100 to 145 million consumers…
Official figures estimate China’s middle class at 145 million people. Credit Suisse last year estimated it at a more conservative 109 million adults.
China is the world’s second largest importer and consumer. In the next five years, it expects to import products and services valued at over 10 trillion U.S. dollars.
Tens of millions of consumers already buying from overseas
‘Haitao’ shoppers refers to mainland Chinese consumers who buy overseas goods by directly placing orders with foreign shopping websites.
The China E-Commerce Research Center predicts the number of China’s haitao shoppers will increase from 18 million in 2014 to 35.6 million by 2018, with the amount spent growing from Rmb150 billion in 2014 to Rmb1 trillion in 2018.
In Australian dollars those amounts are approximately $30 billion increasing to over $190 billion (at current exchange rates).
They’re buying Australian any way they can
Austrade refers to estimates of between 10,000 and 40,000 purchasing agents in Australia. Arrangement with these purchasing agents – often referred to as a personal shopper or ‘daigou’ in Chinese – are usually informal so constitute ‘grey’ or ‘parrallel’ exports. Daigou often start as Chinese students studying in Australia and many advertise Australian products on Chinese social media applications, or C2C and B2C e-commerce marketplaces in China.
The daigou market could be worth as much as $350 million per annum according to estimates made by the Australian Financial Review using industry data. Other estimates are much higher.
CHAFTA opens the door
The Chinese Australian Free Trade Agreement (ChAFTA) was signed on 17 November 2014 after nearly 10 years of negotiations. China is already Australia’s biggest export trade partner accounting for over 33% of export trade despite hefty tariffs (up to 40% on some products).
Over time ChAFTA will mean that 95% percent of Australian exports to China will be tariff free.
Together with obstacles to the informal daigou trade (see below) ChAFTA opens the door to Australian businesses wanting to sell into China.
The China International Import Expo, announced by Chinese President Xi Jinping in May 2017, signalled strong central government support for trade liberalization and actively opening the Chinese market to the world.
Australian producers learned the dangers relying on the informal daigou trade in April this year when Chinese authorities announced changes to import regulations.
Daigou deliveries to bonded warehouses reportedly fell 50%. The profits of some high profile Australian producers were hit and share prices followed.
The abrupt decline in imports prompted Chinese authorities to allow a one-year grace period to fully implement the new regulations but a shadow remains over the daigou industry.
JAT has the crucial import licenses, distribution channels, top level contacts and resources needed to launch and grow Australian products in the Chinese market.