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Livia Wang, organiser of the 2016 China eCommerce Expo at Sydney Town Hall Saturday. Ryan Stuart
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by Su-Lin Tan
It was chaos at Sydney's Town Hall on Saturday as more than 5000 "daigous" or Chinese personal shoppers clambered for vitamins, UGG boots, cosmetics and milk powder to send to family and friends back in China.
The occasion was the second China eCommerce Expo in Sydney at the start of "Golden Week", when Chinese travellers take a week-long holiday commemorating the founding of the People's Republic of China.
Students, housewives, young professionals and grandmothers were grabbing samples and products from milk company a2 and Dairy Farmers, medical company Capitol Health, cosmetic firm Dr LeWinn's and even insect repellent group Aerogard.
The expo, organised by well-known Chinese company "eCommerce China", was aimed at match-making Australian retailers to Chinese daigous and while it wasn't a direct selling event, many daigous placed orders with exhibiting Australian brands including UGG boots and Comvita while marketing their products instantly on Chinese social media WeChat.
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AFR. Goldenweek. Photograph shows queue to get into the 2016 China Commerce Expo at Sydney Town Hall, Saturday 1st October 2016. The queue went underneath the staircase then around and back up to George Street. Goldenweek is a semi-annual 7 day national holiday in China. Chinese holidays means lots of people shopping, and Daigous are doing teh shopping for them. Daigous are Chinese black market couriers. The Commerce Expo is somewhat of a convention for them. Photo: Ryan Stuart Ryan Stuart
On Sunday, the expo moved to Melbourne, where about 2000 daigous attended. "This is now an industry," eCommerce China's managing director Livia Wang said. "And it is getting bigger every day, it's a complex ecosystem."
A masters in commerce student, who has been an active daigou throughout her degree, told The Australian Financial Review prices of products in Australia were cheaper, even after being sent by courier.
"For example, 1000 fish oil capsules would be about 200 renminbi, or $40. In Australia it's $20," she said.
"And for seafood-related products, Australia is preferred over America, for example, because it is an island country."
She said her customers, including friends and family, trusted the goods that fall out of her suitcase or couriered parcel more than those on the shelves of Chinese supermarkets.
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AFR. Goldenweek. Photograph shows scenes from 2016 China Commerce Expo at Sydney Town Hall, Saturday 1st October 2016. Goldenweek is a semi-annual 7 day national holiday in China. Chinese holidays means lots of people shopping, and Daigous are doing teh shopping for them. Daigous are Chinese black market couriers. The Commerce Expo is somewhat of a convention for them. Pictured is the crowd swarming the Cowala Milk Powder stall. Photo: Ryan Stuart Ryan Stuart
Another daigou, Alice, an accountant and former student, said a full-time daigou could make revenues up to $200,000 a year.
Retailer Gareth Devine said: "It is absolutely the next wave of the economy for Australia's trade with China.
"If Chinese demand for one Australian product increases by just 20 per cent, the impact here is disproportionately large here in Australia."
Mr Devine is setting up a certification business to stamp the authenticity of products sold to daigous, so Chinese buyers know they haven't been interfered with by Chinese manufacturers or the Chinese government.
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AFR. Goldenweek. Photograph shows scenes from 2016 China Commerce Expo at Sydney Town Hall, Saturday 1st October 2016. Goldenweek is a semi-annual 7 day national holiday in China. Chinese holidays means lots of people shopping, and Daigous are doing teh shopping for them. Daigous are Chinese black market couriers. The Commerce Expo is somewhat of a convention for them. Pictured is the crowd swarming the Cowala Milk Powder stall. Photo: Ryan Stuart Ryan Stuart
And that was what sparked the "daigou" industry, two to three years ago.
Family and friends, concerned about the quality of food products such as milk powder in China, asked their student or resident friends or "daigous", to bring back trusted Australian products to China when they travelled home.
The "suitcase trade" has now expanded into million-dollar businesses involving couriers. Daigous buy from supermarkets or wholesalers and pack them off in boxes to China.
Ms Wang said on an average day, there would be 40,000 active daigous sending parcels from Australia to China.
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AFR. Goldenweek. Photograph shows scenes from 2016 China Commerce Expo at Sydney Town Hall, Saturday 1st October 2016. Goldenweek is a semi-annual 7 day national holiday in China. Chinese holidays means lots of people shopping, and Daigous are doing teh shopping for them. Daigous are Chinese black market couriers. The Commerce Expo is somewhat of a convention for them. Pictured is crowd at Blackmores and Blingskin stall. Photo: Ryan Stuart Ryan Stuart
In an average week, these 40,000 daigous would send up to 40 parcels each worth up to $1000 a batch, or roughly $40 million in trade a week.
"Everyone is a daigou," she said.
"Without daigous it would be very hard to market or advertise your products persuasively in China. The Chinese trading system relies on peer endorsements. When family and friends see you endorsing a product on WeChat, the product goes off."
So powerful is this form of marketing for Australian companies, Sydney health product company Natural Life's Anthony Adare hires full-time Chinese staff just to advertise his company's supplements on WeChat.
Natural Life has even custom-manufactured products for Chinese consumers such as "Lung Clear", which helps to relieve the effects of air pollution.
"For the next 20 years I can make profits selling to China and without selling to local Australians, ever," Mr Adare said at the expo.
And while milk powder and vitamins were popular, there was strong demand for medical-related products.
Chinese consumers are demanding medical products such as second opinion radiology, products to combat obesity and diabetes, as well as supplements for the elderly and young children, said ASX-listed diagnostic company Capitol Health.
"The interest is phenomenal," chief marketing officer Margaret Wright said at a stand at Town Hall.
The daigou business has also created other side businesses. Nanhai Culture & Media, Chinese media company based in Sydney now focuses on producing advertisements for "Made in Australia" products.
But two issues could obstruct the industry – taxes and regulation.
Australia could be missing out on uncollected taxes on profits made by daigous, which were often cash trades. Many daigous make a margin on product price, courier services and even foreign exchange services.
"Maybe the Tax Office can set up a department to assist them with how to lodge their taxes. Every daigou is keen to be compliant with their taxes but they just don't know how to lodge it. Even their accountants don't know," Ms Wang said.
"When they ring the tax office, they don't get the answers they need but they are very willing to pay taxes."
In April, parcels from Australia were also blocked because China's Customs Bureau was adjusting its systems to accommodate new import taxes, a process that could last a year. As a result several courier companies have suspended their parcel businesses.
But Ms Wang said new solutions had already emerged to "get around the difficulties". There were at least 25 companies which specialise in dealing with Chinese customs and assist with parcel delivery to China including Alibaba-associated logistics company, ALOG.
(20min delay)