Allgemein

Living in China today: The Phenomenon of 代购 (dàigòu)

by Andrea Glaab

代购 dàigòu – a word that most people here have never heard of. The activities it is generating here around us go unnoticed as well. In the Chinese sphere, however, this phenomenon is very well known. Some bigger media outlets like the Financial Times picked up stories about it while Western scholars, unlike Chinese academics, have not been attracted yet. According to Wikipedia, dàigòu is a “channel of commerce in which an overseas person purchases commodities (mainly luxury goods but also groceries) for a customer in mainland China” (Wikipedia 2017). The activity does not stop there but also includes areas like Taiwan or Hongkong. Many different people are sellers, from students that want to earn pocket money to full time professional dàigòu. Buyers can be family members and friends, but often sellers also supply their own shops which they set up on Weixin or Taobao. The product range is especially interesting. There is nothing that dàigòu are not selling: from the luxury handbag or watch, to products of daily needs like pans, facial cream, snacks, medicine or even female hygiene products (Shannon 2016). While it is also common for most European readers to ask friends or family to bring some special product back from a holiday trip, or send it from abroad, this phenomenon encompasses an all new scale and reach. For the dàigòu it is a profitable business; they can earn around 5-15% commission, which is especially lucrative for luxury goods (Shannon 2016).

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So how can we explain this strange phenomenon, taking into account that you can buy most of the things in China just as well, without all the hassle? The most important motives to buy such a product for a buyer are brand or country of origin. For one, there is a very high tax in China on luxury products of 30-60%, so buying it abroad is still cheaper than in domestic shops (Chitrakorn 2014). Furthermore, for daily products there is a mistrust in Chinese brands and the quality among Chinese people. This is especially easy to highlight with the example of milk powder. After the Chinese milk scandal in 2008, almost no Chinese mother dared to feed her child domestic milk powder. In German drugstores like DM or Rossmann, there is a limit of how many packages of milk powder a person is allowed to buy. According to German drugstores and producers, they seek to “protect the German mother” (Gronwald 2016). The same happened in Hongkong, and there are also calls for more regulation in Australia. In all those places milk powder became a scarce product because of Chinese daigous herding it (Battersby 2016).

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Slowly the Chinese government started to pick up the topic, trying to regulate this shadow economy. Motivated by the tax revenues of import tariffs it is losing, it ordered an import tax on postal. The Chinese government also seeks to bolster the sales of domestic industries (Chitrakorn 2014).  Therefore, further action should include strengthening consumer protection through stricter foodstuff inspections as well as control of other goods as hygiene products, that still have the reputation of being harmful, if made in China. This can lead to a growing trust in domestic brands in the long run. Furthermore, the trend of growing nationalism in China is contributing to a slowly increasing demand for domestic brands and products (Shepard 2016). So, while growing spending capacity in Chine leads to higher demand, the work of daigous is also becoming more complex.

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Further Reading

Battersby, L. 2016. Government powerless to stop daigou formula herders. The Sidney Morning Herald. http://www.smh.com.au/business/retail/government-powerless-to-stop-daigou-formula-hoarders-20160128-gmg6jo.html  [retrieved 20th September 2017].

Chitrakorn, K. 2014. Can China End the Illicit ‘Daigou’ Trade? Business of Fashion. https://www.businessoffashion.com/articles/global-currents/can-china-put-an-end-to-the-illicit-daigou-trade  [retrieved 20th September 2017].

Gronwald, S. 2016. Wie Chinas Durst nach Babymilch deutsche Supermarkt-Regale leerfegt. Stern. http://www.stern.de/wirtschaft/milchpulver-fuer-china–wie-der-durst-nach-babymilch-gestillt-werden-soll-6648768.html [retrieved 20th September 2017].

Shannon, S. 2016. On the floor with the daigou, China’s overseas shoppers. Financial Times. https://www.ft.com/content/0e0c6a36-330c-11e6-bda0-04585c31b153 [retrieved 20th September 2017].

Shepard, W. 2016. Will Growing Nationalism Kill Foreign Brands In China? Forbes https://www.forbes.com/sites/wadeshepard/2016/07/22/will-growing-nationalism-kill-the-foreign-brand-in-china/#374e9c171080 [retrieved 20th September 2017].

Wikipedia. 2017. Daigou. Wikipedia. https://www.ft.com/content/0e0c6a36-330c-11e6-bda0-04585c31b153 [retrieved 20th September 2017].