China-focused AuMake International Soars in Australia Trading Debut

The price of shares of AuMake International Ltd., an Australia-based retailer targeting Chinese tourists and “daigou” services — in which a person shops for goods on behalf of someone in China and sends them to the mainland — nearly tripled in their trading debut on Thursday.

AuMake shares closed at AU$0.235 (18 U.S. cents) Thursday, nearly three times its offer price of AU$0.08 per share, with an issuance of 50 million shares.

The company connects makers of popular Australian goods, such as infant formula and health supplements, directly with Chinese tourists or “daigou” services, which are used to avoid possible counterfeits, tariffs and high consumer taxes in the domestic market.

AuMake runs online shops as well as five brick-and-mortar stores in Australia, according to its prospectus. The company works with more than 250 Australian manufacturers and suppliers.

The rising popularity of hiring daigou, usually students studying overseas or migrants, has created a huge opportunity for companies like AuMake, which has been the first such to list on a stock exchange.

The Australia-to-China daigou market consists of an estimated 40,000 daigou services and as many as 1,200 stores in Australia, which combined send 100 to 200 parcels a day back to China, according to the AuMake prospectus, which cited The Sydney Morning Herald.

Such business can also benefit Australian manufacturers and suppliers that wish to target Chinese customers. But expansion is costly and Chinese regulations often change.

For example, a new rule requires all infant-formula makers in the China market — both domestic and foreign — to register all of their products with the authorities by next year and produce no more than nine types of formula under a maximum of three brand names. The rule is expected to cut the approximately 2,000 baby-formula products in China by 75%.

So far, dozens of companies have completed the registration process, the majority of which are Chinese dairy companies.

New Zealand’s a2 Milk Co. Ltd. is one company that has benefited from daigou. The company has used the daigou network in Australia and New Zealand to promote its products to China. Its profit nearly tripled to a record NZ$90.6 million ($64.97 million) for the fiscal year that ended on June 30.

AuMake said it would deploy the capital raised on the stock market to improve its product inventory, online shopping platform and possible acquisitions.

Contact reporter Coco Feng (renkefeng@caixin.com)