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Costco, America's largest wholesale membership club, proudly opened its first physical store in China on Tuesday. Located in Shanghai, thousands of customers poured in on day one. But can Costco keep this "beginner's luck" alive, especially with most Chinese not used to buying items in bulk?
Grand Opening in Shanghai
Costco wholesale’s first physical store in China opened its doors at 8am Tuesday in Shanghai's Minhang district.
Some Shanghai residents told me that this supermarket is very big and many said the prices are very cheap, so I got a membership card.
There were an innumerable amount of products, ranging from fruit to meat, from water to nuts.
I was among the first group of consumers shopping in this retail store. Interestingly, last week U.S. President Donald Trump asked enterprises to withdraw from the Chinese market, yet now America’s largest warehouse club retailer has opened its brick-and-mortar doors, after selling to Chinese customers online for the past 5 years.
Costco faces a lot of challenges ahead
Costco arrives at a time when some international retail giants including Amazon and Carrefour are retreating from the Chinese market, due to strong competition from local retailers.
The trade war escalated last Friday as President Donald Trump increased existing and planned tariffs on a total of 550 billion U.S. dollars worth of Chinese goods in response to new levies announced earlier that day by Beijing on 75 billion U.S. dollars of U.S. imports. Imports like meat, coffee and juice, are most affected, and everyday consumers of these will likely bear the burden.
Another Shanghai Customer said this U.S.-China trade war indeed worries them, "if the prices are getting higher, we may buy fewer American imported goods", they said.
China welcomes foreign investors, but localization is key for sustainable growth
With the growing number of Chinese middle-income families, foreign supermarkets and retailers including Costco and Walmart are battling to win over China’s high-end consumers. But experts say Costco faces a very different market in China compared to the U.S.. In China most city dwellers prefer shopping more frequently and haven’t embraced bulk-shopping habits.
A Shanghai resident told CGTN that if the service at Costco is good, he would be willing to go there regardless of the prices.
China says it always welcomes foreign companies and investors, but the fortunes of these overseas retailers in China will largely depend on their strategies in adapting to local consumer preferences.
So if anyone in Shanghai wants to shop there, they’d better pick another day.
(CGTN)
