Here’s what Australia’s daigou trade will look like in 2021, once international students return
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The daigou trade in Australia will look different in 2021 to what it was in 2019 and potentially even 2020.
Prior to COVID-19, the daigou trade involved bringing Chinese tour groups to physical stores and tourists buying goods in bulk on behalf of relatives and sending them back home.
For most of 2020 the only way for daigou store operators to reach Chinese consumers was online. That process was not a simply a case of setting up a website – it involved engaging through dedicated ecommerce platforms.
One such company that had to shift was AuMake (ASX:AUK) and it is preparing to shift again in 2021.
AuMake has closed out 2020 raising $7 million to promote its new online platform but also to refurbish and relaunch a store at Sydney’s Town Hall.
Speaking with Stockhead last week, chairman Keong Chan said his company isn’t just preparing for a return to 2019.
“We will predominantly be using the Town Hall store for showcasing – it will be a part showroom and part service centre for our online platform,” he explained.
Chan believes international students will return to Australia “sooner rather than later”. Once they’re back, he says, they’ll be the catalyst for a revival of physical foot traffic.
“The way they (engage) is come into our store, our service people will help them download the (AuMake) app, explain what’s going on and then show them some of them products we have that are available to then talk about with their friends and family back home,” he explained.
“That’s very, very different to what it (daigou) used to be where they’ll come in, see the product, mark it up a bit to send to their family back home to make money so they’re providing a service.”
Chan also told him the app will allow daigou buyers in Australia to share in the profit of new brands that they sell back to their families in China.
“The way we think about our physical stores, it doesn’t drive our business. It complements our online platform by converting them online,” he said.
The other ASX stock involved with daigou in Australia is Mediland Pharm (ASX:MPH) which listed in early 2019, when the market was at its peak having just reached 1 million annual consumers.
The collapse of Australia’s daigou trade led to it suspending retail operations at its Sydney, Melbourne and Gold Coast stores. Mediland has shed two-thirds of its IPO value and placed those subsidiary companies into administration.
But like AuMake, Mediland also has online platforms with which it has sought to reach its consumers.
It has also hedged its bets in acquiring a $2.5m hotel in New Zealand – the Heartland Ambassador Hamilton Hotel.
While New Zealand’s tourism sector has also been hit by COVID-19, the country’s elimination of the virus has allowed domestic tourism to resume, allowing the hotel to maintain positive occupancy rates.
The transaction will be completed in mid-January 2021 subject to shareholder approval.