Tesco says: China = yes; USA = no

In an interview with The Observer, Tesco's boss said that the company would seek to be a major power in China, but would, for now, not seek to enter the US market.

Sir Terry Leahy, chief executive of Tesco, has ruled out making a significant acquisition in the United States, but plans to expand in China, where he wants the company to be a major force.

In an interview with The Observer, Sir Terry said: 'People have talked about businesses in the US that could be bought, but I don't think they are right for us. We have had researchers in America, but I can tell you that we have no current plans to make an acquisition there.'

China is viewed differently. Tesco last year announced a £140m investment by taking a 50 per cent stake in China's Hymall chain. Leahy said: 'We will have to scale up in China, it's such a big place that you either have to ease out or commit quite a bit.' But he adds that this would take many years to achieve.

Leahy didn't explain his reasons for not wanting to enter the US, except to say that "the US is a competitive market; it's a challenging place."