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China Resources Enterprise mulls Tesco venture in China China Resources Enterprise in talks with Tesco
(about 3 hours later)
China Resources Enterprise (CRE) says it is considering a joint venture with the UK retailer Tesco to operate hypermarkets and supermarkets in China. China Resources Enterprise (CRE) is in exclusive talks with the UK retailer Tesco about merging their hypermarkets and supermarkets in China.
CRE would control about 80% of the venture while Tesco would have 20%, it said in a filing to the Hong Kong stock exchange. The venture would combine Tesco's 131 stores in China with CRE's almost 3,000 stores, called Vanguard, to create what they say would be the leading multi-format retailer in China.
The move would combine Tesco's 131 stores in China with CRE's almost 3,000 stores, called Vanguard. CRE would control 80% of the new chain while Tesco would have 20%.
After an aggressive expansion, Tesco has left some international markets. Tesco and CRE both confirmed the talks in stock market statements.
CRE said in a statement that the move would bring together its "deep understanding of local customers, established nationwide infrastructure and proven track record as a partner with Tesco's global retail expertise, international sourcing scale and supply chain capabilities". CRE said that the venture would bring together its "deep understanding of local customers, established nationwide infrastructure and proven track record as a partner with Tesco's global retail expertise, international sourcing scale and supply chain capabilities".
Tesco, the biggest supermarket in the UK, first started operating in China in 2004 where it mainly has hypermarkets and some shopping malls with Tesco stores. Tesco, the biggest supermarket chain in the UK, first started operating in China in 2004 where it has hypermarkets and some shopping malls containing Tesco stores.
Analysts said the joint venture would allow Tesco to bring down the amount of capital it must commit to its China business, while still having a presence there. Analysts said the joint venture would allow Tesco to reduce the amount of capital it must commit to its China business, while still having a presence there.
After a decade of international expansion Tesco faces challenges in outside markets. After a decade of international expansion Tesco faces challenges in some markets.
In April Tesco said it was exiting its US chain of 199 Fresh & Easy shops, at the same time announcing its first decline in annual profits in almost 20 years. It is still to be decided whether it will sell the business or close it down. In April, Tesco said it was abandoning its US chain of 199 Fresh & Easy shops, at the same time announcing its first decline in annual profits in almost 20 years. It is still to be decided whether it will sell the business or close it down.
That move came after Tesco said it would leave the Japanese market in 2012. It also announced that it would leave the Japanese market in 2012.
Tesco has meanwhile been re-focusing its effort on its home market, unveiling a new concept store in Watford designed to appeal to young mothers and diners. .