Tesco is to enter China's fast-growing but increasingly competitive retail market with the £140m ($260m) purchase of a 50 per cent stake in a Taiwanese-owned hypermarket chain.The deal with Ting Hsin, one of the region's largest food groups, will enable the UK group to join international rivals such as Wal-Mart and Carrefour and a number of Asian companies in gaining a foothold in China.The move to buy half of the Hymall chain from Ting Hsin is part of Tesco's expansion away from the UK and into the emerging markets of Asia and eastern Europe.Sir Terry Leahy, chief executive, said on Wednesday that expanding into China was an important strategic step to becoming a "truly international retailer".About £2.8bn of the group's £34bn turnover comes from its 179 stores in Japan, South Korea, Thailand, Taiwan and Malaysia but China was becoming "the economic driver" of the region.The price offered by Tesco, which values the 25-superstore group at more than 50 time last year's earnings, underlines the high valuations foreign investors are prepared to pay to buy into China."It is a market we have researched extensively over the last three years," said Sir Terry. It was key to find the right partner that had already shown it could grow fast in what can be a difficult market," he said.Ting Hsin, which opened its first Hymall store six years ago, "is already profitable and has shown that it can grow from scratch".The two companies will have equal represenation on the board, with Tesco poised to name the venture's president and Ting Hsin to retain the chairman and chief executive post.Hymall's superstores had sales of £330m and an after tax profit of £5.5m in 2003. The group plans to open 10 more outlets this year, which should help to increase sales to an estimated £450m this year, according to Tesco. The stores, which are mainly in the east, north and north-east of China, serve some 2m customers a week.Ting Hsin, which was established in Taiwan in 1958 and in China in 1988, has large businesses making and selling cup noodles, a staple of Asian fast-food and operates a fried chicken restaurant chain on the mainland.Wal-Mart expects to open seven stores in China this year, bringing its total to 41 and Carrefour has plans to add to its existing 43 outlets. Metro, the German retailer, plans to build 40 more stores, taking its total to 58. Tesco's purchase will give it immediate scale to compete with its rivals without having to go through the often difficult and complex government approval process.

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