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Tesco prepares for Chinese expansion

20 July 2011 - 09:52 by Simon Crisp

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UK supermarket chain Tesco is moving to capture more of the Chinese retail market both on the high street and via safe shopping online in 2011.

The revenue generated in the first three months of 2011 meant that the retail market in China was worth a staggering £386 billion and so Tesco is keen to get a greater foothold in the nation that is already being fought over by two of its biggest rivals, Wal-Mart and Carrefour.

In the autumn Tesco will start to give Chinese consumers the opportunity to enjoy safe shopping online via its e-commerce site. At first it will only sell fashion items and accessories, but it has plans to make online grocery distribution another key facet of its business in China.

Shanghai will be the first place to get Tesco online grocery deliveries at some point in 2012, with more places expected to follow if this proves to be a success.

A large logistics centre was opened in China by Tesco this month, representing the latest in a long line of strategic moves that has seen the company expand its presence to encompass more than 96 supermarkets and a further 12 small scale outlets.

Despite rapid growth the Chinese high street is not necessarily the most stable place to operate. Online shopping is big business as internet connectivity becomes more widely available and in some areas supermarkets which were only recently constructed have been forced to close because of dwindling revenues.

Both Wal-Mart and Carrefour have seen a few of their Chinese locations shut their doors in recent years, but like Tesco these companies will be keeping a keen eye on the e-commerce potential in China. The growing online population should fuel this expansion and help western companies survive problematic economic conditions.