Daigou

Daigou () is an emerging form of cross-border trade in which an individual or a syndicated group of exporters outside China purchases commodities (mainly luxury goods but sometimes also groceries such as infant formulas) for customers in China.

''Daigou'' shoppers typically purchase the desired goods in a region outside China and then ship the goods to China or carry them in their luggage upon their return to China. The goods are then resold for profit in China.

''Daigou'' activities can be conducted either illegally or legally, often using loopholes to circumvent import tariffs imposed on overseas goods.

Sales

''Daigou'' sales across sectors total $15 billion annually. 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).

''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.

The large demand for ''daigou'' service is because of the perceived high import tariffs on luxury goods and concerns over unsafe products, especially food safety problems, ''Daigou'' shoppers can provide assurance that the products that are ordered by consumers in China are genuine and safe to use. Shoppers often have personal connections with the people in China who order from them.

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

Negative impacts

''Daigou'' syndicates can be involved in hoarding and stockpiling of goods in large quantities and often infuriate local customers for the shortage of goods and disruption incurred to the markets.

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.

In January and February 2020, in response to the COVID-19 pandemic, China's United Front organized successful ''daigou'' in numerous countries to help China import 2.5 billion pieces of epidemic safety equipment, including over two billion safety masks. The Australian subsidiaries of Country Garden and Greenland Holdings had their employees gather medical supplies, which were subsequently airlifted to Wuhan and exacerbated the shortages in Australian hospitals. Jorge Guajardo, Mexico's former ambassador to China, suggested that China was evidently hiding the extent of a pandemic that endangered the world and covertly securing PPE at low prices, as the "surreptitious" operation left "the world naked with no supply of PPE."

Such actions have prompted several governments to take actions against ''daigou'' smuggling and hoarding. In 2012, the New Zealand government began regularly cracking down and sometimes outright banning unauthorized export of consumer goods through unregistered channels. Australian retailers have imposed multiple restrictions on ''daigou'' purchases of baby formula.

Some ''daigou'' service providers fraudulently sell counterfeit products that have been altered to appear purchased abroad from legitimate sources.

Responses from China

On January 1, 2019, China officially rolled out a new e-commerce law, the first of its kind that directly regulates ''daigou'' activities. Under the new law, all ''daigou'' participants are 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 in which they purchased goods. Any e-commerce platform or seller could be fined 2 million yuan or 500,000 yuan, respectively, and possibly face criminal charges, if they are found guilty of smuggling, tax evasion or willful violation of the new e-commerce law.

See also

* Parallel trading in Hong Kong

References

External links

JINGDAILY: daigou

{{China topics

Retail processes and techniques
Smuggling
Chinese business terms
Tax evasion
Tax avoidance
Sales occupations
Retailing-related crime