China Resources-Tesco JV gets nod
Print Edition
CHINA Resources Enterprise has received regulatory approval for a joint venture with UK supermarket operator Tesco Corp that will create the largest food retailer in China.
Under the venture, China Resources’ almost 3,000 outlets in China will be combined with about 130 Tesco stores in the country. The Anti-Monopoly Bureau of the Chinese Ministry of Commerce unconditionally approved the transaction earlier this month.
“The joint venture combines Tesco’s retail practices, international sourcing and multi-channel capabilities with China Resources’ strong local experience,” Tesco said in a statement yesterday.
China Resources will hold 80 percent of the venture, it said in a separate stock exchange filing.
Tesco China will change its store names to Vanguard to synchronize with existing stores operated by China Resources.
China Resources estimates annual sales of the venture could reach 95 billion yuan (US$15 billion).
Frank Lai, chief financial officer of China Resources, told Reuters earlier this year that Tesco China is expected to turn profitable in two to three years.
Existing Vanguard supermarkets held about a 6.8 percent market share in the four weeks ended on April 18, following Sun Art Group and Wal-Mart China, according to consumer research firm Kantar Worldpanel. Tesco China had a market share of less than 2 percent.
Sales growth in China’s consumer goods market slowed in the first quarter of this year from a year earlier as consumers became more selective about what they purchased, according to Kantar Worldpanel.
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