Over the past decade, China’s middle-class population has grown at an enormous rate. In turn, so too has China’s demand for high-quality and novel foreign goods.
The emergence of multi-hundred-million-dollar grey (Daigou) channels into China throughout the early 2010s presented a number of challenges for China’s government. Not only was the industry incredibly difficult to regulate and monitor from a quality control perspective, but China was also missing out on countless dollars in foregone tax/import revenue.
Daigou traders were able to flourish; largely due to the challenges that existed for foreign brands to obtain General Trade Registration (GTR) for their products. GTR enables regular export to China, whereby product can be sold over the counter in physical retail stores. In the early 2010s, the costs and red tape associated with GTR were so high, such that most brands simply couldn’t justify a commercial China launch.