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.
- 1euronews live TV - News | euronews : the latest international news as video on demand
- 2International breaking news | euronews online world breaking news in video
- 3Caught red-handed: the Russian Major fighting in Ukraine
- 4Video footage shows massive explosion in Tianjin, China
- 5Ukraine puts top Russian general Gerasimov on ‘most wanted’ list
- 6Why World Elephant Day matters
- 7Latest News Bulletin
- 8Who came out top in the US Republican television debate?
- 9UK: at least 7 dead after plane crashes into road in Brighton
- 10Snowden, Assange and Manning statues unveiled in Berlin
- 11Virginia:TV journalist and cameraman shot dead live on air
- 12ISIL militant group claims to have killed Croatian hostage in Egypt
- 13Earth Overshoot Day…Pushing Mother Nature too far
- 14Windows 10, three weeks on: the good, the bad and the ugly
- 15International news | euronews, latest international news
- 16Bringing the trolls out of the dark: Russian ‘troll’ awarded 1 rouble damages
- 17As ‘Daily Show’ Jon Stewart’s tenure ends, scholars say goodbye to their research topic
- 18Momentum for Mars: Astronauts say mission is inevitable
- 19European Union News | euronews: latest breaking news and headlines about European Union
- 20Scientists find sinkhole cave under Mexico’s Kukulkan Castle Pyramid
Wires > Business
- 11:07 CET China fears linger as focus on Fed sharpens
- 10:20 CET Despite raids, Macau pawn shops still help flout currency rules
- 09:36 CET Suzuki Motor to buy back VW stake as tribunal settles long feud
- 06:54 CET China is growing at ‘reasonable’ pace despite pressures – Premier…
- 01:11 CET Half of UK manufacturers worried by China, some review plans – EEF
- 21:49 CET Fed’s Fischer sees inflation rebound, allowing gradual rate hikes
- 20:51 CET ECB’S Constancio says policies firming inflation against oil…
- 20:17 CET Bank of England stance on rates unchanged by China – Carney