The Fool chats with Costco's new CEO, Craig Jelinek. Craig first joined the company as a warehouse manager in 1984, quickly rising to become a regional manager and then through various executive posts over the years. He became president and COO in 2010, and took over from longtime CEO Jim Sinegal in January 2012.
As enticing as the massive Chinese market may be to many companies, Costco isn't tempted -- at least not now. The company is doing well in other Asian locations, but has no plans for China at the moment, especially after seeing other U.S. retailers struggle there.
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Analyst: Everyone has to be intrigued by China, just because it's such an opportunity. You guys haven't explored that yet. I think PriceSmart had actually licensed to China and pulled out within a year. What's your feel on the space? Have you guys looked at it and decided it's not an opportunity right now, or is it you're focusing enough on other opportunities like South Korea and Japan, it's just not on your horizon yet?
Craig Jelinek: Well, we've got us a pretty good business going in Asia where we're at right now. There's lots of opportunities in the countries, in Japan, in Korea, in Taiwan. We're looking at France and Spain; we'll get that going.
You have to be careful. We've always been very conservative not to stretch the management so far where we can't run the business the way we choose to run it. I don't see us...
China will always be there. China will be there 15 years from now, 10 years from now. At some point we'll probably look at the opportunities in China. We've been over there, we've looked at it, but right now we think we've got enough in Asia going on right now with Taiwan, Korea, and Japan, and within the U.S. where we can do just fine if we're not in China.
Austin Smith: There are a lot of retailers that have gone to China, certainly, with international experience and they've done very poorly over there. I know Best Buy has done very poorly, Wal-Mart's had a tough time. Why do you think it is that big, ordinarily successful retailers have a really tough time with China?
Jelinek: You know, I think that's a pretty good question. That's one reason that...
It's not fair for me to say, because I haven't spent a lot of time over there. I think when I go in there they all kind of look the same, so maybe you can't tell what's different about them, just because they're from the U.S.
But that's one of the reasons that... we're very successful in Korea, Japan, Taiwan, so we might as well go there. If we knew somebody that was really successful over in China, but we haven't seen that at the moment. More people seem to be cutting back than going in there, which, to me, that's kind of a red flag.