Costco is one of the largest retailers in the world organized in membership warehouse club store. With the domestic market becoming matured and saturated, entering emerging market for company’s long term development might be a choice. Considering China is the fastest growing country with economic growth of 8% in the world, and during the "12th-five year plan" period, the scale of retail sales maintaining stable growth to an average annual growth rate of 15%, and China has surpassed the United States as the world’s largest food and grocery retail market according to new research from the Institute of Grocery Distribution (IGD),which means the great room for potential development. The purpose of this assignment is to propose a viable market entry strategy for setting up operation focusing on food area in China market which based on SWOT analysis and competitive forces analysis about advantages and disadvantages of Costco in China.
In looking at the SWOT analysis, the main strength of Costco might be its comparatively low-price in high quality、wisely chose and organic food product to China market which is supported by low margin profits、bulk-packaged goods、high volume sales from a single vender(Wikipedia,2012) and private label products. Resulting a 30% lower price on average compared to the largest supermarket. The prestigious brand of Costco can also contribute to the business establishment. The well membership with its customers provides the company with a source of stability. As for the weakness, Costco doesn’t carry multiple brands or varieties in order to save costs while it may also resulting in the loss of customers. For example, a typical Costco store stocks 4,000 types of items while Wal-Mart stocks more than 100,000. Besides, as a wholesale corporation, Costco’s suburban locations an expensive membership fees might conflict with Chinese consumption custom.