Tesco has been in the Chinese market since a joint venture with a local operator in 2004. Their strategy to this point was to build large stores on the east coast of China, numering over 50 at this time.
Now that's changing as they're moving back to their strength and looking to add a number of smaller stores to its China operations, focusing on the convenience they offer.
This isn't unusual for Tesco (LSE:TSCO.L), the largest retailer in the UK, in that they use a similar multi-format approach in other international markets, like South Korea and Thailand, among others.
Even so, its long-term international strategy is to focus on the US, Turkey, and China as its key to successful growth, as its domestic market is maturing.
The company continues to increase its investment in their Chinese domestic partner "Tin Cao," which they increased by £180m in 2007, from the original 50 percent stake they paid £140m for in 2004.
Tesco has a lot of room for growth in the China market, as it has a smaller penetration there than in most other international markets.
At this time the company is playing catch up in the China market, as their chief competitors, Wal-Mart (NYSE:WMT) and Carrefour have more stores at this time in the country. Of course Carrefour has been in the Chinese market for about a decade, and has over 100 hypermarkets in the country, as well as close to 300 discount stores.
Wal-Mart has 100 hypermarkets they own outright, and an interest in 102 other Trust-Mart stores.
It seems to me that Tesco is going the route of the smaller stores in able to build out quicker, as well as get their brand out there in the Chinese public. Branding by internationals does will with consumers in China.
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