Costco Gets China Right!

Costco’s August 27 launch in China could be the best China marketing entry of all time! HBS should do a case study on Costco.

Costco did all the right things right, then tirelessly executed on its strategy. First, Costco has run a Tmall store for the last five years, so it had incredible data on its members—and that eliminated the guessing on which products to showcase. Second, Costco left no stone unturned and applied fanatical focus to detail on its products, selection, vendors, licenses, certifications, and everything necessary to run a world-class operation in China. At the grand opening, Richard Chang, Costco’s senior VP for Asia, walked me through the mountains of details and compliance they tackled to bring the first warehouse to life.

Third, Costco built a highly energized and dedicated following of local citizens who were at their keyboards, waiting to sign up for memberships (Rmb299, a slight discount vs. the U.S.). Over a third of my Shanghai team are new Costco members! Not surprisingly, 100% of the new members visited a Costco warehouse in Seattle when they were at AMMEX HQ. Every AMMEX China team member wanted their first stop to be Costco. 

Last, Costco stayed true to its mission and delivered a member experience that was consistent with its warehouses around the globe. Yes, there was localization of product, but the underlying commitment to its members of delivering value was front and center. Hot dogs could be had at the food court—and rotisserie chickens were stacked high and deep!

In the face of tariffs, trade war, and uncertainty, Costco applied long-term vision. The company high-stepped all the noise on Twitter and executed on its long-term strategy to share the Costco experience with the people of China. Yeah, the first day was a bit crazy, and the warehouse had to close at 2 p.m. because there was so much traffic that it brought the township to near gridlock. But once again they did all the right things by focusing on safety and ensuring that new members would soon get to experience Costco China.

Now, hurry up and build a second warehouse in Pudong!