The emergence of the Chinese middle class continues to grow exponentially. This change has given individuals new aspirations in terms of consumption, particularly in terms of quality of life, which is generally reflected in the purchase of luxury goods.
The Chinese luxury market
The luxury market in China is much more expensive than abroad due to taxes charged on imported products. The Chinese prefer to buy their products abroad. It is for this reason that the Daigou surfaced. These people considered “personal shopper” travel abroad and buy the products they dream of cheaper in China.
Faced with this trend for buying through these Daigou is one of the issues that the luxury brands present on the Chinese territory encounter. Should we consider them as a development opportunity and surf the trend?
The Daigou phenomenon
The Daigou, which means “buy in the name of” in Mandarin, is an intermediary in the purchasing process of an end consumer. They travel abroad and through the game of taxes, offers competitive prices compared to Chinese market prices to consumers remained in China. No need for specificity to decide Daigou, we can all be the personal shopper of someone, as long as we are based abroad in large cities known for their relationship to luxury such as Paris, Milan, London, New York. Besides luxury goods, the second category of products generally requested are the delicatessen products.
The Daigou allows a win-win situation with the buyer, one seeking extra income, the other to avoid import taxes and have a product at cheaper prices.
Daigou’s total sales amounted to 55-75 billion yuan, or 8 to 11 billion euros, and accounted for 15% of luxury purchases by Chinese customers, according to Bain and Company. The brand that Daigou usually takes is between 20% and 30% of the price of the product, the transaction is also facilitated by all the payment platforms that can be found in China such as Alipay WeChat Pay.
It is a true relationship of trust that settles between Daigou and the final consumer. Indeed, the phenomenon of personal shopper allows individuals to trust each other for the purchase of the desired product. This relationship of trust even allows the Daigou to make recommendations to their buyers in terms of products to buy.
This relationship must therefore be seen as a development opportunity for brands to approach and interact with their customers in an optimal way.
An opportunity for brands to strengthen their relationship with their customers
Emerging brands focus most of the time on these Daigous to expand their business with China. Indeed, they do not have or have not obtained registration for export to China and do not have the necessary funds to establish their brand in China.
Creating a relationship with these personal shopper is a solution to promote the brand in the Middle Empire. Harnessing the Daigou as a brand ambassador is a way to communicate around your product offering and build a brand image abroad. Indeed, the relationship of trust between Daigou and final purchaser allows to influence and to recommend in a genuine way the consumer in its decision process of purchase.
A number of brands also carry out awareness campaigns with these Daigou, invite them in their shop and let them discover their new collections for example.
To reach the Daigous you can create events in small groups allowing you to present your brand as a whole. This is what the Harker Herbal’s brand has invited 70 Chinese Daigou to an event that allows the brand to present its history, positioning and philosophy and to be able to interact with these intermediaries to bring them all the information they need needed.
Part of the event consisted of demonstration and product testing, essential elements in any purchasing decisions or positive word-of-mouth. The brand had highlighted a QR code linked to its WeChat store so that they could make purchases directly.
Brands to expand in Chinese territory should not miss out on this opportunity and promote their brand on channels and media different than those commonly used.
Want to start starting an activity in China?
We are a digital marketing & e-Commerce Agency that can facilitate and develop your business in this market. We can become your field operators in China and help you implement your digital strategy.
For more information, contact one of our experts.