Don’t Discount Costco’s Chances in China
Many foreign retailers have struggled. The U.S. warehouse giant is better placed to thrive than most.
Card-carrying members of the U.S. retail experience.
Photographer: HECTOR RETAMAL/AFP/Getty Images
China has been a graveyard for many foreign retailers, which frequently arrived with grand hopes only to pull back after years of debilitating struggle. Carrefour SA sold 80% of its operations in June after more than two decades in the country, Tesco Plc folded its business into a joint venture in 2013, and Metro AG is seeking a buyer for its Chinese unit. Costco Wholesale Corp. has more reason than most to believe it can buck the trend.
It’s an inauspicious time to enter the world’s second-largest economy. Growth has slowed, and the trade war has made the environment less hospitable for overseas companies. China’s plan to set up a corporate social credit system will raise compliance costs and could put some firms out of business, the European Union Chamber of Commerce in China said Wednesday. At the same time, online shopping is increasingly taking market share from bricks-and-mortar retailers. None of that stopped Costco’s first Chinese outlet, in Shanghai, from being mobbed on its opening Tuesday.