Carrefour has become the latest big Western retailer to beat the retreat in China after agreeing to sell its business there.
The French giant offloaded 80% of its Chinese division to Suning.com, in a deal valued at €1.4bn.
Carrefour launched in China in 1995 and has 210 hypermarkets and 24 convenience stores there. However, last year it only generated EBITDA of €66m on sales of €3.6bn.
Suning, in which ecommerce giant Alibaba has a 20% stake, operates more than 8,881 shops in 700 Chinese cities as well as a business-to-consumer platform that is the country’s third biggest.
Suning said: “The transaction will accelerate Suning.com’s business expansion in all-categories merchandise retailing while reinforcing its market competitiveness of fast-moving consumer goods operations. The further enriched bricks-and-mortar portfolios will also improve the shopping experience for local consumers.”
China has been a tough market for international retailers. Tesco and B&Q are among those to scale back their interests in the country, while Walmart is focusing on ecommerce through a partnership with JD.com.
Shore Capital analyst Clive Black said: “China, an Eastern El Dorado for a number of Western domiciled multi-product, store-based retailers, has become something of a corporate graveyard.
“A number of grocers have sought to bring their longstanding offline capabilities to this distinctive political economy and market, one where the digital age appears to have arrived as a first base for modern retailing for many shoppers.
“Alas, despite all the huge potential that the Chinese market seemingly offered, a successful financial way through has rarely, if ever, been found.”
Carrefour will keep a 20% stake in its Chinese operation and have two seats on the seven-person supervisory board.
The deal is expected to complete by the end of this year, subject to the approval of the Chinese competition authorities.