While Alibaba celebrated record sales on Single’s Day this year, a lot of daigou were overwhelmed by a sense of their own demise. Literally meaning “buying on behalf of”, daigou is a uniquely Chinese occupation that capitalises on delivering to locals quality foreign goods (and bypassing heavy import duties if the same are purchased in China). It started with amateurish, part-time personal shoppers – mainly expatriate students and housewives looking to make extra income – and gradually blossomed into a minor industry that led to dedicated cross-border e-commerce platforms such as Little Red Book (see WiC413). To cater to daigou Australia Post even opened stores solely tasked with shipping health and beauty products to China.
So what is killing the flourishing trade? Apparently China’s new e-commerce law set to kick in on January 1. It requires facilitators of overseas shopping – be it companies or individuals – to register in both the source and selling countries and pay taxes accordingly. Nor is the new rule just window dressing: the Guangdong provincial government this month sentenced a daigou – who operated a fashion store on Taobao – to 10 years in jail for tax evasion and smuggling. The seemingly draconian law has contributed to the declines in the share prices of luxury brand owners such as LVMH and Kering in recent weeks.