TESCO HAS ANNOUNCED it is to sell its business in Japan after eight years of trying to build up its operations there.

The British retailing giant conceded that despite “considerable efforts” it cannot build a “scalable” business in Japan.

Announcing the decision, CEO Philip Clarke said, “We have decided to sell our operations there and focus on our larger businesses in the region, in line with our priority of driving growth and improving returns.”

Insisting that the company still has “good stores in good locations” in Tokyo, Tesco said it will be undertaking a sale process over the next few months.

Trading will continue as usual in the meantime.

Japan is the smallest of Tesco’s international businesses, accounting for only about 0.5 per cent of Tokyo’s market share.

The supermarket chain runs 129 small stores in the Greater Tokyo area under the Tsurakame, Tesco and Tesco Express brands. Only about half of those stores are profitable, according to Tesco.

Altogether, more than 4,300 people are employed by Tesco in Japan.

As analysts and investors welcomed the decision, shares in the company rose more than 2 per cent and were trading at 372.95p at 1.22pm.

Tesco operates supermarkets in 14 countries, including China, Thailand, Malaysia and South Korea in Asia.