Retailer AuMake — which exports local products to China via ‘daigou’ shoppers — has opened an initial public offer to sell 31 per cent of the company.

A daigou (which means to buy on behalf of) is anyone outside China who shops on behalf of a China resident, the company’s prospectus says.

“Typically, daigous are students who are studying overseas, Chinese tourists or people who have migrated from China and are living in Australia.”

AuMake estimates 40,000 Australian daigous send 100 to 200 parcels to China every day.

Other major segments are the 1.2 million Chinese tourists who visit here each year and Australia’s 155,000 Chinese students — up to 80 per cent of whom send parcels back home.

AuMake plans to raise up to $6 million selling as many as 75 million shares at 8c each.

The bulk of the money raised — $2.2 million — will be used to buy new inventory – particularly healthcare, cosmetics, infant formula and dairy food plus wool and leather products.

About $400,000 will be spent on a new e-comemrce system, $300,000 on marketing and $300,000 developing the company’s own product lines which should attract higher margins.

Another $585,488 will go towards salaries, rent and other operating costs. Expenses related to the offer account for the remaining $514,512.

The chain plans to open new stores in Sydney, Melbourne, Brisbane and Perth and establish new suppliers — but consistent profits may be some way off.

AuMake reported a slim profit of just $13,551 from sales of $10.3 million in the year to June 30.

Wholesaler ITM — which merged with AuMake in June — made a loss of $862,156 on sales of $1.2 million in the same period.

Among the risks outlined in its prospectus, AuMake warns that “changes by the Chinese or Australian governments may impact the demand or supply of Australian products sold by the AuMake Business.”

ASX investors have only to look at Bellamy’s to see the impact of such regulatory changes. The infant formula maker had a recent scare when China temporarily banned its Victorian processing plant.

After listing, AuMake’s biggest shareholder will be founder and former duty free shop worker Jiahua Zhou with a 16.9 per cent stake worth $3.2 million at the offer price.

Mr Zhou grew AuMake from a single Western Sydney souvenir store in 2010 to a chain of five stores today.

The two other major shareholders are Riva Resources founder Gang Xu (7.1 per cent) and company secretary Keong Chan (5.1 per cent).

AuMake – currently known as Augend — is due to formally adopt its brand on September 12.

It was previously known as Titan Energy Services, a mining services provider that was placed into voluntary administration in 2015.

The public offer opened on Monday and is due to close on September 18.

AuMake expects to relist on the ASX from October 6.