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CLASS

The large distribution to leave the Asian markets

January 06, 2020


Abstract : The chain of large western distribution companies leaving the Asian markets. The latest case is that of Tesco, the British supermarket group that has made it known that it is looking for buyers for its business in Asia, which would have a value of about 9 billion dollars.

MILAN, Jan. 6 (Class Editori) -- The chain of large western distribution companies leaving the Asian markets. The latest case is that of Tesco, the British supermarket group that has made it known that it is looking for buyers for its business in Asia, which would have a value of about 9 billion dollars.

Dow Jones Newswires told sources aware of the facts, pointing out that the first round of offers is expected in mid-January. Last December, Tesco announced that it had started an option review process for its businesses in Thailand and Malaysia, including the possible sale of the businesses.

The British company, recently risen to the headlines in China on the basis of a complaint for having used in the packaging of some products, prisoners of Shanghai prisons, treated as slaves, has reduced its presence abroad to focus on its internal market, characterized by strong competition due to opponents such as Amazon.com and Ocado Group.

For some years the company has left several markets including Japan, the United States and South Korea and has given up part of the control of its operations in China.

In the six months to 24 August, Tesco's pre-tax profit stood at £ 494 million compared to € 463 million in the same period a year earlier. According to the same market sources, the Thai segment of the Asian business could have a valuation of 7 billion dollars, while the Malaysian segment between 1.5 and 2 billion dollars.

The confirmation that the major foreign chains are struggling to survive in the Chinese market today by abandoning it or by selling their company shares has been confirmed in recent months by the sale of the activities of Carrefour, one of the major western retailers in China, in Suning, and by the ongoing negotiations between Alibaba and Metro, the German chain of wholesale shopping centers, also leaving.

Jason Yu, partner of Kantar Worldpanel China, marketing company, recently explained one of the reasons for what is happening in large retailers. "The Chinese market is very complicated and requires innovative and localized retail companies," explained the expert. In China, in large retailers the price factor is increasingly important, even at the expense of quality, while large locations, whose profitability margins are narrowing, are also threatened by e-commerce competition and new forms of distribution door to door or based on small and very scattered locations in the area.

On the other hand, the moves of two distribution giants, the American ones Costco and Wallmart, seem to have gone against the trend, both of which moved on the Chinese market, successfully judging from the first moves. But both move mainly on the price factor, confirming the latter as the key market factor at the middle class level.

(Source:Class Editori)

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