Chinese customers excel in parallel import | RetailDetail

Chinese customers excel in parallel import

Chinese customers excel in parallel import

An increasing number of Chinese customers are ordering goods at a "personal shopper" (a so-called daigou) abroad while the government is trying to find an answer to this parallel import.

Avoid import tax

The Chinese call it 'Daigou' which basically means 'order something for someone else'. A personal shopper abroad gets an order from China and sends the stuff to them in an attempt to avoid China's high import tax for foreign luxury products.

 

Market researcher Bain believes Chinese customers bought about half of their luxury products abroad last year, while that number has grown to 70 % in the first quarter of 2015 as a strong yuan currency increased their spending power. Chinese customers mostly use Korea and Japan as their operating base.

 

There are several ways to get those imports: first is to use tourists that bring several items along when they return, but personal shoppers are becoming increasingly popular.

 

Second-hand items sold as new

Cosmetic items are the most popular target for this daigou trade, followed by leatherwear, watches and jewelry. Consultancy firm Bain estimates foreign purchases through a daigou agent to reach 55 to 75 billion renminbi, some 8 to 11 billion euro, in 2014.

 

Several observers believe the growth in second-hand luxury items is because of this daigou trade. Items are bought in Europe with a discount and then transferred to China where they are sold as new.

 

China is trying to counter

The Chinese government is trying to counter this popular practice. It has for example lowered import tax on several foreign items, like cosmetics from 5 to 2 %. Diaper import tax was lowered from 7.5 % to 2 %, while import tax on costumes for example was also lowered.

 

Brand manufacturers like Estée Lauder and L'Oréal have also made an effort, by lowering their prices even further in an attempt to discourage parallel import. China is also contemplating adding more tax-free areas.

 

The question is whether this will suffice, as parallel import is still a lucrative business, even after lower taxes. Wealthy Chinese people also consider status to be important, with a foreign product adding to their status. On top of that, foreign products are also considered to be more qualitative. 

Questions or comments? Please feel free to contact the editors


Not everyone is pleased with new European warranty guidelines

23/02/2018

The European Parliament approved a proposal to harmonize warranties all across Europe, but not everyone is satisfied with the content.

The world's first start-up supermarket, KaDeTe, opens in Berlin

22/02/2018

The world’s first startup supermarket, KaDeTe, will open its doors in Berlin next month. The physical marketplace will give young brands and companies an opportunity to engage consumers and buyers.

"Not a major surprise" if Unilever were to choose Rotterdam

22/02/2018

The Financial Times believes Rotterdam is in pole position to become the British-Dutch Unilever’s new main office, instead of London. The business paper claims the information comes from political insiders.

Record results for Henkel

22/02/2018

German Henkel experienced a strong 2017, with record numbers for both its profit and turnover. The company managed to surpass the 20 billion euro turnover milestone for the first time.

Go Sport divulges major international plans

22/02/2018

French sports retailer Go Sport, which has twelve stores in Belgium, has very ambitious expansion plans. Spain and Poland are its European targets, but it will also focus on Morocco and India.

American chains consolidate to fight Amazon

21/02/2018

American retailer Albertsons has acquired its competitor Rite Aid, after the latter had already sold a series of stores to Walgreens. The acquisitions are mainly a reaction to Amazon and other online players’ onslaught.

Back to top