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Chinese international students living in Australia have been making a killing in re-selling baby formula and other Australian health products to buyers back in their home country.
Earning thousands of dollars per week, these budding entrepreneurs have discovered the lucrative business of distributing popular Australian products such as a2 Platinum Formula and Bellamy’s Organic for customers in China.
According to Business Insider, a growing number of Chinese students are turning themselves into online wholesalers simply by setting up online shops via WeChat, a social media platform similar to Facebook where they find and grow their markets. A unique feature the platform has over Facebook is its ability to connect the user’s bank account, allowing for easy money transfers without having to open up a separate banking app.
Sydney-based Carol Lin, who began her online reselling business last year, earns between $2,000 to $3,000 per week selling baby formula and Blackmores vitamins through the platform. Considering regular university students in Australia earn $23 per hour, Lin has indeed struck gold.
Before heading to Australia, the 25-year-old ELS student had already studied the market and discovered how lucrative selling Australian health products to China was through online shops.
Like many others like her, Lin has tapped into China’s huge demand of high quality and authentic health products created by the rampant local distribution of fake brands and counterfeit products.
“You WeChat and tell me what you want. Then I have to write it down, for example if a customer buys five things, but all five things aren’t available at the same place,” Lin said, explaining her process. “For example, it could be from the supermarket, Chemist Warehouse. I need to go to a lot of differences places to buy everything and then afterwards, I have to send the stock and pack it up.”
Her clients consist mainly of parents of her friends back home. With the help of some buzz generated by word-of-mouth recommendations of her regular customers, she was able to grow her clientele.
Lin, who considers her venture as a success, usually spends her money buying designer goods.
“It depends on each person’s preferences,” said Lin. “Some people will save but some people will go shopping. We both go shopping because our family backgrounds are already quite good.”
International student Maggie Ma, found herself in the same business after she brought some Australian health products to China during a family visit. With relatives asking for more products each visit, she realized the potential for turning it into a business of her own.
Aside from health products, Ma also sells manuka honey and pawpaw cream to her customers. During one Chinese New Year, she was able to earn much more than usual as many friends and family stocked up on Aussie goods to give as gifts.
These online entrepreneurs have the potential to make a huge amount of cash in revenue. However, as they are operating as an unregistered business, they have not been paying taxes.
Other online resellers have also expanded to other platforms such as Taobao and Alibaba. The business is doing so well that the products sold on these platforms already account for 5-10% of the total retail of Australian food and health products on the market, according to estimates by Austrade.
China’s economic boom in the last decade has brought about a steady rise in the living standards of many of its citizens who do not mind spending premium for imported products. This allows for the resellers to significantly mark up some of the prices to be more than double its retail price. An a2 Platinum Formula and Bellamy’s Organic which costs $25, for example, can fetch for more than $80 in China.
Being Australia’s second largest market for medicine and other health brands, China easily spent $381 million in 2014 alone, according a report by The University of Sydney.
“China is facing a host of new health challenges, including an ageing population, changing diets, increasing prevalence of obesity and environmental problems,” George Institute for Global Health professor John Knight told Business Insider. “The demand for high quality health care is a constant, unlike the boom and bust cycles of many other industries such as the resources sector.”
So far Chinese authorities have failed to stop the practice as they are unable to regulate imported products sent by post.