In daigou market, dishonest agents can fake both products and where they come from

By Li Xuanmin Source:Global Times Published: 2017/5/30 17:33:39

First phony goods, now sham sources


More and more Chinese consumers are running into counterfeit products when they order goods through overseas purchasing agents known as daigou. In Putian, East China's Fujian Province, a comprehensive industry chain has emerged for agents willing to sell counterfeit products. Companies and factories in the city not only offer high-quality knockoff products but also phony documentation that shows the products were purchased abroad. These services have allowed dishonest daigou to earn profit margins above 70 percent in some cases, according to industry insiders, cutting into the business of legitimate purchasing agents. Analysts noted that e-commerce platforms also bear responsibility for the counterfeit problem because of their poor oversight.

Two Chinese purchase items at a duty-free shop in South Korea in November 2016. They provide daigou services for their customers. Photo: CFP



Wang Sun, a 29-year-old Beijing-based white-collar worker, was disappointed when she received her order of cosmetics over the weekend from a daigou, one of the overseas purchasing agents who have become popular with domestic consumers who want to buy products made abroad.

Wang had paid the overseas shopper more than 1,500 yuan ($218.89) for the order, a price that included the agent's commission.

Yet the price was still about one-third less than what she would have paid if she had bought the same items on the Chinese mainland, which adds import tariffs and luxury taxes.

"When I contacted the South Korea-based shopper through a China-based e-commerce platform, the daigou assured me that she would go to the store in person and purchase genuine products. I looked up her sales record on the platform and decided to trust her," Wang told the Global Times over the weekend. "But as soon as I opened the box, I could tell that the cosmetics smelled different than the ones I had bought from the brand's counter. She is making empty promises."

Wang noted that it's difficult to file a complaint on the platform, because the agent has evidence that the products are genuine, including sales receipts and customs clearance documents.

For her part, Wang doesn't believe there is much she can do to rectify the problem. "It's time-consuming to look for a third-party monitoring agency to identify the authenticity of the items," she added.

Wang's experience illustrates the counterfeiting problem that has come to overshadow China's booming overseas purchasing market. In 2016, complaints about counterfeit products accounted for the largest proportion of consumer complaints about overseas purchasing, according to data released by e-commerce industry website 100ec.cn.

Sham sourcing

In Putian, East China's Fujian Province, an industrial chain has emerged for agents who claim to sell products purchased overseas, according to people in the industry.

"From supplying counterfeit goods and providing receipts to making up third-party logistics tracking records, we have a complete system that covers upstream and downstream," said a 30-year-old industry insider who would only speak on condition of anonymity.

Putian's factories are good at producing knockoff shoes and bags from high-end brands, the insider said.

"Those counterfeit items are inexpensive and of high quality. Once we label them and make up a fake scan code, it's hard for consumers to tell the difference," he told the Global Times over the weekend.

Daigou can buy a pair of counterfeit Nikes from a local factory for 90 yuan and sell them for at least six times the price, the insider said.

As for documents that show proof of purchase, it costs about 20 yuan to acquire sales receipts and customs clearing documents from local manufacturers, a person close to the situation said.

Currently, online shopping platforms such as taobao.com and jd.com have each hired third-party logistics services that they claim can weed out counterfeit overseas products that are sold on the domestic market.

But just because an item comes from overseas doesn't mean it is genuine. To fool the logistics companies, many in the overseas purchasing industry export domestically produced counterfeits just to import them back into the country, said a US-based daigou surnamed Chen.

"Some [domestic daigou] have contacted me, offering prices and asking me to work with them," Chen told the Global Times on Thursday.

However, the Putian-based businessman said this method is costly, especially considering that there are numerous logistics companies offering "under the table" services that can make shipments of domestically produced products look as if they come from overseas.

In a video that went viral online last week, an SF Express employee noted that such services only cost an extra 36 yuan. The employee also showed a website of a foreign delivery company that he said would "deliver" the order.

"To make it look more real, we made up the website… and most of the tracking records are in Chinese," he said in the video.

The Global Times called several major express delivery companies in Putian over the weekend. Some employees were guarded about talking about these kinds of services. One SF Express employee said he was only willing to speak about such things in the local Chinese dialect. A YTO Express agent first denied that any such service existed, only to add, "but if you have the need, you can talk with me in person."

Poor oversight

Money lies at the heart of the counterfeiting problem in the overseas purchasing industry.

"The daigou market is rife with fake products, leaving a slim profit margin for those of us running a legitimate business," an Australia-based purchasing agent surnamed Wen told the Global Times over the weekend.

Wen said she makes about 10 to 15 percent in profit on beauty products.

A France-based daigou pointed out that the profits are far higher for agents selling phony products. "This is in sharp contrast to the windfall profits that can be made from selling counterfeit products, which can be as high as 70 percent or 80 percent of the product's cost," she said.

A lack of oversight on overseas purchasing by e-commerce platforms has left loopholes that are easy to exploit, analysts said.

"It is easy to register as a third-party buyer on some overseas e-commerce platforms... You only need to submit your e-mail address, and don't need to provide any documents or identification information," Wen noted.

It's also hard for customers to receive a refund for counterfeit products even if they report the problem because of "the sketchy dealers and lengthy process," Wen said.

 

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