Supermarket giant Tesco unveiled its first move into China today after spending £140m on a 50% stake in a 25-strong hypermarket chain.
The joint venture agreement with Ting Hsin, which operates the Hymall-branded business, comes after a three-year search by Tesco for a presence in China.
The group said it would add its experience in supply chain, product development and store operations to the business, which has sites in Shanghai and a number of other fast growing cities in east and north China.
The UK’s biggest supermarket chain presently has operations in 12 countries, including Hungary, Poland, South Korea, Taiwan and Japan.
Chief executive Sir Terry Leahy said: “China is one of the largest economies in the world with tremendous forecast growth and a market we have researched extensively over the last three years.”
The chain of 25 hypermarkets – mostly located in shopping mall developments – generated annual sales of £330m and post-tax profits of £5.5m in 2003. A further 10 stores are expected to open in the coming year.
Hymall opened its first outlet in September 1998 and is now one of the leading hypermarket operators in the country, with French chain Carrefour and US-owned Wal-Mart among its rivals.
International growth is seen as a key segment of Tesco’s strategy with sales from 440 overseas outlets now worth more than £6bn.
In the last financial year, Tesco achieved group turnover of £30.8bn from 2,318 shops.
Ting Hsin chairman Wei Ying-Chiao said: “This strategic partnership with Tesco will bring new management expertise and technology know-how to help grow the business even further.”
References: EGi News 14/07/04
