British retailer Tesco is reportedly seeking a local partner in China, describing the nation as a strategically important market.

The Financial Times reports Tesco is planning to form a joint venture in the Chinese market to help expand operations launched back in 2004.

Tesco’s strategy to partner would see it use less capital.

Analyst Clive Black of Shore Capital predicted the market would accept Tesco’s strategy.

“The story is not confirmed, but if an appropriate partner could be found it may be welcome news, helping local insight in a market that pure Western plays struggle to effectively penetrate in our view. Such a move would also assist the group’s drive to better capital discipline and we believe would be welcomed by the market,” said Black.

Tesco declined to comment on the report.

About two years ago, Tesco planned agressive expansion in China, however, it scaled back its plans after posting losses. Currently, it operates 130 stores there.

In its financial report, Tesco said it had “taken more measured approach in its growth in China”. In the year to February, it opened 12 stores and closed five.

“We still see an excess amount of new space being opened in the market – ahead of customer demand – and we have moderated our pace of development accordingly,” it said.

It is also planning to open an online grocery store in Shanghai after similar moves in Bangkok, Thailand and Kuala Lumpur, Malaysia.