Cross-border shoppers have become a multi-billion-dollar industry—but changing regulations could spell the end for the entrepreneurial sellers.

Li has gone to South Korea more than 20 times this year, but she hasn’t spent her time wandering tourist sites or sampling local delicacies. She’s only had one destination in mind: duty-free stores.

Each time, she’s brought back two suitcases crammed with lipsticks, skin care sets, watches, and luxury bags. 

But after her most recent mid-December trip, the 30-year-old Shanghai housewife decided to put an end to her frequent visits. She’s afraid her shopping excursions are breaking the law.

Li is a so-called daigou — which literally translates to “buying on behalf of someone else.” 

She’s one of an estimated 1 million small-time business operators who shop overseas, then sell the goods over messaging app WeChat or Chinese e-commerce platforms. 

A woman live-streams while purchasing health products for her customers in Australia. VCG

A 2015 report said that the daigou market for luxury goods alone was worth between 34 billion to 50 billion yuan ($5.2 billion to $7.6 billion).

Last year, an estimated $100 billion of foreign goods was slipped into the Chinese mainland.

But the booming daigou industry might be in its death throes. 

Over the past decade, daigou have made their money by taking advantage of price gaps between different countries and avoiding tariffs and sales taxes to under cut big brands. 

On Jan. 1, 2019, China’s new e-commerce law—the first to directly affect daigou—will come into effect. 

Under the new law, daigou will be required to register as e-commerce operators and acquire licenses in both China and the country where they shop, making their business subject to taxation. 

Any e-commerce platform and seller could be fined 2 million yuan and 500,000 yuan respectively—and possibly face criminal charges.

It’s likely to be good news for China’s tax collectors, who missed out on an estimated 100 billion yuan this year, thanks to e-commerce between private individuals. 

But it’s unclear how the law will be enforced. 

Li’s not waiting around to go bankrupt — she’s getting out now to avoid risk. 

“Of course, we knew that bringing in such large amounts of undeclared products wasn’t right,” says Li.

“But we thought paying a fine would be the most severe punishment. Who could have known that the worst consequence would be jail?”

Two Chinese ‘daigou’ drag bags throughDongdaemun Market in South Korea

Since the end of August, when the government approved its new e-commerce law, daigou have grown anxious. European luxury and cosmetic brands’ shares have plunged.

Customs officers in China have started preemptively getting stricter. On social media, people have complained of being searched and taxed. Some daigou and WeMedia accounts have even termed it a “massacre.”

The panic has passed on to the consumers. 

Avid daigou customer Qin Pan gets her son’s milk powder from Australia, her husband’s sports shoes from the United States, her Louis Vuitton bags from France, and her toilet seat from Japan. 

Normally, the Shanghai mother spends over 60,000 yuan each year on products bought via daigou. Since September, after the rule was announced, she’s been seeing notices reminding her to stock up, and warning: “Treat your daigou friends nicely: 

"The e-commerce law is coming.”

What do you think will be the impact of the law?

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Source / SixthTone

Writer / Clara

Designer / Amber