Concerns have emerged about the quality of overseas products after an online post appeared offering authentic Australian-made baby formula for only 9 yuan ($1.37) a kilogram to a daigou, a person who helps consumers on the Chinese mainland buy overseas products. To better develop cross-border e-commerce, the country needs to improve its information-sharing mechanism with countries of origin to ensure the quality of imports.

Consumers buy baby milk powder imported from overseas markets in an experience center in Chengdu, capital of Southwest China's Sichuan Province. The experience center is run by an online cross-border platform that claims it has cooperation with China's major bonded areas. Photo: CFP

There are always concerns about the quality of baby formula in China. However, those who prefer foreign baby formula bought overseas recently started to question the so-called Australian-made milk products available online.

Cen Jialing, 34, who lives in Auckland, New Zealand, has been working as a full-time daigou - a Chinese word for someone helps consumers on the Chinese mainland buy overseas products - since 2011. "I was once approached via taobao.com by a supplier sourcing goods. He offered me goods at very cheap prices," she said.

The prices were impossibly low, so she decided not to do business with him.

According to a post published by domestic news portal sohu.com in late December 2015, a supplier was offering to sell 1-kilogram containers of Devondale milk powder for 9 yuan ($1.37) each - a price that was "suspiciously low," according to an unnamed daigou who was quoted in the report. 

While the daigou business has been booming in China in recent years, Chinese consumers have come to see overseas products such as baby formula, daily necessities and pharmaceuticals as cheaper and of better quality than those made in China.

Leading online marketplaces such as Alibaba-backed taobao.com and JD.com rushed into the Australian baby formula market. They were followed by emerging domestic maternity and baby product platforms such as mia.com and beibei.com, where Chinese shoppers can choose to buy goods ranging from imported diapers to milk powder.

The two websites have won favor of capital markets, securing millions of dollars in their latest fundraising rounds, according to media reports.

Soaring demand

From July to October in 2015, the quantity of Australian dairy product exports, such as powdered milk, has grown robustly on an annual basis, according to the latest report by Diary Australia, a national services body for dairy farmers and the dairy industry, on December 3, 2015. Milk exports rose 3.1 percent year-on-year  to 57,925 tons, while powdered skim milk exports shot up 43.6 percent year-on-year to 58,019 tons.

China is Australia's largest export market and its fastest-growing dairy export market, according to a post published by Dairy Australia in August 2015. From 2007 to 2014, exports increased annually by more than 300 percent from 28,000 tons to 117,000 tons, the post noted. Products such as cheese, milk and powdered milk make up the bulk of the shipments.

A 27-year-old woman based in Guiyang, Southwest China's Guizhou Province, said she started her daigou business after the Singles' Day shopping festival on November 11, 2015.

"I have friends in Australia who purchase milk products and directly ship them to me. The sourcing and shipping costs usually run almost 100 yuan [per kilogram]," she told the Global Times on Wednesday. The woman preferred not to be named.

She noted that she is selling Devondale milk powder at prices ranging from 130 yuan to 150 yuan, which are much more expensive than similar products sold on domestic online marketplaces, such as taobao.com, which cost about 60 yuan a kilogram.

Devondale powdered milk sells for A$9.49 ($6.63) to A$9.69 a kilogram in local supermarkets, said Wang Wei, 29, who lives in Melbourne and is familiar with the daigou business. Shipping costs another A$18 for two packages. "It's impossible for a supplier to provide the same product for 9 yuan," Wang told the Global Times on Wednesday.

A 34-year-old woman in Shenzhen, who has been working as a daigou for a year, said that some online merchants sell the same products at such low prices that it makes people wonder about their sources.

"I've heard that some local firms recycle used cans and bags of certain types of powdered milk and then refill them with different products, as a way to pocket some profit," she said. She spoke on the condition of anonymity because of the sensitivity of the issue.

Gray market

A Wenzhou-based merchant surnamed Li sells Devondale powdered milk for around 60 yuan a kilogram on taobao.com.

"It's cheaper than those in supermarkets or purchased directly by your friends in Australia because it's from a free trade zone," he told the Global Times on Wednesday.

Li vouched for the quality of the products. He explained that bulk quantities of infant formula shipped from Australia to the Chinese mainland through Hong Kong can be sold at much cheaper prices because Hong Kong has favorable tariff policies.

Facing different prices for the same product, shoppers are more concerned about the authenticity of those Australian-made dairy products. And the major reason why illegal workshops can continuously produce fake milk products is because there is no effective information-sharing mechanism between China and Australia in terms of dairy imports, Song Liang, a Beijing-based expert on the dairy industry, told the Global Times on Thursday.

"Chinese shoppers can buy products from many countries and regions, and the daigou business has a low barrier to entry and lacks oversight," he said, noting that those factors create room for illegal companies and merchants to produce phony products.

Cross-border e-commerce has grown rapidly in China over the past two years, thanks in part to a high-degree of government support, Zhou Xiaoqian, an analyst from the Beijing-based market research firm iResearch, told the Global Times on Thursday.

However, related rules and regulations have not been fully established.

"For example, a legitimate procedure for products imported through the free trade zones, or requirements for complete information about baby formula products, should be taken into account in the near future," she said.

China will set up more cross-border e-commerce pilot zones, according to an announcement published on the government's website on Wednesday.

More than 200,000 companies are running cross-border e-commerce businesses in China via 5,000-plus e-commerce platforms, according to the Ministry of Commerce. The trade volume of cross-border e-commerce grew 42.8 percent to more than 2 trillion yuan in the first half of 2015.

As the cross-border e-commerce continues to grow, more transparent data-sharing platforms will have to be set up, Zhou said.
Newspaper headline: Questions arise about daigou trade