Tesco turns east as Sir Terry Leahy leaves

The £170 million deal will see Tesco partner a consortium of Asian investors including Singapore's Metro Holdings to build three shopping malls in Shenyang, Xiamen and Fuzhou.

It will have a 50% stake in the malls, each of which will include a Tesco hypermarket.

Tesco plans to quadruple revenue in China to about £4 billion in the next five years.

However, critics say Tesco is behind rivals such as Wal-Mart in the region.

Today's developments indicate "a move into second gear" by Tesco in China, said Clive Black at Shore Capital. "They've put together the team and structure. The significance of this deal is that they're taking it into roll-out mode."

The deal is funded by £30 million of equity from Tesco, £30 million from the Asian investors, and debt provided by banks including Standard Chartered and the Commercial Bank of China.

Sir Terry hands over today to successor Philip Clarke, having built Tesco into the clear market leader in the UK supermarket field. Tesco has 30% of the market, nearly double that of closest rival Asda.

Today it launched a new attack against Asda, lowering prices on more than 1000 items. Consumer groups note that supermarket claims of a "price war" don't tally with the rising cost of feeding a family.

Sir Terry was knighted in 2002 for his services to food retailing.