A Korea Daigou Hopes to Live a Little Better | 2018 Stories ①

Regulation is tighter and carrying goods costs more, but the side business goes on.

"Documenting the actions and daily lives of ordinary people," said Walt Harrington, "there is too little of that kind of record in our trade. These are stories that record the behavior, motives, feelings, beliefs, attitudes, discontents, hopes, fears, achievements, and longings of people as they search for meaning and purpose in life. They help people understand their place in the world."

He once wrote a story about a family whose teenage son had killed himself two years earlier. "I tried hard to explain to them the kind of story I wanted to write, the depth I was trying to reach. The father listened for a long time, and finally said, 'So you want to know what's in my head when I pray in a quiet room.'"

Harrington said the simplest form of the question is this: how do people live, and what do they value?

Each of our lives makes up this world.

"2018 Stories" is a new column from QDaily.

Wang Jing was getting anxious.

The flight from Incheon to Shanghai Pudong, scheduled to leave at 9:05 pm, landed 47 minutes late and parked at a remote stand, so passengers had to take a shuttle bus. By the time she and her husband finished immigration and pulled their bags off carousel 21, it was almost 11:30 pm.

The next day was a workday. On a normal night Wang Jing would already be washing up and getting ready for bed. But the drive from the airport to her home takes nearly an hour even with no traffic. Getting to sleep before 1 am would count as a good night.

Luckily, she and her husband were the first to collect their luggage, and once they walked the fifty meters to the customs checkpoint she could call a car home.

The passengers from the previous arriving flight had all cleared customs and the next flight hadn't landed, so Wang Jing and her husband — dragging two 24-inch suitcases at the head of the line — were for a few minutes the only two travelers in Terminal 2 of Pudong Airport.

When she was less than ten meters from the customs counter, the officers closed the nothing-to-declare lane. That meant every traveler's luggage now had to go through the X-ray machine. Wang Jing, who flew between China and Korea about once a month, knew the scene — her bags had been X-rayed before, then waved through.

But this time, watching the nothing-to-declare lane close, Wang Jing stood frozen for nearly a minute. She asked her husband what to do. "What else can we do? Keep walking," he said.

"What we did right then basically told customs these two definitely have something to hide. But I really did freeze up, my heart was racing," Wang Jing said, her voice dropping as she recalled it.

After the scan, customs asked Wang Jing and her husband, one at a time, to open their suitcases. One of the officers was from Shanghai, so Wang Jing spoke to him in Shanghainese and tried to argue — a honeymoon trip, personal spending — that the two suitcases packed with skincare, cosmetics, and beauty devices were all for her own use. The officer's reply, "We all know how this works, but the fine won't be crazy," broke her hopes a little and eased her mind a little. The goods in the suitcases were worth 70,000-80,000 yuan, and there was another 40,000-50,000 yuan in her carry-on; taxed in full at the 60% rate for cosmetics, more than half a year of her daigou earnings could be wiped out.

Setting the declared value took several rounds of argument. Chinese customs allows travelers a 5,000-yuan duty-free allowance for personal items, and taxes cosmetics and watches (above 10,000 yuan) at 60%, skincare at 30%. Officers spotted several boxes of identical, same-model, expensive skincare products in her suitcases — Estée Lauder, La Mer — rejected her first declared value, refused to believe it was all for personal use, and made her declare again.

Wang Jing was reluctant to describe that exchange, and after describing it asked us not to publish it, worried that customs or other daigou might read it. What exactly worried her, she couldn't say. By her account, the two suitcases drew a fine of nearly 20,000 yuan.

"That counts as expensive, in the daigou world," Wang Jing said. "I think a few thousand would have been about right. I've seen a lot of this in the group chats with other daigou — for roughly the same value of goods, the fine is usually a few thousand yuan."

The timing was rotten. While she was opening her suitcase, the rest of the passengers from her flight came surging toward the checkpoint, and customs reopened the nothing-to-declare lane. Partway through, the officers changed shifts, so everyone else passed through unchecked. Waiting off to the side for her fine, Wang Jing wanted to swear.

That evening, still at the Korean airport after checking her luggage, she had ordered Korean stir-fried noodles and seafood udon at an airport restaurant for dinner. She picked up her food, sat down, slid the noodles a little closer to herself, took a photo with her phone, and posted it to her WeChat Moments with the caption "dinner" and a bowl-and-spoon emoji. The timestamp read June 10, 2018, 6:58 pm. She hadn't expected the penalty she'd read about so often on WeChat to reach her so soon.

Fined, through customs, sharing a car home, she and her husband said nothing the whole way, and once home she cried for more than an hour. In a low, clipped voice she told us that a single trip couldn't earn back that much money — she'd come home with nothing, out of pocket, and fined for something so stupid. Maybe to shake off the bad luck, she discounted the whole batch to get her cash back faster.

Still, next to the mass crackdown on daigou at Pudong Airport in late September, and before that the daigou handed to the anti-smuggling bureau and prosecuted for suspected smuggling or tax evasion, Wang Jing counts herself lucky.

Before becoming a daigou, Wang Jing spent ten years buying from one

Wang Jing is tall and thin, with big eyes and long hair — quiet, introverted, a little timid, the kind of person who wouldn't ask to cut a line even if she were about to miss her flight. After graduating from college in 2010 she went through three jobs, and in 2014 joined the foreign-owned trading company where she now keeps the internal books, working nine to five. She started at around 5,000 yuan a month, with raises of 100-500 yuan every six months; she now makes more than 7,000.

What the couple earns and spends is fairly typical of a white-collar Shanghai household. Her husband earns several times what she does; the family of three spends a little over 10,000 yuan a month, with enough left over to buy two or three luxury bags a year. They own a two-bedroom apartment of just over 100 square meters inside Shanghai's outer ring road, worth around 4 million yuan, with no mortgage. It was their wedding home.

Asked the first time why she started doing daigou, Wang Jing said she wanted a better life, and left it there. Pressed again, she said she was planning to trade up to a new apartment.

Their requirements for the new place were practical: closer to both sets of parents, and possibly smaller than what they have now, because they don't want a mortgage — or, if they sell the old apartment, they'd add at most 500,000 yuan of their own money, with nothing from their parents.

Wang Jing has only been a daigou for two years, but she has at least ten years of experience buying from them. In college she bought from Hong Kong daigou, people who shuttled between Shenzhen and Hong Kong every week and sold through Taobao. China's overseas daigou market started growing fast at about the same time.

Data compiled by the China E-Commerce Research Center and Industrial Securities puts China's overseas daigou transactions at 5 billion yuan in 2009, jumping to 26.5 billion yuan by 2011, an average annual growth rate above 100%. Over that stretch the yuan's central parity rate strengthened from 6.8 to below 6.1, so one yuan bought more foreign currency, the price gap between the same goods at home and abroad widened, and consumer appetite grew with it. Not until 2015 did that growth stop, as the yuan turned back toward depreciation. According to a report by Bain & Company, China's overseas daigou market shrank by a third year-on-year in 2015, to about 43 billion yuan.

The market shrank mainly because the government tightened its controls. After April 2014, customs required overseas courier companies to clear packages through EMS rather than process them as personal postal items, and some goods began clearing directly as general trade — meaning the declarant paid a 17% value-added tax on top of customs duty.

Customs also adjusted the dutiable value of imported goods, raising it for cosmetics and lowering it for electronics; the higher the dutiable value, the higher the tax. Several market research firms found cosmetics to be the leading daigou category, more than half of all trade, followed by bags, watches, and jewelry. From September 2015, customs stepped up checks on travelers, especially those coming back from popular shopping destinations such as Korea, Japan, and Hong Kong, making it harder for daigou to dodge tax.

Even so, Korea has for years been the first choice for shoppers traveling abroad, Chinese ones above all. A CSC Financial research report noted that Korea's duty-free market has ranked first in the world for ten years running; in 2017 it was worth US$12.8 billion, with compound annual growth of 19.77% from 2009 to 2017. Chinese travelers bought 60% of that. Weekday or weekend, the early-morning Shanghai-to-Jeju flight is basically full, and 70% of the passengers are daigou.

Chinese tourists bring Korean retailers profit and Korean airports a cleaning problem. To cram as much as possible into a suitcase, and to cut the odds of a customs penalty, nearly every "human courier" daigou strips the packaging off the goods before boarding. Unwrapping and repacking a 24-inch suitcase filled with makeup and skincare takes at least half an hour, and few daigou bother to clear away the boxes they leave behind.

In May 2015, on a trip to Korea with her husband, Wang Jing tried daigou for the first time, on the spur of the moment. Her customers were mostly relatives and coworkers, plus a few strangers who found her through an ad she'd posted on Weibo. That trip she took under 40,000 yuan in orders and, after travel costs, cleared a few thousand yuan. But until March 2017 she was trying to conceive, then pregnant, then giving birth, then in her postpartum month, then breastfeeding, and the daigou work stopped. She only took the occasional small order, a few thousand to more than ten thousand yuan, when friends happened to be traveling abroad.

In that stretch she had a spell of selling through social-media marketing, or weishang, that broke even and that she calls a "failure." It pushed her forward anyway, and made her pick daigou back up as a side business and put more into it.

"Maybe I'm the type who needs someone to pump me up"

At the end of 2016, a Hong Kong daigou Wang Jing had bought from regularly started selling a beauty device on WeChat Moments. The two had never met, but Wang Jing had spent at least a hundred-odd thousand yuan with her over the years, and knew how she had grown her daigou business until she became the founder of this beauty device brand. So when the product turned up in her Moments feed, no persuasion was needed. "I talked myself into it pretty easily."

Talking herself into it was one thing; opening her mouth to sell in her own Moments feed was another. Wang Jing said she hesitated a month before posting her first ad. She wrote it on her phone, edited it, deleted it, and dragged it out for three days, asking her husband and her friends over and over, "Can I write it like this? Does this sound okay?"

Under the distributor agreement, Wang Jing had to order at least five units from the top-level distributor. Each sub-distributor's name corresponded to a code; on the WeChat official account run by the top distributor, she entered her name, her level in the sales hierarchy, and her order quantity, and paid before the goods shipped. The ads immediately displaced her six-month-old son as the main content of her Moments feed: photos of the product, photos from buyers, screenshots of transactions.

She usually posted three or four times a day — soft-sell posts and personal-image content in the morning, inspirational quotes in the afternoon, a hard-sell ad or another soft-sell post in the evening or at night. Posting her results, and other people's praise of her, looked like an attempt to show off effort and ability that nobody had noticed before.

"A lot of people, me included, used to hate weishang sellers, and in the end I became one," Wang Jing wrote in a Moments post in early 2017. "Weishang really can toughen a person up! The moment you set aside your pride to make money, you've already grown up."

Business was decent at first — her first customer came less than two hours after her first ad — but it didn't last.

One reason may be that she started too late. In 2012 WeChat rolled out Moments, WeChat Pay, and official accounts in quick succession, building the basic infrastructure for weishang, and the business got going. Brands like Kans, Q10, and Sibu then moved onto WeChat and Weidian as team-run weishang operations, assembling their own distributor networks to sell products, and the industry exploded, ads covering everyone's Moments feed. According to a report by iResearch, China's weishang market went from 22.49 billion yuan in transactions in 2013 to 328.77 billion yuan in 2016, a cumulative increase of over 1,361%.

By the time Wang Jing started, growth had already fallen from a peak of 264% to 51%, and 20 million people were doing what she was doing. News reports calling weishang a pyramid scheme, and reports of counterfeiting and fraud, were multiplying, and the commerce and tax authorities had begun talking about writing rules to bring the business into line.

On the surface, harder competition and her own lack of follow-through are what ended Wang Jing's beauty-device weishang business in less than six months. "I felt like I didn't have the energy for it," she said. "In weishang you have to build up your own distributors, not go it alone. It takes constant hype to keep going, and maybe I'm the type who needs someone else to pump me up."

The likelier reason is that the daigou business she started at about the same time was settling into shape. It paid better, and because she was sourcing well-known brands she didn't have to post inspirational quotes every day the way she had for the beauty device, which suited her temperament. So even though daigou took more of her time and energy, she made the trade.

"Miss, do you have any xxx in stock? How much?"

According to the Korea Duty Free Shops Association, Chinese tourists spent close to 10,000 yuan each on average at Korean duty-free stores in 2017, far more than travelers from anywhere else. Some investment firms estimate that daigou accounted for nearly half of that.

Geography, easy visas, cheap travel, Korea's decade at the top of the world duty-free market, its prices, and the pull of Korean pop culture all made it the first stop for Chinese tourists shopping abroad, Wang Jing included.

Wang Jing started daigou in March 2017, about two or three months after starting her weishang business. Against the roughly 10,000 yuan the beauty device ever tied up, she set aside a 200,000-yuan budget for daigou — half of it rolled over on credit-card grace periods, half from savings. Her usual investment vehicle was Lufax, and each month she redeemed a few tens of thousands of yuan from that account for buying. Her method was to fly to Korea, buy, and carry the goods home to sell. Korean brands to other brands ran about 1:4. She still advertised on Moments and Weibo.

But she wasn't sure how far this would go, so even with 200,000 yuan in working capital she couldn't bring herself to pay for a five-year multiple-entry Korean visa. She started with Jeju Island, which needs no visa.

Nearly every Korean "human courier" daigou buys the same way: order on a duty-free store's app before departure, work the city duty-free stores in Korea for leftovers and restocks, then pick up the pre-ordered goods at the Korean airport before flying home. To stretch her shopping and pickup time abroad, and to save money, Wang Jing left home at 4 am for an early flight and took a red-eye back at night, doing China-Korea round trips in a single day. She kept each trip to about 3,000 yuan.

Competition among daigou is fierce, partly because low barriers push up everyone's costs, and partly because so many sellers carry nearly identical products, which leaves price as the main weapon. Wang Jing said that in 2016 and 2017 Korea-route daigou seemed to catch fire out of nowhere, and she felt it from every direction: the daigou ads flooding her Moments and Weibo feeds, and the growing lines of Chinese people at Korean airports when she went to pick up her own goods, sometimes close enough to overhear them comparing how much they'd bought and sold.

Every time Wang Jing reached a duty-free store on Jeju it was already close to noon, and to fill as many customer orders as she could she often ate one meal a day, leaving every other minute for grabbing stock. Meanwhile, faking daigou purchases had become its own cheap supply chain — counterfeits made in China, purchase receipts forged, the goods shipped abroad in bulk, then resold by daigou back into China, with fake receipts going for 15-20 yuan apiece. So to convince customers her goods were real, on every trip Wang Jing photographed her boarding pass and passport, the cabin, the signed credit-card slips and maps of Korean shopping districts, and tagged her posts with a Korean location.

Her first customers were people close to her, which spared her the early cost of explaining herself. For the first month or two they were mostly friends, coworkers, and people who had bought from her back in 2015. She was doing about 50,000 yuan a month. She didn't stockpile: she took orders, collected deposits, shipped, then collected the balance, which kept her from losing money on unsold goods. After airfare and other costs, her margin was around 10%.

Cosmetics and skincare aren't monthly purchases, and selling to people she knew went less smoothly than she'd hoped. By early summer 2017 Wang Jing had nearly used up her personal network and business had dropped close to zero. It felt to her like she'd hit another wall after a short run. With Moments ads no longer working, she paid Weibo influencers to advertise for her. By her account, the customers came at once.

In May 2017, with business picking up, Wang Jing opened a Taobao store. She put almost no design or promotion into it, and shifted from taking orders to holding stock and selling from it. "Taobao promotion is too expensive," she said. "I pay a Weibo influencer a few hundred yuan for a day of ads, post in the morning and by noon people are buying. They trust those influencers. It's so much less work than promoting myself." Business brings its share of unpleasantness — she ran into people who threatened bad reviews to force a refund, then resold shoddy goods for a profit. She would tell them, "If I'm selling fakes, may lightning strike me," except Taobao's messaging filter replaced those characters with exclamation marks, so she typed it again in pinyin.

After hearing that another daigou had been reported to the commerce authorities over something similar, fined, and shut down, Wang Jing had two nightmares in one week about her own Taobao store being closed.

As more daigou poured into Korea, the popular lip products, essences, and other makeup and skincare on Jeju grew harder to find. "Sorry, we're out of stock," "Sorry, sold out," and "Sorry, please come line up tomorrow morning" were the three sentences Wang Jing heard most. Tired of empty shelves, she found someone on Taobao to handle her application for a five-year multiple-entry Korean visa and moved her base to Seoul.

Korea has two big duty-free groups, Shilla and Lotte. For Shilla, the Jeju city store was only 13.44% of 2017 revenue, about US$512 million. The Seoul city store was 49.87%, and adding the Incheon airport store brings the two to nearly 70%. Shilla's total 2017 revenue was about US$3.81 billion.

Lotte is bigger. In 2017, with the THAAD dispute cutting the number of Chinese tourists to Korea by nearly half year-on-year, Lotte Duty Free still took in about US$5.1 billion, down only 0.02%. By store, its Myeongdong flagship in Seoul accounted for more than half of sales and its Incheon airport store for about 19.2%. In the first half of this year the number of Chinese tourists to Korea rose month by month, reaching 2.17 million, pushing Lotte's sales up 29% year-on-year.

Seoul offers more to buy and costs more time on the road. From Incheon Airport to the Myeongdong flagship downtown, subway plus bus takes at least two hours, twice as long as on Jeju, and the trip adds a night in a hotel, though the total still stays under 3,500 yuan.

Wanting to balance daigou, her job, and her family, Wang Jing often flew to Korea on Sunday and took Monday off to fly back, keeping one weekend day for her son. From Korea she would video-call him. He kept asking where she was, and in time the little boy learned all those place names.

"Do this much daigou and you turn into a saint"

Wang Jing's customer network now runs to about 2,000 people, with monthly turnover approaching 200,000 yuan, split roughly 70-30 between Taobao and WeChat. Most of her customers are women aged 20 to 30 who found her by word of mouth on Weibo or Moments. No more than 20 regulars order every month, mostly from the Jiangsu-Zhejiang-Shanghai region, usually spending 3,000-4,000 yuan a time on skincare and makeup, still the mainstream categories.

She also has groups of college students who pool the orders of a whole dorm room, or the room next door, and send one representative to place a combined order, usually a box worth 4,000-5,000 yuan.

Worried that regular customers might band together to haggle, and that competitors might poach them, Wang Jing has never set up a WeChat customer group and has no auto-reply bot on an official account. She handles everyone one-on-one on WeChat or Taobao. On workdays, when customers message her with questions, she sets a reminder and clears them in a concentrated hour or two at lunch or before she leaves work. "Miss, do you have any xxx in stock? How much?", "Miss, when's your next trip?" and "Miss, any eye cream/essence/foundation you'd recommend?" are the openers she gets most.

The good relationship she built during her maternity leave with the aunty who runs the office tea room has helped her with packing and shipping. After a buying trip she sorts the goods at home first, then brings them to the office the next day to pack and send some out right away. Most of the packing happens in the aunty's little cubicle, with Wang Jing paying her 5 yuan for a small item and 10 for a large one. The aunty is in her fifties and has a daughter about Wang Jing's age, which may be why she doesn't fuss over exactly what she is owed each time. If she packs and ships 15 parcels in a day, she'll take 50 yuan.

Wang Jing and her husband still do most of the packing and shipping themselves. She ships four days a week, never on weekends. The routine is to pack the day before, about 20 parcels a day on average. The next morning she loads them into her husband's car on her way to work; after work she takes them to her parents' place but doesn't carry them upstairs, then tells the courier to come after 6 pm, and the three of them sign and hand off the parcels at the car's trunk. She keeps the boxes out of the apartment mainly because her two-year-old son lives with his grandparents now and likes to hug the shipping boxes; she worries the dust on them is bad for him. After the handover she usually stays at her parents' until nine or ten, waiting for her son to fall asleep before going home, where she keeps packing the next day's orders or hunts for stock on her phone.

She's an accountant, and reconciling accounts receivable is part of her day job, but Wang Jing can't say how much the daigou business earns and keeps no books for it. Her sense of the numbers comes from the monthly credit card statement. Even talking about her big orders, her expression doesn't change: "A big order is luxury goods — a bag and a necklace, 30,000 or 50,000 yuan. It happens about once every three months." Only when asked how her husband reacted to those orders did she laugh, two dimples showing at the corners of her mouth: "He just says, 'impressive.'"

Back on the subject of the June fine, she was still visibly upset. Wang Jing belongs to a group chat of more than 500 fellow daigou who trade notes on what is happening at customs as they come through. Since March of this year she has clearly felt enforcement tighten: reports of fines that used to appear about once a month now come every week.

Forums like Douban, Hupu, Zhihu, and Tianya carry the same discussions, including which customs officer at Pudong Airport is the strictest. In a cached snapshot of a deleted Hupu post, someone mentioned daigou wanting to crowdfund money to buy the shift schedule of a few customs officers.

In a screenshot of WeChat messages Wang Jing gave us, one message from early October says Pudong Airport customs had posted three managers and seven officers on duty, and that this daigou saw a whole row of people pulled aside on her way back in. We have not confirmed that message. Still, on top of the late-September fines, Wang Jing scrapped her October travel plans and pushed them to November. Another woman, who flies to Japan to buy every three or four months while on business trips, told us she sees this sort of thing less often, but remembered coming home last November and watching customs open every single traveler's suitcase.

Daigou now takes so much of Wang Jing's time that our four-plus hours of conversation had to be split into three sessions. The first ended at 6:15 pm, when she apologized and said she had to get home to ship. The second and third had to start after 10 pm and 11 pm, because until then she was grabbing stock on a duty-free app.

Wang Jing insists she isn't trying to get rich on daigou. She wants to live a bit better than an ordinary office job allows, to work hard enough to trade up to a nicer apartment, and never to feel any pressure when spending money on her son. She has arranged to leave work an hour and a half early every day, with the total deducted from her pay as leave. Some nights she is still packing at home at midnight. After the Lunar New Year holiday this year, once the couriers went back to work, she shipped more than 200 parcels worth over 60,000 yuan in three days. On the day she shipped 90 parcels in eight hours, she gave herself 15 minutes to eat.

She won't say how much she clears each month, only that it's more than her salary. Her next small goal is 400,000 yuan in monthly revenue.

"Do this much daigou and you turn into a saint," Wang Jing said. "But right now I'm still on the way there. Having a goal keeps me in a good mood."

At the interviewee's request, "Wang Jing" is a pseudonym.

Cover image/Korean Air; the airport pictured is Incheon. Masthead image: Stéphan Valentin on Unsplash