LONDON - British retail giant Tesco announced Friday that it had signed a Memorandum of Understanding (MOU) with the China Resources enterprises (CRE) to create a leading multi-format retailer in China, indicating a further expansion in China market.

Tesco said in a statement "the proposed joint venture would create a business with sales of some 10 billion pounds ($15.55 billion), in which CRE and Tesco's effective interests are expected to be 80 percent and 20 percent respectively.

The joint venture would involve the CRE combining its CR Vanguard business, which currently operates 2,986 stores across China and Hong Kong, with Tesco China's 131 stores and shopping mall business.

"The partnership would bring together CRE's deep understanding of local customers, established nationwide infrastructure and proven track record as a partner with Tesco's global retail expertise, international sourcing scale and supply chain capabilities,"  Tesco said

Both companies confirmed the talks on the joint ventue in stock market statements.

Tesco, the biggest supermarket chain in Britain, now operates in 12 countries and regions with 350,000 employees. It entered China market in 2004, mainly operating hypermarkets and shopping malls containing Tesco stores.