Mystery new shops emerging on streets
ALONG just 200m of a bustling shopping strip in Sydney, five similar-looking shops with covered-up windows have popped up in recent months.
Unless you speak Mandarin, it would be hard to tell what the stores, found along Kingsford's Anzac Parade, are selling from the outside.
They have emerged over the past few months as part of a major shift in the suburb's demographic over several decades, which has seen its traditional Greek and Aussie population decline.
And with the University of New South Wales down the road, thousands of Chinese students now call Kingsford home. That's almost 30 per cent of the suburb's population, according to the latest census.
As the suburb becomes a major drawcard for those looking to pick up a sublime Chinese meal at a bargain price and the new light rail is set to open next month after five painful years in the making, more and more of these new shops are beginning to pop up.
But they are just a few of the thousands that have been set up across the country over the past two years as part of a booming industry estimated to be worth more than $1 billion.
Their windows are often covered with posters, but inside there are shelves filled with Ugg boots, honey, health food bars, vitamins, supplements and skin cream.
Lined up against the walls, there are large stacks of popular brand name baby formula tins and piles of empty mailboxes alongside them.
Jamie Yi, who works at one of the stores called Easy Go, told news.com.au the range of goods on display in the shop are on sale to the public, but the majority of what they sell goes directly to China.
"People in China can probably find this stuff online, but what they find is that when they pay for it, it's fake sometimes," she said.
The shop also sells the products to Chinese students who resell the products through social media sites such as WeChat and Weibo and through online shopping sites.
This has opened up a major money-making opportunity for the 1.4 million Chinese students studying in Australia as they look to sell high-quality health products to their homeland.
While the process - known as daigou shopping - has been around in Australia since 2008, the numbers of physical stores, such as those emerging in Kingsford, have exploded over the past two years.
Dr Mathew McDougall, president of the Australia China Daigou Association, told news.com.au that roughly 12,000 of these so-called "gift shops" have opened up in Australia over the past decade as part of a $1 billion industry.
That's up from just 1500 three years ago.
"When daigou started in 2008, it was informal and infrequent with people's relatives living in China sending this products back home," he said. "Then it got a lot bigger and bigger, and those selling the products needed somewhere to store them. They figured that these warehousing facilities began to double up as store fronts."
He said it used to be that other daigou shoppers would have to go to several Aussie supermarkets and chemists to find the highly-sought products they were after.
Now, these gift shops - which Dr McDougall says have a small range of high-value products - allow shoppers to find everything they need in one place.
Many of the shops also provide pack-and-send services through partnerships with logistic companies.
"So it's a convenience thing for shoppers, because they have everything in one place and they do the shipping," Dr McDougall said.
A another worker in one of the Kingsford shops said the business model works for them because their customers in China buying directly have friends and family in Australia who can suss out their store and ensure they are legitimate.
"Then the customers tell their friends and family in China about us and we get more and more orders," she said.
In recent years, supermarkets have clamped down on the number of baby formula tins customers can buy and daigou sellers using online stores have operated as unregistered businesses without paying taxes.
So the physical "gift shops" that pay tax and give out receipts ensure that those using them are not involved in anything dodgy.
But although it sounds like the perfect business plan, shop workers in Kingsford told news.com.au they were struggling to fill orders at the moment because of the coronavirus crisis.
They said the sales of traditionally sought-after products like baby formula and skincare items have dropped off a cliff in recent weeks because of the spike in demand for medical equipment.
"People are more worried about catching the virus so they're not buying the other products as much," said Ms Yi from Easy Go.
Dr McDougall said this was true across the industry and that fears and restrictions have made getting the products to peoples' doorsteps in China a real challenge.
"Getting the parcels to China is the easy part, but products are being returned to warehouses, because parcels are not being allowed to dropped off because of fears of the virus spreading," he said.
"This isn't just in quarantined cities. Even in cities like Beijing sometimes it's not possible to deliver and we've had parcels coming all the way back to Australia."
However, he said that demand for other products associated with stopping the spread of the virus like face masks and hand sanitiser, goggles and thermometers had increased dramatically.
"So some of the sellers (who were focused on selling baby formula and skincare products) are way out of pocket, but others are now resurgent because they have the products that are in demand," he said.
"What's really interesting is that the motivation is different now. Before, these sellers were dedicated to making a profit but now they're concerned about China and the outbreak of the virus. They want to help the situation."
He added that these "gift shops" face the same pressures as other physical retail outlets in Australia, in that they're being undercut by purely online operations - which allow shoppers to complete their transactions without having to step outside their homes.
However, Ms Yi said she's not too disheartened by the current situation as sales tend to dip off this time of year after Chinese New Year anyway.
And with the $1 billion industry showing no signs of slowing down, perhaps she has every reason to be optimistic.