Nine years after arriving there, British supermarket giant Tesco is to fold its unprofitable operation into a state-run company as a minority partner.
It is in now talks to team up with China Resources Enterprise.
Tesco would combine its 131 outlets with CRE’s Vanguard unit, which operates almost 3,000 stores across China and Hong Kong, taking just 20 percent of the venture.
It is the latest setback for the world’s third biggest retailer, which has pulled out of the United States after five years trying to crack the market. It has also quit Japan as it focuses on investing in its British home market.
Retail analysts said the decision was effectively a surrender by Tesco, showing the difficulty foreign companies have in negotiating with suppliers and regulators in a fast-growing but tricky market.
“This may look win-win, but in reality, Tesco is saying ‘We can’t figure out China’,” said one Hong Kong-based M&A banker.
“Tesco has been struggling in China and has been losing money. Similar to Carrefour, they had issues in their home market which they had to resolve,” he added.
Independent retail analyst Nick Bubb felt this was the best solution for Tesco: “Its partner brings formidable scale and local access, so it is hard to fault the logic of the move, even if it reads badly for the initial gung-ho expansion into China under previous management.”
China has proven to be conundrum for many foreign retailers. The world’s biggest and second biggest retailers, Wal-Mart and French retailer Carrefour are for now slugging it out alone, although there have been suggestions that Carrefour too could be seeking a local partner.
Copyright © 2014 euronewsMore about:
- 1euronews live TV - News | euronews : the latest international news as video on demand
- 2Now is ‘right time’ for Catalonia independence vote, says Mas | euronews, world news
- 3Vatican rocked by another paedophilia scandal | euronews, world news
- 4Two container ships collide on Egypt’s Suez Canal | euronews, no comment
- 5Revealed: Europe’s capital cities where it’s hardest to be a foreigner | euronews, world news
- 6Sweden becomes first European nation to recognise Palestine | euronews, world news
- 7European Union News | euronews: latest breaking news and headlines about European Union
- 8International tv news | euronews: European and International tv news bulletin
- 9How nasheeds became the soundtrack of jihad | euronews, world news
- 10Ebola: Six new suspected cases in Spain | euronews, world news
- 11Learning through “serious games” | euronews, learning world
- 12Iceland volcano ‘pollutes Paris’ | euronews, world news
- 13US says ISIL makes $1 million-a-day selling oil – even to enemies | euronews, world news
- 14All you need to know about the Ebola virus | euronews, world news
- 15Mike Tyson: ‘You learn humbleness when you get older in life’ | euronews, the global conversation
- 16What to expect in “The World of Ice and Fire,” George R.R. Martin’s new book | euronews, world news
- 17International breaking news | euronews online world breaking news in video
- 18Philippe Starck: ‘Words like longevity and legacy have become almost avant-garde’ | euronews, the global conversation
- 19US delivers technical aid to Ukraine but warns over security | euronews, world news
- 20euronews apps : iPhone, iPad, Android, Windows Phone 8, Windows 8, Nokia S40, Nokia Asha, Smart TV and Google Glass
Wires > Business
- 06:42 CET Panasonic says to transfer Sanyo TV unit in U.S. to Funai Electric
- 04:20 CET ECB faces test of its own as Europe braces for landmark banking…
- 18:35 CET Areva-Siemens raises claim to $4.4 billion over Finnish reactor…
- 17:14 CET Deutsche Bank lawyer found dead in New York
- 11:02 CET Russian government approves law to clamp down on offshore tax…
- 11:00 CET Greybull Capital buys UK’s Monarch
- 10:31 CET Deutsche Bank lawyer found dead in apparent NY suicide – WSJ
- 09:11 CET Areva-Siemens raises claim to $4.4 billion over Finnish reactor…