As per the terms of the deal, Tesco will merge its retail network of 131 outlets in the country with CRE’s 3,000 stores forming an integrated entity.
CRE will take up a majority holding of 80% in the new chain while Tesco will have a 20% stake.
Tesco CEO Philip Clarke said the partnership creates a strong platform in one of the world’s largest markets.
"We can now combine our strengths to build a profitable multichannel business, offering our customers in China the best of modern retail," added Clarke.
Tesco that forayed into Chinese retail market in 2004 is confident of the joint venture, consolidating its best-in-class retail practices, international sourcing and multichannel capabilities with CRE’s strong local knowledge and brand, to create a business which is the largest food retailer in China.
CRE CEO Hong Jie said, "We are very excited about the completion of this agreement; it also marks a major milestone for our business development. We believe that this partnership is one that combines the strength of both parties and enables the JV to become the leading multi-format retailer in Greater China, through improved operations, better growth and enhanced profitability."
With plans to invest nearly £85m, the UK’s company is planning to operate 12 stores retailing a range of products including groceries and home care products following the formation of the joint venture business.