British retailer Tesco has signed a joint venture agreement with China Resources Enterprise (CRE) to combine their Chinese retail operations.

CRE and Tesco will respectively hold 80 per cent and 20 per cent of the JV.

CRE will combine its CR Vanguard business, which currently operates 2986 stores across China and Hong Kong, with Tesco China’s 131 stores and shopping mall business.

Tesco said the JV would create a business with sales of some £10 billion.

The intended partnership follows a series of highly successful JVs between CRE and other multi-national corporations and is consistent with Tesco’s stated strategy of focusing on profitable routes to growth in fast-growing but less mature markets, with a ‘disciplined approach’ to the allocation of capital.

Tesco, like Carrefour, has been struggling in China due to cut-throat competition with local players such as Sun Art Retail Group, which holds 13.6 per cent market share.

But, according to Kenny Wu, an analyst at Societe Generale Ji-Asia in Hong Kong, finally, Tesco has found a giant to salvage them.