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:
- 1Podemos: Spanish indignation in Brussels’ corridors of power | euronews, reporter
- 2Israel announces it will seize 400 acres in West Bank | euronews, world news
- 3Watch: Angry mob throw Ukraine MP into rubbish bin | euronews, world news
- 4Iraq: Baghdad rally held against US ‘occupiers’ | euronews, world news
- 5Japan sounds bluefin warning, calls for 50% catch cut | euronews, world news
- 6Now is ‘right time’ for Catalonia independence vote, says Mas | euronews, world news
- 7New car offers freedom for disabled drivers | euronews, hi-tech
- 83D printing: a driving force in design and engineering | euronews, hi-tech
- 9Rise of the machines | euronews, futuris
- 10Ukraine: Donetsk rebel weapons factory blows up | euronews, world news
- 11Young Yazidi girl escapes Islamic State kidnappers | euronews, world news
- 12Algeria: ISIL offshoot releases video threatening French hostage Hervé Gourdel | euronews, world news
- 13EU leaders name Donald Tusk European Council president | euronews, world news
- 14Official ‘executed by flame-thrower’ over links to Kim Jong-un’s purged uncle | euronews, world news
- 15Vatican rocked by another paedophilia scandal | euronews, world news
- 16#Indyref Live: Scotland votes on independence from UK | euronews, world news
- 17Thousands ‘evade’ Ebola lockdown in Sierra Leone | euronews, world news
- 18British Muslims’ message to ISIL: Not in my name! | euronews, world news
- 19Iceland puts on a show as two of its volcanoes spew out lava | euronews, world news
- 20The business benefits of EU chemical regulation | euronews, business planet
Wires > Business
- 13:25 CET China takes boldest step yet to lift housing market, economy
- 13:24 CET News Corp to buy real estate website operator Move for $950 million
- 13:23 CET UK economy picks up in second quarter, recovery pace revised higher
- 13:06 CET EU says Luxembourg tax agreement with Fiat may be state aid
- 12:52 CET News Corp to buy real estate website operator Move for $950 million
- 12:37 CET FTSE edges lower, Next weather warning hits retailers
- 12:34 CET Euro zone inflation slows in Sept, weakens euro vs. dollar
- 12:22 CET Exclusive: NY targets Commerzbank employees in sanctions accord -…