Tesco seal his fate in China with China Resources Enterprise , a number of supermarkets in the country, a strategic movement to remain strong in the central market at a lower cost and to focus its resources on its recovery in the UK.
" Tesco and China Resources Enterprise ( CRE ) today announced they have signed a preliminary agreement and is in exclusive negotiations to combine their distribution in China to form the number one distributor in China multi - format," said Tesco said in a statement Friday.
The intention is to bring together both groups controlled by the CRE , CR Vanguard , a number of supermarkets in the country with 2,986 stores in China and Hong Kong chain , and 131 Tesco supermarkets in China in a joint venture owned 80 % by CRE and 20% in Tesco and weighing 10 million pounds of revenue ( € 11.6 billion ) . Benefit from the growing Chinese market A giant that highlights the "deep understanding of local customers," and the national network of Chinese public conglomerate, as well as "global experience" and the international network of Tesco, the world number three , behind Wal -Mart supermarket and French Carrefour. Tesco , the main alliance advantage of being " consistent" with its strategy of "focusing on profitable routes for growth in high growth markets and less mature in a disciplined approach to the use of capital."
A question mark hangs instead on the future of the Tesco brand within this new entity.
Entered the Chinese market in 2004 , Tesco, whose stores are concentrated on the east coast , reached a turnover of £ 1,432 million in China for its 2012/2013 , which was only 2 % of its total sales. According to Ishaq Siddiqi ETX Capital , Tesco therefore looking through this alliance to continue to weigh on China, but without having to invest large sums of money even to expand its presence there. " This is a strategic decision full of common sense Tesco, the group clearly want to review its operations in China to have some presence , but less investment," said analyst AFP .
This agreement is also " good news for shareholders of Tesco, as it shows that the group is their priority to inject more funds in the UK and its international operations, while maintaining a presence through a joint venture for it to maintain its market share among international supermarket chains , "he said , adding . On the London Stock Exchange , also Tesco 's announcement was welcomed by investors , taking title to 1.11% 373.2 pence at 09:45 GMT , in a market up 0.29 %.
After a rare earnings warning in January 2012 , Tesco launched into effect in April of that same year investment plan billion pounds in the UK , representing over 65% of its sales to recover their customers and face competition from Asda (Wal -Mart) , Sainsbury . The group had decided in December parallel to withdraw from the United States, where its local subsidiary Fresh & Easy , which has about 200 stores in the western United States (Arizona, California, Nevada), has never made a profit despite billion pounds of investment since its launch in 2007.
Mid-2012 , Tesco had already withdrawn from the Japanese market after eight years of presence .
The Alliance of Tesco and China & Resources Enterprise
" Tesco and China Resources Enterprise ( CRE ) today announced they have signed a preliminary agreement and is in exclusive negotiations to combine their distribution in China to form the number one distributor in China multi - format," said Tesco said in a statement Friday.
The intention is to bring together both groups controlled by the CRE , CR Vanguard , a number of supermarkets in the country with 2,986 stores in China and Hong Kong chain , and 131 Tesco supermarkets in China in a joint venture owned 80 % by CRE and 20% in Tesco and weighing 10 million pounds of revenue ( € 11.6 billion ) . Benefit from the growing Chinese market A giant that highlights the "deep understanding of local customers," and the national network of Chinese public conglomerate, as well as "global experience" and the international network of Tesco, the world number three , behind Wal -Mart supermarket and French Carrefour. Tesco , the main alliance advantage of being " consistent" with its strategy of "focusing on profitable routes for growth in high growth markets and less mature in a disciplined approach to the use of capital."
A question mark hangs instead on the future of the Tesco brand within this new entity.
Entered the Chinese market in 2004 , Tesco, whose stores are concentrated on the east coast , reached a turnover of £ 1,432 million in China for its 2012/2013 , which was only 2 % of its total sales. According to Ishaq Siddiqi ETX Capital , Tesco therefore looking through this alliance to continue to weigh on China, but without having to invest large sums of money even to expand its presence there. " This is a strategic decision full of common sense Tesco, the group clearly want to review its operations in China to have some presence , but less investment," said analyst AFP .
Welcome to the London Stock Exchange
This agreement is also " good news for shareholders of Tesco, as it shows that the group is their priority to inject more funds in the UK and its international operations, while maintaining a presence through a joint venture for it to maintain its market share among international supermarket chains , "he said , adding . On the London Stock Exchange , also Tesco 's announcement was welcomed by investors , taking title to 1.11% 373.2 pence at 09:45 GMT , in a market up 0.29 %.
After a rare earnings warning in January 2012 , Tesco launched into effect in April of that same year investment plan billion pounds in the UK , representing over 65% of its sales to recover their customers and face competition from Asda (Wal -Mart) , Sainsbury . The group had decided in December parallel to withdraw from the United States, where its local subsidiary Fresh & Easy , which has about 200 stores in the western United States (Arizona, California, Nevada), has never made a profit despite billion pounds of investment since its launch in 2007.
Mid-2012 , Tesco had already withdrawn from the Japanese market after eight years of presence .
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