China Food Imports: Costco Enters into Agreement with Alibaba

On 14 Oct 2014, Costco, the second biggest warehouse retailer in United States, officially launched its business in China. Costco will cooperate with Alibaba, the world’s largest ecommerce group.

By reaching a strategic partnership with Alibaba in China, products from Costco will become available to all Tmall users (a subsidiary to Alibaba). At same time, Costco also agreed to join Tmall in its annual shopping festival by offering special prices down to 50% percent off. These moves have clearly indicated Costco’s eagerness to explore China’s market potential. "Costco sees tremendous growth opportunities in China, especially in light of Chinese consumers' increasing appetite for imported products,” said Costco Executive Vice President Jim Murphy.

To facilitate import trade, Tmall is implementing its bonded warehouse model to help foreign retailers introduce their products into China and has received strong backing from the Chinese government. The business model, which automatically transfers the order, payment and logistics information to Chinese Custom’s electronic ports, will allow Costco to deliver its products to bonded warehouse in six pilot cities. The shipment will made once consumers orders are place. Using this model only import tax on personal postal parcels will be charged allowing retailers to offer fairer prices to Chinese consumers.