Costco, a U.S.-based warehouse club second to Walmart, will build its flagship store and South China Headquarters in Longhua District, according to an agreement signed between the Shenzhen government and Costco.
Founded in 1983, Costco specializes in retail merchandising, operations, e-commerce and travel. The retail company allows its members to obtain memberships to purchase bulk goods, food, electronics, household goods, jewelry and office supplies.
It ranks 33rd among Fortune Global 500 enterprises in 2020 and 76th in World Top 100 Most Powerful Brands in 2020. It is now operating 785 stores in 13 regions around the world and has 99.9 million members.
The project, Longhua Costco Galaxy Project, is estimated to cost 9 billion yuan (US$1.31 billion), Yao Huiqiong, president of Galaxy Holdings Group, a partner of Costco, said at the signing ceremony.
Costco will set up its South China headquarters and a flagship store, while Galaxy will set up its industrial headquarters and business property headquarters inside the business facility that will comprise retail space, offices and hotel businesses.
Costco opened its first physical store in China in Shanghai last August. It was so popular that it had to shut down early on its first day because it had quickly reached capacity with crowds of shoppers. Police were deployed to restore order and manage traffic jams around the store.
Costco has had an online presence in China for six years through a partnership with Chinese e-commerce firm Alibaba.
Costco’s business model is to collect membership fees from its members and then basically sell items in bulk at rock-bottom prices. It makes most of its operating margin entirely from membership fees.