Daigou sales slump: Trade is down but they can still ‘make or break’ nutrition brands in China
Daigou refers to Chinese expatriates purchasing products from overseas and shipping them back to consumers in China.
These Chinese expats are usually international students, new immigrants, and stay-at-home mums who have friends or connections in China.
However, the COVID-19 pandemic has caused a lot of disruption to Daigou businesses.
As part of the Consumer Insights Programme at New Zealand’s High-Value Nutrition (HVN) Ko Ngā Kai Whai Painga National Science Challenge, scientists from Plant & Food Research conducted 16 in-depth interviews and an online survey with 205 daigous in New Zealand to give a post-COVID overview of the channel.
The research explored Chinese consumers’ perceptions and demand for New Zealand food products, and investigated whether the health and wellness food products they are being asked to purchase has changed in the post-COVID environment.
“Daigous can be seen as an extended sales network for brands and they have first-hand interactions with their customers, thus can provide us with such insights”, says study lead Dr Ivy Gan, Scientist from the Stakeholder & Consumer Intelligence Team at Plant & Food Research.
While Daigous did not see customers’ trust in New Zealand brands changing much in the pandemic, they suspected that some of their customers had turned to domestic channels for New Zealand brands, or had switched to Chinese local brands, partly due to concerns of international parcels being contaminated by the virus.
“The High-Value Nutrition National Science Challenge has supported a large body of work into understanding the health concerns of consumers in China, and their perceptions of NZ food and beverage products. What makes this research unique is it reflects actual purchasing behaviour and how this has changed in response to the global pandemic,” says Joanne Todd, HVN Challenge Director.
Many daigous stated that their business was gradually recovering from the pandemic, yet two thirds of them were still performing worse, and only 9% performing better than before COVID-19.
Encouragingly, most seemed confident that the demand for healthy food products will increase again, due to the rising health consciousness and growing incomes in China.
New Zealand brands are still appealing to Chinese consumers not only because of the ‘clean green’ image but also the ‘kind and trustworthy nature of kiwis’.
“Daigous play a unique role in connecting New Zealand brands and Chinese consumers, especially those not usually reached by traditional marketing from New Zealand businesses”, says Dr Gan.
Many New Zealand brands are now selling direct to Chinese customers though online stores. However, this study finds that customers may still seek Daigous’ advice on the authenticity of New Zealand products and initial trial, rather than taking the risk of buying counterfeits from domestic outlets that offer New Zealand products.
The study concludes that Chinese consumers’ demand for New Zealand brands is promising, and businesses using the Daigou channel can still benefit from its strong trust-based relationship with customers in the near future.
Given the strong relationship with their customers, daigous themselves can become market influencers, who can make or break brands in China, it added.