Tesco diversifies with launch of China multiplex

15 January 2010

QINGDAO: Tesco has officially launched 76,000 square metre, 500m yuan ($73.2m, £50.5m), freehold shopping centre in China.

The Qingdao multiplex, the nation's largest foreign-owned retail mall, incorporates a hypermarket, smaller retail outlets and restaurants.

Entertainment venues, apartments and offices will all form part of Tesco's Chinese projects, with more than 20 of the complexes currently planned.

According to rankings from Deloitte Touche Tohmatsu reported by Warc earlier this week, Tesco was the world's fourth-largest retailer in the 2008-09 fiscal year, with Wal-Mart and Carrefour taking the top two positions.

All three firms have been active in China, reflecting the world's most populous nation's rising superpower status.

Wal-Mart launched its Chinese operations in 1996 and operates 160 stores, generating 45bn yuan ($6.61bn, €4.55bn), according to research firm Euromonitor..

Meanwhile, Carrefour has 145 outlets with sales share running at 33bn yuan ($4.83bn, £3.34bn).

Tesco has been operating in China since 2004, and currently runs 71 hypermarkets and seven smaller Express outlets in urban areas.

Annual sales have reached 11bn yuan ($1.61bn, €1.11bn).

However, the planned malls represent a diversification of the firm's traditional rented supermarket operations.

Locations for the multiplexes will include Yaojiayuan in the well-heeled Chaoyang district of Beijing, home to the capital's central business district and many foreign embassies.

Qinhuangdao in Hebei province and Fushun in Liaoning have also been earmarked for development.

Paul Mercer, ceo, Tesco Property China, said: "The freehold multiplexes will provide us more freedom in selecting better locations and also making better plans for supportive facilities - for example, parking lots - compared to the old model of renting properties."

Data sourced from China Daily; additional content by Warc staff