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M&S to change approach to China by seeking JV partner

By RJ Whitehead , 03-Apr-2014
Last updated the 03-Apr-2014 at 17:47 GMT

An M&S store in Hong Kong, where the retailer has been present for some time
An M&S store in Hong Kong, where the retailer has been present for some time

Marks & Spencer no longer plans to open wholly owned stores in China, making the British retailer the latest in a long line of international chains to be seeking a local partner in the country.

Ever since Britain’s biggest supermarket chain, Tesco, admitted defeat in running its own standalone business in the country, turning instead to a joint venture to combine its 134-store China operation with China Resources Enterprise’s Vanguard business, retailers have been wary of taking a direct approach to doing business in the country.

International expansion

However, M&S’s desire for international expansion with a focus on opening 250 new stores, growing its food business and increasing its franchise operations is well known, and its chief executive outlined yesterday how the company will concentrate on growing international revenues by 25% and international profits by 40%.

"Our strategy of becoming an international, multi-channel retailer is more relevant than ever before because of the strong growth potential of international markets," said Marc Bolland, M&S chief executive, adding that the retailer will seek a local partner to further expand in China. 

"When we started in China we said we wanted to establish strong flagship stores. We have done that. Now a partner could help us roll it out across what is a vast country.”

The international division, which has more than 450 stores across 53 markets, accounts for about 10% of group revenue. The company's priority markets are India, China, Russia, the Middle East and Western Europe, M&S said.

Tesco tackles India

Meanwhile, Tesco has revealed it is taking a local-partner approach to moving into India after striking a deal with Tata Group to invest in a dozen stores in the south and west of the country.

The joint venture makes Tesco the first foreign supermarket to enter India, after it invests £85m (US$141m) in 12 existing Star Bazaar stores selling food and groceries, as well as homewares, kitchen products and fashion items.

It is reported that the Star Bazaar product lines will remain geared to Indian tastes after the Tesco deal.

M&S is also present in India, through a joint-venture with local partner Reliance Retail, and has 36 stores across the company, and plans to expand this number to 100 by 2016.

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