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InterNations
China 2.0

Costco Ambitions In China, Lessons For Foreign Retailers

E-commerce, local partnerships and logistics are among the keys to success for foreign retailers trying to tap into the massive Chinese consumer market.

Mountains of sales to be sorted
Mountains of sales to be sorted
Lao Yingying

BEIJING — U.S. warehouse retailer Costco continues to push its way into China, most recently by inking partnership deals with online Chinese retailers JD.com and Ymatou.com.

The agreements, which went into effect last month, are the latest in a series of ambitious moves by Costco, which made its successful debut in China last October by stationing itself on Alibaba's Tmall International, China's No. 1 e-commerce platform.

Costco's high-profile interest in China is no doubt being encouraged by the fast growing number of Chinese shoppers looking more and more to buy foreign goods directly online. China's Ministry of Commerce estimates that China had 20 million foreign website shoppers in 2014, up from 18 million a year before. Together they spent approximately 1 trillion RMB ($161 billion). By 2016, China's cross-border import and export volume is expected to grow to 6.5 trillion RMB ($1.047 trillion) with an annual growth rate above 30%.

Chinese authorities announced last August that they wanted to establish a new legal framework for cross-border commerce to include preferential tariffs, logistics, payment and foreign exchange. As such they are hoping to set up a favorable environment for boosting online retail development.

At the annual session of the National People's Congress, in March, Chinese Premier Li Keqiang introduced an Internet Plus strategy — a scheme aimed at promoting the Internet-powered sector so as to boost and transform China's economy, where growth has begun to slow. "I'm most willing to promote the new e-commerce...because they create employment and stimulate consumption," he said, referring to both Chinese and foreign-owned electronic vendors.

According to one analyst, while 2014 was the debut for many foreign retailers opening an online presence in China, 2015 will be their real breakout year. It has been reported that several e-commerce firms have experienced initial setbacks in the Chinese market, which makes choosing the right partner particularly crucial.

For Costco, an e-commerce giant like Alibaba is a safe bet as evidenced by the quasi-monopoly share enjoyed in the buying bonanza that took place last Nov. 11, Singles' Day, a Chinese holiday that has become the largest online shopping day in the world.

Some foreign retailers that tried to test the water in China by injecting capital into less famous Chinese online platforms have had disappointing results. Thee years ago, for example, Macy's invested $15 million in Jiapin.com, an online fashion vendor specialized in global luxury brands. As part of the deal it authorized the Chinese firm to be its exclusive partner in China. The relationship, however, appears to be plagued by problems. Three years on Jiapin has yet to display any Macy's goods on its site.

Macy's failure isn't an isolated case. A deal between Neiman Marcus, another U.S. upscale retailer, with Mei.com, a flash-sales retailer for designer fashion, also wound up as a fiasco. In both cases the U.S. companies found it very difficult to adapt to their Chinese partners' business management and operational approach.

Costco has opted to go with behemoths such as Tmall.com and JD.com as partners: with their overwhelming dominance in online traffic and accurate customer targeting that no foreign retailer can ever expect to match on their own in the Chinese online marketplace.

Fickle customers

Apart from choosing the right channel, foreign retailers keen to cash in on Chinese shoppers also need reliable logistics chains. That means having a regular express delivery force and a higher service standard for the growing market. Chinese shoppers are famous for being particularly discerning over the delivery of their purchases. So far most foreign retailers have failed to adapt to the particular shrewdness of Chinese shoppers.

Costco, for its part, has given its delivery task to SF Express, a Taiwanese transporter offering tailor-made services to overseas retailers for their business-to-consumer (B2C) market in China. Costco passes the merchandise to SF Express in Taiwan, where the U.S. retailer owns brick and mortar stores, while the latter handles customs clearance and domestic delivery. Up to now, SF Express is the only courier that offers such a full-range logistics service specialized in foreign commodities for China.

Other global couriers may have an advantage in that they have complete worldwide distribution networks and can move products around faster. But they tend to charge exorbitant rates and aren't specialized enough to meet the more particular needs of cross-border retailers.

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Society

For Seniors, Friendship May Be More Important Than Family

Even if the aging and elderly tend to wind up confined to family circles, Argentine academics Laura Belli and Danila Suárez explore the often untapped benefits of friendship in our later years.

Photograph of two elderly women and an elderly man walking arm in arm. Behind the, there are adverts for famous football players.

Two elderly women and a man walk arm in arm

Philippe Leone/Unsplash
Laura F. Belli and Danila Suárez Tomé

Updated Dec. 10, 2023 at 10:10 p.m.

BUENOS AIRES — What kind of friendship do people most talk about? Most often it is childhood or teenage friendships, while friendships between men and women are repeatedly analyzed. What about friendships among the elderly? How are they affected when friends disappear, at a stage when grieving is already more frequent?

Argentines Laura Belli and Danila Suárez Tomé, two friends with PhDs in philosophy, explore the challenges and benefits of friendship in their book Filosofía de la amistad (Friendship Philosophy).

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They consider how friendships can emerge later in life, in profoundly altered circumstances from those of our youth, with people living through events like retirement, widowhood, reduced autonomy or to a greater or lesser degree, personal deterioration. All these can affect older people's ability to form and keep friendships, even if changes happen at any stage in life.

Filosofía de la amistadexplores the place of friendships amid daunting changes. These are not just the result of ageing itself but also of how one is perceived, nor will they affect everyone exactly the same way. Aging has firstly become a far more diverse experience, with increasing lifespans and better healthcare everywhere, and despite an inevitable restriction in life opportunities, a good many seniors enjoy far greater freedom and life choices than before.

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