After detailed, ethnographic customer research involving Tesco staff living at home with Japanese families, Tesco surprised industry analysts by acquiring a small, little-known Japanese discount chain called C Two-Network in 2003. With about 80 small shops located around Greater Tokyo, Tesco had departed from the successful hypermarket format of its other foreign forays and also the Japanese strategies adopted by the hypermarket -based Metro and Carrefour. Instead, Tesco has plumped for a discount convenience retailer and wholesaler centred on a major conurbation with a marginal share of the local market. in August 2004, Tesco's C Two-Network business was expanded with the acquisition of Fre'c, a fresh food specialist. The business now trades from 104 stores with 15 new stores planned for 2005/06
International strategy development
Other significant SE Asian retail markets are now emerging as part of Tesco's growth plans and include China and India. In September 2005, Tesco completed the acquisition of a 50% holding in Ting Hsin's Hymall business for £145 million. The new joint venture operates hypermarkets in Shanghai and the North-East of China. Rumours continue about Tesco in India although its ability to establish a presence there is current ly limited by Indian protectionism which prevents foreign retailers from operating in the country. Nevertheless, Tesco has established an IT service centre in Bangalore in 2005.
Tesco's entry into Japan and other Asian markets had been typical of its belief in calibrating the precise local impact of its brand on every new market it enters. After identifying the direction of consumer spending, it then examines whether or not it can tap in to this spend "in a Tesco way" . The company believes its brand name stands for value for money and making life simpler, and it shuns new ventures that might detract from such brand values.
By 2005, Tesco had achieved market leadership in 2 of the 12 countries it had entered in the previous ten years. The success of its international strategy development, according to Terry Leahy, is built on six core elements9 • These are:
1. Be Flexible - each unique market requires a slightly different approach ;
2. Act Local - local cultures, customers, supply chains and regulations are the norm (in Thailand, for example, all stores open precisely at 9.09 am, said to be a lucky number in local custom);
3. Keep Focus - to be the leading local brand is a long term effort, it is not about planting flags;
4. Operate Multi-formats - no single format can reach the whole market;
5. Capability - success is not about scale, it is skill that counts and being able to share this around the business is vital; and finally,