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; literally: '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]

Criminal Offences[edit]

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 government and the Chinese government have started cracking down this form of smuggling. In early 2019, six of these so-called "Daigou" were arrested in Australia over baby formula smuggling ring.[2] In early 2017, 23 of these so-called "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 2012, a former flight attendant and professional Daigou smuggler was sentenced 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]

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.[21]

Sales[edit]

Daigou sales across sectors total $15 billion annually.[22] 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.[23] Approximately 80% of Chinese luxury purchases are made abroad.[24]

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.[25] The large demand for daigou service is due to perceived high import tariffs on luxury goods[25] and concern over unsafe products, especially food safety problems,[26]

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 "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 "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 "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. ^ "What a New Law Could Mean for China's 'Daigou'". Sixth tone. December 21, 2018.
  22. ^ Buchwald, Brian; Neckes, Joshua (August 15, 2014). "Op-Ed | Alibaba's Catch-22". businessoffashion.com. Retrieved 28 October 2016.
  23. ^ Solca, Luca (16 April 2015). "Digital China Leaving Ostrich Brands Behind". businessoffashion.com. Retrieved 28 October 2016.
  24. ^ 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.
  25. ^ a b Zhu, Julie (February 23, 2014). "Online agents cut luxury bills for Chinese buyers". Financial Times. Retrieved 2014-08-17.
  26. ^ "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.

External links[edit]