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Last Updated: Friday, 15 September 2006, 11:32 GMT 12:32 UK
Threat to Tesco's Thai expansion
Sales assistant helps Tesco customer in Thailand
Thailand is one of Tesco's key markets
The Thai government is threatening to freeze Tesco's rapid expansion in the country amid growing concerns at the power of foreign retailers.

Ministers are considering whether to freeze new store openings by Tesco, French firm Carrefour and other leading foreign and domestic retailers.

Small shopkeepers fearful of being forced out of business have demanded action ahead of November's election.

Tesco has more than 200 stores in Thailand and plans to open 200 more.

Rapid expansion

Thailand is Tesco's single largest overseas market in terms of store numbers and total floor space.

It has expanded rapidly since opening its first store there in 1998, in partnership with Thai firm CP Group.

We are waiting to see details of his proposals
Tesco spokesman

Its joint venture Tesco Lotus has become the country's largest food retailer, operating 54 supermarkets, 15 discount stores, 15 Lotus markets and 189 Express convenience stores.

Its stores - which have a combined selling space of nearly seven million square feet - are located across the country, ranging from Chiang Mai in the north to Hat Yai in the south.

Tesco and other international retailers have incurred the wrath of deputy commerce minister Preecha Laohapongchana, who is concerned about the threat to traditional fresh food markets.

Tesco Lotus Express store
Tesco has nearly 190 convenience stores in Thailand

Mr Laohapongchana met with Tesco and other firms this week to express his concerns and further talks are due in the next few days.

"We are waiting to see details of his proposals," a Tesco spokesman said.

Tesco said it would continue to argue the benefits it brings to Thai consumers "in terms of low prices, product range and quality and a safe, modern and hygienic supermarket environment".

With an election due in the next few months, it is unclear whether any restrictions on foreign retailers will come into force.

Impact on competition

Retail experts have warned that the rapid growth of large, multi-outlet retailers could threaten small, family-run stores.

"The inevitable trend is that traditional retailers such as small 'mom and pop' stores and wet markets are gradually making their irreversible exit from the Thai retail trade," Euromonitor International said in a report on Thailand's retail sector earlier this year.

In recent years, Tesco has strived to help Thai farmers and food companies benefit from its surging global growth.

It is working with a number of local firms to help them become regular suppliers of products to its stores around the world.

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