An ABC investigation has uncovered a sophisticated network of Chinese personal shoppers known as daigou operating in Adelaide’s CBD to source in-demand baby formula as soon as it hits supermarket shelves.
- Daigou are Chinese personal shoppers operating in Australia
- They have been seen stockpiling baby formula to ship overseas
- Retail workers say they are worried about their safety as they try to limit purchases
While it has been a decade since the 2008 Chinese milk scandal, when melamine-laced formula killed six infants and made 300,000 sick, the country’s demand for safe baby formula continues.
It has raised concerns from Australian parents struggling to access formula and retail workers who said they were being abused while monitoring limits on purchases.
Over a series of days, the ABC witnessed shoppers in Adelaide’s Rundle Mall communicating with each other through mobile phones and posting lookouts in supermarkets posing as shoppers to monitor stock.
When the boxes arrived for unpacking, so did the daigou, who made repeated trips to the formula aisle to collect their two-can limit.
As they left the supermarket, they stashed their purchased baby formula behind roller doors in nearby businesses, in the boots of cars parked in loading zones, as well as personal shopping trolleys, before repeatedly returning for more.
A man loading tins of formula into his car boot said he planned to sell the product overseas.
The ABC does not suggest that daigou or their distributors are operating illegally.
Exports booming at inflated prices
In Greenacres, 8 kilometres from Adelaide’s CBD, Chinese exporter Healseeway is also riding the baby formula boom.
Trucks, cars and vans deliver goods throughout the day, and deliveries witnessed by the ABC included plastic bags and cardboard boxes full of tins of baby formula.
The site appeared to be a hive of activity as boxes containing baby formula were unloaded from vehicles, while multiple pallets of the a2 brand formula sat in the driveway and warehouse awaiting shipment.
Healseeway’s business registration lists A&N Corporation as the business holder, with Chinese-born director Xin Wu A&N Corporation’s sole shareholder.
Employees on site declined to respond to questions about the origins of their stock, and the company did not respond to a request for an interview by the ABC.
Who are the personal shoppers?
It is believed there are about 400,000 daigou in Australia, sourcing products for Chinese buyers including formula, vitamins and beauty products.
To lower the cost of freight, it is common practice for shoppers to group their exports together through a central organiser, to increase the profit margin for a shipment of goods from Australia to China.
Daigou advertise their services and products on Chinese social media platforms such as WeChat and online shopping sites such as Taobao, China’s equivalent of eBay.
They often advertise with photos taken in Australian supermarkets as proof their product is sourced from Australia and is not counterfeit.
China’s unquenchable thirst for formula
China’s tainted milk scandal, combined with the scrapping of the one-child policy, poor long-term breastfeeding rates and clever marketing, continue to drive strong demand for formula.
Formula that normally retails in Australia for about $30 a can sells overseas for upwards of $45 through the personal shoppers.
While daigou are plying a lucrative trade exporting baby formula to their homeland, there are fears China’s unquenchable thirst for formula is having a real impact on Australian consumers.
Supermarkets are seemingly unable to prevent their shelves from being emptied by personal shoppers within minutes of being restocked, despite a limit on how many cans can be purchased at once.
Pharmaceutical distributors have also warned of the difficulty in sourcing enough stock to meet demand, with some pharmacies resorting to using third-party resellers to fill their shelves, with a mark-up on the recommended retail price.
Adam Trevorrow is a pharmaceutical supplier, and even he struggled to source his child’s formula when there was none available in the supermarket.
“Two weeks ago we ran out of formula and couldn’t find any anywhere —and our little one is quite picky — and I called around to my colleagues in pharmacy and they said ‘there is none’,” Mr Trevorrow said.
He said smaller businesses like chemists were struggling to source a2 from the manufacturer, as demand continued to outstrip production.
A Woolworths spokesperson said the company worked hard to ensure stock was available for customers, while Coles said it was committed to ensuring customers had access to infant formula.
Retail staff also under fire
In response to continued concerns about the availability of formula from the major supermarkets, this month the maximum number of cans allowed to be purchased dropped from eight to two.
Retail staff and the Shop, Distributors and Allied Employees’ Union (SDA) said workers were being abused by Chinese personal shoppers while they attempted to police the purchase of baby formula in Australian supermarkets.
SDA SA assistant secretary Josh Peak said the safety concerns were being raised by staff, with the union already campaigning over Christmas for companies to better protect their workers.
Mr Peak said supermarket staff should not be forced into a position where they had to challenge customers and act as security guards.
“We are very concerned that young and vulnerable retail workers are being put in a situation where they’re having to enforce particular guidelines when they’re not security guards and it’s not their job to do asset protection for the large supermarket chains,” Mr Peak said.
“It’s obviously concerning that customers are out there trying to take advantage of baby formula prices in Australia, but at the same time it’s not the role of retail workers to protect stock in this manner.”
Supermarket employees who asked to remain anonymous told the ABC it was upsetting the major chains were not doing anything to stop the rush on formula by banning shoppers after their first purchase.
When workers try to intervene, they are abused and sometimes even spat at, a worker said.
“As a worker, it’s upsetting that the company I work for won’t do something to help,” said one employee who did not want to be named.
“I tried to stop a man who came in three times and he got angry towards me and denied coming in already and got abusive.
“It needs to stop, and Woolies and Coles need to do something about it.”
Companies reaping the rewards
One of the companies producing in-demand formula, a2, has headquarters in Australia and New Zealand.
The company’s share price and profits have soared, partly in response to strong demand from China, with their November trading update announcing net profits of $86 million for the four months to October, an increase of 64.5 per cent on the same time last year.
An a2 spokesperson said as a listed entity the a2 Milk Company was unable to comment on market-sensitive information.
“The a2 Milk Company guarantees that any mother who wants to buy a2 Platinum Infant Formula will be able to do so if they contact the company via its website,” he said.
“This mechanism demonstrates our commitment to all Australian consumers having access to our product.
“There are many thousands of online facilities in China across all brands in China which have the capacity to operate outside of the control of brand owners.”
This week, the Chinese Government released guidance on its new cross-border e-commerce law which will impact English-label products entering the country.
In a release to the Australian Stock Exchange, a2 said it was confident all requirements would be met before the deadline of March 2019, with the company receiving a bounce in its share price.
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