Is Daigou still making money?

22/12/2019 Admin


A lot of Daigou (buyers on behalf) are seeking to transit to another golden chance.

Daigou might be the biggest industry you've never heard of. The Mandarin term, which translates as "buy on behalf of", is used to describe Chinese buyers who purchase sought-after products abroad and resell them back home for profit by dodging taxes and duties. It's like bringing cheap fags back from your holiday to flog to your friends, but on a much, much larger scale.
 
Daigou sell products cheaper than they are available in China, where taxes on luxury goods are high. They also capitalise on high distrust among Chinese consumers: fakes are ubiquitous, and health scares like the 2008 milk scandal – when six children died from melamine-contaminated baby formula – mean products purchased abroad are often perceived as safer and more legitimate. Some estimates claim there are now over one million daigou working globally, but before growing into a slick grey market operation it was a fairly innocuous pastime.
 
 
"It started out really innocently – you know, people go abroad and people go, 'Hey, can you send me home this kind of handbag?'" says Wade Shepard, author of On the New Silk Road: Journeying Through China's Artery of Power. "And it kind of grew from this informal, grassroots thing into a $100 billion a year industry."
 
Daigou – which can be used to refer to the practice as well as the people doing it – grew alongside a boom in China's middle class over the last decade. The scale of China's population is dizzying: it's the most populous country on Earth, boasting over 100 cities with more than 1 million residents each, and its economic growth means a large number of those people now have more disposable income than ever before.
 
While the country's 400 million-strong middle class represents a relatively small share of its 1.4 billion person population, in absolute terms it is one of the biggest markets in the world. According to the consulting firm McKinsey, Chinese consumers spent £120 billion on luxury goods in 2018 – a third of the global total. This is the spending power that daigou capitalise on: