British retailer Tesco has completed its exit from China. Tesco has sold off its 20% stake in the Gain Land joint venture to a unit of its state-run partner China Resources Holdings (CRH). This helped the company raise $375 million or £275 million. The deal is likely to get completed on February 28.
Tesco last year had shared its plans of exciting the China market after it failed to make a significant impact in one of the world's biggest retail markets. Tesco had been long struggling in China and has already exited from several lofty Asian markets. Its exit from China finally marks the end of a long struggle that got further complicated over the past few years.
End of a long struggle
On Tuesday, Tesco, Britain's largest retailer, sold of its 20% stake to China Resource Holdings. Tesco along with China Resource Holdings, stated a joint venture Gain Land in 2014. Per the joint venture Tesco combined all its 131 stores in China with China Resource Holdings' 3,000 stores. However, the retailer struggled to penetrate the lucrative Chinese retail market and finally decided to exit the country.
The company said on Tuesday that the 20% stake selloff will now make things easier for it and will allow it to focus solely on its core business area. The proceeds will be utilized by the company for corporate purposes. That said, for Tesco, which has earlier struggled in other international markets, the China exit too looks quite costly.
Tesco's struggle continues
Lately, quite a few big US companies have exited China. However, that has mainly been because of the trade dispute between the United States and China. Tesco's exit has a different story. The company has long struggled in China although there were tremendous opportunities. In fact, Tesco had shared its plans of exiting China last December.
Tesco had earlier exited Japan and the United States where too it struggled to crack the market. The retailer also disposed off its South Korean business and is presently assessing its businesses in other Asian markets. Tesco presently has operations in Thailand and Malaysia and if the company sell off its businesses in these two countries also, then it will be left only with be operating only in Europe with presence in Ireland, Czech Republic, Poland, Hungary and Slovakia.