Chinese supermarket operator Wumart has agreed to buy 36 CP Lotus stores in China.

Thai company CP Lotus, a unit of Charoen Pokphand Group, is selling its stores in Beijing, Shanghai and most provinces in China, excluding South China’s Guangdong Province and Central China’s Hunan Province, for HK$2.3 billion (US$302 million).

The deal is part of a share swap that involves Wumart buying 10 per cent of CP Lotus’ shareholdings for HK$548 million (US$70.7 million) and CP Lotus acquiring 14 per cent of Wumart’s shareholding for HK$2.9 billion (US$373.08 million).

By acquiring CP Lotus stores, Wumart, which is known for its low-priced products, can expand its store selection and tap into the middle-class market.

“We hope to expand into new geographical markets, increase efficiency and reduce costs with this strategic alliance with CP Group and CP Lotus,” said Wumart executive director and president Xu Ying.

CP Lotus will have a direct participation in Wumart’s operations by purchasing its shares.

CP Lotus entered China in 1997 and has 55 stores across China while Wumart has 541 stores as of June 30.

The Chinese market has recently seen a consolidation of competitors through acquisitions and mergers as the market slows and competition gets tougher.

Earlier this month, British retailer Tesco formed a joint venture with Chinese grocer China Resources Enterprises that will combine Tesco’s 134 Chinese stores with CRE’s 2986 stores.