Hong Kong-based supermarket operator China Resources Enterprises has seen its net profit for 2013 slide 52 per cent, dragged down by its weaker retail division.

CRE said net profit dropped from HK$3.95 billion in 2012 to HK$1.9 billion (US$246 million) in 2013.

“China’s economy saw slower growth momentum and faced challenges throughout the year under review,” said CEO Hong Jie.

Rising labor costs have hurt the retail business, which declined 65 per cent. The company operates more than 4600 stores in China.

However, it is confident it can bounce back following its new joint venture with British retailer Tesco.

Tesco will inject 134 stores and 19 shopping malls it currently operates in mainland China into the JV which aims to become the leading multi-format retailer in Greater China.

Though Tesco has been losing momentum in China, CRE is optimistic it can guide the business back into profitability.

“When we bought Home World, they were also losing 600 million yuan. It took us two-and-a-half years to turn it into break even. Then in the fourth year, we made a profit. So you can see the synergy definitely will come,” said CFO Frank Lai Ni-hium.

CRE plans to open 200 to 240 new stores in 2014, 135 of which are Tescos.