A bus full of Chinese tourists arrive in front of Galeries Lafayette Haussmann, a must-visit department store in Paris; it is just one of many throughout the year. Although recent policy in Chinese government has devalued its currency, RMB¥, and consequently slowed down its economy, it doesn’t seem to scare Chinese people away from traveling to Europe. Nor has it decreased the desire to purchase luxury products. According to the article “Meet The Chinese Luxury Shoppers Who Are Taking Over The World” from Business Insider, Chinese customers account for 35% of the luxury sales around the globe and their spending is 1-2 times higher than other nationalities.

Jasmine Lai, 24, is a recent college graduate from one of the well-known universities in Shanghai, Fudan University. After graduation, she took a trip to Europe to help propel her career as an overseas purchase agent. “Before this trip, I was not aware that the price for the same luxury product in Europe and in China could varies so much.” Lai saw a chance for her to step in. The price discrepancy between luxury products priced in Euros and the same product’s price in China, gave her the idea for a brand new business model. “I started to ask myself. If I was able to purchase the luxury products in Europe and bring those products back with to China, even if a service fee is added, the price for the product from Europe is still lower than its retail price in China.”

With the advancement of technology, instead of setting up online website, Lai created a business that relies solely on two of the most used mobile applications in China, which are Sina Weibo and Wechat. Sina Weibo is a social media application that combines the functions of Facebook and Twitter. Users are able to comment, share posts from friends, and upload photos, and videos. Contrarily, Wechat offers free messaging and focuses on interactions between the user and his/her friends. “Wechat serves as a great way for me to interact directly with my client. When my clients saw a product that they are interested in buying, they would send me the picture of the product directly through Wechat.”

Using these graphics, I will explain how Lai’s business model works. Take this iconic handbag from Saint Laurent, one of the luxury brands in Paris. On the top, the price for the bag is £1590, which is ¥9540. On the bottom, the price for the same bag in China, is $2190, which is ¥14322.6. When a customer requests the bag, Lai would signal her buyers in Europe to confirm the price of the bag. Once the price, ¥9540, is confirmed, Lai will add thirty percent of service fee, ¥2862, to the price and report the price back to the customer on Wechat. After the client’s nod, Lai’s employee in Europe will purchase the bag and sent it back to China.

Although it might seem to be fun and glamorous to be an overseas purchase agent, there are many underlying difficulties and uncertainties jeopardizing Lai’s daily work. “The most challenging part of my job is going through customs,” Jasmine said.

A big part of Lai’s career as an overseas purchase agent is to travel to Europe twice a year, during its sale season. It was easy and quick for Lai and her employees to buy the desired products for the clients. Nevertheless, bringing all the products back safely to China without custom’s suspicion is the hardest part.

“Carrying all the products with me didn’t become a problem until recent years. During my first and second year as an overseas purchase agent, I would place all the items into two large suitcases. Except having to pay an extra overweight fee, I never encounter problems with China custom. However, the situation is different nowadays.” With an increase numbers of overseas purchase agents, Chinese shoppers tend to purchase luxury products overseas thus leading to a shrinking economy for the luxury brand market in China. As soon as the government realized the overseas purchases are endangering the growth of its luxury brand industry domestically, it immediately enforced stricter custom policies.

“With the new custom policies, instead of leaving the price tag, boxes, and the wrap for the luxury products, we need to remove everything in order to pretend that all the products are for personal instead of commercial use.” The updated custom policies definitely bring changes to the overseas purchase industry but it seems that even though the risk for buying the products through overseas purchase agents is bigger than buying the products in a nearby department store. Chinese shoppers are willing to take the risk instead of paying for the retail price, which include stiff taxes imposed by the government.

Besides the need of paying extra attention on custom policies, monitoring the foreign exchange between RMB¥ and the Euro becomes the daily task of an overseas purchase agent’s due to the fact that it might also serve as a potential threat to the sales. On one hand, when the value of the RMB¥ increases comparatively to the value of the Euro, the price of Chinese exports increased because it is more expensive for European to buy Chinese products but it is cheaper for Chinese to buy European products. On the other hand, when the value of the RMB¥ decreases comparatively to the value of the Euro, the price of Chinese imports increases, which makes it cheaper for European to buy Chinese goods but more expensive for Chinese to buy European products. “When RMB¥ appreciates against Euro, our sales tend to decrease a little because our clients are more likely to pick Europe as their travel destinations,” recalled by Lai.

The luxury brand industry in China is booming. An increased number of Chinese shoppers, combined with an increased interest toward luxury products, creates more opportunity. However, just like how happiness is often associated with the purchase of luxury products, the risks, such as custom policies and the fickle foreign exchange rate, are closely tied to the success of overseas purchase agents.