Tesco and China Resources Enterprise (CRE) have announced they have signed a Memorandum of Understanding to combine their Chinese retail operations.
The Hertfordshire-based UK supermarket already has a substantial presence in China, but has struggled in running disparate subsidiaries in other east Asian countries, including Taiwan, where it eventually gave up its market share in a deal with French grocer Carrefour.
But this new deal will be seen by shareholders as a positive step toward greater levels of integration into the Chinese market, with the potential for over 3,000 outlets to be combined under the arrangement.
A statement from Tesco read: “The intended partnership follows a series of highly successful joint ventures between CRE and other multinational corporations and is consistent with Tesco’s stated strategy of focusing on profitable routes to growth in fast-growing but less mature markets.”
However, Tesco supermarket has urged caution and said there are still some details to be ironed out before any final contractual action takes place.
