UK retailer Tesco is developing its Asian expansion campaign apace, and yesterday outlined its plans in Malaysia, with an emphasis on local sourcing and local management.

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Tesco Stores (Malaysia) is a 70-30 JV between Tesco and local company Sime Darby Bhd, and is opening its first hypermarket later this week. The company plans to open up 20 stores in peninsular Malaysia over the coming five years, with the first four opening by the end of 2002. Damansara, Klang and Malacca are the locations identified for the other three to be opened this year.


CEO Simon Turner this week moved to allay scepticism among Malaysian producers by emphasising that Tesco intents to work closely with local suppliers to source many own-label products locally. Initially these products would be destined solely for shelves on the group’s Malaysian outlets, but eventually they would also be exported to international stores.


Turner commented: “We’re at the early stage in designing the plan to encourage these traders into our stores. We want to have unique Malaysian products at our stores. We want to build up local businesses and we’re developing the domestic supply for the local market and also for export.”


Products would be exported to Thailand, the UK and central Europe, said Turner, adding that the growth in the hypermarket business was supported by the Government’s efforts to develop Malaysia as a retail centre for Asia. “That’s why we have chosen Malaysia. I think it’s a well-managed economy with good outlook.”

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Turner said the investment outlay for one outlet was about RM50m (US$13.2m) and that the company would spend about RM1.2bn over the next five years for the 20 outlets. He stressed that the arrival of Tesco in Malaysia would offer strong employment opportunities for locals. “It’s a company run by Malaysians, a lot of them are local managers and there are only six expatriates,” he added.