The British retailer Tesco is set for new development in China now that a joint venture agreement has been approved.
The joint venture agreement between CR Vanguard and Tesco has been approved by Chinese authorities, and the two parties will form a diversified retailing joint venture for businesses in Greater China.
The joint venture will be responsible for hypermarkets; supermarkets; convenience stores; cash and carry business; and liquor specialty store business in Greater China, including mainland China, Hong Kong and Macau. Meanwhile, Tesco will integrate its Chinese businesses and cash into the joint venture. Based on the agreement, CR Vanguard will hold a 80% stake in the joint venture while Tesco will hold the remaining 20%. This newly established joint venture aims at sales of about GBP10 billion, which is about CNY95 billion.
Hong Jie, chief executive officer of CR Vanguard, said that in the future, Tesco's 135 retail outlets in mainland China will be renamed under the CR Vanguard brand to realize brand expansion. With the cooperation, the two parties will use their retailing resources to the largest extent and they will realize integration of background management systems.
Hong says that the cooperation between CR Vanguard and Tesco will create a win-win situation and it is a combination of global intelligence and local experience. With the management of foreign enterprise and the scale resource of Chinese local company, the two parties will take advantage of the complementary effect. The cooperation marks an important step of business consolidation of Chinese and foreign retailing giants.