(Yicai) May 13 -- Costco Beijing International Business Development is in negotiations with Costco China Investment over their trademark dispute, a representative of Costco Beijing told Yicai today, adding that a settlement is likely to be reached and that Costco Beijing will continue to develop in the Chinese market.

Their dispute began in April when Costco China issued a statement claiming that the registered trademark “Costco" was being misused. It identified Costco Beijing as one of the entities responsible and accused it of “spreading false information and misleading the public.”

Costco Beijing responded by filing a civil lawsuit against Costco China at the end of April, saying that false claims by Costco China had seriously harmed its reputation, business credibility, and operations.

The shareholders behind the two companies are both named Costco Wholesale International, and they are registered in the US states of New York and Nevada as independent legal entities. But according to information on business data platform Qichacha, the registered address of the shareholder of Costco China has changed from Nevada to New York.

The person from Costco Beijing said the case has now entered the judicial process and the two parties are in negotiations and are not at liberty to disclose more details. 

The person pointed out that the Chinese market holds vast potential, and membership stores are the most profitable business model in brick-and-mortar retail, so the company will not abandon its plan to open stores in China, but whether to retain the “Costco” brand name will depend on the outcome of the talks. As of press time, Costco China has not responded. 

Costco Beijing previously announced plans to open stores in six major cities in China: Beijing, Chengdu, Guangzhou, Hefei, Tianjin, and Wuhan. It has removed this information from its official platform, and Costco China has also deleted the statement it released in April.

Retail analyst Shen Jun said that regardless of the outcome of the dispute, big-box stores will remain a fiercely contested area for traditional retailers. Besides well-known brands such as Costco and Walmart-owned Sam’s Club, new companies are expected to join the field in the future. 

Competition in the space will only intensify, Shen said, which will test the supply chain management and product development capabilities of the brands involved.

Editor: Tom Litting