Tesco China. (Photo Credit: Tesco)
UNITED KINGDOM
Friday, May 30, 2014, 00:40 (GMT + 9)
Combining Tesco’s best-in-class retail practices, international sourcing and multichannel capabilities with the strong local knowledge and brand that belong to China Resources Enterprise, Limited (CRE) a joint venture has been created.
“We’re very pleased to have completed this historic agreement. The partnership creates a strong platform in one of the world’s largest markets. We can now combine our strengths to build a profitable multichannel business, offering our customers in China the best of modern retail,” pointed out Tesco CEO Philip Clarke.
For his part, CRE CEO Hong Jie welcomed the agreement as ‘a major milestone for their business development’ and expressed that this partnership combines the strength of both parties and enables the joint venture to become the leading multi-format retailer in Greater China, through improved operations, better growth and enhanced profitability.
As a result of the partnership deal CRE, with almost 3,000 stores, will own 80 per cent of the new chain and Tesco, which has 131 outlets, will possess a 20 per cent stake, BBC News reported.
According to figures from research group IGD, China is the world's biggest market for food and groceries with an annual value of more than one trillion dollars and is forecast to grow by 50 per cent over the next three years.
The British firm, which earlier this year announced a joint venture with Trent Limited, part of India's Tata Group operating the Star Bazaar retail business in India, has also been eyeing the Indian market - which is forecast to witness rapid growth in the coming years.
Tesco, which is the world's third biggest supermarket chain behind Wal-Mart and Carrefour, stressed it would invest around GBP 85 million (EUR 104.6 million) in the Indian joint venture.
On the other hand, the London-listed company has been facing intense competition in its home market and decided to close its failed US division Fresh & Easy and to exit from the Japanese territory.
In Turkey, meanwhile, Tesco acknowledged this week that it was unable to find partners to improve the financial situation of its Turkish Kipa unit.