Sam’s Club expands rapidly in China

Sam’s Club, the warehouse retail chain operated by Walmart, is expanding rapidly in China, where it now operates 63 stores nationwide since entering the market in 1996. Growth has accelerated in recent years, with 10 new stores opening last year alone. Some flagship stores in major cities such as Shenzhen and Shanghai generate annual sales of about 3 billion yuan, or roughly 660 billion won.

An annual membership for in-store shopping or online orders costs 260 yuan, or about 57,000 won, even though most large Chinese retailers do not charge fees. Still, customers say the value lies in reliability. “Even with the fee, I trust the products sold here,” said a shopper surnamed Wang.

That trust in quality is the key draw for both Chinese and foreign customers. While China’s online retail and delivery platforms are highly developed, many consumers say it can be difficult to identify dependable products among the vast selection. At Sam’s Club, merchandise is widely regarded as meeting consistent standards, easing purchasing decisions. The retailer also limits its assortment to about 4,000 items, setting it apart from conventional hypermarkets that carry tens of thousands.

Prices are not especially low. At a store visited on April 4, steak-grade beef was priced at 120 to 180 yuan per kilogram, more than 30 percent higher than locally sourced beef at typical supermarkets. The premium reflects a mix of imported goods and globally sourced private-label products, as well as a strategy that prioritizes quality over price. Differences in processing standards, lingering skepticism toward local fresh food and the appeal of differentiated products all help sustain demand.

Kang Jung-min, an executive at Hyundai Food, which recently placed butter-grilled squid products in Sam’s Club, said the retailer places less pressure on suppliers to cut prices than major distribution channels in South Korea. The product sells for 49.9 yuan, broadly in line with prices in South Korea after accounting for tariffs and related costs.

At the same time, Sam’s Club is known for its rigorous screening process. Small and medium-sized suppliers must secure product safety certifications and demonstrate supply chain reliability as well as environmental and ethical compliance, a process that can take about six months. “Once we began supplying to Sam’s Club, it strengthened trust in our products when dealing with other Chinese retailers,” Kang said.

● China shifts focus to consumption quality

China’s middle class is increasingly focused on value, seeking a balance between price and quality while also placing weight on the emotional satisfaction of consumption. Sina Finance said middle-income consumers tend to avoid both low-end goods and excessive premium spending, making that balance a central consideration.

Although overall consumption remains subdued, higher-income consumers are not simply cutting back due to limited purchasing power. Many are holding off because they cannot find products that meet expectations at reasonable prices.

For years, Chinese retailers have competed aggressively on price, squeezing manufacturers’ margins. Lower profitability has in turn pressured wages, reinforcing a cycle of weaker consumption.

The Chinese government, which has made domestic demand recovery a top priority this year, is focusing on reversing that trend. Premier Li Qiang last month highlighted expanding and upgrading consumption as a key policy goal, with an emphasis on improving the quality and diversity of services.

Authorities are aiming not just to boost spending but to restore consumer confidence and drive structural change. Recent warnings to sectors such as electric vehicles and food delivery against excessive price competition reflect that approach.

Reuters reported that China is seeking to use consumption upgrading as a driver of industrial upgrading, as it works to offset a property downturn and growing uncertainty in exports.

● Opportunities grow for South Korean companies

Analysts say the push to improve the quality of domestic consumption could create opportunities for South Korean firms. The South Korean government has also stepped up support for consumer goods companies entering China amid improving bilateral ties following recent summits.

With global demand for K-food and K-beauty rising, the combination of China’s policy direction and strong brand appeal is expected to generate significant synergy.

In the consumer sector, Sam’s Club has emerged as a key channel for entering China’s domestic market. Companies such as Pulmuone are expanding supply through the retailer, while Amorepacific’s body care brand Happy Bath began exporting body wash products to China through Sam’s Club last year. “Sam’s Club is an important platform for building brand recognition and expanding consumer touchpoints in China,” an Amorepacific official said.

Interest from small and medium-sized South Korean firms is also rising. According to KOTRA’s Shenzhen office, applications for its Sam’s Club entry support program increased about 49 percent last year. Exports through the retailer grew from $1.7 million in 2023 to $4.47 million last year.

Yoon Bora, a deputy director at KOTRA’s Shenzhen office, said more South Korean companies in food, baby products and household goods are expected to enter Sam’s Club this year. “Products that clearly offer strong value within their category are more likely to be selected,” she said.