Page 41 - The Economist

The Economist December 9th 2017 Asia 41
Australian exports to China
Public transport in the Philippines
Purchasing Jeep stakes

powder
Manila
The governmentdeclares waron a four-wheeled icon
Perth ENETIANS have theirvaporettos, to fighterjets. Many are also fitted with
An armyofChinese shoppers dictates V Londoners theirdouble-deckers, deafeningstereo systems. The supply of
the fate ofAustralian brands
Japanese theirbullet trains and Filipinos surplus jeeps dried up longago, so the
HE firstdaigou, meaningsomeone who theirjeepneys. None ofthose other vehi- builders now take superannuated diesel
Tmakes purchases on another’s behalf, cles, however, is as dirty, dangerous and trucks from Japan and add bodywork
were Chinese students studying abroad, uncomfortable as the jeepney, a Franken- vaguely reminiscent ofa jeep. Ashort
who hauled desirable products home on stein’s monsterofa minibus that was first hop around Manila costs 8 pesos ($0.16).
behalf of family and friends. Adding a cobbled togethersome 70 years ago. Yet But the passengermust crouch to
commission helped them pay their tuition when the government announced plans climb in the backand squeeze onto an
fees. The spread ofsocial-networking apps to phase jeepneys out, opponents ac- inward-facingbench, hunched underthe
such as WeChat, China’s most popular, cused it oftryingto expunge the soul of low roofand crammed up against the
brought the business online. Daigou could the nation. passengers on eitherside and opposite.
then offer their services to friends of The first jeepneys were made from Air-conditioningto take the edge off the
friends, and promote items they thought surplus jeeps that American forces left tropical heat and humidity is rare. The
might appeal to their network. But where- behind afterthe second world war. En- cramped space and single exit make the
as daigou in America and Europe procure terprisingFilipinos added benches and a workofpickpockets and armed robbers
mainly luxury goods for their custom- roof, creatingaffordable publictransport easy. Breakdowns are frequent. The old
ers—a function of high Chinese tariffs—in and a host ofsmall businessmen, who engines spew smoke into the already
Australia they buy mainly vitamins, food owned and sometimes drove the vehi- filthy airofPhilippine cities. Drivers pick
and beauty products. And whereas luxury cles. In due course, jeepneys were embel- up and set down customers anywhere
brands see daigou as a menace, undercut- lished with chrome decorations, col- they like, often without pullingover,
ting sales in China, Australian firms have ourful streamers, fairy lights and gaudy imperillingthe passengers and blocking
come to embrace them. paintings ofeverythingfrom Jesus Christ the road.
There are perhaps 50,000 daigou, stalk- No wonder, then, that the govern-
ing the aisles of Australian shops and per- ment has decided to ban jeepneys that
iodicallystrippingthem bare. The small fry are more than15 years old, startingnext
alone post 60,000 parcels to China every month. It wants drivers to use electric
day. The biggesthave grown into organised replacements instead, orat least vehicles
export businesses which funnel goods with cleanerengines. Manufacturers
through China’s free-trade zones. Express have proposed new models that lookless
delivery services to China have prolifer- like jeepneys and more like—whisper
ated, and some 1,500 stores in Australia ca- it—minibuses, with such frills as side
ter mainly to daigou. One such chain, Au- entrances, individual forward-facing
Make, recently listed on the Australian seats, air-conditioning, automated fare
SecuritiesExchange. Itsbilingual sales staff collection and security cameras. The
can arrange for a purchase to be posted to government says it will provide cheap
China as soon as it has been rungup. loans to buyers.
The appeal for the customers is simple: Angry jeepney operators drove in
the products daigou post are guaranteed to convoy through Manila on December4th
be genuine. After Chinese firms were to protest against the plan. They say that
found to have been selling contaminated most operators will not be able to afford
milk powder in 2008, many anxious Chi- the new models, which cost around1.5m
nese parents turned to foreign brands. But pesos. Such expensive vehicles, they
websites peddling foreign goods are rid- maintain, will drive up the minimum
dled with counterfeits, while Chinese fare to 20 pesos. And then there is the fact
shops charge a fortune forthe real thing. that the clapped-out, smoke-belching
The odd sales channel works for com- jeepney is a national treasure and an
panies, too. Daigou allow young Austra- Treasure and menace expression ofcollective genius.
lian firms to build their brands in China
much more cheaply and easily than ifthey
tried to market their products directly, ar- strong sales force,” says Andrew Cohen, move that the firm feared might under-
gues Keong Chan, the chairman of Au- chiefexecutive ofBellamy’s, a listed manu- mine sales through daigou.
Make. A firm called the a2 Milk Company facturerofinfant formula. So Bellamy’s decided to funnel its
doubled itsprofitin the yearto June thanks Bellamy’s learned the hard way. It used wares to Chinese retailers and e-tailers,
to soaring Chinese demand. Daigou ac- to worry about entrusting so important a who in turn offered big discounts to cus-
count for more ofthose sales than Chinese market to squads of anonymous interme- tomers, undercutting the daigou. This ap-
retailers or e-commerce sites, according to diaries. Daigou had earned a bad press in proach backfired completely, as daigou
Peter Nathan, who heads its Asia-Pacific Australia for creating shortages of certain abandoned Bellamy’s products. Sales
unit. Businesses fall over themselves to goods and for failing to pay tax on their plunged. The firm’s share price collapsed;
win the favour of the most influential dai- commissions. Worse, the Chinese authori- heads rolled. Bellamy’s recently cut back
gou, offering discounts and Chinese mar- ties began talking last year about demand- sales to other distributors, restoring daigou
keting materials. “It’s like having a 50,000- ing import duties on personal packages, a to prime position once again. 7