The company might expand the store count after seeing how the first store performs.The stock closed about 5% higher on Tuesday after the massive response from Chinese customers. Also, the store opened during the US-China tariff war.Costco already had an online presence in China through its partnership with Alibaba. The overwhelming response to the Shanghai store forced it to shut down early. Meanwhile, the renewal rates were 88.3% worldwide.The membership-based bulk selling model isn’t new in China. W ith the Moutai now running dry, is the honeymoon period coming to an end for China’s first Costco?. The stock has risen 43.5% YTD (year-to-date). Retail giant Costco is planning to open a second store in Shanghai after its first store in the city saw a blowout grand opening in August. The prolific response was a surprise. The signing ceremony between Costco and Shanghai Pudong KangqiaoAmerican wholesale giant Costco is opening its first store in the world’s second-biggest economy, even as foreign retailers like Tesco and Lotte scale back their businesses in China due to market barriers and disappointing sales.Costco inked an agreement with state-owned Shanghai Pudong Kangqiao (Group) on Wednesday to set up the headquarters of its Chinese business in Kangqiao, an area in Shanghai’s Pudong district,Prior to the news of Costco’s planned bricks-and-mortar venture, the US retailer has targetted Chinese consumers for several years via Tmall, the online marketplace of e-commerce giant Alibaba. Last week, the outlet opened in suburban Shanghai to ravenous crowds who forced the store to shut down early on its first day with their ferocity. At the end of the third quarter, the membership renewal rates in the US and Canada were 90.7%. The company’s successful business model is reflected through its high membership renewal rates. The company plans to open another store in one and a half or two years.Costco opened three stores in Australia in four years. The company opened six stores in Japan in five years. An account from Kuaxiaopin.net says Costco will open its first Chinese physical store in Shanghai’s Minhang district in the spring of 2019. Costco China Investment penned a deal with Shanghai Pudong Kangqiao Group two years ago to set up Costco's headquarters in Kangqiao Town. Customers flooded Costco’s first store in China. Other major foreign retailers have struggled in China and scaled back their operations. So far, the stock has outperformed the broader markets this year. However, the company has a different plan for opening stores in China. After the state-controlled media condemned Lotte Group, fire safety authorities shut down 74 of the Korean retailer’s 99 stores across China over alleged violations within two months.Lotte Shopping entered the Chinese market in 2008 by acquiring Dutch wholesaler Makro’s stores in the country. Costco The wholesale giant, which operates hundreds of warehouses mainly in the US, also has outlets in Japan, Korea and Taiwan.Expect to see Costco in Shanghai, and maybe more citiesCostco appears to be betting that its foray into Chinese retail will fare better than the efforts of some of its global rivals in a market fraught with political risk and hard-to-please consumers.In February 2017, Lotte Group agreed to provide land for the deployment of the American-built Terminal High Altitude Area Defence (THAAD) anti-missile system, which was opposed by the Beijing government. It was planning to open another Shanghai store with a proposed opening at the end of 2020 or early 2021, Chief Financial Officer Richard Galanti said in September last year.
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