How the cookie crumbled for Tesco

British retailer can still succeed in China if it becomes a premium, exclusive brand

About nine years after the British supermarket chain Tesco PLC launched its gung-ho, go-it-alone expansion across the Chinese mainland, it announced on Aug 9 that it was to merge its unprofitable operation into a State-run company as a minority partner. Tesco's partner, State-owned China Resources Enterprise Ltd, will dominate the tie-up, with Tesco taking just a 20 percent stake.

This marks a humiliating retreat for the British retail giant and, rather than representing part of any coherent strategy, appears to be an attempt to limit losses.