22 Jan The Act of Daigou
A buyer in China wants to buy 3 cans of Stage 2 infant formula, but it’s expensive, inconvenient and difficult to order directly from an Australian website.
The Chinese based buyer heads into their WeChat community to look for one of their network currently living in Australia to buy the milk formula on their behalf and send it directly to China. The buyer finds Li Li in their WeChat friends and they settle on a price: $42 per can.
Back in Sydney, Li Li heads to Woolworths to purchase the products, she takes a photo of the receipt for proof of purchase and repackages it for shipment to China.
Social media-fuelled transactions (almost exclusively conducted on WeChat) such as these have grown so popular in China that they’ve become an industry known as daigou, a Chinese phrase that means “to buy on behalf of.”
Daigou purchases in Australia were estimated at up to $1 billion and there are between 50-70,000 Chinese living in Australia undertaking this form of trade.
Chinese communities nationwide have embraced daigou as a way to earn a living leveraging China’s wealthy and middle-class’s anxiety of fake and unsafe products with high demand, quality foreign goods.
The roots of daigou start in 2008, when Chinese milk containing a toxic additive killed at least six infants and sickened hundreds of thousands more. The scandal created huge demand for overseas milk powder, which quickly became and remains one of daigou‘s most popular products. Quality control scandals for products such as toothpaste, cosmetics and medicine also have motivated Chinese consumers to shop overseas.
But daigou really began to take off in 2011, when Chinese e-commerce platforms such as Taobao gave buyers a platform to grow their business beyond their friends and family and combined with the rise of Chinese social networks such as Weibo and WeChat daigou started to buy in greater and greater volumes.
The trust based, ‘person-to-person’ nature of the business makes it difficult to beat as a sales/marketing channel for new and emerging brands looking to gain a foothold in the Chinese market. This channel known as D2C (daigou-to-consumer) has become recognised by many of the leading brands as being responsible for their China success, in some cases without the brand actually knowing where it’s popularity was coming from.
In 2017, Reach China developed a WeChat marketplace called, ‘DaigouSales.com” that linked Australian brands with daigou buyers, like Li Li. Where Li Li used have to physically travel to Woolies to purchase then head to the post office or shipping agent to send she can now do this all online through the marketplace, whist ensuring to her buyer that the products are legitimately sourced from Australia. Li Li’s role as the buying agent has evolved and broadened, making her a powerful voice for new brand recommendation within her WeChat circle.
It’s not always cheaper to buy in Australia, but Chinese buyers requesting products want to have peace of mind.
Thanks to daigou, Li Li now spends more time with her family. And pays better than her last job: working in a Sydney food outlet.