British retail giant Tesco PLC announced on October 2 that it signed an agreement to establish a joint venture in China with the China Resources Enterprise Ltd. (CRE).

Tesco, which entered the Chinese market in 2004, announced that the two companies "have entered into a definitive agreement to combine their Chinese retail operations and create the leading multi-format retailer in China."

The joint venture will create a business with estimated sales totaling 10 billion pounds ($16 billion) in which Tesco will hold 20 percent, and CRE the remaining 80.

The joint venture, aiming to create the leading retailer in seven of the most populous and economically advanced provinces in China, will combine Tesco's 134 existing stores as well as its shopping mall businesses with CRE's 2,986 stores.

Tesco will make cash contributions totaling 345 million pounds ($560 million) to the joint venture, and will hold two seats on the board of 10 members.