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  • Home > News > Details
    US retailer giant Costco defies calls for decoupling
    Costco’s first store causes sensation, highlights irresistible Chinese market for firms

    US retailer giant Costco on Tuesday opened its first brick-and-mortar store on the Chinese mainland much to the delight of Chinese consumers, even as US officials are calling on companies to withdraw from China, laying bare the reality Washington fails to grapple with that the US simply cannot decouple from the Chinese market.

    After five years selling goods online in the Chinese mainland, the US warehouse retailer on Tuesday morning officially opened its first physical store in the Shanghai suburban Minhang district, near several international schools, and drew thousands of residents who flooded the store causing chaotic scenes. Some even traveled hours to take a first look at the new Costco store.

    "I heard that Costco was opening this brick-and-mortar store and decided to come and see, but I didn't expect such chaos on the first day," a resident from the Qingpu district in Shanghai, who has been a customer of Costco's online store, told the Global Times.

    An employee told the Global Times that as many as 130,000 people had signed up for store memberships as of Monday night.

    Lesson for the US

    Costco's move and the reaction from Chinese consumers underscored the room for cooperation between China and the US despite escalating tensions and, more importantly, presented a valuable lesson for the US administration on rethinking its approach to China, analysts noted.

    "This shows the reality that US companies cannot resist the massive Chinese market of 1.4 billion people, no matter what US officials say," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation attached to China's commerce ministry, told the Global Times.

    US officials have openly called for decoupling from China, as the trade war continues to escalate. In a bizarre tweet on Friday, US President Donald Trump "ordered" US companies to "immediately start looking for an alternative to China."

    While Costco's high-profile move on Tuesday directly defied Trump's call for decoupling, it is not the only US company that sees huge potential in the Chinese market and its rising middle class with considerable spending power.

    Prior to Costco, US electric carmaker Tesla also moved in the opposite direction to the US government in constructing its first gigafactory outside of the US, also in Shanghai. US biotech firm Thermo Fisher Scientific also announced last week that it would invest in a new production base in Suzhou, East China's Jiangsu Province.

    There are many more US companies quietly investing in China to avoid attention during this sensitive time in China-US relations, but the fact remains that the Chinese market has the biggest potential, said Song Guoyou, director of Fudan University's Center for Economic Diplomacy. "There is no more room for market growth in Europe and the US," he told the Global Times.

    More opening

    Overall, China attracted 478.33 billion yuan ($66.8 billion) in foreign investment in the first half of 2019, up 7.2 percent year-on-year, according to the Ministry of Commerce. There were 20,131 new foreign-funded companies in the country during the period.

    The increasing investment in the Chinese market by US and other foreign companies is also a vote of confidence in China's commitment to further open up its market and improve domestic business conditions, analysts said.

    China has recently announced an array of measures that would significantly expand market access for foreign investors in a wide range of areas from finance to manufacturing. The country is also pushing forward reforms to enhance protection of intellectual property rights and streamline regulations to make it easier for companies to operate in the market.

    "[Costco's move] shows that the Chinese market is still open to foreign companies and will be even more open and Chinese consumers still have a huge appetite for high-quality foreign products and services," Bai said. "It seems many in the US don't want to hear the truth, but I want to stress again: the only right path forward is cooperation not decoupling."

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