The answer to baby formula fury
WE'VE all seen stories about Chinese shoppers stripping supermarket shelves of baby formula and bulk-buying vitamins, but a solution could soon be within reach.
Pictures of full trolleys and empty shelves have flooded social media in recent months. Just yesterday footage emerged of hundreds of diagou - or personal shoppers - out the back of a Chemist Warehouse store, selecting from "hundreds" of tins of baby formula.
Video of the incident was filmed by a 13-year-old boy whose mother was forced to ween his baby brother off formula due to limited supply.
"Two (tins) per customer. How many times did you come in? ... Who am I? I am a concerned parent who can't get certain powder for the grandson," she tells the group.
It's an ugly scene driven by huge demand. To meet demand, daigou numbers are going through the roof. Since 2014, the number of daigou in Australia has doubled from 40,000 to around 80,000, with some earning anywhere from hundreds of thousands to millions of dollars a year.
But how do we stop them clearing out supermarket shelves? A Sydney-based retailer says the answer is simple.
PUTTING AN END TO SHOPPER FURY
The demand for Australian-made organic baby formula has skyrocketed in China, where trust in local dairy products had plummeted. The fallout is being felt in Australian homes and on supermarket shelves.
Considering the overwhelming demand for baby formula both in Australia and in China, major retailers have begun to strictly enforce limits on how many tins customers can buy.
Some supermarkets have gone as far as limiting customers to two tins at a time - but shelves still lay bare.
While some daigou stick to sending the tins of the "white gold" to their friends and family as favours, others profit and scale up their businesses.
Daigous have been known to sell tins of baby formula for up to $200 each to desperate buyers, and pocket the hefty profits.
And with insatiable demand for clean, green Australian products and an estimated 50 million potential customers in China, the daigou industry shows no signs of slowing.
Keong Chan is the Executive Chairman of AuMake, a one-stop shop for Chinese tourists or Chinese nationals supplying family and friends back home. He says he has the answer to an increasingly complex problem.
According to Mr Chan, AuMake is currently selling around 500-600 tins of baby formula every day, a figure he only expects to see increase.
He told news.com.au his business, which launched on the Australian Stock Exchange last month, has the potential to end shopper fury.
"We're that person out in the Australian market that is directly connecting daigou with Australian suppliers to keep grocery shelves from going empty," he said.
Mr Chan said the demand for baby formula, which makes up around 30 per cent of AuMake's sales, is easily managed.
"We're trying to create a perfect world where suppliers can talk to us and then diagou can come here. Woolworths never knew the demand was going to be like this so instead we can tell suppliers exactly how much demand we have, they know exactly how much they have to make and daigou can leave the supermarkets alone," he said.
CUTTING OUT THE MIDDLE MAN
As AuMake continues to see monumental success - its shares tripled on its ASX debut - some might see its strengthening brand name as an opportunity for the company to go out on its own, cutting out the daigou and supplying directly to China.
This, however, is something Mr Chan said will never happen, blaming the huge Chinese market and the strong footholds other online companies like Alibaba have already established.
"Some diagou supply as many as 1000 people back in mainland China so it makes no sense for us to try and deal with all of these consumers directly," he said.
Mr Chan said diagou in Australia will never disappear, instead AuMake will evolve with the already established practice, helping them meet demand back home.
"People think diagou is a new thing but they've been around for decades. Why would we try to crack that business and have to deal with so many people when it makes more sense to deal with people in between," he said.
Mr Chan said while the company definitely saw the gap in the market, supplying diagou with an easy way to buy a lot of trusted Australian products, the company never anticipated the sheer demand.
"We never expected it to be this big. We have up to 20 Australian suppliers sending stuff to us every day trying to get us to stock them," he said.
THEY'RE NOT BAD PEOPLE
Mr Chan says you'd struggle to find a Chinese person living in Australia who hadn't been a diagou at some point.
"More than 99 per cent of Chinese people here have all bought stuff for friends back in China. They want to buy formula or vitamins from the trustworthy Australian market but they won't be sure of the brands.
"So, they'll ask someone like me or a friend or family member to help them or recommend something good. They'll buy something and send it back," Mr Chan said.
And while Chinese shoppers cop a lot of heat for stripping grocery shelves, Mr Chan insists it isn't something they want to be doing.
"If you follow [a daigou] around it's actually a little sad. They go into a major retailer where no one speaks to them and they can't really speak to anyone because they don't speak much English. It's not a good experience for them."
And while that hostility isn't necessarily a good thing, Mr Chan sees it as a way diagou are embracing companies like AuMake more and more.
"At all of our stores, all our workers speak both English and Chinese. We help them pack whatever they've bought and send it back to China. They can also pay with WePay [a financial branch of the popular WeChat] which is much easier for them," he said.
"Daigou don't actually like running around," he added.
That's where Mr Chan says he comes in. He hopes to make it easier for daigou and, in turn, ease pressure on supermarket shelves. Maybe then we'll see less of the ugly confrontations.