Tesco Buying Stake in China Hypermarket Chain

SHANGHAI-Tesco PLC, Britain’s biggest retail group, has signed a joint-venture agreement with Ting Hsin International Group for its wholly owned subsidiary Ting Cao, which owns the Hymall chain of supermarkets in China. Under the agreement, Tesco will acquire 50% of Ting Cao’s equity in Hymall for $260 million (£140 million). The transaction is expected to close within the next four months.Hymall operates a chain of 25 supermarkets and plans to open as many as 10 more stores in the coming year. It is a profitable business with sales of $613 million (£330 million) in 2003 and an after-tax profit of $10.1 million (£5.5 million). In 2004, sales are forecast to top $833 million (£450 million).The supermarkets average 89,000 sf (8,300 m2) in size with most located in shopping mall developments. Hymall’s stores serve around two million customers each week and are mainly located in the east, north and northeast of China (Shanghai, Hangzhou and Ningbo in the east; Tianjin, Shenyang and Dalian in the north). The Tesco Group has sales of $62.1 billion (£33.6 billion) with profits of $3.1 billion (£1.7 billion). It operates 2,318 stores and employs 326,000 people in the 12 countries in which we operate. China has a population of 1.3 billion and is the sixth largest economy in the world. Its GDP that has been growing by 8% annually and now stands at $1.4 billion.