New form of parallel trading within economics relations between Russia and China

Abstract

This paper investigates the phenomenon of ‘daigou’. Daigou are perceived as harmful in China as they do not pay any import taxes. However, daigou have established well-organised supply-chain channels on the borders between Russia and China and have helped to boost sales for Russian regional businesses. With the help of in-depth interviews, this study provides three core findings. Firstly, it describes the entire supply-chain structure of daigou activity in Russia-China trade relations and the methods used by daigou to bypass border customs controls. Secondly, it explores the key benefits for Russian manufacturers and retailers and shows how they cooperate with Chinese daigou. Finally, it proposes that daigou are not just purchasing representatives but that they also act as consultants to Russian manufacturers and retailers and may therefore have a significant impact on the marketing costs, product development, and internationalisation strategies of those manufactures and retailers.

Keywords: daigou, Russia, China, parallel trading, cross-border mobility, social embeddedness, mobility, virtual community

JEL Classification: D03, D85, F16, J61, K42, M38, N15, N85, O35