist. And if things don’t pan out, there always vlogging on Youtube or hey, I could be an Uber driver.” Chances are they would think you were stoned.
Rapid advances and disruption in a range of industries (and retail is right up there) has meant changes in the employment and skills landscape. Consider this cited estimate from a World Economic Forum report: 65% of children entering primary school today will ultimately end up working in completely new job types that don’t yet exist.
The daigou phenomenon has been fuelled by the development of payment technology via mobile phones. Taking advantage of cost or favourable exchange rates, there are more than a million daigou operating internationally. They’re seen as trusted advocates for their communities in China, and they make their money by charging a tidy commission on goods.
In 2016, Bain estimated daigou accounted for £5bn of sales. The first daigou were said to be Chinese students studying abroad who procured hard-to-find, Western “stuff” for family and friends. Later, as a way to pay tuition, the list grew to “friends of friends”, with the advent of Wechat eventually bringing the trade online.
A typical daigou would work like this: an order will be sent or negotiated via Wechat, which has inbuilt cash transactions. Daigou answer customers’ queries, live-stream on Wechat and video-post their product evaluations. Then it’s just a matter of shopping, packing and sending the product via post to the Chinese buyer.
Some daigou even have stock warehouses and hire other people to do their customer service.
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Built on trust
With the spate of scandals involving tainted or fake baby formula, daigou trade has also been driven by mistrust in the authenticity of products sold in China. Chinese consumers also prefer to buy pricier items overseas because they can be more certain the goods are genuine — and the choice is more varied.
Luxury goods can be around 50% cheaper in cities like Milan or Paris than in mainland China.
While daigou in the US and Europe buy mainly luxury goods for their customers, in Australia they buy vitamins, food and beauty products.
Aumake, a daigou business in Sydney, became the first of its kind to list on the Australian Stock Exchange. Australia’s daigou market is estimated to be worth A$850m, with government in that country recently throwing its support behind the movement in light of its job-creating potential. Small daigou operators in Australia are said to post 60,000 parcels to China every day, while larger players tend to funnel goods through China’s freetrade zones.
It’s important to note that Chinese officials recently increased penalties for false declarations and have tightened customs controls.
Any way you look at it, daigou is a grey-market trade because it avoids import duties and tax and ultimately discourages China’s domestic consumption sector.