Costco bets on international appetite for first Chinese store , Latest Business News - The New Paper

Costco bets on international appetite for first Chinese store

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SHANGHAI: US retail giant Costco is diving into the thorny area of food retail in China with its first store opening this week, but analysts warn it faces a tough ride as it looks to succeed where a series of international retailers have failed.

The move also comes at a challenging time with Beijing and Washington engaged in a tense trade war that has seen them swop punitive tariffs on hundreds of billions of dollars of two-way trade.

China has proved a brutal battleground for overseas food retailers in recent years, with many failing to understand consumer habits and tastes as well as local competitors building a stronger presence.

In June, French supermarket giant Carrefour agreed to sell 80 per cent of its China business to domestic giant Suning after repeated losses.

And German wholesaler Metro is in the process of selling its operations to a local bidder, while British grocery giant Tesco pulled out of the Chinese market in 2014.

"The Chinese market is complicated and requires retailers to innovate and localise," said Mr Jason Yu, general manager of market research firm Kantar Worldpanel China.

But Costco thinks it can avoid the malaise that has plagued others with its "no-frills approach" and bulk-buy strategy. The retailer will throw open its doors tomorrow, five years after making its first online foray into China. - AFP