Daigou

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Daigou
Occupation
NamesDaigou, Overseas personal shopper,[1] Professional shopper[1]
SynonymsHaiwai Daigou
Occupation type
Profession
Activity sectors
Smuggling[2][3][4]
Description
Fields of
employment
Self-employed
Related jobs
Smuggler[4]

Daigou (Chinese: 代购[5]; pinyin: dàigòu; lit.: 'Surrogate Shopping')[1][6][7] is an emerging form of cross-border exporting[8][4][3][5] in which an individual or a syndicated group of exporters[4] outside China purchases commodities (mainly luxury goods, but sometimes also groceries such as infant formulas) for customers in China,[1][9] in order to either illegally[10][11] or legally use loopholes to circumvent import tariffs imposed on overseas goods.[12] Daigou shoppers typically pose as ordinary shoppers and purchase the desired goods in a region outside China, after which they return the goods to China by post, or by posing as normal tourists while carrying the purchases in quantities under the threshold for customs declaration or sometimes concealing the purchased goods from the customs authorities altogether, and then relay the purchased goods to the actual buyers while charging an extra more than the cost of the purchase in order to make a high profit. Daigou activities can range from illegal criminal offences such as smuggling, tax evasion, and fraud to the legal exploitation of the loopholes in the form of tax avoidance, depending on the specific case.[13]

Impacts[edit]

Daigou syndicates are often involved in illegal hoarding and stockpiling of goods in large quantities, often infuriating local customers for the shortage of goods and disruption incurred to the markets.[14][15] This has also prompted several governments to take actions against Daigou smuggling and hoarding. Starting from 2012, the New Zealand government has been regularly cracking down and sometimes outright banning unauthorized export of consumer goods through unregistered channels.[16] The Australian government has rolled out numerous rounds of policies several times and imposed multiple restrictions on Daigou purchases of baby formula, and yet many Daigou smugglers would still come up with new ways to circumvent those restrictions.[17][18]

Regular Asian customers often became subject to gratuitous suspicion and even outright discrimination due to the disruptive nature of the rampant purchases of luxury goods and other consumer goods made by Daigou hoarders and smugglers, who are mostly Asians. Asian-American sales associates at Macy's Herald Square sued Macy's for racial discrimination in September 2017, alleging that store managers instructed sales associates not to sell more than one unit to any single Asian customer, and that they were fired when they spoke up about the alleged discrimination.[19]

Some Daigou service providers fraudulently sell counterfeit products that have been altered to appear purchased abroad from legitimate sources.[20]

The illicit Daigou business has been thriving for some time in Australia and New Zealand, but recently both the Australian and the Chinese governments have started cracking down on this form of smuggling. In early 2019, six of these so-called "Daigou" were arrested in Australia over a baby formula smuggling ring.[2] In early 2017, 23 so-called "Daigou" were arrested for involvement in a smuggling ring in the US.[10] In late 2017, Melbourne police cracked down on a syndicate of "Daigou" smugglers and arrested seven suspected smugglers after a months-long investigation.[4] In 2012, a former flight attendant and professional Daigou smuggler was sentenced by a Chinese court to 11 years in prison convicted of cross-border smuggling, domestic smuggling of overseas goods through unregistered channels, defrauding the customs authorities, willful violation of Customs laws, and evading more than 1,000,000 RMB worth of taxes.[13]

The Australian government has rolled out numerous rounds of policies several times and imposed multiple restrictions on Daigou purchases of baby formula, and yet many Daigou smugglers still come up with new ways to circumvent those restrictions. Demand for Australian infant milk products soared following a series of food scares in China.[21][22] In early 2017, 23 of these Daigou were arrested for involvement in a smuggling ring in US.[10] In late 2017, Melbourne police cracked down on a syndicate of Daigou smugglers and arrested seven of such smugglers after a months-long investigation.[4] In early 2019, six of these Daigou were arrested in Australia over baby formula smuggling ring.[2] In mid 2020, during court proceedings, police alleged that at least ten suppliers regularly stole baby formula to sell to a person who subsequently, "raked in hundreds of thousands of dollars" exporting the baby formula to China.[23]

It is estimated there are 150,000 daigou operatives in Australia.[24][25]

The burgeoning daigou trade and organised crime gangs have been blamed for a 16 per cent spike in shoplifting that cost Australian retailers at least $2.26 billion in 2018-19.[26]

It is reported that COVID-19 pandemic provides a new opportunity for Australian daigou shoppers to re-sell into the China market.[27][28] "The virus crisis, while frightening, has a silver lining".[29] The staff of the Chinese property developing group 'Greenland' were, "sent on a mission to find bulk supplies which were flown to China."[30] The Sydney property developer Risland, a subsidiary of Country Garden Holdings, sourced 82 tonnes of supplies, which were subsequently airlifted to Wuhan.[31] A former Chinese military man behind the export of tonnes of medical supplies called on Chinese nationals in Australia to take action to contribute money and supplies to their home country.[32][33] These diagou shoppers were accused of leaving Australians short of essential supplies.[34][35][36] On 24 March, Prime Minister Scott Morrison said that the Australian Government would attempt to prevent individuals from exporting and re-selling prevention-related goods.[37][31][38]

Responses from China[edit]

On January 1, 2019, China officially rolled out a new e-commerce law, the first of its kind to directly regulate Daigou activities. Under the new law, all Daigou participants will be legally required 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 China and the region where they purchased goods. Any e-commerce platform and seller could be fined 2 million yuan and 500,000 yuan respectively, and possibly face criminal charges, if they are found guilty of smuggling, tax evasion and willful violation of the new e-commerce law.[39]

Sales[edit]

Daigou sales across sectors total $15 billion annually.[40] In 2014 the value of the daigou business just in luxury goods increased from CN¥55 billion to CN¥75 billion yuan (US$8.8 billion to $12 billion).[11]

A 2015 survey of Chinese online luxury shoppers found that 35% have used daigou to purchase luxury goods online, while only 7% used the website of the brand they are buying, or think they are buying.[41] Approximately 80% of Chinese luxury purchases are made abroad.[42]

Operations[edit]

Daigou purchases are often made in luxury brand boutiques in major fashion cities like Paris, London, New York City, Hong Kong, Tokyo and Seoul. Some daigou operators use Weibo and WeChat to communicate with their clients.[43] The large demand for daigou service is due to perceived high import tariffs on luxury goods[43] and concern over unsafe products, especially food safety problems,[44]

Chinese navy involvement[edit]

In June 2019 naval personnel from a Chinese warship berthed in Sydney Harbour, Australia were photographed unloading boxes of baby formula and other products from a large van to carry onto the ship.[45]

See also[edit]

References[edit]

  1. ^ a b c d Parker, Pamela (16 March 2018). "How to become a professional shopper". BBC.com.
  2. ^ a b c "Six arrested in Australia over baby formula smuggling ring". The Irish Times. January 22, 2019.
  3. ^ a b "'Baby formula ring' leads to six arrests in Australia". BBC. January 21, 2019.
  4. ^ a b c d e f "Melbourne baby formula syndicate smashed as police seize tins worth $300,000". The Sydney Morning Herald. November 30, 2017.
  5. ^ a b Hunt, Katie (August 19, 2014). "Shoppers or smugglers? China cracks down on 'daigou' boom". CNN. Retrieved August 29, 2014.
  6. ^ Owens, Susan (July 1, 2015). "FROM DAIGOU TO DIGITAL: LUXURY EXECUTIVES WEIGH IN ON BIGGEST CHINA CHALLENGES". Jing Daily (精日传媒). Retrieved 28 October 2016.
  7. ^ Lee, Terence (November 16, 2012). "Daigou, a novel e-commerce business model, is an intriguing Chinese export". businessoffashion.com. Retrieved October 28, 2016.
  8. ^ "Six arrested in Australia over baby formula smuggling ring". The Irish Times. January 22, 2019.
  9. ^ Chitrakorn, Kati (9 April 2014). "'Daigou' Agents Help Chinese Get Luxury Goods for Less". businessoffashion.com. Retrieved 28 October 2016.
  10. ^ a b c "23 arrested in crackdown on milk-powder smuggling ring run in US". South China Morning Post. April 12, 2017.
  11. ^ a b Chitrakorn, Kati (February 5, 2016). "Can China End the Illicit 'Daigou' Trade?". businessoffashion.com. Retrieved October 28, 2016.
  12. ^ Menendez, Enrique (February 18, 2016). "Missed Opportunity: China's Neglected Domestic Travellers". businessoffashion.com. Retrieved 28 October 2016.
  13. ^ a b "Daigou, the legal "blind-spot" you don't know. 海外代购,你所不知道的"法律盲区"" (in Chinese). China Network Television. September 9, 2012.
  14. ^ "'Desperate' mum's plea after catching baby formula hoarders emptying shelves". Yahoo7 News. August 3, 2017.
  15. ^ "Parents fume after watching shoppers hoard milk formula". The Chronicle. September 13, 2017.
  16. ^ "新西兰"禁奶"引上海妈妈囤货" (in Chinese). Oriental Morning Post. Retrieved February 16, 2019.
  17. ^ "Australian limit baby formula as China demand hits stocks". The Strait Times. May 16, 2018.
  18. ^ "Retailers crack down on baby formula limits amid parent pressure". news.com.au. October 26, 2018.
  19. ^ Kimberly Yam, Former Macy’s Employees Sue Company For Allegedly Racially Profiling Asian Shoppers huffingtonpost.com 09/19/2017
  20. ^ Sim, Shuan (April 8, 2014). "China's Sketchy 'Daigou' Luxury Market Is A Hotbed For Fakes". jingdaily.com. Retrieved August 29, 2014.
  21. ^ "Australian limit baby formula as China demand hits stocks". The Strait Times. May 16, 2018.
  22. ^ "Retailers crack down on baby formula limits amid parent pressure". news.com.au. October 26, 2018.
  23. ^ "Woman shipped thousands of stolen baby formula tins to China". Daily Telegraph. 18 May 2020. Retrieved 18 May 2020.
  24. ^ Xiao, Bang (31 July 2019). "The daigou channel — how a handful of Chinese shoppers turned into a billion-dollar industry - Part 3". news.com.auC.
  25. ^ "Daigou: How a handful of Chinese shoppers turned into a billion-dollar industry". news.com.au. 30 July 2019.
  26. ^ https://www.afr.com/companies/retail/daigous-organised-crime-blamed-after-16pc-spike-in-shoplifting-20190725-p52ali
  27. ^ Whiteside, Grace (13 February 2020). "Coronavirus sees daigou demand for health items soar as perishables feel the pinch". ABC News. Retrieved 24 March 2020.
  28. ^ Dean, Lucy (20 February 2020). "Forget A2 Milk: Professional daigou shoppers buying up face masks to send to China". Yahoo. Retrieved 24 March 2020.
  29. ^ Tan, Su-Lin (7 February 2020). "Coronavirus could provide silver lining for Australian daigou retailers looking to tap China market". South China Morning Post. Retrieved 19 March 2020.
  30. ^ McClymont, Kate (26 March 2020). "Chinese-backed company's mission to source Australian medical supplies". Sydney Morning Herald. Retrieved 26 March 2020.
  31. ^ a b McClymont, Kate (26 March 2020). "Second developer flew 82 tonnes of medical supplies to China". Sydney Morning Herald. Retrieved 27 March 2020.
  32. ^ McKenzie, Nick (1 April 2020). "Former Chinese military man behind export of tonnes of medical supplies". Sydney Morning Herald. Retrieved 1 April 2020.
  33. ^ McKenzie, Nick; Galloway, Anthony (1 April 2020). "Profiting from a pandemic: former Chinese general accused of huge COVID-19 mark-ups". Sydney Morning Herald. Retrieved 2 April 2020.
  34. ^ McPherson, Emily (18 March 2020). "Desperate dad snaps airport photos to show why he can't buy baby formula". 9news.com. Retrieved 19 March 2020.
  35. ^ "Coronavirus Australia: More medical supplies and groceries being shipped to China". news.com. 31 March 2020. Retrieved 31 March 2020.
  36. ^ Cucchiara, Sam (30 March 2020). "Vital coronavirus supplies being shipped from Australia to China". 9Now. Retrieved 31 March 2020.
  37. ^ Jenkins, Shannon (25 March 2020). "COVID-19: Morrison announces latest restrictions". The Mandarin. Retrieved 25 March 2020.
  38. ^ Nguyen, Mimi (1 April 2020). "Australia Bans Exports of Medical Supplies After Items Sent in Bulk to China Amid COVID-19 Pandemic". The Epoch Times. Retrieved 8 April 2020.
  39. ^ "What a New Law Could Mean for China's 'Daigou'". Sixth tone. December 21, 2018.
  40. ^ Buchwald, Brian; Neckes, Joshua (August 15, 2014). "Op-Ed | Alibaba's Catch-22". businessoffashion.com. Retrieved 28 October 2016.
  41. ^ Solca, Luca (16 April 2015). "Digital China Leaving Ostrich Brands Behind". businessoffashion.com. Retrieved 28 October 2016.
  42. ^ Denis, Pascale; Wendlandt, Astrid (6 April 2016). Holmes, David (ed.). "Luxury Market Growth Will Hit Low Point in 2016, Forecasts Bain". businessoffashion.com. Retrieved 28 October 2016.
  43. ^ a b Zhu, Julie (February 23, 2014). "Online agents cut luxury bills for Chinese buyers". Financial Times. Retrieved 2014-08-17.
  44. ^ "中国食品安全问题现状、原因及对策 中国食品安全现状" [The phenomenon, reasons and solutions of food safety problems in China]. Baidu (in Chinese). August 26, 2013.
  45. ^ Loomes, Phoebe (11 June 2019). "Chinese warships pictured loaded with Australian baby formula before departure". News Ltd.

External links[edit]