‘DAIGOU’, THE SILENT TRANS-BORDER PHENOMENON
WHAT’S GOING ON
A Diagou (pronounced ‘dye-goo’) is not only a Chinese word meaning ‘buying on behalf of’, it has become a lucrative silent trans-border operation serving mainland China with authentic foreign products whilst avoiding conventional channels.
The Diagous (often Chinese students or Chinese migrants) act as ‘shopping agents’ who buy sought-after products for their customers in China.
With counterfeiting of foreign products a big problem through online and offline channels in China, buying from a Daigou (who is often known to you personally) has become a more trustworthy alternative.
Most of the trade is facilitated via the Chinese social media platform WeChat.
The need for trust coupled with a ballooning Chinese middle class with cash to spend, has resulted in an estimated $15 billion annual global Daigou sales.
There are 1200 “gift stores” in Australia which cater specifically to Daigous, sourcing, ranging and packaging products ready to post to China.
An estimated 40,000 full-time Daigou operate in Australia with 5 or 6 “Mega Daigou”.
GROWTH MANTRA’S PREDICTION
- As the Chinese middle class grows and this network becomes more entrenched, it will continue to strengthen and disrupt conventional channels.
- We believe the only thing that could disrupt the Diagou market will be new measures introduced by the Chinese government. For example, each product that is purchased outside of China represents tax revenue they are not collecting. With Chinese purchasing power stronger than ever, the Chinese govt. will be looking for ways to get a piece of it and therefore introduce measures that encourage spending inside the country.
- However we think the Diagou market is so strong, they’ll find a way to get around this.