From Sydney to Shanghai: how the Chinese diaspora shapes (and sometimes misguides) market entry into mainland China and growth

By Mark Tanner*

From Sydney to San Francisco, Chinese communities have become a powerful presence in many of the world’s most dynamic cities. Sydney alone is home to over half a million people with Chinese ancestry - more than one in ten residents. Melbourne isn’t far behind, while in Auckland it’s closer to one in eight. Vancouver’s Chinese community makes up a remarkable fifth of the city, and in Toronto it’s around 11%. Over 2 million live between New York, Los Angeles, and San Francisco. Even London counts roughly 150,000 residents of Chinese heritage.

Why does this matter? Because these communities in themselves can be a large market. But often more importantly, they can act as cultural bridges sometimes influencing what products, styles, and trends gain traction back home. Despite being an effective route for foreign brands looking to connect with consumers in mainland China, they are often under-tapped.

The Rise (and Plateau) of the Daigou

Many old hat Skinny readers will recall the golden days of daigou. In the 2010s, daigou - overseas personal shoppers who bought goods abroad to send to China - were responsible for the rise of some of the most successful foreign brands in China, acting as a shortcut into China’s vast consumer market. At their peak, daigou networks helped everything from infant formula to luxury handbags gain traction.

But regulatory changes, rising domestic competition, and shifts in consumer behaviour have dampened the daigou model’s influence. China’s increasingly sophisticated e-commerce ecosystem makes it easy for consumers to buy direct, often at competitive prices. While daigou still play a role in niche categories, they are no longer the mass-market entry point they once were. As a result many brands often neglect other opportunities to tap into Chinese consumers in their home turf.

From Cultural Hubs to Consumer Catalysts

A recent study of Chinese-run commercial spaces in Hurstville, Sydney, highlights how diaspora businesses serve as cultural anchors for migrants. These spaces go beyond places to shop, acting as spaces where people reconnect with language, taste, aesthetics, and community. This mirrors a key dynamic in China: consumption is not purely functional, but also deeply tied to identity and belonging.

For foreign brands, these spaces reinforce how much cultural authenticity matters. Just as the Sydney Chinese community gravitates to stores, restaurants, and services that “feel right” culturally, consumers in China are drawn to products and brands that respect and reflect their values. But there’s a caveat: authenticity needs to be rooted in Chinese cultural cues, not a generic “Asian” aesthetic, and certainly not a Western perception of what Chinese consumers should want.

The Home-Market Halo

Success with the Chinese diaspora in a brand’s home market can bolster credibility in China itself. Consumers in the mainland often notice what’s popular with their compatriots abroad, especially if it is presented as a point of pride. A strong reputation among overseas Chinese can be leveraged in marketing narratives back in China, if its handled carefully to avoid overstatement or tokenism.

VFR Travellers: A Quieter Influence with a Loud Impact

One diaspora-driven channel that remains strong is VFR tourism, Visiting Friends and Relatives. Chinese diaspora members often host visiting family from the mainland, guiding them through shopping, dining, and travel experiences. These visits have a halo effect far beyond the individuals involved.

Mainland visitors often share their discoveries with friends and family back home, post them on platforms like WeChat and Xiaohongshu/RED, and carry home products as gifts. This social sharing can spark demand in China that ripples through entire networks. Executed a way that makes it easy for visitors to build a connection to the brand and product – and stay connected when they return to China, can be a powerful and lower-cost way to acquire customers in mainland China.

Using the Diaspora as a Research Tool - Proceed with Caution

Some brands use local Chinese communities abroad to test products, messaging, and positioning before launching in China. On paper, it makes sense: the consumers speak the language, share cultural roots, and can give quick feedback without the complexity of in-market research.

But there are pitfalls:

• Taste evolution – Diaspora communities often adapt to their new country’s tastes and trends, which may diverge significantly from those in China.
• Regional mismatch – Many Chinese abroad come from provinces or cities that may be different from regions you are targeting in China, and their views and preferences may not align.
• Different purchasing contexts – The customer journey in Sydney or San Francisco looks very different to the one on Tmall or in a Chengdu department store.

Insights from diaspora research can still be valuable, but they should be validated in China before committing to a market strategy.

A Smarter Way Forward

The Chinese diaspora remains a valuable asset for foreign brands, but its role is shifting from a direct sales engine (daigou, personal imports) to an influencer, amplifier, and credibility-builder. The most effective use of diaspora links today is as part of a multi-channel China entry and growth plan, combining Chinese sales channels, local partnerships, and on-the-ground market research.

Brands that treat the diaspora as a cultural bridge rather than a perfect mirror of the China market are likely to avoid costly missteps. They’ll also gain the deeper insight needed to connect with Chinese consumers in ways that are authentic, resonant, built to last and less contested.

*Mark Tanner is the CEO of China Skinny, a marketing consultancy in Shanghai. This article was first published here, and is re-posted with permission.