There are certainly issues within the region that should be taken into account by Costco and other retailers looking to consider international expansion. First of all, retailers need to be aware that the Chinese company Alibaba has a stronghold on the market. The smart and effective approach would be to create a partnership instead of a forced entry into the market. Secondly, the region offers limited investment opportunities. Foreign companies will not have the opportunity to purchase large amounts of real estate like foreign companies are known to do in the United States. Also, there is a huge difference between the rural and urban areas within the area. “The large gap in economic development and industrial structure between urban and
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The Chinese or Asian market has a very high entry barrier due to the fact that logistically, culturally, and geographically the area presents the most challenges. “Every company making this move faces an array of choices: It can acquire an existing player, build an alliance with an existing player or start greenfield operations, either alone or in partnership with another player.” The entry mode of an organization looking gain popularity in an Asian market must be planned and executed meticulously.
Costco Wholesale took a nimble approach by linking up with local retailer Alibaba. “U.S. retailer Costco Wholesale Corp plans to open an online store in China using Alibaba Group Holding Ltd's fast-growing Tmall online marketplace, entering the country's booming e-commerce market to combat slowing sales at home (Ramakrishnan, 2014).” The organization will also have to focus on getting representative offices established. The representative office established in China will effectively act as a liaison office for Costco Wholesale; ensuring operations remain within the legalities of the country. The representative office will also develop business partnerships and ensure the company is being portrayed in the correct manner.
The Chinese or Asian market has a very high entry barrier due to the fact that logistically, culturally, and geographically the area presents the most challenges. “Every company making this move faces an array of choices: It can acquire an existing player, build an alliance with an existing player or start greenfield operations, either alone or in partnership with another player.” The entry mode of an organization looking gain popularity in an Asian market must be planned and executed meticulously.
Costco Wholesale took a nimble approach by linking up with local retailer Alibaba. “U.S. retailer Costco Wholesale Corp plans to open an online store in China using Alibaba Group Holding Ltd's fast-growing Tmall online marketplace, entering the country's booming e-commerce market to combat slowing sales at home (Ramakrishnan, 2014).” The organization will also have to focus on getting representative offices established. The representative office established in China will effectively act as a liaison office for Costco Wholesale; ensuring operations remain within the legalities of the country. The representative office will also develop business partnerships and ensure the company is being portrayed in the correct manner.