Crazies, fights and shouting: welcome to the opening day of Costco in China



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The opening of the first Costco store in China, in the commercial capital of Shanghai, has been a theater of chaos. Customers waited in line for hours to enter the store when it opened, dodging under the rolling door that was coming up from the floor.

They fought over Birkin bags and Moutai liquor. They struggled for detergent and grabbed a piece of pork with their bare hands, even though the butcher was trying to cut it. There was a three hour wait for a parking spot, and sometimes more in the queue for the check-out.

In the afternoon, the store was in such chaos that he had to close early. "Please, do not come," Costco said in an alert sent to members, who paid $ 28 to sign up for a year.

Even for the veterans of Black Friday in the United States, the scenes would have been extraordinary.

Beyond the chaos, they illustrated an important political point. The Chinese and American economies are inextricably linked. Chinese buyers want American products, especially if they are cheap, while US companies want Chinese buyers.

President Donald Trump a week ago ordered US companies to leave China without the power or the opportunity to do so.

Chinese state media responded enthusiastically by pointing out some of the big US companies, including Costco, that do exactly the opposite.

The nationalist newspaper Global Times, which often reflects the ideas of the ruling Communist Party in foreign policy, said Starbucks and Walmart were expanding, Tesla is expected to produce model 3 cars at its Shanghai plant by the end of the year. The head of Coca-Cola said that he "must not give up" China.

"It is a beautiful dream awakened by US President Donald Trump that US companies are abandoning China," said Liang Ming, a researcher at the China Academy of International Trade and Economic Cooperation.

If the retail landscape in the US has created winners and losers, the differences are even more striking between companies that do it in China and others.

Home Depot closed its last stores in 2012. Best Buy acquired a majority stake in a Chinese electronic chain in 2006, and then withdrew from China eight years later.

Walmart has been in China since 1996 and has grown steadily through traditional stores and a partnership with the Chinese e-commerce platform JD.com.

Retail analysts said Costco was a darling of the retail business that outperformed its international development competitors, because of the company's measured and thoughtful approach to each and every country in which he enters – and his long game before officially opening a new store.

Five years ago, Costco partnered with Alibaba, China's leading e-commerce platform, which allowed big box stores to gain legitimacy with Chinese buyers, said Mark Cohen, director retail studies at Columbia Business School. And even after Alibaba offered a platform to Costco, Costco took his time, said Cohen, waiting years to prepare for his "big opening day, during which thousands of people presented themselves ".

"They built a link – a very powerful link – between what they are and what they do, and the Chinese consumers who happily signed up as subscribers and introduced themselves. "said Cohen.

In a statement, Costco said that at the opening of its doors in Shanghai, the store "has met a record number of members wishing to shop with us.We work closely with local authorities to control traffic flows and ensure a smooth transition to our new warehouse. "

In addition to Costco's 543 stores in the United States and Puerto Rico, Costco says it has opened stores in 11 other countries. It has 100 branches in Canada, 39 in Mexico, 29 in the United Kingdom, as well as in Taiwan, Japan, Australia and elsewhere. The company employs 163,000 full-time and part-time people in the United States and 243,000 worldwide.

But this success is not enough to attract a Chinese audience, say the experts. Walmart, for example, learned that his model was not reproducible everywhere when he had to withdraw from Germany 13 years ago. In order for Costco to maintain such an interest in China, it will have to tailor its choice specifically to this new market.

"Target went to Canada and it did not work," said Charlie O. Shea, vice president of Moody's. "Canada literally goes across the border, going from the United States to China does not go from the United States to Canada, there are huge differences there."

O Shea explained that Costco can afford to test a Chinese expansion, unlike retailers who barely hold on. Growing slowly does not involve many risks, but it can be very profitable to "throw objects on the wall and see what is stuck".

"They went there and chose this site [in Shanghai] with a lot of thought, and look what happened, "said O. Shea. They were congested. If anyone can succeed in this market, it's Costco. "

This article was written by Anna Fifield and Rachel Siegel, Washington Post reporters.

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