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Haitao, daigou and tourism

It has been mistakenly reported that 100 million Chinese tourists will go overseas in 2015.  Actually only around 10 million real tourists will go abroad, and the remaining 90 million will be shoppers in the guise of tourists. The most popular way of buying imported goods remains personal overseas trips, ostensibly for tourism but firmly revolving around the task of securing coveted products that the Chinese are not able to find on the domestic shelves.

Plastic bags with distinctive patterns and logos (referred to as luxury products in the industry because of their excessive price) have been a perennial favorite. Louis Vuitton stores in Paris, Bloomingdales in New York, Selfridges in London and now also the Japanese departmental stores all hire Chinese speaking shop assistants to welcome and service the droves of Chinese shoppers.

However, what the Chinese consumers buy overseas is becoming curiouser and curiouser. The latest items on the popularity charts among the tourists to Japan was toilet seats. The Chinese want to experience everything – including the pleasure of sitting on a warm toilet seat which performs the required hygiene tasks through water jets, as the consumers play Angry Birds on their iPads. Japanese rice cookers also figured high on the list. And so did Japanese rice, in spite of being ten to even a hundred times more expensive than the domestically grown variety. It is difficult to say whether the popularity of Japanese rice was driven by a belief that Japanese toilets work best in expelling the digestive residue of Japanese rice, preferably cooked in Japanese rice cookers.

When the Chinese are not traveling overseas, they quench their thirst for imported goods through haitao. Haitao refers to the phenomenon of scouring the global websites to buy the products that the consumers want.  International e-commerce websites like Amazon now allow the Chinese to directly purchase from their international site and have the products shipped to China. Other websites require a local address and do not ship directly to China. Logistic companies have cropped up which provide a local address where the website can ship to, and logistic companies then transfer the product to China.

More and more Chinese are also purchasing imported goods through overseas contacts and agents – a phenomenon referred to as daigou. Daigou is preferred to buying goods which are already imported by dealers who hawk their wares on Taobao. Daigou and haitao offer consumers a sense of assurance of quality and authenticity. Daigou agents can also be contacted on Taobao but are now being increasingly reached through Wechat.

The most popular ingredient of the daigou and haitao baskets is baby milk formula. In fact, according to a recent survey conducted by PayPal Inc, the US based payment service provider, Chinese parents, especially those with children under the age of six, have become the largest spenders on overseas online stores. Chinese parents want to only buy foreign goods for their babies, as the domestic producers have lost their trust. Not just the melamine scandal from a few years ago, but intermittent but frequent news for various types of contamination and adulteration has put the parents on the edge and they want to do everything to protect their children.

Chinese behavior of buying foreign goods is driven by certain basic needs. Foremost of them is a desire to buy the safest possible products for themselves and their families. It is also driven by a curiosity and a desire to experience new delights and a quest for better life. Domestic manufacturers need to up their game if they also want a good share of the new Chinese consumer.

For more information contact Ashok Sethi at ashok.sethi@gfk.com.

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