Blog Information

• Posted By : Jason Taylor
• Posted On : Aug 07, 2024
• Views : 33
• Category : General
• Description : About Daigou Market is an ethical and legal issue for business, government and society in China.

Overview

• Daigou market is an ethical and legal business-government-society issue in China. This is a serious concern and a hugely profitable opportunity for luxury and grocery retail brands with premium quality essays looking to gain control over their bottom lines. According to KPMG, the import tariffs and taxes imposed by the Chinese government resulted in the price of luxury products surging by up to 80 percent. The government does so with the aim of protecting its local industries by limiting importation. Zheng states that the average Chinas prices for luxury products are 39.1 percent more than the prices in the United States. For that reason, the Chinese government restricts its consumers from purchasing low-quality counterfeit products at high prices when variable alternatives exist across borders at low prices in high quality. Chinese luxury consumers have suffered from a sordid history of purchasing low-quality counterfeit products within mainland China at higher prices. This raises ethical concerns. Through Daigou markets Chinese customers avoid inflated prices and import tariffs on luxury goods. According to Brain and Company, 15 percent of China’s spending on luxury products occurs through Daigou. As a result, Chinese customers use overseas shoppers to purchase products on their behalf at a commission. McCauley states that this has resulted in the Chinese government experiencing a one billion dollar tax blackhole. On the other hand, Chinese luxury customers obtain high-quality products while overseas personal shoppers gain profit. Daigou market kills local businesses in China based on price competition. Businesses importing inventory legally and paying all taxes, tariffs and duties sell products at higher prices when compared to Daigou markets hence unable to compete Daigou markets. Despite the Daigou market being lucrative, it has consequences as enshrined in the Chinese custom laws which not only focus on curbing the overseas shoppers but also individuals using Daigou market products.

  The stakeholders involved in Daigou markets include the government, overseas shoppers, the Chinese customers and social media platform owners. The government plays a significant role in stopping Daigou markets. Firstly, the government formulates custom laws associated with inspecting, prohibiting, and restricting Daigou markets. According to GACPRC, the laws ensure even an individual using Daigou market products is fined between 5 and 20 percent of the worth of the inventory. Secondly, the Chinese government reduces tariffs on imported goods associated with Daigou markets with the aim of reducing the price differences between imported products in China and overseas. Pan, states that the Chinese Ministry of Finance lowered tariffs on 187 products suspected to have high sales in Daigou markets. Unlike the government, Chinese customers and overseas shoppers play a significant role in enhancing Daigou markets. They make purchasing decisions and choose not to abide by customs laws formulated by the government to prevent access to illegal markets. Overseas shoppers link Chinese customers with overseas markets and play a key role in evading taxes and tariffs when they bring products to mainland China. On the other hand, Chinese customers finance Diagou markets. However, both the actions of the Daigou market customers and overseas shoppers are punishable under Chinese customs laws. Social media platform owners such as WeChat enable Daigou market to occur remotely between overseas shoppers and customers. The platforms allow Chinese customers to pay directly and have instant communication with overseas shoppers thereby providing an instant purchasing and logistics process. Social media platform owners have the power to protect their clients’ personal information. Therefore, Daigou market is a multifaceted phenomenon covering the interests of various stakeholders not limited to China but globally.