Aug. 9 - British supermarket firm Tesco is to fold its unprofitable operation in China into a state run company as a minority partner. As Kirsty Basset reports, it comes nine years after the company set out to crack China on its own.
Tesco - the British supermarket giant - is in retreat in China. After nine years, the chain has become the latest foreign retailer to give up on trying to crack the Chinese market on its own. Reuters Breaking Views Assistant Editor, Robert Cole. (SOUNDBITE)(ENGLISH) REUTERS BREAKING VIEWS ASSISTANT EDITOR ROBERT COLE SAYING: "A lot of retailers went in, Tesco among them, trying to set up its own kind of chain. And has realised it's difficult - local competition has caught up and although consumers there should be getting more prosperous and it should be getting easier for the likes of Tesco, it's not." It's now in talks to team up with state-run retail conglomerate China Resources Enterprise. A deal would leave Tesco with just a 20 per cent stake, but bring their combined efforts close to the market leader Sun Art Retail Group Ltd. (SOUNDBITE)(ENGLISH) REUTERS BREAKING VIEWS ASSISTANT EDITOR ROBERT COLE SAYING: "I think it's the right thing to do, it's as I say, realistic. But it would have been much nicer if we could have said Tesco's going to go in and have ten thousand stores across Asia's biggest market etc etc." Analysts say it's difficult for foreign companies to negotiate with suppliers and regulators in a fast-growing market. Germany's Metro AG is pulling out of the consumer electronics business in China and America's Home Depot is closing its home improvement stores. Tesco has already begun scaling back on its international expansion. Instead it wants to focus on the British market, after posting a drop in profits in April for the first time in two decades.