Tesco to retreat from China

UK supermarket giant Tesco is in talks with China Resources Enterprise about merging both companys' markets and stores. If the deal goes through, Tesco is going to bring its nine-year solo venture in China to an end at a cost of up to $2.3 billion making it the grocer's latest aggressive international expansion to unravel. The story comes courtesy from Reuters.

Tesco - the British supermarket giant - is in retreat in China.

After nine years, the chain has become the latest foreign retailer to give up on trying to crack the Chinese market on its own.

It's now in talks to team up with state-run retail conglomerate China Resources Enterprise.

A deal would leave Tesco with just a 20 per cent stake, but bring their combined efforts close to the market leader Sun Art Retail Group Ltd.Analysts say it's difficult for foreign companies to negotiate with suppliers and regulators in a fast-growing market.

Germany's Metro AG is pulling out of the consumer electronics business in China and America's Home Depot is closing its home improvement stores.

Tesco has already begun scaling back on its international expansion. Instead it wants to focus on the British market, after posting a drop in profits in April for the first time in two decades.