“Working with Costco Taiwan is rewarding yet challenging. We learned
about the highest standards of food safety, and creating membership
value. The challenge is having the best price and bringing merchandise
to members in a more efficient way.” – Terence Chen, General Manager,
Taiwan Hsin Lin Enterprises Co
“I don’t think anybody wins with them. They’re
a negative proposition. If you look at what we do
in Asia, though, all things being equal, we’ll still be
able to offer the lowest prices. But if you go the
other way, and you apply these tariffs on Chinese
imports, which are a big part of the US economy,
you start to see problems,” he says.
“Again, all things being equal, I think Costco
still has an advantage. But in both countries, we
look elsewhere to avoid paying tariffs. For instance,
in China, we were looking at bringing in US beef.
If the tariffs are cost prohibitive though, we’ll have
to bring in beef from Australia. In the US, if Costco
thinks Chinese textiles have become cost prohibitive,
they’re going to have to look for a substitute from
Vietnam, Cambodia or Mauritius.
“We’re prepared for the worst-case scenario. But
again, there are costs associated with that. We might
not see the best results for customers, and that’s a
by-product of tariffing being bad for everyone.”
Richard admits that customers will bear the brunt
of the added costs. “We can absorb as much as we
can, but some of that is going to be passed on to
customers because it has to be. They’re the ones who
will feel the negative impact of trade restrictions.
“We hope that won’t happen. From what I’ve
seen, the dialogue between China and the US looks
positive. So, we’ll see what happens. Based on what
we know right now, I’m cautiously optimistic about
the situation.”
EVERYONE’S PART OF THE TEAM
Although Richard focuses on customers throughout
his conversation with The CEO Magazine, he’s
keen to stress that he views everyone associated with
the business to be important to him. It’s the care
Costco shows for these people that Richard believes
has made the company as relevant today as it has
been for decades.
“In my 25 years with Costco, we’ve stayed
relevant because we’ve elevated the quality of life for
our employees and our members in each country that
we’ve been in,” he says. “It’s imperative that between
markets, in every position we hire for, whether you’re
an hourly employee or the director of finance and
accounting, we pay the highest rates for our people.”
Richard maintains this is a way for the company
to retain its competitive advantage. “We get employees
who will see random increases in their pay and
become confused as to why that happened. The
reason though is often our competitors were
beginning to pay similar rates for the same work,
so we want to maintain a gap between us and our
competitors. It’s small things like this that improve
our employees’ quality of life.”
He says he first realised how much these small
shifts in wages were impacting his employees when
one turned up to work one morning driving an
imported Volkswagen Scirocco. “It’s 6am in the
morning, and I looked at this kid, tapped on his
window. He rolled down the window, and it was one
of our junior programmers.
“I had to ask him how he could afford that car.
He said he could because the wages that he earned at
Costco were so good. There are so many employees
like that; one of our warehouse managers told me he
lives in an apartment complex next to a doctor and
a lawyer; he said he would have never dreamed of
that if he didn’t have the wages he’s on.
“This resonates with me, because it means Costco
is making a positive impact on people’s lives. Whether
it’s someone telling me they love Costco hot dogs or
Costco toilet paper, we’re a brand that elevates the
lives of employees and customers.”theceomagazine.com | 47“In my 25 years
with Costco, we’ve
stayed relevant
because we’ve
elevated the quality
of life for our
employees and for
our members in
each country that
we’ve been in.”
Interview | INSPIRE