Daigou: a "grey" form of market entry into China

Abstract

Daigou is a Chinese term that indicates a purchasing agent who engages in buying and providing goods to his client. However, Daigou has not to be intended as a common agent. The reason is that common agents work as intermediate between their principal and the final consumer. They ease negotiations between the two parties and earn a commission proportional to the professional service they have provided. Daigous, on the other hand, purchase goods, usually belonging to the luxury segment, from sellers, such as retail boutiques, for the network of clients they have created. In order to better contextualize this specific professional, the first two chapters of present dissertation focus on the analysis of commercial contracts. In particular, the first one points to classify them according to the scope of the commercial relationship. Two major categories have been individualized: sale and supply, and contracts regulating the circulation of goods and services. They have been analyzed from an international perspective, by relying both on international regulations and on the international business practice. The second chapter focuses again on the categories mentioned above in order to create a parallelism with the previous chapter by instead analyzing them from the perspective of China. Every type of contract has also been connected to the role of Daigou in order to better understand how he acts in the business environment. Nevertheless, it is important to remind the origin of such professional, since it started to catch on around 1980s in China, when Deng Xiaoping promoted the open door policy. After having explained such point, the third chapter concentrates on the analysis of daigou, as a case study. Nowadays, he is considered as an agent who works in the "grey" market. This implies that his conduct of behave is legal, but at the limit of such legality. Such problem derives also from tax exemption and incentives he highly enjoys, due to the fact that he holds a non-citizen passport when purchasing abroad. Consequently, his clients pay a price that is lower than the one they would have paid by directly purchasing the goods from retail stores. Nevertheless, the final price comprehends a commission he is entitled to. What he offers is a comprehensive service that starts with the order made by the client and finishes with the delivery of the commodity personally or by express courier. As a matter of fact, more and more Chinese, not only students, are engaging in such profession, due to high remunerability and low costs, since not even an inventory is required: some purchases are directly made-to-order ones. Daigou has become a massive phenomenon that is conquering world's high-end stores, also thanks to China's improvement of the quality of life and general wealth of the rising middle class.