Sun, May 07, 2017 page15

• ‘Daigou’ quench China’s thirst for foreign products

  • By Jacqueline Williams and Xiuzhong Xu / NY Times News Service, MELBOURNE, Australia
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  Zhang Yuan’s (張媛) business started with favors for relatives: an aunt who wanted baby formula, a cousin looking for Ugg boots.

  She was a college student in Australia and every dollar helped, so she mailed the items back to China and charged a bit of a commission.

  However, then, through word-of-mouth, her business kept growing. Between classes, she would shop for whatever was popular that week: vitamins, brand-name jewelry, a fake erectile dysfunction drug called Kangaroo Essence.

  When she could not find a more lucrative job after graduation, she stayed in Melbourne and in the booming gray market for selling Australian goods to Chinese consumers.

  Her business now employs two buyers, two packers and two people in customer service, with offices in Melbourne and Hangzhou, her hometown in China.

  Taking orders online, she sells mainly to health-conscious and well-to-do women, and says she makes more than US$300,000 per year.

  “The Chinese have always had blind adoration for foreign things,” Zhang, 25, said. “So rather than paying for expensive, made-in-China products that might lack safety, why wouldn’t they buy high-quality Australian ones at lower prices?”

  Even as the world has come to rely on Chinese products, Australian goods have become hot commodities in China and tens of thousands of young Chinese who are students at Australian universities or recent graduates have built a cottage industry to meet the demand.

  The thriving trade — fueled by Chinese anxiety over counterfeit goods and product safety at home — reflects the growing economic interdependence between China and Australia, with all the opportunities and challenges that come with closer ties between a wealthier nation of 24 million people and a rising regional power of more than 1.3 billion.

  China is Australia’s biggest trading partner and Chinese investment in Australia set a record last year.

  The students, who call themselves daigou (代購), or purchasing agents, are highly attuned to Chinese tastes and move quickly, sometimes creating spikes in demand in Australia and clearing out stores of specific products before shopkeepers know what hit them.

  Some analysts estimate that daigou last year sent as much as US$600 million in Australian products to China.

  However, their success has also drawn scrutiny, with officials in both China and Australia examining whether they are paying required taxes and complying with other regulations.

  Chinese purchasing agents first appeared in Europe, buying and shipping luxury goods like handbags for China’s rapidly growing middle class.

  However, the trade has shifted to Australia as the Chinese student population in Australia has expanded, and consumers in China have grown more anxious about food and product safety.

  Worries over infant formula, for example, surged in 2008 when six babies died and more than 300,000 children fell ill from drinking Chinese milk products that had been tainted with melamine, a toxic chemical.

  Many in China turned to imported milk powder in response, but reports of distributors or retailers adulterating it with Chinese formula prompted consumers to directly seek supplies from overseas.

  “There’d be huge amounts of infant powder, 900g cans, that were being bought off the supermarket shelves here, and put in mail bags and sent to China via students,” Dairy Australia senior analyst John Droppert said.

  Chinese students in Australia say as many as eight in 10 of them are involved in the daigou business.

  Some are just trying to make ends meet with occasional sales. Others have managed to build significant export businesses. They mail their products to customers in China or ship them to Hong Kong, where traders can carry them across the border to avoid tariffs.

  “Shopping for others is like buying for myself. It gives me the same pleasure,” said Uki Shao, 18, a business major in Melbourne who described herself as the “best daigou at my college.”

  She sells brand-name items like Pandora jewelry, Michael Kors accessories and Aesop lotions, and said her main challenge was convincing customers that her products are not fake.

  Express delivery companies that specialize in shipping to China are now dotted throughout major Australian cities to keep up.

  One of the more popular companies, Chang Jiang International Express (長江國際速遞), which describes itself as a “direct train from Australia to China,” sends about 400 tonnes of products to China each month, its operations manager Lu Wang (王璐) said.

  Because most payments are processed on WeChat and other Chinese platforms, the authorities in Australia rely on students to declare the income themselves.

  Some daigou also offer lower prices by evading Chinese import duties and there are occasional reports of arrests in China.

  “There’s quite a few that have grown into quite substantial operations, and there’d be quite a lot where they’re perhaps flying under the radar,” said Paul Drum, the head of policy at CPA Australia, the national association of accountants.
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