A Chinese official named Guan Zhaojin, formerly head of customs in the busy port city of Dalian, is under investigation for helping professional “personal shoppers” evade huge import tariffs and intrusive inspections for overseas purchases.

Extra spice was added to the scandal by Guan’s alleged habit of conducting sexual affairs with some of the female clients for his smuggling operation.

According to the South China Morning Post, Guan was undone by his wife videotaping him confessing to his many affairs – a confession he elected to deliver clad in only his underpants. China Daily reported Guan’s wife reported him to the authorities and handed over the underpants video as evidence.

Guan claims he was already investigated and exonerated on corruption charges in September and has no fear of another investigation, but the SCMP was more downbeat about his chances, relaying a social media announcement from the port authority that “new leads and online reaction concerning Guan Zhaojin’s cover-up and assisting with smuggling, corruption, and bribery” have come in.

The “online reaction” is presumably public grumbling over the immensely valuable advantage Guan allegedly conveyed to his clients, personal shoppers for the burgeoning Chinese upper class known as daigou:

Daigou have thrived in recent years, as more consumers have turned to buying luxury goods and products like baby milk formula from overseas, where they are often much cheaper, due to China’s heavy import tariffs of 30 per cent to 80 per cent.Daigou, who are often Chinese citizens living abroad selling to friends and trusted clients through WeChat, also act as key influencers for foreign brands among consumers, often stopping sales of a particular brand after it has encountered controversy in China.

But daigou have sometimes earned a bad reputation in countries such as Australia, where their activities have led to chronic shortages of baby milk formula for local consumers.

The value of daigou smuggling has been estimated at over $100 million worth of luxury goods per year – possibly far over that, given high-end estimates of $100 billion in luxury goods imported to China every year – which is more than enough for the Chinese government to consider making a mournful example out of someone.

A marquee prosecution would also be a good way for Beijing to roll out tighter controls on daigou shopping, as detailed by Caixin:

On Jan. 1, China’s new e-commerce law — the first to directly affect daigou — came into effect. Under the new law, daigou will be required to register as e-commerce operators and acquire licenses in both China and the country where they shop, making their business subject to taxation, finance lawyer Cheng Jiuyu from Zhongwen Law Firm said. Any e-commerce platform and seller could be fined 2 million yuan and 500,000 yuan respectively — and possibly face criminal charges.

It’s likely to be good news for China’s tax collectors, who missed out on an estimated 100 billion yuan this year, thanks to e-commerce between private individuals, according to a report from the Beijing-based Central University of Finance and Economics. “This law is making an effort to regulate all e-commerce business,” Cheng says. “[Those daigou who didn’t pay taxes] will lose their edge, and those who didn’t have many clients will find it hard to survive.” But it’s unclear how the law will be enforced. Cheng says it’s likely that customs will get stricter on undeclared parcels, and platforms like WeChat and Taobao — where many of the products are sold — may work with the authorities to avoid being held liable themselves.

Daigou will have to register and truthfully declare their items, and the increased cost will be passed on to their customers. “Customers’ purchasing behavior will also change accordingly: They will go for sellers who have bigger platforms and better services,” Cheng says. “There will be a wave of bankrupt, small-time daigou.” Nevertheless, he believes that some daigou may try to stick it out and ignore the law. “If profits are high, some may take risks to continue their business,” he says.

The new regulations have apparently been enough to frighten casual daigou shoppers out of the business and dramatically reduce their customer base. The Chinese government imposed those rules somewhat gingerly, with a nod and wink to let the personal shoppers and their clients know they should stock up because the good times were coming to an end.

If the next stage involves letting them know they will be treated as criminals and face severe punishment if they defy customs laws, the high-profile prosecution of a high-ranking customs official – served up with a dash of sex scandal – would be an effective means of sending the message.

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