Living the ‘Daigou’ Life: Why int’l students sell milk powder

Unexpected to most, while in other supermarkets around the world expensive items may be fancy food items or tech devices, here in Australia the hottest commodity is milk powder. Capitalising on the market, Chinese nationals in Australia buy the local milk powder to resell it back home in China. These people are called ‘Daigou’ and many of them are international students.

Through coverage by mainstream media such as ABC News’s piece highlighting the Daigou lifestyle, Daigous in Australia have often been framed as milk powder villains. To many Australians, all they seem to do is evade tax, block up pathways and buy up all the milk powder which makes it hard for local parents just for the money.

Although there is some truth to this, the reason and intent behind the job is not.

Like many things involving the international student community, the Daigou life leaves too much room for misunderstanding. Speaking with two international student Daigous, I unpack this extremely scrutinised occupation and delve into the murky grey area.

Daigou roughly translates to the act of buying and selling on behalf of others.  It can be small scale- someone purchasing goods to send back to family members and friends, to mega businesses with shipping containers full of Daigous buying on behalf of strangers. The spectrum is wide and varied.

Kristen Cheng, an international student from Monash University says her decision to join the lucrative market began by helping out family and friends but later branched out to strangers.

“My whole purpose is not to earn money but do my friends and family a favour… if I can earn money that’s an additional good thing,” Cheng says.

Another reason for joining the billion dollar Daigou industry is due to slim employment prospects. Not everyone is a crazy rich asian and even for those who can find a job, often 20 hours a week is not enough to cover tuition fees, rent, and other living expenses.

For Cheng, becoming a Daigou meant these burdens were lifted off her shoulders. “I couldn’t find a job in Australia… being a second-agent helps me practice my degree and build connections.”

Yvonne Jiang, an international student from the University of Monash, said many become Daigou because it is easier to juggle whilst studying.

“I need to focus on studying, with this I don’t have any limitations of requirements, you can just tap your fingers for a few seconds,” she said.

The way Cheng and Jiang explain it, the smaller interaction the better. Otherwise, as the product passes through multiple stages, the total amount of profit is divided into smaller sums.

Not often spoken about is the positive parts of the lifestyle. The Daigou industry helps with job creation, establishing Australian brand awareness, and helps local businesses break into the wealthy Chinese market. For example, many Daigous have helped Australian wineries reach chinese consumers who then either go through Daigou or come themselves to buy the product.

Buyers also receive a more genuine transaction, fit with personal advice as well as strong insights, knowledge and updates on the latest sales. Cosying up to the booming Chinese market and utilising this e-commerce ecosystem is a business strategy that many Aussie brands have been quick to grasp.

But let us address the cow in the room, what Cheng describes as the “dark side” of Daigou. As local demand persists alongside a growing foreign demand, tensions rise between locals and the many Daigous wishing to purchase the same product.

Since China’s milk scandal in 2008, which killed six infants and caused mass social panic and brand distrust, Australian milk powder has become the gold standard and hot commodity that Chinese families try their hardest to obtain. Empty shelves here, however, ultimately resulted in a two-can ban.

“It’s not our fault, we are the small retail they (milk companies) have a big industry they sell direct, they have the resources to make more and meet the demand,” Cheng says.

This makes sense. If Australian milk producers have the resources to produce to both local and foreign markets, would that not lead to higher profits? Is that not the whole purpose of businesses? To expand and profit?

Australian and New Zealand largest milk company, A2 Milk, have both expanded and profited exponentially in the last few years. Despite China’s new e-commerce laws cracking down on online traders, A2 Milk has remained in demand throughout Asia and America.

The company has reported a 50 per cent rise in revenue from China and other Asian markets. Last year A2 Milk made $656 million in sales in products bound for China via Daigous.

Both Cheng and Jiang, are on the lower side of the Daigou spectrum and cause no direct disruption to the Australian market. Whilst they are largely pro-daigou, the two students are “horrified” by the illegal side that exploit the industry and needy buyers.

Last year, Chinese officials seized huge amounts of counterfeit products such as vitamins and wines in shipments from Daigous. Through investigations by the police they found that these products could be sold up to 1,000 per cent profit.

There are also Daigous who tax evade by selling products on social media such as WeChat. In an article by JingDaily, a chinese publication, there are instances where Daigou draw images of the product rather than use pictures to avoid getting caught evading taxes.

According to Cheng, “there is a line between what is legal and what is illegal.”  China’s recent e-commerce law has attempted to clamp down and address the illegal side, making all Daigous subject to a license and taxation.

Judging by weakening sales of Australian supplement brand, Blackmores, and makeup giant Napoleon Perdis’ handover to Livia Wang (dubbed “Daigou queen”), the practice is only growing even with more taxes and regulation.

The consequences of such selling practices, however, are still at large, local parents are still negatively affected by their experiences trying to buy milk powder.

As local father Andrew Trevorrow who struggles to feed his child explains in an interview with ABC News, “Two weeks ago we ran out of formula and couldn’t find any anywhere —and our little one is quite picky — and I called around to my colleagues in pharmacy and they said ‘there is none’.”

While leveraging the Chinese market for businesses are a profitable option, a middle ground where Australian consumers and Daigous can co-shop in harmony remains to be seen.