Pandemic leads to decline of daigou era in Australia

SYDNEY – The era of the “daigou” – shopping agents, mainly students and tourists, who make money by buying and sending products back to China for resale – appears to be ending in Australia.

For years, daigou in Australia made lucrative sums, often by reselling Australian infant milk formula back in China or other items such as vitamins and beauty products.

But the practice seems to be drying up.

The travel curbs during the Covid-19 pandemic brought a sudden stop to the influx of arrivals from China, which was the largest source of Australia’s foreign students and tourists.

In 2019, 1.4 million visitors arrived from China. But just 241,720 came in the 12 months up to the end of March 2023.

Other factors have also been contributing to the decline of the daigou.

Chinese students often relied on income from daigou sales, but can now find alternative sources of work due to Australia’s booming job market.

The unemployment rate in Australia is just 3.7 per cent, which has led to surging demand for casual workers in areas such as hospitality and retail.

Chinese consumers are also increasingly buying local products.

One of the major products sold through daigou in Australia was infant milk formula. For years, many families in China sought formula from abroad following a contamination scandal in 2008, which caused the death of six infants and made some 300,000 sick.

Formula from Australia and New Zealand was viewed as safe and reliable. But China’s birth rate has been declining, causing lower demand. And Chinese regulators have imposed some of the world’s strictest standards for formula, which means parents can be more confident about products that are locally made or imported.

Dairy firm a2 Milk, which was founded in New Zealand, revealed in August that it experienced a slump in daigou sales, amounting to a 39 per cent drop in the year up to June 30.

According to the company’s annual financial report, the value of its daigou sales to China dropped from more than 12 billion yuan (S$2.26 billion) in 2019 to less than three billion yuan in the past year.