Tesco steps up battle for attention of Chinese retail consumers

Where they should be: Tesco shopping trolleys at a store (AFP PHOTO/Paul Ellis/FILES)

The battle for supermarket supremacy in mainland China is about to enter a new phase as the United Kingdom-based Tesco chain opens a giant new logistics center and announces plans to open more than 20 new stores nationwide this year.

Tesco - which entered the Chinese market in 2004 - currently operates 96 supermarkets and 12 express stores across China, with its operations mainly centred around Shanghai. But with last week's opening of a 240,000 square meter logistics centre in the nearby eastern coastal province of Zhejiang, the company hopes to start expanding throughout the country.

Tesco is currently the world's third-largest retailer by revenue behind American giants Wal-Mart and France's Carrefour chain - and that's how the rivals rate in terms of stores in China, too.

Wal-Mart first appeared in China back in 1996 and now boasts 333 stores nationwide, while Carrefour entered the fray in 1995 and is now serving customers at 180 outlets across the nation.

Tesco is obviously keen to expand into a retail market which saw a 16.3 percent growth year on year in the first quarter of 2011, meaning it was worth more than four trillion yuan (440 billion euros). Tesco is also planning to open an online shopping service for clothing goods across the country this September and online grocery shopping throughout Shanghai next year.

The logistics center in the city of Jiashan will focus on the company's 53 supermarkets spread through the East China region for groceries but will be able to deliver the company's self-made products throughout the additional regional centers of Shenyang (northeast), Tianjin (central) and Guangzhou (southern).

Carrefour in particular has had a tough time of it in China lately, the company being embroiled in price-fixing controversy in 11 of its outlets that led to fines being administered by the Chinese government. Last year the company opened 30 new outlets across the country - down from 2007's all-time high of 112 - and already this year three stores in China have closed their doors due to falling revenue, the first time this has happened since the company entered the market.

Wal-Mart too has not been beyond some controversy, in May losing two of its top China-based executives for reasons that were never fully explained.

MS