Saturday, November 18, 2006

Tesco freezes expansion in Thailand

Tesco has agreed to a three-month freeze on openings of new Tesco Lotus Express convenience stores in Thailand.

The Thai venture pledged in a letter to the government that it will not open Tesco Lotus Express stores smaller than 800 square meters, or about 8,600 square feet, "that are not currently under construction" as of last Friday and until Feb. 10, the company said in an e- mail response to questions. The move "does not affect" planned openings of new hypermarkets - larger combined supermarket and department stores, it said.

"The objective of this is to allow us to work with the minister, the retail industry and other interested parties toward a long-term solution which is acceptable to everyone," Tesco said. "During this time we hope to explain the benefits Tesco has brought to Thai consumers, suppliers and the economy over the past eight years."

The new Thai government, which took over in a military coup, has pursued a protectionist agenda, with particular emphasis on protecting small businesses.
Small retailers in Thailand, second- biggest economy in Southeast Asia, with 65 million people, are protesting the expansion of big supermarkets and small convenience chain stores into regional provinces. Retail chains including Tesco, Carrefour, and Thailand's Big C Supercenter and CP-711 are venturing into the countryside after growth in the capital Bangkok and neighboring suburban provinces slowed.

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