Tesco mulls massive Chinese expansion

Tesco looks set to launch online in China and take orders in Shanghai from mid-summer. Although the summer launch would not apply to a pan-China roll-out, nationwide expansion could follow, if successful.

Any roll-out would rely heavily on Tesco's existing UK online experience. Will its China online ambitions work?

Cash still king

China is not an easy market for Tesco. Many Chinese consumers still rely on cash, though mobile online shopping is expanding fast in the big cities. Tesco payment, in some cases, would need to be paid in cash on delivery.

The Telegraph reports that Tesco's chief executive wants to boost digital technology investment to almost £500m this year alone. "In the future, app development is going to be just as important as property development," Phil Clarke is quoted as saying.

More globally for Tesco, it's a heavily tweaked, local approach. Delivery is a nightmare in certain congested cities in Asia, Bangkok being a good example. Tesco first got into China back in 2004 and even as recent as 2010 it was planning to launch more than 100 massive hypermarkets. But like-for-like sales have been less than impressive.

Don't ignore the bread and butter

Compounding the Chinese worries have been serious concerns at home in the UK - service quality, questions over everyday good value prices and erratic, much criticised 'misleading' offers - with a plummeting (though now recovering) share price.

There was also Tesco's US Fresh and Easy distraction, recently cited as a '$2bn flop'. "Tesco's failure [in the US] will rank as one of the biggest among food retailers in modern supermarket history," Burt Flickinger from retail consulting firm Strategic Resource Group in New York told the Los Angeles Times.

Many criticised Tesco for taking its eye off the ball on its bread and butter - the UK. "For me," Phil Clarke said when he became chief executive, "China is not a race, its not a sprint. If it's a race at all, it's a marathon." That's still very much the case.