China’s Shopping Army Revitalizes Australia’s Retail Sector, According to Reuters

By Swati Pandey

SYDNEY – In 2013, student Na Wang started sending fish oil capsules from Sydney to China to help cover her rent. Today, she’s part of a burgeoning group of Chinese shopping agents who are capitalizing on the growing demand for Australian food and dietary supplements.

At 33 years old, Wang is among an estimated 40,000 ‘daigou’ in Australia, according to retail experts. These individuals leverage social media and mobile payment applications to source goods on behalf of customers in mainland China. Initially known for shipping luxury items from places like Europe, this new wave of daigou focuses on essentials such as infant formula and other consumer staples.

Affluent, health-conscious Chinese consumers are increasingly seeking safe Australian products, a trend fueled by past food safety scandals in China. This year, companies like A2 Milk have started exploring partnerships with daigou instead of competing against them, tapping into a cross-border e-commerce market projected to reach $1 trillion in sales.

"People in China just love Australian products," Wang explained while packing an order of Maca Plus, a supplement claimed to enhance libido, along with a detox product. "They appreciate the quality. Nothing is too expensive for them."

However, the daigou business is not without its challenges. In April, Beijing imposed stricter regulations on cross-border online shopping, yet many Australian agents like Wang report that their operations have not suffered significantly.

During a 2015 surge in demand for infant formula from China, stemming from food safety concerns, daigou faced criticism in Australia for depleting supplies, leaving local consumers without access to certain products.

Despite these issues, the growing trade has captured the attention of retail brands, which recognize the opportunity to generate sales through partnerships with daigou that might be inaccessible for mid-tier goods manufacturers. "Everyone is now focusing on establishing connections with daigou, including major brands," said Benjamin Sun, a director at ThinkChina. "From a global perspective, Australia’s offerings to Chinese consumers revolve around food, supplements, and dairy products, rather than fashion."

The term ‘daigou’ translates to ‘on behalf of’ in Chinese, and these agents often create networks of potential clients on popular messaging apps. Some, like Wang, even live-stream their shopping trips to assure buyers that the products are authentic and sourced from legitimate Australian retailers.

Wang and her daigou counterparts typically charge a mark-up of about 50% over the retail prices of products in Australia. However, even with shipping costs factored in, many Chinese consumers still find it cheaper than purchasing equivalent items in local stores—if they are available at all. For example, a bottle of 200 capsules of a popular fish oil brand sells for three times its Australian price in China. This brand reports that around 40% of its sales are made through Chinese customers, encompassing both direct exports and daigou transactions.

Customers like Lu Jiwei, a software worker from Dalian, usually buy from multiple daigou suppliers each month, preferring Australian dairy, wine, and nutritional products. "It’s a bit more expensive, but not significantly so compared to local items," said Lu, citing food safety as a primary concern. "Food safety standards might be lower in China, and the source of milk is also questionable due to environmental contamination."

The challenges of entering the Chinese market have prompted consultants to encourage Australian companies to collaborate with daigou agents. Peter Nathan, CEO of A2 Milk, has noted the potential advantages of aligning with daigou. "We believe these agents contribute positively to both our local economy and our business," Nathan commented.

While food producers are keen to engage with daigou, some large retailers are attempting to reach the Chinese market directly. A major grocery chain has launched an online store on a prominent Chinese e-commerce platform, though industry insiders report mixed results, primarily due to daigou offering similar products at lower prices.

For agents like Wang, the daigou business appears to be a stable venture. "I’ll keep doing this even after finding a job," she stated. "There’s substantial profit to be made."