Mr. Guo Wengui, the founder of the New Federal State of China and a Communist China dissident said in several events that take down the Chinese Communist Party and the world businesses would have a leveled Chinese market of 1.4 billion people that would comply with the western standards and rules. Corporative owners would be able to earn “clean money” in a healthy competition environment, without being exploited and kowtowing to the CCP.
Daily Mail published a news article with the title Chinese shoppers are caught stockpiling containers of baby formula from a Melbourne Woolworths by blatantly exploiting two-tin limit on December 28, 2019. The Chinese people featured in the footage are called “daigou”, which meanings shoppers on behalf of others, specifically customers in mainland China.
If you’ve seen Chinese-looking shoppers piling commodities into shopping carts, you’re probably not unfamiliar with the daigou phenomenon which has grown into a billion-dollar grey industry in the last decade. On July 30, 2019, ABC News published a report named The daigou channel — how a handful of Chinese shoppers turned into a billion-dollar industry, decoding some aspects of it.The report has explained what the “daigou industry” is and how it works. (Please click the link above for more details.)
Much as I agree with this report, I have a bit more thoughts on the reason why some “businesses found themselves in terrible positions” when trying to “get around the daigou by cutting costs or selling directly into China”. It says, “that’s because the key to the daigou phenomenon doesn’t simply lie in the Australian product quality, but how the daigou market it”, and “daigou have direct rapport and personal trust with Chinese clients that Australian companies simply don’t have”.
This is a good point. Take baby formula as an example. After the 2008 Chinese milk scandal, Chinese parents started to turn to foreign brands. But as the tariffs are high, imported goods are much more expensive. With an annual GDP $700 per person, nothing as Child Tax Benefit and overall expenses to raise a child very high in China, some parents would try every means they could to provide their children with safe food.
They use daigou because the prices offered are negotiable and lower than imported goods in retail stores. They could see from livestream that the commodities are directly purchased from local stores to avoid counterfeits. The price they pay for a tin consists of the local product price, shipping and daigou’s profit. Sometimes they are unlucky to pay some duty if the parcels are “checked” when going through the Chinese customs. Normally daigous would kick off their business from shopping for relatives and friends, then expanding it to others with word of mouth marketing.
But the key element still lies in “price”. Even the company could lower their costs, it’s not as much a space as to be “duty free” and “advertisement free”. How could daigou manage to do so?
In Communist China, there’s nothing the CCP wouldn’t have absolute control of, from people’s thoughts to their money and even their lives.
In foreign trades, due to high tariffs, prices of imported goods sold in China are much higher, some could triple the originals. If foreign companies want to have a share of the huge Chinese market, they need to play by the CCP’s rules and appease them.
In the so-called “daigou industry”, the CCP controls daigou’s online shops operated on Wechat, Taobao of alibaba, and a few others. These apps and websites are all CCP long arms to collect and control user data by providing “free uses”. Because they are free and convenient to use, daigou could build up a large customer pool rapidly with no obvious cost. But everything is under CCP’s surveillance. Other companies or governments don’t think of or have access to this online operation.
The CCP controls the logistics. For example, S.F. Holding Co., Ltd, which is the largest Chinese delivery services company, includes China Merchants Group as one of their shareholders. China Merchants Group is a shareholder of many of its subsidiary companies in the areas of transportation, investment, finance, energy etc., such as China Merchants Port Holdings Company Limited, China International Marine Containers (Group) Ltd. (CIMC), China Merchants China Direct Investments Limited, banksChina Merchants Bank Co.,Ltd, and numerous highway companies. This group is allegedly owned by the CCP senior officials and their families. A foreign postal service company will never have access to Chinese domestic logistics. Even the international shipment is handled by Chinese companies giving daigou a lower fare than western companies.
The CCP controls Chinese customs. Shipment companies offer “duty free” service to daigou, making it more like an official smuggling, only that there’s allegedly some sort of “cooperation” in it.
The CCP controls the banking and money transactions of the daigou industry. Most daigous use Wechat pay and Alipay, which serve as online banking systems absorbing enormous cash, exchange fees and membership fees. The more daigous sell, the more profit these payment agencies make, just by maintaining an online system strictly controlled by the CCP.
The CCP can impose new policies whenever they want. In 2018, they “implemented e-commerce laws to ensure professional daigou are registered as businesses and pay tax on the products that they’re importing” (ABC News). It seems they want a share of daigou’s profit. They can impose similar laws on any companies that seem to be making a good fortune in China.
As the ABC News report says, the daigou industry has brought a number questions and concerns to the international market. With the CCP acting behind the curtain, there’s not much the corporations could do other than give in if they want their businesses in China. Eventually, it’s a dead end. As is mentioned at the beginning of this article, the world should stop investing in Communist China and kowtowing to the CCP regime. What seems to be beneficial for now might turn into poisonous in the near future. The other way round, you will see an open market with huge opportunities playing by international standards and rules. It’s not only about profits, but the future of the corporative participants.
(Credits to ABC News. Opinions are the author’s. Thanks for reading.)