Tesco brand reportedly to be dropped

The group's turnover in the retail sector during the first three quarters of 2013 increased 13.9 percent. China Resources Enterprise's retail division mainly comprises supermarkets, VIVO health and beauty stores and Pacific Coffee shops. At the end of September 2013, the group operated more than 4,500 stores in China.

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China Resources Enterprise said the retail division is expected to adopt hypermarkets as its main retail format while expanding its multi-format store network in regions in which the group has already established a presence.

"It is still too early to say Tesco is exiting the market because they still have one foot here," said Jason Yu, general manager of Kantar Worldpanel. But it is true that foreign retailers are facing increasing challenges in the country where they have to be very adaptable to the changing market situation, he added.

The strong operational capabilities of local retailers exceed that of their foreign peers in both management and strategy.

But he said the new venture mixes the advantages of the two retailers. According to their research, in 2013, Tesco reached 7.8 percent of Chinese families, while China Resources Enterprises gained access to 18.1 percent of Chinese families.

The two combined reached 23.7 percent of families. The figure indicates that overlapping areas of the retailers are few, with Tesco strong in China's eastern and northern markets, while China Resources Enterprises is developed more in the south and west.

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