In recent years, with the devolvement of social media platforms and international transportation, ‘Daigou’ is rising as a side business among international students, especially for Australian international students. It is reported by ChinaNews that there are more than 110,000 Chinese students are making money in Australia by working as ‘Daigou’.
What is Daigou?
Daigou is pronounced dye-goo and literally translated means ‘buying on behalf of’. There are several words and expressions to describe this occupation, such as a purchasing agent, shopping agents, overseas shoppers, and personal shoppers. It refers to a network of overseas purchasing agent who buys products which are unavailable or hard to find for residents of China. Basically, it is a channel of commerce between purchasing agents and Chinese buyers. Judy said, ”Recently, international students might be more or less to be a purchasing agent, even if you do not buy products for strangers, you might buy for friends or families.”
International students with Daigou business
In the December of 2017, Judy Cui, a Chinese girl from Shandong who is studying in the University of Sydney, made a decision to lighten the burden of expensive tuition fees for her parents by working as a ‘Daigou’ during her space-time. Therefore, she began buying Australian goods such as infant formula and healthcare products, then advertised them on Chinese social media platforms such as WeChat, Weibo, Red for sale to the Chinese. Now, Judy could earn nearly 2000rmb per month and it is enough to pay her rent after adding her wage of the part-time job.
”Social media is a great channel to build a connection with potential customers,” Judy said. She is good at taking advantage of social media, she posts the advertisement on various social media platforms. She updates her social media contents on daily to introduce the products to her friends, family, and social media followers. As Judy said, it provides various channels to gain potential customers. In order to build trust with online customers, she always posts photos and videos with the location to show her customers that she is in the shopping center of Sydney.
”Social trust is a significant factor in bargaining,” said by Judy. Frequently, the main consumers are her classmates, friends, relatives who live in China since there is an extremely strong social trust in acquaintances relationship. As Judy said, ‘The more my customers know my personality, the more likely they are to trust you.’ Taking Judy’s classmate in the high school as an example, they have already known each other for seven years and thus she is willing to buy every product that Judy recommended on Wechat Moments. Besides, there are also some strangers from outer space social media such as Weibo, Red, would ask her to purchase products. As Judy said, it needs a long time to build a relationship of trust for strangers.
”Cheap and real are the most competitive advantages of Daigou,” Judy also points out that one of the most competitive advantages of buying products from daigou is price advantage. Due to the lower sales tax and less operating costs, the products from Australia is cheaper than Chinese brand store counters. Besides, the product from the overseas agent is real than e-commerce platform. The customers show more trust in Daigou because of the proliferation of counterfeit goods and the higher false standards in China. Although Taobao, the biggest e-commerce website of China, claims that it had removed two million ‘fake branded goods’ from the platform, there are still a large number of counterfeit goods on the site. For instance, healthcare products and milk powder of Australian are best-sellers since these kinds of products are easier to make fake and thus people prefer shopping through the outlets of Daigou although there are only a few price advantage.
How does it work?
Uploaded by 2mm Ohh on 2018-06-07.
Daigou leads to the pressure on the local market
It is wildly reported that daigou business leads to the pressure on the local market. The local consumers complain that Chinese consumers are now snapping up baby formula, pantry goods, skincare products and even washing up liquids. Jessica Hook is a 27-year-old mother, she said the situation was “out of control”. It cost her “a couple of hours” every week traveling to different supermarkets early in the morning to find Aptamil Gold, the brand of formula she needs for her eight-month-old daughter.
Essentially, Daigou is a channel of commerce between mainland Chinese buyers and overseas professional shoppers, sometimes referred to as the ‘grey market’ which is not supported by the local government. In this case, mainstream society still does not accept daigou. However, Australian brands are different.
Daigou is an essential entrance of the Chinese market
On a weekday of May, Judy attended a daigou meeting in Hyde Park which was being held by a famous Australian brand — Capilano. The sponsor invited nearly 200 Chinese purchasing agents to this activity in order to promote their new products. Australian brands believe that without Daigou support, it will be difficult to enter the Chinese market. The brand even prepared a Chinese version introduction brochure for each daigou in order to increase the effects of word-of-mouth in the daigou service industry.
As the brand manager said, they attach importance to Daigou since it is a powerful way to fulfill consumer demand and to advocate for the product and brand. Edmunds Alan Edmunds, an investment analyst in Sydney, points out that Australian companies’ lack of understanding of the Chinese market was the reason for the rising of Daigou.’ A lot of Australian companies own good products but out of touch with the Chinese market.”
Feature Story – Video2 – Capilano Daigou Meeting
China’s overseas shoppers have taken a significant role for Australian brands with the power to make or break brands. Australasian dairy company A2 Milk, another company which takes advantage of the daigou networks. It posted a record NZ$90.6 million profit for the year to June thanks to a 56 percent jump in revenue, which it credits in part to using daigou sellers as part of its distribution plan. By contrast, Bellamy’s, the Tasmanian infant formula company, which tried to directly sale formula into the Chinese market and undercut daigou in order to gain more profits. However, it ended up losing business when the overseas agents retaliated by turning against it. – but it failed and ended up losing business when the sellers retaliated by turning against it. As Judy mentioned, social trust is a significant factor in bargaining, it is daigou who has the credibility of their social networks instead of the brands. “Chinese customers do not tend to trust big companies, they trust familiar friends more,” Judy said, ”It is is an essential entrance of the Chinese market.”