For K-Food, Expanding into Costco U.S. Requires More Than Food Safety—Social Compliance MattersJay Lee’s U.S. Market Report (179)

Food safety compliance alone may not be enough—suppliers can still face barriers during Social Audits

Korean exporters targeting Costco should begin strengthening ESG documentation and social compliance systems

Jay Lee, President, J&B Food Consulting

Recently, we have been consulting with a growing number of clients regarding Costco’s Social Audit requirements in the United States.

Driven by the rapid growth and popularity of K-food, more Korean food companies are exploring opportunities to enter Costco and expand their presence in the U.S. market.

However, even after clearing the first major hurdles—including FDA compliance and food safety requirements—suppliers may encounter another significant challenge: social compliance audits based on Costco’s Code of Conduct (CoC).

Food Safety Is Only One Part of Supplier Compliance

For global retailers, supplier evaluation increasingly extends beyond product quality and food safety.

Traditionally, manufacturers preparing for major U.S. retailers focused heavily on quality assurance and food safety systems such as HACCP, SQF, and other recognized certification programs.

Today, however, supplier compliance may also include broader expectations involving labor practices, occupational health and safety, environmental management, and business ethics.

For Korean manufacturers accustomed to preparing primarily for FDA inspections or food safety audits, this can require an entirely different level of preparation.

A facility may have strong food safety controls and successfully complete negotiations with a U.S. buyer, yet still face difficulties if the manufacturing facility does not satisfy the retailer’s applicable social compliance requirements.

This is why social compliance should be considered early in the Costco entry process—not after the commercial agreement is nearly complete.

What Does a Social Audit Examine?

Costco’s supplier expectations are based in part on its Code of Conduct, which addresses labor, workplace, environmental, and ethical standards within its global supply chain.

Depending on the facility, sourcing arrangement, and applicable audit program, areas of review may include:

Prohibition of forced labor and child labor

Compliance with applicable working-hour and wage requirements, including overtime

Occupational health and safety, including fire protection, personal protective equipment (PPE), and chemical management

Maintenance of accurate time and attendance records

Employee training and workplace safety documentation

Environmental management, including waste and wastewater controls where applicable

Business ethics and responsible supply-chain practices

The important point is that auditors evaluate not only what a company says it does, but whether those practices can be demonstrated through records and actual conditions at the manufacturing facility.

Where Korean Manufacturers Can Encounter Problems

Two areas deserve particular attention for Korean manufacturers: differences in workplace practices and insufficient documentation.

A practice that may be permissible under Korean labor law does not automatically mean that it will satisfy every requirement or expectation imposed by a global retailer or its responsible sourcing program.

Working hours, overtime practices, rest periods, and payroll records therefore need to be reviewed not only against applicable local law, but also against the specific standards required under the retailer’s supplier program.

Documentation is equally important.

Discrepancies in time records, incomplete occupational safety training documentation, missing fire inspection records, or insufficient evidence of corrective actions can become significant audit findings.

In social compliance, an activity that occurred but cannot be properly documented may be difficult to demonstrate during an audit.

When deficiencies are identified, suppliers may be required to implement a Corrective and Preventive Action (CAPA) plan and provide evidence that the issues have been appropriately addressed.

For companies pursuing a major retail account, discovering these problems only after an official audit can cause significant delays and commercial risk.

How Korean Food Exporters Should Prepare

Korean food companies targeting Costco should consider a structured preparation strategy.

First, balance food safety with labor, environmental, and workplace safety compliance.

Manufacturers should move beyond a compliance structure focused almost exclusively on HACCP, SQF, FSSC 22000, or other food safety programs.

The working conditions of employees, occupational health and safety controls, emergency preparedness, and environmental management should receive comparable attention. Management systems aligned with internationally recognized frameworks, such as ISO 45001, may also help companies establish a more systematic approach to workplace health and safety.

Second, conduct a pre-audit Gap Analysis and strengthen documentation.

Before undergoing an official Social Audit, companies should evaluate their current practices against the applicable retailer requirements.

Payroll and attendance records, overtime documentation, employee training records, fire and emergency inspection records, chemical management procedures, workplace safety documentation, and environmental records should be reviewed carefully for both completeness and consistency.

Auditors rely heavily on objective evidence. Policies and verbal explanations alone are rarely sufficient if the supporting documentation and actual workplace conditions do not align.

Social Compliance Is Becoming Part of Global Competitiveness

The sustainable global success of K-food will not depend solely on taste, packaging, or product innovation.

Increasingly, global retailers and consumers also care about how and under what conditions a product is manufactured.

A manufacturer that can demonstrate a transparent, safe, responsible, and well-documented production environment may be better positioned to build long-term relationships with major global retailers.

For this reason, Costco’s Social Audit requirements should not be viewed simply as another regulatory burden.

They can also serve as an opportunity for Korean manufacturers to strengthen internal systems and align their operations with the expectations of global supply chains.

For K-food companies seeking sustainable expansion in the United States, food safety may open the door—but responsible sourcing, workplace compliance, and documented social accountability can be equally important in keeping that door open.