European retailers bet on China

China offers huge market potential

German retailer and distributor Metro and UK supermarket chain Tesco are both looking to expand in China.

The German retail giant plans to open 10 more stores in China this year, and another 40 within five years.

Meanwhile, Tesco chief executive Terry Leahy said the firm plans to open stores in China and across Asia.

Retailers regard China - which saw 9% growth last year and has a population of 1.3 billion people - as offering huge market potential.

Change in law

Tesco's Mr Leahy said Asia was a "key growth area".

"To be a significant world player you have to be present in places like China," he said.

Metro, the world's fifth largest retailer, will locate the 10 stores in major cities including Dalian, Guangzhou, Shenzhen and Beijing, Xinhua news agency reported.

The firm, which has been in China since 1995, opened its 20th store in the country, in Dalian, on Thursday.

Meanwhile, General Electric has said it anticipates revenue in China to rise by 92% to $5bn in 2005.

To be a significant world player you have to be present in places like China Terry Leahy, Tesco chief executive China's retail revolution

Chief executive Jeffrey Immelt was quoted by the China Daily newspaper as saying China had become the company's fastest growing market, with annual revenue increasing by 20% over the last 10 years.

General Electric revenue in China last year reached $2.6bn, company officials said.

Foreign retailers can only operate in China through joint ventures with local companies and cannot hold more than a 65% share in any operation.

However, as part of China's commitments to the World Trade Organisation(WTO), Metro will be able to set up fully-owned stores by the end of the year.