Thailand threat to Tesco expansion

Tesco said today it will highlight the “benefit of modern retail” when it meets the Thai government to discuss plans to block the supermarket’s expansion in the country.

Thailand is keen for international and domestic companies to tone down growth until rules can be put in place to protect the area’s small shopkeepers.

Tesco had planned to open 170 stores in the country during the year as it attempts to build its market lead ahead of the chains Carrefour and Casino.

Thailand is already the supermarket’s third biggest market in the world behind the UK and South Korea with its 219 shops generating £1bn (€1.48bn) of sales each year.

But the Thai Government has decided to review expansion plans by major retailers following calls from small shopkeepers for better protection.

Tesco has yet to formally respond to the outlined proposal and said it would wait to see more detailed plans before commenting.

A spokesman said: “We will be highlighting the benefit modern retail has brought to Thailand in delivering consumers low prices in new and hygienic stores.”

It is not known when – or if – the Thai government will table more in-depth details on how it plans to cope with the supermarket’s expansion scheme.

Tesco was named the world’s fifth biggest retailer in April. It moved up one place in the Global Powers of Retailing Report, an annual survey produced by business advisory firm Deloitte, which covered the period from July 2004 to June 2005.

The group operates in 12 countries outside the UK, including China, Turkey and Japan. It is also expected to become Britain’s biggest non-food retailer by the end of the year, overtaking Argos Retail Group, which owns Argos and Homebase.

Tesco shares were trading up 3.25p – or 1% – at 371p today.