Investors could soon have exposure to the lucrative "daigou" trade, after the ASX gave the nod for an Australian-based business to hit the boards later this year.
ITM International subsidiary AuMake Australia has quietly built up five stores around Sydney, acting as a one-stop product shop for the estimated 40,000 "daigou" shoppers, and directly shipping goods to Chinese nationals eager to get their hands on high-quality Australian-made products.
Looking to raise $6 million, husband and wife team Joshua Zhou and Lynn Zheng have leveraged their backgrounds as Chinese tour operators in Australia to link an extensive network of Chinese customers to a hungry array of Australian businesses wanting to tap into the swelling Chinese demand.
"We are pre-daigou really, we have been sending these kinds of products to China since 2010," says Mr Zhou. "But the advent of WeChat, and now that suppliers really want access to the Chinese middle class, we must grow very quickly in order to keep up."
The ASX has given in-principle approval for AuMake Australia's parent company, ITM Corporation, to back-door list through Augend Limited, to form AuMake International.
AuMake turns over about $13 million each year and is looking to expand its five stores into 20 over the next 12 months, with plans to develop a flagship store on Sydney's bustling George Street.
Interested fund managers have valued the business at between $15 million and $17 million.
Using communications app WeChat, which has a direct payment feature, AuMake can talk directly to Chinese mothers wanting to understand different brands of infant formula, or explain what ingredients are used in various skincare ranges.
"This direct communication means I can build trust with Chinese customers," says Ms Zheng. "And they can place an order immediately. It is very immediate, lots of people use it and it means we can offer all kinds of Australian-made products, not just the well known ones, to Chinese."
While there is no denying the reach of the daigou shopper, the phenomenon has not always been welcome.
Infant formula marketer Bellamy's Australia has suffered savage losses as it was caught out by regulatory changes in China, which impacted its daigou business.
a2 Milk, on the other hand, has embraced the role of the "in-between" shopper, and the company's value has soared beyond $2 billion.
"There is no grey channel here at all," says Keong Chan, a director and one of the founders of ITM Corporation. "We have set up a regular retail business where we source products from all over Australia and export them over to our customers in China."
Aside from the costs associated with running several shopfronts, AuMake's main expenditure is on postage. However, several Chinese mailing businesses have sprung up, allowing AuMake's customers a choice of which service they are prepared to pay for.
"We used to just have to use Australia Post, which was very expensive," says Mr Zhou. "But now through WeChat we can ask what people want. It's very flexible and immediate."
