Ruqayyah Snyder
Daigou, a Mandarin term meaning to buy on behalf, is a practice where individuals or networks buy sought-after goods overseas to resell them in the Chinese market. This phenomenon has become particularly prominent in Australia, where Chinese nationals, including international students, purchase local products, such as milk powder and luxury goods, to sell in China. While the daigou industry has created economic opportunities and facilitated trade between Australia and China, it has also faced criticism and regulatory challenges. The large demand for daigou services can lead to shortages of certain goods in local markets, and there have been concerns about fraudulent and counterfeit practices within the industry. To address these issues, the Chinese government implemented new e-commerce laws in 2019, requiring daigou participants to register, acquire licenses, and comply with taxation rules in both China and the countries where they shop. These regulations aim to curb illegal activities and ensure compliance with tax obligations. As the daigou industry continues to evolve in Australia, there are ongoing discussions and efforts to professionalize and standardize practices to promote sustainable growth and address potential issues.
| Characteristics | Values |
|---|---|
| Legality in Australia | Not illegal, but regulated by the Chinese government |
| Nature of Work | Purchase of sought-after goods overseas to resell in China |
| Goods Involved | Milk powder, luxury goods, safety equipment, etc. |
| Market Size | Over 100,000 daigou in Australia, with a global estimate of over 1 million |
| Annual Revenue | Upwards of $100,000 per individual daigou |
| Challenges | Counterfeit products, tax evasion, hoarding, community backlash |
| Industry Response | Development of a code of conduct, registration, and licensing |
| Government Response | Support for professionalization and taxation |
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What You'll Learn
- Daigou in Australia is a multimillion-dollar industry
- Daigou shoppers in Australia are often Chinese expats or international students
- Australian retailers have imposed restrictions on daigou purchases of baby formula
- The Chinese government has tried to clamp down on the illegal practice of daigou
- Daigou in Australia has affected local parents' ability to buy milk powder
Daigou in Australia is a multimillion-dollar industry
Daigou, a Mandarin term meaning "to buy on behalf", is a multimillion-dollar industry in Australia. It involves the practice of purchasing sought-after goods, from milk powder to high-end handbags, overseas to resell in China. The industry is largely driven by Chinese expats and international students in Australia who buy Australian goods and sell them to customers in China, often using Chinese social messaging apps like WeChat to connect with buyers.
The demand for daigou services is fuelled by concerns over the safety and authenticity of products available in China, particularly regarding food safety. Daigou shoppers can provide assurance that the products they order are genuine and safe to use. In addition, luxury goods purchased overseas may be priced significantly lower than in China, creating an opportunity for arbitrage.
The daigou industry in Australia has grown significantly, with estimates suggesting that there are over 100,000 daigou operators in the country. In 2018, it was reported that individual daigou in Australia could make upwards of $100,000 per year, with some even turning their garages into stock warehouses and hiring staff. The success of daigou in Australia has led to the emergence of dedicated daigou businesses, such as AuMake in Sydney, which has a chain of physical retail stores catering to daigou shoppers and plans to expand to other cities.
However, the rise of daigou has also led to concerns and challenges. Local Australian parents have expressed frustration over the constant shortage of milk powder due to bulk purchases by daigou shoppers. There have also been instances of fraudulent activities, with some daigou selling counterfeit products. In response, the Australian government and retailers have imposed restrictions on daigou purchases of certain items, such as baby formula. China has also implemented new e-commerce laws that require daigou participants to register, acquire licenses, and pay taxes in both China and the countries where they shop. These regulatory changes aim to address the illegal activities associated with daigou while recognizing the economic potential of the industry.
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Daigou shoppers in Australia are often Chinese expats or international students
The daigou phenomenon has been fuelled by the development of mobile phone and payment technology. Daigou shoppers can provide assurance to consumers in China that the products they order are genuine and safe to use. They often have personal connections with the people in China who order from them.
In 2019, China introduced an e-commerce law that requires all daigou participants to register as e-commerce operators and acquire licenses in both China and the country where they shop, making their business subject to taxation in both countries. This has led some daigou to opt out of the business due to the extra hassle and potential fines.
The Australia China Daigou Association is working to professionalize the industry by drawing up a code of conduct to implement a common standard of behavior for daigou shoppers. This includes not filling supermarket trolleys with infant formula and not leaving marks on unpurchased products in shops. The Australian government has supported this movement, recognizing the job-creating potential of this grey industry.
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Australian retailers have imposed restrictions on daigou purchases of baby formula
Daigou is a term used to refer to Chinese expatriates who buy consumer goods for people in China. They make money by selling these foreign goods at a markup. In Australia, daigou can make upwards of $100,000 a year. One of the most in-demand products is baby formula, which is sought after in China due to the country's tainted milk scandal in 2008 that killed six infants and made 300,000 sick.
However, the activities of daigou in Australia have led to concerns and problems for Australian shoppers and staff. Australian retailers have imposed restrictions on daigou purchases of baby formula due to the rapid depletion of stock, leaving Australian parents struggling to access formula for their children. Retail workers have also reported being abused while monitoring purchase limits.
An ABC investigation in 2018 uncovered a network of daigou in Adelaide who would immediately stockpile baby formula as soon as it hit supermarket shelves, sometimes communicating through mobile phones and posting lookouts in supermarkets to monitor stock. They would then stash the formula in various locations before returning for more, circumventing purchase limits.
To address these issues, Australian retailers have imposed restrictions on daigou purchases of baby formula. For example, the Australia China Daigou Association is developing a code of conduct to implement common standards of behaviour for daigou, including not filling supermarket trolleys with infant formula and not leaving marks on unpurchased products. These measures aim to improve the relationship between Australian brands and daigou buying agents while ensuring that Australian consumers have access to the products they need.
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The Chinese government has tried to clamp down on the illegal practice of daigou
The Chinese word "daigou" means purchasing agent and refers to individuals who buy goods overseas and bring them back to China to avoid taxes. The daigou industry is a multimillion-dollar industry, with individual daigou in Australia making upwards of $100,000 (£72,000) a year. The large demand for daigou services is due to high import tariffs on luxury goods and concerns over unsafe products, especially food safety problems.
In 2019, China officially rolled out a new e-commerce law that directly regulates daigou activities. Under this law, all daigou participants must register as e-commerce operators and acquire licenses in both China and the countries where they shop, making their business subject to taxation in both regions. Any e-commerce platform or seller found guilty of smuggling, tax evasion, or willful violation of the new law may be fined up to 2 million yuan (US$291,620) or face criminal charges. Chinese customs have doubled down on their inspections of daigou merchants at airports, and some have been imprisoned for tax evasion.
The COVID-19 pandemic also hurt the daigou industry, as China shut down its borders and the cross-border daigou industry disappeared. During the pandemic, consumers turned to other channels, such as legitimate cross-border e-commerce platforms like NetEase's Kaola and Alibaba's Tmall Global. The Chinese government's crackdown on daigou will likely benefit retailers on Hainan Island, where individuals can buy duty-free goods worth up to CNY 100,000 (US$15,000) and bring them to the mainland without restrictions.
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Daigou in Australia has affected local parents' ability to buy milk powder
Daigou, or Chinese personal shoppers, have become a big business in Australia, with the power to make or break brands. The demand for Australian products in China is high, and Daigou shoppers buy consumer goods for people back in China. In Australia, Daigou shoppers have been buying up baby formula and sending it to China, affecting local parents' ability to buy milk powder for their children.
In 2018, it was estimated that up to 80-90% of infant formula purchased in Australia was destined for China. This led to complaints from Australian parents who were unable to find formula for their children. As a result, some supermarkets restricted the sale of baby formula, locking tins away behind counters and placing limits on the number of items per purchase.
Daigou shoppers have been accused of flouting these restrictions, with reports of shoppers taking multiple tins of formula before they were even placed on shelves and stripping shelves in groups before Australian mothers could access the baby food. This has led to negative perceptions of Daigou in Australia, with some media outlets framing them as "milk powder villains".
However, the Daigou phenomenon has also had positive impacts on the Australian economy, creating jobs and helping local businesses break into the Chinese market. Some Daigou shoppers have also expressed optimism about the prospect of their job being recognised as a legitimate profession.
To address the issue of milk powder shortages, the Chinese government has started regulating Daigou activities. Additionally, baby formula brands have begun exporting heavily to China, reducing the need for Daigou shoppers to buy and send formula from Australia. As a result, milk powder supply is no longer an issue in Australia as of 2024.
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Frequently asked questions
Daigou (dye-go) is a Mandarin term from the luxury goods industry. It means "to buy on behalf" and refers to the practice of purchasing sought-after goods from overseas to resell in one's home country.
Daigou is popular in Australia because of the high import tariffs on luxury goods in China and concerns over unsafe products, especially food safety problems. Daigou shoppers can provide assurance that the products are genuine and safe.
Daigou is not illegal in Australia. However, the Australian government has imposed multiple restrictions on daigou purchases of baby formula. There are also concerns about daigou shoppers evading taxes, blocking pathways, and buying large quantities of milk powder, making it hard for local parents to find formula for their children.
Daigou has become a multimillion-dollar industry in Australia, with some individuals making over $100,000 per year. It has also created job opportunities and drawn support from the Australian government. However, there are concerns about the impact on Australian brands, as changes to Chinese laws and increasing prices may reduce demand for daigou.
In China, a new e-commerce law was introduced in 2019, requiring all daigou participants to register as e-commerce operators and acquire licenses in both China and the countries where they shop, making them subject to taxation in both regions. In Australia, the Australia China Daigou Association is developing a code of conduct to standardise behaviour and improve the industry's reputation.
