What’s ‘Daigou’ and What’s It to Gucci and Beijing?

It’s a Mandarin term that’s part of the lexicon of the luxury-goods industry. Daigou (dye-go), or “to buy on behalf,” describes the practice of purchasing sought-after goods -- from high-end handbags to premium infant formula -- overseas to resell back home. It can also refer to the people who do the buying. Sometimes the profit comes from price arbitrage, sometimes it’s scarcity. At its peak around 2014, when big-name fashion houses such as Chanel and Gucci routinely priced their wares as much as 80 percent higher in China than Europe, daigou accounted for four out of 10 luxury goods purchased by Chinese consumers. But that success has prompted a clampdown on the illegal practice by the Chinese government, which has been losing out on potential tax revenue.

It’s hard to know, since the gray market ranges from students running side hustles to professional resellers who even offer personal shoppers. But Bain & Co. in 2016 estimated it to be worth 43 billion yuan ($6.3 billion) in annual sales. Boston Consulting Group reported that Chinese consumers spent 105 billion euros ($120 billion) on luxury purchases in 2017, almost a third of the global total. Bain estimates a third of those purchases were made overseas. How many people work as daigou? The BBC estimates more than a million globally, while Nielsen says there are 100,000 to 200,000 in Australia alone.