Tesco plc Annual Report and Financial Statements 2012

International: Footholds in newer markets
China: three regions the size of countries
A large, rapidly growing market, China offers
real long-term potential for growth, despite a
currently challenging consumer environment.
South region
Present in this region for only
four years, we continue to adapt
our offer to meet consumer needs
in this warmer part of China
Our strategy in China is
to focus on building scale
in three regions which
together have a population
of over 600 million.
18 Tesco PLC Annual Report and Financial Statements 2012
Diversity and complexity
A market of China’s scale brings not only
significant opportunities but also huge
diversity and complexity. To be successful,
we need a deep understanding of regional,
provincial and city-level differences, as well
as an ability to leverage our global expertise
and systems in order to build scale. Our
vision of winning locally by applying our skills
globally is key to our ambition to drive
long-term, sustainable growth in China.
The importance of being local...
Even within a single region temperatures,
tastes and preferred brands can all vary,
so our operation is ‘local’ in many ways.
For example, our buying teams are based
in different regions and even in specific
provinces and cities to be close to our
customers and suppliers. We have appointed
more local Directors this year to strengthen
our China Board and have ongoing plans
to recruit and develop local talent.
North region
Hymall opened here in 2001 and 11
years later we have 39 stores trading.
Our first Extra opened in Shenyang in
December. Freezing cold in winter,
our clothing and food ranges are very
different to the East and South
East region
The ‘home’ of Tesco in China is
Shanghai and here we are trading
our first Express convenience stores
... and operating responsibly
Our stores are active in their local communities,
for example through ‘Care for the Needy’, where
we donate daily essentials to elderly and infirm
people. Drawing on our Group expertise and
technologies, our new distribution centre in
Jiashan uses 45% less energy than a traditional
depot. These are just two examples of how we
operate responsibly through a combination of
being local and applying our skills globally.
Group skill and scale
Tesco’s skill and scale are crucial to
differentiating our business in China. Our
new distribution centre was an important
first step to streamlining our supply chain,
allowing us to buy on a greater scale and
giving us more control over the storage and
transportation of fresh produce. Drawing on our
brand capabilities, we have recently relaunched
the packaging for 250 of our own-brand
products, with hundreds more to follow in the
coming year. Our Shenyang Extra store has
benefited from the success of our new format
in Europe, with the senior team trained in our
Extra store in Bratislava, Slovakia.