Five questions answered on Tesco’s talks with China Resources

A win-win move, or do Tesco still just not understand China?

UK supermarket giant Tesco is said to be in talks with China Resources Enterprise (CRE) about merging both company’s markets and hypermarkets.

How many stores are the companies thinking of merging?

The grocery retailers are talking about merging Tesco’s 131 stores in China with CRE's almost 3,000 stores, which are called Vanguard. Both companies confirmed they were talks in stockmarket statements, but warned there was no guarantee the deal would go through.

How will control be divided up? 

State run CRE would control 80 per cent of the new chain and Tesco would have the remaining 20 per cent. The companies say that if the deal goes through it would mean Vanguard would be the leading multi-format retailer in China.

What will the deal mean for Tesco?

It would mean that Tesco could still have a presence in China without having to invest a significant amount of capital. One analyst, speaking to Reuters new agency, said: "This may look win-win, but in reality, Tesco is saying 'I can't figure out China',".

What has CRE said about the merger?

The company said that the venture would bring together its "deep understanding of local customers, established nationwide infrastructure and proven track record as a partner with Tesco's global retail expertise, international sourcing scale and supply chain capabilities".

What about Tesco’s other overseas operations?

In recent times Tesco, which is the biggest supermarket chain in the UK, has faced increasing difficulties in its overseas operations.

In April the company said it was abandoning its US chain of 199 Fresh & Easy shops. It also announced its first decline in annual profits in almost 20 years. In 2012, it announced it would leave the Japanese market.

The deal would mean Tesco retained a low-capital stake in the Chinese market. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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