When luxury brands generally remain highly costly, the industry’s prices in China are sometimes two times more expensive than it is in Western countries. Because of the taxes applicated on that kind of goods, the luxury products are often unreachable for Chinese consumers. They have to be more innovative in their approach, by directly finding a solution to their problem: the Daigous.
What is a Daigou?
A Daigou is a traveller who profits from their vacations abroad to buy items from luxury brands in order to resell them in China. Their clients are often friends, family or just people they barely know who take advantage of this trip to offer themselves one – but most of the time several- presents and for a discounted price. Unfortunately, it’s not even close to the prices present in the displayed shelves of the Chinese shops. Moreover, because of the significant price difference, it is the prime opportunity for these Daigous to keep a comfortable margin on every sales. Two results : satisfying their clients but also themselves. They are often known as “intermediates” between the brand and the final consumer, or even sometimes “personal shoppers” who just go shopping for you.
Why South Korea?
Despite a drop in the number of Chinese tourists in Korea, the Land of the Morning Calm is surprised to observe an increase in its Duty Free sales. Only one potential solution: the Daigous. South Korea is relatively famous for its large ranges of cosmetics, which Chinese consumers are fond of and that is one of the reasons why Daigous are really present in the country. At first sight, the existence of those resellers was good news for South Korea who suffered from a lack of Chinese tourists, following the ban of Chinese group travellers. Daigous could actually secure a certain level of visits in the capital and maintain the Duty Free sales.
What are the consequences?
Luxury brands don’t see the presence of Daigous as a very good asset for their market. In fact, most of them think that those Chinese resellers tarnish the brands’ image by giving them an affordable and easy access aspect, which happens to be very “unhealthy” for their unicity. Moreover, when those Chinese tourists resell their products in their country, buyers are often afraid of that being fake goods. This situation can only affect the brands who are fighting against that scourge which is not valuable for their image. To avoid that, the Korean brand Amorepacific even established a limit on the number of product a single consumer can buy. Between significant revenues in the Duty-Free shops and a damage for brands’ image, South Korea is now having a hard time deciding whether this trend is valuable or not for the country. What we can be pretty certain about : demand stays really high and Daigous are not steady to stop their business in the Land of the Morning Calm yet.
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