Is It The End of Daigou Shopping With China’s New E-Commerce Law

A Daigou is a ‘personal shopper’ who purchases products from businesses overseas and ships them back to customers in mainland China, via courier or post. The term ‘Daigou’ literally translates to “purchase on behalf of” in Chinese. Essentially, it is a channel of commerce between mainland Chinese buyers and overseas professional shoppers, sometimes referred to as the “grey market”. The Chinese customer gives the Daigou agent their shopping list and usually makes a down payment. Once the Daigou agent buys the goods, they ask for a full payment, along with their commission. The goods soon arrive right on the customer’s doorstep. Commentators say daigou shopping trend was born as a result of mistrust in the authenticity of products sold in China.

China’s New E-Commerce Law & The Crackdown on Daigou Shopping

The launch of China’s new e-commerce law, coupled with the Daigou crackdown at the Pudong International Airport in Shanghai, has stirred up uncertainty in the Daigou industry. China’s crackdown on daigou is part of its moves to strengthen e-commerce regulation and better control the rapidly expanding sector.

>> From January 1, 2019, daigou merchants are obligated to register and pay taxes. The new law compels daigou merchants to obtain licenses and formally register as businesses. Otherwise, they will be subject to fines as high as RMB 2 million (US$291,620) for illegal business and tax evasion.

>> The law will also crack down on the sale of fake goods, another factor in the daigou phenomenon of recent years [The Moodie Davitt Report believes that legitimate travel retailers should give greater emphasis to the guaranteed authenticity of goods that they offer.

>> A major provision under the new law is the clarification of the types of businesses that will fall under its jurisdiction. The e-commerce law mainly applies to the following three types of operators- Platform operators, Operators on platform and Online sellers.

Final Thoughts

In recent weeks there have been widespread reports that Chinese border authorities have been instigating more thorough customs checks — and certainly, the long lines to pass through customs at some of the country’s main airports appear to corroborate this.

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