'daigou' suitcase shoppers decrease substantially

Because of copyright I've only pasted part (about half) of today's FT article and have attached link at the end. It might explain why BAL and BKL have fallen recently.

Good times are over for China’s ‘suitcase’ shoppers in Australia
Change to Chinese customs rule hits trade in buying western goods to sell at 50% mark-up back home
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Supermarket sweep: a 'daigou', or buyer-on behalf, selects an Australian breakfast cereal popular in China at a Sydney store © Reuters

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7 HOURS AGO
by: Jackie Range and Jamie Smyth in Sydney, and Sherry Lu in Beijing
Alongside her day job, accountant Jane Li runs a lucrative export business. A recent Chinese migrant to Sydney, she sells baby formula and other products to a network of friends and acquaintances back home who pay a mark-up of up to 50 per cent for products from the trusted shelves of foreign supermarkets.

One of a group estimated to number more than 100,000 in Australia, Ms Li is a “daigou” or “buyer on behalf”.
This “suitcase trade” in luxury and health goods has become a global phenomenon, accounting for Rmb34bn-Rmb50bn ($5bn-$7.5bn) globally in sales last year, according to the consultancy Bain & Co.

It has thrived because of the relatively higher cost of these products in China, a perception that western brands have higher safety standards following a string of food scandals in China and a surge in interest among middle-class Chinese consumers for products perceived to feed a healthier lifestyle.
The trade has become so big that Australia’s biggest supermarkets, Coles and Woolworths, were last year forced to limit the number of tins of infant formula they would sell to individual customers amid concerns of a shortage that were sparked by a surge in daigou buying.
But a change to Chinese customs and ecommerce rules introduced in April and a desire by some luxury goods companies to take control of their supply chains is denting the trade.
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“The market has started to cool down,” says Ms Li, who along with her mother sells up to Rmb20,000 of products every month.
Swisse, one of Australia’s biggest vitamin and supplements companies, says that the number of daigou buying and selling its products has fallen from more than 100,000 to about 20,000 over the past year.
“New cross-border ecommerce rules introduced in China created uncertainty for daigou and we saw resellers sell off stock to reduce risk,” says Michael Howard, the company’s sales director.

In April, the Chinese government targeted daigou, raising import taxes on postal items, consumer goods brought into the country by air passengers and foreign ecommerce transactions.
Beijing is also introducing stricter food safety rules, which from next year will require overseas companies to obtain certification for products they wish to continue selling on cross-border ecommerce websites.
Windeln, a German online retailer of baby and children’s products, said that sales to Chinese customers had declined since the new regulations were introduced.
Meanwhile, more foreign brands are seeking to establish direct sales channels into China. Swisse in March set up a dedicated store on Chinese ecommerce site Tmall and has plans to launch bricks and mortar stores over the next 18 months.
Half-empty shelves of infant formula in a supermarket in Australia during last year's shortage when shops were forced to place limits on the number of tins anyone could buy © Getty
“We want the consumer to have a place to go where they can have a direct relationship with our brand,” says Mr Howard.
KPMG expects the number of daigou to dwindle over the long term as the price differential for luxury goods between China and western countries reduces.
“It only lasts while there is an arbitrage opportunity,” says Doug Ferguson, KPMG Australia’s head of Asia and international business practice.
Chanel is among several luxury brands to have slashed prices in China.
Along with regulatory change, Mr Ferguson expects the daigou business to be hit as Chinese businesses snap up foreign consumer brands, and overseas companies take greater control of their product distribution.
However......

https://www.ft.com/content/68163434-8c45-11e6-8cb7-e7ada1d123b1