Economy

Strict rules no obstacle to daigou industry

By Eric Jou (China Daily)
Updated: 2010-12-23 11:28

BEIJING - Despite China's recent efforts to prop up its domestic market and to crack down on the smuggling of foreign goods, the popular business known as daigou is booming as Christmas is around the corner.

Daigou is a mostly Internet-based business in which companies act as shopping agents for Chinese people who want goods unattainable in China.

As individual purchasing power in China increases, a taste for luxury goods has led many to turn to the daigou industry.

"Every year, 10 days before Christmas and 10 days after the holiday, business is good, even with the increase in customs restrictions," said a marketing manager for eushophq.com surnamed Huang. "Orders so far this year, compared with the same period last year, increased 10 to 15 percent."

The industry, however, is under threat from regulations that have been in effect since November.

Some businesses who talked to China Daily said they have been forced to forego buying hot items such as Apple iPhones and are shifting toward less risky products, such as cosmetics.

The daigou businesses operate in one of two ways: Bulk purchasing of whatever is popular abroad and selling in the domestic market; or making customers pay a premium for a product, which will then be bought overseas and brought back into China, often illegally.

"Ninety-nine percent of our customers are individual, non-corporate clients," Huang said. "They mainly purchase luxury goods, in particular, watches and bags."

Related readings:  New customs limit fails to dampen shopping tourism  Customs crack down on secret smuggling method Import tax to be levied on more parcels sent from overseas  Reduce import tax on iPads

The industry became increasingly popular during the global recession when the prices of Western goods were slashed.

But products such as baby formula and Apple iPads have come under a customs crackdown in China and have become increasingly expensive to import.

Officials say the point of the new regulations is to prevent illegal imports from being falsely categorized as personal import-and-export goods.

Daigou businesses say they are finding it harder to bring in Apple iPads and iPhones from Hong Kong.

The authorities have been stepping up their enforcement to prevent these goods from entering the mainland, with a hefty 1,000 yuan ($150) fee.

Since November, mainland customs have been levying the 1,000 yuan tax on iPads, inflating the price of the gadget to 5,000 yuan, or a 20 percent markup.

A general manager of overseadeals.com, surnamed Zhao, says even though he has seen an uptick in business, the new tariffs are having an effect.

"We no longer provide iPads and iPhones," Zhao said.

"In fact you can't even get them unlocked in Hong Kong anymore."

What is taking over in lieu of high-tech goods are luxury handbags, brand-name clothing and cosmetics.