Chinese embrace grey market of personal shoppers

Many Chinese consumers prefer to shop beyond the nation's borders. Photo / Bloomberg

Years ago, my daughters were treated to a personal shopping service in London's Topshop. Having a personal shopper run around and collect clothing to suit their style and preferences while they relaxed in the customer lounge was rather special.

I recently learned of a personal shopping phenomenon hugely popular in China which, according to the Sydney Morning Herald, is "leading Australia's retail drive".

"Daigou" - literally translated as "buying on behalf of" - is a commerce channel where overseas shoppers buy on behalf of mainland Chinese buyers.

A daigou, or professional shopper, can be anyone based overseas who shops for goods on a customer's list and ships the goods back to China. Daigou are often Chinese students studying abroad, airline stewards and others who travel frequently for business.

A daigou will mail products from overseas to China as personal items to avoid customs duties, thus offering lower prices than those in China.

The daigou industry is not just another black market designed to avoid duties; its popularity is as much due to the growing Chinese demand for luxury goods that cannot be purchased in China, and for authentic goods, as opposed to counterfeit.

Chinese buyers can find a personal daigou through referrals. They then provide their shopping list, make a down payment and pay in full on receipt of the goods.

Or buyers can browse official daigou websites and purchase items right away - much like ordinary online shopping. Chinese buyers often prefer daigou websites over regular sites because they don't understand English well enough to buy directly and they don't know which to trust; counterfeiting is rife online.

A daigou charges a fee - the Sydney Morning Herald quoted a Ms Sophie He, who sends up to 60 tins of baby formula and 40 bottles of vitamins to China every week, charging her customers 25 per cent of the purchase price.

The daigou market is thriving, with a whopping 75 billion yuan ($17 billion) in trade completed in 2014. The Chinese authorities have recently strengthened customs regulations, with stricter inspections and plans to introduce a new tax of 11.9 per cent on goods bought via foreign websites.

Though tougher policies might dent the industry, it is widely thought the practice will never die while the prices and selection of luxury goods are better overseas than in China.

In recent months the Australian media have written a lot about daigou buying up so much infant formula that supermarket shelves have been cleaned out, leaving Australian consumers empty-handed. The milk companies have been happy to see tonnes of product sold at Australian stores (at full profit margin) sent to the growing Chinese market.

But the buying has prompted a backlash from Australian parents, who fear they will not be able to buy enough to feed their own children.

Though baby formula has been the most keenly sought product to date, the daigou network is spreading to fresh food, vitamins, skin and health products and even clothing.

Producers see daigou as a good thing: the dawn of a new and potentially immense retail era. Consumers who risk missing out to this growing band of buyers don't necessarily share their enthusiasm.

A personal shopping experience used to be a luxurious treat. Daigou take it to a whole new level.