"Daigou" retailer lists on ASX

AuMake, a specialist retailer targeting Chinese "daigou", has started trading on the Australian share market.

A former oil and gas drilling company has resumed trading on the Australian share market under a new name and purpose: selling Australian products to Chinese tourists and "daigou".

AuMake International sells Australian cosmetics, vitamins, long-life milk, baby products, and wool and leather products through its wholesale warehouses and retail stores.

The company wants to become the leading retail brand for "daigou" and Chinese tourists buying "clean and green" Australian products, and consolidate the highly fragmented number of daigou stores through acquisition.

Daigou means "to purchase on behalf of" in Chinese.

The daigou, who may be Australia residents or visiting Chinese, buy goods on behalf of people in China and either take the goods to China in person or mail them.

Consumers in China use daigou because they don't trust some Chinese-made products and have been stung by counterfeit overseas brands.

AuMake executive chairman Keong Chan says Chinese consumer demand for safe, reliable, trusted Australian products is growing, and daigou numbers are increasing.

"The majority of Chinese living in Australia are daigou," Mr Chan told AAP on Thursday.

"They have friends or family back home (in China) that will be asking them to buy products in Australia and to send it back to them.

"As long as Chinese are immigrating and living in Australia, or coming here to study, the number of daigou will continue to grow."

AuMake estimates there are about 40,000 daigou in Australia, who potentially could reach 50 million Chinese consumers.

It believes the daigou and Chinese tourist market has significant growth potential.

About 1.2 million Chinese visited Australia in 2016, spending an estimated $9.2 billion.

About 18 per cent of AuMake's shareholders are daigou or Chinese tour guides.

AuMake replaces Augend Ltd, which used to be called Titan Energy Services, a provider of drilling and other services to the West Australian energy sector.

In December 2015, Titan Energy went into voluntary administration, and later changed its name to Augend.

Augend subsequently acquired Perth-based ITM Corporation, a wholesaler and retailer supplying Chinese customers living in Australia and China.

ITM acquired AuMake in February 2017.

AuMake was established seven years ago by husband-and-wife Australia-based Chinese tour guide team Joshua Zhou and Lyn Zheng.

It has five retail outlets in Sydney and plans to open a flagship store on George Street in Sydney's CBD in mid-October.

AuMake raised $6 million in an oversubscribed offer of shares at eight cents each.

The company will use the funds to expand its retail network, acquire brands attractive to daigou, and develop its online capability.

Titan Energy shares traded at $8.88 when the company went into administration.

Under the AuMake name and business, the company's shares were at 17 cents at 1115 AEDT - 98 per cent lower than the last traded price of Titan Energy but well above the AuMake issue price of eight cents.

3 min read
Published 5 October 2017 at 11:42am
Source: AAP