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Tesco struggles to crack Chinese market as profits fall

3 October 2013 Last updated at 01:18 BST

With nearly 1.4 billion people, China is the biggest consumer market in the world. But it's proven to be a tough one to crack for British supermarket giant Tesco.

After struggling to make money in the country, Tesco has announced a joint venture with China Resources Enterprise (CRE).

The UK firm will combine its Tesco China business, which includes 134 stores, with the 2,986 stores held by CRE's Vanguard business.

Tesco will have a 20% stake in the business, which it said would have sales approaching £10bn.

The announcement came as Tesco reported a 23.5% drop in profits during the first half of its financial year.

Martin Patience has more from Beijing.

Watch more reports on Asia Business Report's website.

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