Daigou is a very popular way of shopping in China, but not so much in the West. Let’s get to know what’s going on with China’s daigou craze.
What is daigou?
Daigou or 代购 dàigòu, literally translated to English means: buying on behalf of. It is a channel of commerce between mainland Chinese buyers and overseas professional shoppers. In 2014 alone, the daigou business was worth a whopping amount of 75 billion yuan (US$ 12 billion).
Who are the daigous?
Daigous / shopping agents can be anyone. Anyone based overseas who shops for goods based on a customer’s shopping list and ship the goods back can be considered a daigou. Chinese students who are studying abroad and stewardesses are two of the most common types of daigou agents.
How does daigou work?
There are two ways to do daigou. First, as mentioned above, is through a personal channel. You could find a personal daigou through search engine, WeChat, or Weibo. But remember, anyone could be daigou agent, even a friend who’s going on a vacation can be a daigou agent!
Simply let your daigou agent know your shopping list and make a down payment. Once your daigou agent successfully buys your goods, they will ask you to make a full payment along with their commision. And voila, your new goodies will arrive right on your doorstep.
The other way to find a daigou is to browse through several official daigou websites and get them to purchase items right away. This daigou method is pretty much the same as the ordinary online shopping.
Why do Chinese daigou?
According to Fortune Character Institute, an organization specializing in lifestyle studies of the rich in China, 76% of Chinese luxury consumption took place in overseas market, which grew more than 9%, with a worth of US$ 81 billion in the year 2014.
Why overseas? For luxury goods, the hefty import tariffs that might mark up goods’ price up to 50% is the main reason why Chinese prefer to shop overseas. For instance, a Louis Vuitton handbag is priced 30% higher in Beijing than in Paris. Lower price and refundable VAT (Value Added Tax, also known as General Sales Tax / GST) are the two things that really caught Chinese shoppers’ hearts (and credit cards).
It’s predicted that China’s middle class will jump to 340 million by 2016, and as China’s middle class grows, so will their purchasing power. There’s no doubt that the Chinese have a great demand towards a better quality of life. Ever since the melamine infant formula scandal, Chinese are more conscious towards their diet and health. This scandal made Chinese second question local food producers’ safety standards. Chinese consumers’ trust issue therefore creates a great demand not only for imported baby milk powder, but also for other imported goods, such as food products, health supplements, skin care products, and make up, which are things easily purchased by a daigou.
Chinese social media platforms have become an important driver of this e-commerce activity. Tencent’s WeChat or Sina Weibo allows shoppers and daigou agents to connect easily. Daigou agents can advertise their goods through photos, while shoppers can seek immediate buy/don’t buy advice from their friends. Transactions are made easy with third party payment platform such as Wechat Wallet and Alipay, avoiding the long-snaked bank queue and sharing sensitive bank account information.
Some say that daigou is a win-win solution for both seller and shopper, while some argue that daigou is just another form of smuggling, avoiding the custom taxes. Despite this debate, it is clear that a simple cross border e-commerce had made a big influence on Chinese shopping habit.
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