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Aussie brands bypass daigou

News, 21 October 2016

SYDNEY/BEIJING: Australian brands are waking up to the daigou phenomenon that has seen private sellers shipping food, cosmetics and health products to China for resale online, with many spying an opportunity to build on this "free" marketing and establish their own presence there.

At one point last year, during another baby food scare, daigou were making significant profits by selling tins of baby formula for up to A$200 each to Chinese buyers, news.com.au reported.

And when the breakfast cereal Weet-Bix appeared on a popular Chinese soap-opera, daigou were asking A$50 for a A$5 box.

Now brands are muscling in on daigou territory. "A lot of bigger players have come from Australia to set up official business models to replace the daigou model," said Livia Wang, director of consulting company Access China

And she warned that those brands seeking to cut out daigou completely could be at risk since the sales success they were looking to cash in on was almost entirely dependent on the recommendations of the individuals concerned.

"If people's family and friends ask the daigou which brand to buy, the daigou could say 'don't buy this brand', and as we've seen, people really listen to them," Wang said.

She recommended a collaborative approach "Brands that will be successful in the Chinese community will be the ones that say, 'okay daigou, can we work together?', and see their influence as an opportunity," she said.

"At the end of the day, Chinese consumers listen to daigou much more than the traders of platforms in China."

That sentiment was echoed by Alibaba, on whose online platforms Tmall and Tao Bao many of the diagou operate.

"Every client we talk to, if they've been to China and they understand China, they know the importance of the daigou community," according to John O'Loghlen, the internet giant's director of business development for Australia and New Zealand.

"We're learning a lot with the daigou community, and our clients want to do that as well," he said.

But he added that the daigou community needed to become better organised and to root out rogue traders.

Data sourced from news.com,au; additional content by Warc staff.