China Resources Enterprise (CRE) has seen its first half net profit drop 8.7 per cent.

The Chinese retail group says it expects the joint venture with British retailer Tesco to take three to five years to turn around rather than two to three years as earlier anticipated because it predicts the Chinese economic slowdown will continue.

“Looking forward into the second half of 2014, the continuation of the Chinese government’s anti-extravagance policy, the accelerated competition from the e-commerce industry and the consolidation of the loss from Tesco stores in China are likely to affect the performance of the retail business,” chairman Chen Lang said in a statement.

The company reaffirmed it is still optimistic about the long-term development of the group’s retail business after forming an alliance with Tesco.

“We believe the immense synergies of the joint venture have yet to be tapped,” said Chen.