What Makes Chinese Daigou Popular in Australia: A Mature Profit Chain of Daigou Industry

More and more stores like Mr Vitamins provide Chinese-English bilingual service to attract Chinese personal shoppers in Australia. Photo: Hongding Wang

“I have many customers who only buy imports from Daigous like me, it might because they are too scared to purchase online because of the news about fake products on the media and therefore prefer to purchase from Daigou to ensure the authenticity of the product.” Gu, a Chinese Daigou said.

When she first came to Australia and studied at the University of Sydney, her sister asked her to buy baby formula and paid her extra fees. She gradually found that almost half of the overseas students like her had the Daigou experience, which means as personal shoppers, they post advertisements of Australian products on their social media, purchase from pharmacies or supermarkets, and ship them to China. Most of the Daigous are Chinese students who study in Australia or new immigrants.

After running for the Daigou business for several months, Gu had attracted hundreds of consumers, who were almost her friends, relatives or friends of her family. She can make about $1500 per month from Daigou, which can almost cover her living expense in Sydney.

“The biggest challenge for being a Daigou is about trust. Luckily, my customers really like me and also trust me” Gu said. In her words, the popularity of Daigou is because China is a typical society of human relationship. Consumers would trust what their friends said rather than the commercial companies or advertisements.

Compared with official advertisements on online stores, personal shoppers can send photos or real-time videos to buyers to show the purchasing process. At the same time, they can introduce some other relevant products. Some of the Daigous also provide special services, such as making a mark on the products they have bought and sending photos to the buyers, which helps the buyers check and ensure the products they receive are the ones they saw in the video.

Mr. Zhao, an IT engineer in Beijing, who has bought Australian infant formula and healthcare products from Daigou for a long time, told us, “Not only myself but also many friends around me have the concern of Chinese food safety issues. That’s why we prefer to ask daigou for help”. Although compared with domestic formula brands, import ones cost more than double, many middle class families in China still choose these brands in order to ensure the safety of the infant formula and most of them ask friends overseas as Daigou also owing to “trust” since they need to make sure the goods they buy are real and fresh.

The convenience of Daigou is only one of the reasons why Chinese people have the blind adoration and are keen to buy foreign goods. However, essentially, the reason why Daigou gets so popular is the food safety issues in China. People are too prudent to take that risk. As The Guardian reported in 2008, China suffered a severe widespread milk scandal that many top Chinese dairy companies were found adding melamine in their products especially infant formula. It was estimated that 300,000 babies were ill owing to this incident. It was at that time that many Chinese people tended to directly buy import milk and gradually purchase other products.

As the statistics from startup daily demonstrate, the estimated market value of Daigou industry is about $850 million in 2018. The Australian Business Review also mentions that only in 2016, 30% to 45% of the products of Swisse, which is the top multivitamin brand of Australia, were sold to Chinese people. Moreover, owing to the massive business growth in China, the share price of Blackmores, a traditional Australian vitamin company, has quadrupled only in 2015, which from $34.96 per share to $210. It helped Blackmores become the first brand whose share price broke through $200.

The share price of Blackmores.  Source: Blackmores official website.

The huge benefit from Chinese market encourages more companies to target on the Chinese market. According to a report of SMH, after being bought by a Hong Kong company in 2015, Swisse made more effort expanding its market in China. Only during the first year it had been bought, Swisse spent $50 million on marketing, which almost 40 times more than its production input. By the end of 2017, Swisse announced Fan Bingbing, the famous Chinese actress, to be its brand ambassador. In the past several months, Fan Bingbing has promoted Swisse products on her social media for many times, which even leads to a selling-out in Australia.

Due to the huge market of Daigou in Australia, a new form of business is getting popular to provide convenient service to personal shoppers, which is always called “gift shop” in Chinese. In fact, these gift shops are kind of shopping agents which specifically serves Chinese Daigous. They mainly take charge of two tasks of Daigou, namely shopping and shipping. As retail stores, they stock a number of goods of different brands that Chinese customers like. Daigous can usually find everything they need in such a small shop with a lower price. Moreover, almost every gift shop provides express service for Daigous. These shops cooperate with Chinese logistics companies to ship the goods to China with the price about $5.5 per kilogram. The staff of these gift shops would pack the goods of one customer together, and the cars of different logistics companies will come to collect these packages every day.

Staff in a gift shop is helping personal shoppers to pack their goods up.
Photo: Hongding Wang

Eastern Gift Shop is one of the biggest and earliest shopping agents for Daigou in Hurstville, which is a large Chinese community in Sydney. Its holder Landy told us that “gift shops” like hers had a really delicate relationship with pharmacies and other stores. “In general eyes, we should have fierce competition since more and more Chinese people would buy Australian products from us, but actually we are partners rather than competitors,” said Landy, “We purchase most of our goods from big pharmacies with a lower price than personal shoppers. Aversely, pharmacies are also willing to cooperate with us as we can clear their stocks so that they can buy newest products from manufacturers.”

As for the brands’ attitude, Landy holds the view that Australian companies are willing to encourage Daigous and also Chinese gift shops. “They provide their high-quality products to us with a better price, and we advertise and sell these products for them. It’s a win-win relationship. Some of their marketing staff also give advertising tagline in Chinese for a specific product and encourage us to post it on social media.”

Landy took the brand Healthy Care as an example. Healthy Care is not widely known among Australian local people initially. In contrast, it has an extremely high reputation in China. That’s because Healthy Care regards China as its main target market. Once these products are on sale, the staff of Chemist Warehouse, which is the only official franchiser of Healthy Care, will visit these Daigou agents and lobby them to stock.

Daigou is now a huge industry in Australia. Although it is always denounced as a grey area, this special business does generate great profits. “Chinese Daigous are becoming more and more regular. Due to the rigid need for Australian products of China, Daigou is still a long-term industry.” Landy said.

About Hongding Wang 3 Articles
A media student of USYD, focusing on social news, gender equality and Chinese culture.

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